Nearly 100 million barrels of oil are used around the world daily. At the end of 2014, fossil fuels accounted for 85% of world energy consumption. If we flicked a switch to change from fossil fuels to renewables overnight, there would be world panic. However, make no mistake that the clean energy disruption is coming.
Disruption usually destroys the wealth of the current market leaders, but disruption also creates new wealth. There are examples of disrupted industries all around us, and we have included a few below.
- Netflix disrupting video rental chains such as Blockbuster.
- Digital photography disrupting camera film makers such as Kodak.
- Apple disrupting the “dumb” or “feature” phone makers such as Nokia.
When it comes to the energy industry, there are three technologies that we feel will severely disrupt our current energy mix by 2030. These technologies are:
- Solar Panels
- Electric Vehicles
- Autonomous Cars
Each of these technologies are disruptive in their own right. When combined, these technologies are exponentially more disruptive to the current global energy order.
Solar Panels. The adoption of solar panels has been doubling every two years since 1990. The key advantage of rooftop solar panels is that there is essentially no cost of transmission. It is estimated that between 2019 and 2022, the cost of solar power globally (panels + battery) should be less than the cost of transmission.
Can this really happen? To see a proof of this concept, we need to look no further than Australia. In Australia, there are currently 1.5 million households with solar energy – that’s roughly 25% of the population. Electricity from solar panels in Australia is cheaper than the cost of transmission of normal electricity – even if the solar panels are unsubsidized.
Electric Vehicles. Roughly 45% of oil consumed in the United States is used in personal vehicles. If electric vehicles replace gasoline cars, our oil usage will drop dramatically. In our opinion, the transition to electric vehicles is inevitable. Most major car manufacturers have electric vehicles on their product roadmap, and we should see a significant shift to electric vehicles by 2020.
On the luxury end of the spectrum, you have relatively new companies such as Tesla and Lucid Motors leading the way. Meanwhile, established brands such as BMW, Mercedes, and Audi have started pushing into the electric luxury vehicle space.
On the entry level end of the spectrum, companies such as GM are introducing reliable electric choices such as the Chevrolet Bolt EV. It is important to remember that the electricity to power these vehicles have to come from clean sources for this disruption to work, and that it why solar power generation is such an important piece of the equation.
Autonomous Cars. This technology has the potential to transform how we design our cities. In LA, 60% of the landmass is parking and roads, and 80% of that could become obsolete with self-driving cars and the resulting redesigned city layout. However, autonomous cars have many obstacles to overcome before people will trust it.
Based on the trends of the three technologies mentioned above, we are confident that the clean energy disruption will continue to gain momentum over the next few years.