Decentralization: The Second D of the Energy Future








I buy everything from ACME, they are the company I trust the most.

– Wile E. Coyote

A fundamental aspect of the centralization that characterizes the electric sector lies in the maxim that says: “the bigger, the better.” For example, the bigger a generation plant is, the cheaper the energy is and therefore investment is made to take it from the distant production centers to the consumption centers. Right?

According to the logic of electric centralization, few large companies are required to make all the investments in generation and also in transmission and distribution lines to take energy to consumption centers. In such a way that production is centralized in vertically or horizontally integrated companies.

To illustrate the above, do you remember the Coyote from the “Looney Tunes” animated series? Created in 1949 with his co-star the Road Runner, in more than 70 years of life he has dedicated himself to the fruitless task of hunting the fast bird. For this he has used products from the ACME company, on which I will stop a little.

The ACME company is an acronym that means, translated into Spanish, “A Company that Makes Everything” and was the clear reflection of the companies of the 1950s. General Electric, for example, made the same irons, stoves, toasters, televisions, refrigerators; garbage burners, coal stoves, jet turbines and, in a futuristic vision, electric cars and their home chargers, to which we will dedicate an article later.

ACME, like GE, like the electric companies of old — known as utilities —, are part of that type of organization. However, since the 1970s this model entered into crisis and was replaced by smaller and more dynamic companies, reducing competitiveness to the large ACMEs. Eventually companies such as GE or the electric utilities began divesting assets and less competitive business branches.

If technological advance has taught us anything, it is the importance of miniaturization, individualization and personalization of products and services. Where before there was a landline telephone, now there is a smartphone for each member of the family. Why should it be different in the electric sector?

Smaller and more flexible plants are cheaper and easier to operate, they can be located near large consumption centers and, therefore, be more competitive than the large plants of old, and among these are solar plants. The development of small solar plants between 0.5 MW and up to 10 MW has grown everywhere in the world under that logic and has lowered the costs of electric energy in the most sophisticated markets.

But it does not end there. What is closer to the consumer than generating on their own roofs? The growth of solar panels on the roofs of residential, commercial, industrial users and even government offices has grown in those markets where regulation is more favorable, for example, California.

The energy future outlines a true trend of decentralization, users who take control of their consumption and require, increasingly less, energy from large production centers, cooperatives that create microgrids for self-consumption or entrepreneurs who use their land to sell energy near the cities.

And this is only the beginning, when electricity storage is economically viable, an important part of consumers will use increasingly less energy coming from large power plants.

Electric decentralization is synonymous with freedom and energy independence of consumers and goes hand in hand with the decarbonization of the sector. Undoubtedly, it will be a reality sooner rather than later.

This article was originally published by Business Insider México.
Date: July 22, 2020
Original Link: https://businessinsider.mx/descentralizacion-sector-electrico-energia-circular-paul-sanchez-opinion/ [offline]
Archived Link: https://web.archive.org/web/20210303081030/https://businessinsider.mx/descentralizacion-sector-electrico-energia-circular-paul-sanchez-opinion/ [Archived]

Decarbonization: The First D of the Energy Future






“This century can credibly be called the century of decarbonization”

-Angela Merkel

This week we begin with the first installment of a four-part series called “the Ds of the energy future,” namely: decarbonization, digitalization, decentralization and democratization. To begin, we touch on the topic of decarbonization, which is one of the social demands that has gained the most strength in recent years.

Decarbonization refers to the process of eliminating the sources of greenhouse gas emissions in economies which, for simplification, is measured in equivalent carbon dioxide. In such a way that the words coal or carbon, in this sense, are used as a reference to this.

The task is not simple, since it is necessary to advance in means of transport that use renewable sources of energy, where the main challenge is found in aircraft and large vessels; as well as in energy efficiency in buildings, electronic devices and industrial processes; and, of course, in the generation of electric energy.

Said in another way, decarbonization would be the most important result of a deep energy transition where the use of fossil sources of energy is eliminated, or at least reduced to the strictly necessary minimum. The challenge is enormous, however, it is already part of the international agenda contained in the Paris Agreement.

In matters of electric energy generation, renewable technologies, particularly solar and wind, have reduced their costs rapidly in the last 10 years. With low technological costs, the proliferation of renewable projects has accelerated throughout the world. Large-scale projects, whether wind, onshore and offshore, as well as large solar farms, have appeared on all continents.

But it has not stopped there. On a small scale, in those places where projects have found fertile ground, roofs have been covered with photovoltaic panels for distributed energy generation, which allows users of more basic markets to save on their energy bills and reduce greenhouse gas emissions, while in more advanced markets, they can charge their electric cars, store energy and sell energy to the grid or to their neighbors.

Nevertheless, to continue advancing in the correct direction of decarbonization, it is necessary to advance in the technological development of new-generation batteries that can store the energy generated by renewable sources and permanently exorcise the ghost of intermittency.

Medium- and long-term decarbonization policies include, in addition to incentives to use renewable sources and reduce greenhouse gas emissions in production, the penalization for emissions in energy consumption. In some countries, advanced carbon bond markets have already been developed where one must pay or compensate for the emissions directly related to their energy consumption; whether in fuels such as coal, gasoline and natural gas; or in electricity, depending on the energy mix that was used for its generation.

Finally, decarbonization in the global energy future will be complemented by other elements such as digitalization, decentralization and democratization, which together generate positive feedback among each of them for the benefit of all the citizens of the world. We will talk about these in the following columns. Until then.

This article was originally published by Business Insider México.
Date: July 15, 2020
Original Link: https://businessinsider.mx/descarbonizacion-futuro-energetico-energia-circular-paul-alejandro-sanchez-opinion/ [offline]
Archived Link: No server is available to handle this request. [Archived]

A New Generation of Consumers




“Many want the government to protect the consumer.

A more urgent problem is to protect the consumer from the government.”

– Milton Friedman

I dare say that in Mexico a consumer culture has not been developed in the energy sector, particularly in the electric sector; at least not at the level of domestic consumers or in small, family businesses and small shops. The citizens who make up the base of the pyramid of electric energy users.

Subsidies to energy prices together with a de facto monopoly in the sale of energy to small consumers, residential and commercial, have distorted the role of the consumer in the Mexican electric sector, which seems more like a captive taxpayer who has to obligatorily maintain the existence of operational and administrative inefficiencies of a market with a single electricity provider.

Small consumers do not have a real idea of their electricity consumption, nor of its real cost, and very few know the levels of energy efficiency of their household appliances and electronic devices.

In these days of confinement, most Mexican households have verified this situation in their electricity bills because by spending more time at home, our consumption has also increased in proportion. A person leaves a series running on TV while being on a video call with the lights on in an unoccupied room and charging a cellphone, laptop and tablet. Does it remind anyone of something?

While this happens in Mexico, in more mature markets such as the United States, Europe, Canada or Australia, a new generation of electricity consumers is being born that takes advantage of technological and social changes to have a more active role and assert its power. The four Ds that drive these changes are: Digitalization, Decentralization, Decarbonization and Democratization of energy. Which I will address in future columns.

This new generation of electricity consumers has indoor meters in their homes that allow them to observe the level of consumption in real time and the price of energy; they have connected smart devices that can regulate electricity consumption, for example in matters of indoor climate control; or schedule tasks, for example washing cycles, at 3:00 a.m. when the price of electricity is cheaper or dim the lights when no one is using them.

Additionally, there are applications for mobile devices that allow them to know consumption and establish limits and alarms, know the energy efficiency of the connected devices and observe their comparative degradation and know market prices. Some of them, more sophisticated, already integrate solar panels on their roofs, with storage systems and charging systems for electric cars, which are also storage systems.

But most importantly, these new-generation consumers have the right and control of choice in their hands. There are numerous electricity providers which offer electricity plans based on the needs of each of the users. There are plans for almost every type of consumer.

Whoever wants to consume 100% renewable energy and obtain their compliance certificate, or whoever wants to reduce their demand during peak hours in exchange for compensation; or whoever only operates on Saturdays and Sundays or at night, or whoever has their solar panels; all of them can obtain different offers from different providers with different prices and different characteristics.

For Mexicans to be able to enjoy an experience like that of mature markets, it is important that electric users become new-generation consumers who take control of choice and demand from rulers changes to move in that direction. We are still far away, but this evolution cannot be stopped.

This article was originally published by Business Insider México.
Date: July 8, 2020
Original Link: https://businessinsider.mx/una-nueva-generacion-de-consumidores-electricidad-opinion-paul-alejandro-sanchez-energia-circular/ [offline]
Archived Link: https://web.archive.org/web/20200805222332/https://businessinsider.mx/una-nueva-generacion-de-consumidores-electricidad-opinion-paul-alejandro-sanchez-energia-circular/ [Archived]