Full circle for electricity revolution with technologies vying for control
In Nikola Tesla’s burial place of Belgrade, giant coils send sparks through visitors to the Serbian inventor’s museum. Pioneer of alternating current, electric motors, transformers, wireless charging, remote controlled boats and much more, he was one of the giants of the late 19th century electric revolution. His name has inspired not just the eponymous car company, but also Nikola Motor’s battery trucks. More than a century later, the electricity business is again entering a phase of upheaval.
The period from the 1870s onwards featured an explosion in the consumer uses of electricity: arc lighting, Thomas Edison’s incandescent bulb, motors for lifts and trams, and radio.
Tesla developed polyphase alternating current (AC) and an induction motor for Westinghouse, two of the company’s key innovations in its “War of the Currents” with rival Edison in the 1890s. Edison promoted direct current, claiming it was safer because it worked at much lower voltages. But it needed much thicker wires, and could operate only over short distances because of high losses. The eventual victory of AC allowed the emergence of the modern system of large, centralised power plants.
Samuel Insull started as Edison’s private secretary, introduced different billing rates for peak and off-peak times to America, and built a utility empire. He pushed economies of scale, building larger and more efficient coal-fired turbines. And he advocated regulation, having his companies granted monopolies over certain areas, in return for the government setting the prices they could charge. Insull’s corporation collapsed in the Great Depression, and he died of a heart attack on the Paris metro with 84 cents in his pocket. But the regulated utility model dominated the US until the 1990s and remains prevalent in many states and worldwide.
Now the electricity industry again faces a revolution. The concatenation of climate change with five key technologies is forcing new business models. The rise of low-cost natural gas and the need to tackle climate change has increasingly forced out reliable, cheap but dirty coal power from Europe and North America. Renewable energy, particularly solar and wind, is increasingly effective. As UK climate change adviser Professor Michael Grubb describes it, solar power has become the cheapest widespread high-grade energy source in human history.
In areas such as Europe and California, much solar power is installed on private residences and business premises, promising decentralisation and democratisation of electricity. Some enthusiasts seek to go entirely “off-grid”. Remote communities in Africa may form micro-grids using local renewables. In other areas, including the Middle East, giant solar farms resemble traditional centralised generation more closely.
Variable renewable energy cannot always generate when needed. It has to be backed up with “dispatchable” fossil fuels, hydroelectricity or nuclear power, or stored, typically with batteries. Batteries are becoming cheaper, long-lived and more energy-dense, allowing them to complement renewables.
Better batteries are also facilitating the rise of electric vehicles, such as Tesla. Charging cars will become an increasingly important business for utilities or retail power distributors, although homes with excess solar output may use their own power. The fleet of battery vehicles could be synchronised to the grid, discharging at peak demand times and recharging when a surplus is available, paying a premium to car owners.
This would be part of a “smart” power system, when home devices turn themselves on and off to match the fluctuations of renewable generation and demand.
The final part of the puzzle harks back to the “battle of the currents”. Modern ultra-high voltage, direct current cables can run over continental distances with low losses. At the start of last month, China, the leader in this field, opened the world’s longest, highest voltage and largest capacity DC line.
As renewable generation increases, power prices may become negative at times – such as a sunny but temperate spring day. At other times, for instance a chilly northern European winter evening, renewable output may be minimal and demand high.
Traditional vertically integrated utilities – a single entity that generates, transmits and sells power – can deal with these issues, but without understanding the true costs. A market-based system, such as that now spanning most of Europe, Australia and many US states, has to allow power prices to rise very high at times to compensate the owners of backup generation that hardly ever runs.
Some utilities, such as Germany’s Eon and Denmark’s Orsted, have sold off their fossil fuel generation entirely to rely on renewables. Oil companies including Shell and Total are muscling in by buying solar, battery and electric car charging businesses.
Tesla would have been thrilled by these innovations. Inventors across China, Europe and America seek to dominate the new world of batteries, panels and grids. Limitless clean and cheap power is within sight, but few existing companies will survive the journey.
The rise of low-cost natural gas and the need to tackle climate change is forcing out cheap but dirty coal power