Steve Smith is the President of National Grid Partners and Group Head of Strategy, Innovation and Market Analytics at National Grid.
getty
The global shift to renewable energy is well underway—a transition underscored by a COP28 agreement among more than 130 governments to triple renewable energy capacity by 2030. That surprise deal revs up the tailwinds already provided by the U.S. Inflation Reduction Act's green energy incentives.
Now, we face inevitable questions: What are the next steps? Where do we go from here? How do we avoid the mistakes of cleantech 1.0, when government spending programs in the early 2000s artificially accelerated many green business models that ultimately failed?
As head of the utility industry's only Silicon Valley-based investment and innovation arm, I'd like to offer my perspective on how the business world can spend wisely in this transformative field. In other words, how can we ensure that the renewable energy economy is as viable financially as it is environmentally?
Curbing climate change by speeding the world's transition from fossil fuels is the most important challenge of our generation. However, the flourishing demand for renewable energy is outpacing the ability to deliver it. Investments in the companies and technologies that would enable change must become smarter and more precisely targeted.
Real-world conditions demand that any model to advance the clean energy transition needs to recognize a number of 21st-century realities. Sources like solar and wind are subject to intermittency—not always available to provide electricity due to their nature. Peak user demand does not always align with peak-generating potential, a phenomenon illustrated by the so-called duck curve. Add in the electrification of transportation, home appliances and heating (which will double or triple electricity demand), and the challenge becomes even more daunting.
The power grid needs more automation if it's to be flexible in matching supply to demand. Of course, customers will expect significant benefits and minimal hassle if they're to join the clean energy revolution.
The investments that pay off will be ones that address these realities in innovative ways. As I see it, companies that fit into one of the following categories have the greatest potential for success. I think of them as the four pillars of the clean energy transition.
1. Digitally Enabled Electricity Networks
Headlines result when supply and demand slip out of balance, stressing the grid to the point of outages seen during extreme weather. The reverse can also sometimes occur, with supply being so abundant that electricity prices fall below zero. As we add more electric assets to the grid, from electric cars to backup batteries that can power a whole neighborhood during an outage, we'll see a more complex and dynamic grid than we've ever envisioned.
By using predictive analytics and artificial intelligence, dynamic software platforms can coordinate the bounty of solar energy on a sunny day to shift demand away from conventional power providers. In this way, automated electric networks simultaneously reduce carbon emissions while deploying renewables at a scale not achievable with conventional grid designs.
2. Enhanced Operational Efficiency
Managing the production of renewable energy is but one of the challenges utilities face. Existing infrastructure often limits the ability to deliver that power to the customer.
In the long run, that means new transmission lines. In the meantime, the efficiency of today's energy networks can be optimized by deploying artificial intelligence as well as cloud and edge computing.
For example, line capacity today is often based on estimates that include weather conditions and other factors. Real-time monitoring using remote sensors can detect actual line conditions. We've found that better data about how much electricity a given line can carry without overheating can add as much as 30% more power to the existing transmission system. That newfound capacity, in turn, can help the industry scale new power generation resources to support broader electrification.
3. Decarbonizing Gas Pipelines
Acknowledging today's realities also means recognizing that natural gas still has a role as a transitional step on the way to fully decarbonizing the grid. The vast, established network of pipelines in the U.S. will be in use for the foreseeable future as we move to cleaner solutions. In the long term, they also hold the potential for carrying renewable natural gas and hydrogen, a zero-carbon energy source that is increasingly the focus of technology innovators.
As a practical consideration, excavation will continue to be necessary for maintaining existing networks and adding or replacing pipelines. To meet the speed of climate change, this infrastructure work will increase the need for technologies like precise underground mapping. A parallel green-tech opportunity lies in the growing adoption of electric excavators and backhoes that reduce carbon by replacing diesel equipment.
4. Putting Customers First
Not least among the necessities to reach net zero is a culture of placing the customer first. There are clear business (and planetary) benefits in having customers seek out carbon-reducing solutions and adopt grid-friendly behaviors rather than dragging them to embrace the concept.
Climate awareness and lower costs (including tax incentives) are already proven inducements. However, optimizing vehicle charging and making it more cost-effective can not only make customers happier, but it can also help power providers balance out periods of high demand—which can reduce the need to fire up fossil-powered backup generators.
Pursuing A Clear-Eyed Vision Of The Future
Whether for power companies, technology innovators, investors or customers, the opportunities that the clean energy transition creates are vast—limited only by imagination and creativity. To achieve a carbon-free economy that is sustainable, renewable and financially viable, we must apply the most relevant technologies being developed today to the challenges of tomorrow.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
