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]

The Third Energy Revolution

"The nation that leads in renewable energy will be the nation that leads the world."
— James Cameron

We can define an energy revolution as a phenomenon in which a series of technological, economic, and social changes enable an exponential increase in the amount of energy available to societies and radically transform their social, economic, and political structures. In world history, there are two major events that fit this description.

The first is known as the Neolithic Revolution, which began with the development of agriculture and animal husbandry during the post-glacial period, around 10,000 BC. This transformation enabled the emergence of the first sedentary societies because increased food production allowed for a greater division of labor and reduced the amount of time, energy, and human effort devoted to hunting and gathering.

The Neolithic Revolution fundamentally transformed human history and laid the foundations for the economic system that would persist until the Industrial Revolution. Societies that mastered agriculture were able to devote more resources to military endeavors, leading to the rise of the first empires and to systems of slavery and serfdom as models of production based on working the land to generate more food, or, put differently, more energy for society.

The second revolution began with the Industrial Revolution in the mid-eighteenth century and was driven by the widespread adoption of the steam engine and the use of fossil fuels such as coal and oil. In just a few centuries, the amount of energy available to societies increased exponentially, replacing manual labor in textile production and reducing reliance on animals for work and transportation.

However, the industrial model that persists today remains fundamentally dependent on fossil energy sources. While this model has undoubtedly been closely associated with global economic development and rising standards of living, it has also generated significant social and environmental impacts and contributed to global warming.

In recent years, technological, social, and digital innovations have begun to outline what may become the leading drivers of a third energy revolution. On the one hand, technological innovation is characterized by increasing per capita electricity demand resulting from the growing number and personalization of technological devices, including smartphones, laptops, tablets, electric scooters, and electric vehicles.

On the other hand, social innovation is reflected in growing public demand for governments to adopt policies that encourage the deployment of renewable energy and promote an energy transition away from fossil fuels.

Alongside these developments, digital innovation is being driven by increasing connectivity and digitalization between centers of production and consumption. This has given rise to new activities such as data mining, social media platforms, and artificial intelligence, all of which depend heavily on electricity as their primary input.

Taken together, rising per capita electricity demand, the energy transition, and growing electricity consumption within an increasingly digital environment are beginning to establish the foundations of a third energy revolution based on renewable energy sources and electrical storage technologies. These developments will undoubtedly increase the amount of energy available to society and transform technological, economic, and social structures throughout the world.

This article was originally published by Business Insider México.
Date: July 1, 2020
Original Link: https://businessinsider.mx/tercera-revolucion-energetica-paul-alejandro-sanchez-opinion-energia-circular/ [offline]
Archived Link: https://web.archive.org/web/20210128141447/https://businessinsider.mx/tercera-revolucion-energetica-paul-alejandro-sanchez-opinion-energia-circular/ [Archived]

Cryptocurrencies and Energy


In the last two decades we have lived through an accelerated process of digitalization that has radically transformed traditional industries that are intimately linked to physical goods. People have stopped having albums filled with printed photographs to be replaced by thousands of digital photographs stored in the cloud or saved on a social network. We can say the same about tapes, compact discs, books, magazines and media outlets.

Perhaps there are hundreds of cases that can exemplify how some of the most traditional material expressions of past eras have been transformed into chains of digital information that are interpreted by computers, tablets and smartphones, but and, although money has not yet been digitalized, there are fiduciary currencies, which are completely digital and do not have the backing of the state, called cryptocurrencies.

The best known is Bitcoin, but there are hundreds of cryptocurrencies with their own characteristics. These digital currencies carry out virtual mining processes that require large amounts of processing power and, therefore, generate a great demand for energy. It is expected that by 2020, the annual income of the industry will be $3,000 million dollars, while the associated expenses will be 2,994 million dollars. This means that more than 99% of income is used to cover costs, and more than 80% of the cost is the payment of electricity.

Consequently, cryptocurrency mining is an extremely energy-intensive activity in such a way that it has become a source of global concern regarding greenhouse gas emissions and the imbalances they generate in deregulated energy markets where the marginal costs generated by this mining can generate a sensitive loss of welfare for the rest of consumers or require the dispatch of more expensive and polluting sources of energy to cover demand.

According to data from Digiconomist, it is estimated that the electric consumption from Bitcoin mining in 2019 was 64 TWh, this is equivalent to one fifth of Mexico’s electric generation in the same year. To compare, the electric consumption of Bitcoin mining in the world was practically the same as the consumption of all electric cars that circulated in 2019 on the planet.

Due to the above, it is estimated that the emissions of equivalent Carbon Dioxide that were released into the atmosphere due to Bitcoin mining were 28.44 million tons and 9,740 tons of electronic waste were produced in the process, and this without considering other cryptocurrencies such as Ethereum, which in 2019 consumed almost 8 TWh, almost double the electricity consumed by all electric vehicles in the United States in the same year.

Nevertheless, the hope is that this problem is solved as more renewable sources and energy storage systems are integrated to sustain the intensive energy consumption in data mining and, at the same time, reduce the greenhouse gas emissions that today characterize the cryptocurrency industry internationally.

Although this could seem to be a phenomenon isolated to the cryptocurrency industry, perhaps in a not very distant future we could be witnesses to the digitalization of all national currencies, just as at the time paper money replaced commodity money, such as gold and silver coins, this could be replaced by digitally interconnected chains of data which, without a doubt, will require a different energy model.

This article was originally published by Business Insider México.
Date: June 24, 2020
Original Link: https://businessinsider.mx/opinion-paul-sanchez-consumo-energiamineria-criptomonedas-dana-medio-ambiente/ [offline]
Archived Link: https://web.archive.org/web/20200805215859/https://businessinsider.mx/opinion-paul-sanchez-consumo-energiamineria-criptomonedas-dana-medio-ambiente/ [Archived]