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Global Futures Report 2013 - Transformational Change?

61 CONCLUSION: TRANSFORMATIONAL CHANGE? Many experts in the course of interviews for this report believed that futures with high shares of renewable energy are possible, and that this is a matter of choice, not of technology or economics. All of the necessary technologies exist, they said, and the long-term economics across different choices are relatively similar, or even tilt in renewables’ favor, they believed. “If we don’t have a renewable energy future, it’s not because we can’t—it’s because we decided not to,” said one. Others believed that the diverse motivations behind renewable energy, together with the changing economics and risks of energy technology portfolios, not just individual tech- nologies, would drive transformational changes sooner than many expect. Experts concerned about climate change said that significantly more renewable energy would be needed to meet mitigation goals, and that this would also drive transformational change. They pointed out that climate mitigation scenarios must compare the costs of renewables with other mitigation technologies, primarily energy efficiency, carbon capture and storage for fossil fuels, and nuclear power. Of these options, energy efficiency is generally considered the cheapest, they said. But beyond efficiency, some questioned whether carbon capture and storage would become commercial enough, and asserted that nuclear power would remain too expen- sive and socially unacceptable. (See also Box 2 on page 16.) Many of the industry and utility managers interviewed were already hard at work bringing about high-renewables futures, in places like Denmark, Germany, and Spain. To them, a future with high shares of renewable energy was already inevitable, in part because of long-term national targets and already-high existing shares. (See Chapter 1.) To them, the main question was, “how will all the energy system pieces fit together in the most efficient way, and how long will it take to transform the system?” Indeed, transformational change is clearly implied by some existing national policy targets. For example, Denmark’s targets for a 50% electricity share and 40% heating share by 2020 (and 100% shares for both by 2050) will force transformational change in the electricity and heating sectors. Germany’s targets for at least 35% electricity share by 2020 and 80% by 2050 will do likewise. (And, experts noted, perhaps sooner than expected: Germany’s electricity share had already reached a reported 25% in the first nine months of 2012. And one said: “European utilities in particular are facing trouble right now because they have to invest in the grids themselves and put increased attention on grid balancing, both at centralized and distributed levels, in order to accommodate renewable energy policy goals and targets to be fulfilled in the next 5–10 years.”) Some experts saw transformation just around the corner, not just technically, but also financially and institutionally. One said: “Electric utility companies will face some of the greatest challenges in technical and institutional restructuring that they have ever faced in the past 100 years.” Another said: “Transportation systems will definitely become less homogeneous, with a multitude of fuel types and vehicle types, and with local solutions tailored to local condi- tions and geography. The days of ‘one size fits all’ transport are numbered.” Beyond the transformation of power grids and transport, many experts also pointed to coming transformations in buildings and construction. They noted that change could be much slower than with power and transport, due to the long lifetimes of buildings. But they framed transformation in terms of new renewables-integrated building materials and components becoming standard products, andintermsoftheacceptanceandadoptionbyarchitects/engineers and developers of renewable power, heating, and cooling technolo- gies as standard elements of homes and commercial buildings. This would usher in a new era of building design and construction, said experts, including the adoption of so-called "near-zero-energy," "net-zero-energy," and “passive” buildings noted in Chapter 2. The idea that technical transformation would lead to financial trans- formation was expressed by one expert in this way: “At 80–90% renewable power share on grids, you can keep the lights on but not necessarily keep the financial and business structures intact and viable.” Indeed, the coming of solar PV “retail grid parity” to many locales and regions around the world, as noted in Chapter 6, was cited by some experts as heralding a transformation in the way utilities must be managed, financed, and operated—and a transformation poten- tially so rapid that many utilities would be caught scrambling for new technical approaches as well as new business models to remain viable. This is already happening today, said some experts, who said grid parity had already come to some locales. Transformational change is also implied by many of the other tech- nical integration challenges facing electric utilities noted in Chapter 2, as well as the choice of utilities themselves to “lead, follow, push back, or perish.” (See “Great Debate 6” on page 34.) Experts foresaw that some utilities and energy companies will lead the coming transformations, and pointed to utilities that are already engaged in rethinking, planning, and implementing new strate- gies. However, experts also warned that with the coming of large amounts of distributed generation by end-users, utility companies could lose sales revenue from existing investments. At the margin, smaller shares are not threatening. But as renewable shares get bigger, an incentive emerges for utilities to resist or even actively discourage renewable energy, so as to not lose market share, in this case to their own customers. Spain is a case where such utility resistance has been manifest- ing already, according to one Spanish expert, given large shares of renewables seen in recent years. Large utility companies that once led renewable energy development were turning back in 2012 to championing coal and actively blocking new renewable energy policies for self-generation, said the expert. Even gas companies in Spain, previously having entered solar hot water markets, were feel- ing the effects from reduced gas demand, the expert said. In interviews, some policymakers questioned the role of poli- cies in leading transformation, given that most existing policies are “incremental” in nature. The policy “bridge” to a transformed energy system was not necessarily clear to them. The viewpoints in this report point to several features of such a bridge, starting with

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