Edison’s liquified revenge

There’s a debate on inside the office. That’s always good news for the likes of you. It spices up the editorial, which means better ideas too.

The challenge is between the distributors and the hoarders. I haven’t thought of better names yet…

I’m a distributor. My colleagues at Exponential Energy Fortunes are hoarders.

What’s being distributed and hoarded? Power – electricity.

But first, the context.

The world is moving towards the electrification of everything. Cars, glasses, clothing, ships, planes and everything else which used to emit CO2, or nothing at all, will soon need power.

There are plenty of sub-trends here. Digitisation, the Internet of Things, environ-mentalism and plenty more. But, for today, we’re focusing on the electrification of everything as the catch-all.

All this means a lot more demand for power. But you’re only allowed to generate power in certain ways, these days. No more building power plants where you need them.

The challenge now is that renewable energy isn’t always to be found where and when you need it. It either has to be moved or stored up. Usually some combination of the two.

A solar power plant can either store energy in a battery in order to supply its users with electricity at night. Or the users can get their power from some other renewable source which works at night, but is likely to be far away.

Which is better? Which is cheaper? Which is more efficient, reliable and environmentally friendly? To distribute power or hoard it?

I’m not sure. But it’s more fun if I take the opposing view to our friends at Exponential Energy Fortunes.

As they see it, battery technology will advance enough to make renewables with storage viable. Aussies will be able to hoard enough power to make it through the cloudy days and the Danes will make it through the less windy ones with their own batteries.

And that may well be right. In fact, it almost certainly is in many places. Which will lead to the decentralisation of power grids. Many smaller self-sustaining grids will become viable. They’ll be independent.

All this is music to the ears of free-marketeers, because it means an end to some of the stranger aspects of the power industry today. It also means we need less inefficient infrastructure to push power around. Back to that soon.

My contention – that of a distributor – is that the opposite could also happen. What if we build an energy grid that is larger and better at distributing energy? What if we get so good at moving energy that, between them, the Danes and the Aussies can keep each other up and running without batteries?

Ok, maybe those two are a bit far away from each other. But you get the idea.

It’s a form of diversifying energy sources and transporting them instead of storing the power from each. If the battery enthusiasts can claim that battery tech will advance enough to save us from the clouds, why can’t the power line enthusiasts argue the same? Actually, their tech is quite advanced too. But it’s the idea I want to focus on today, not the tech.

An efficient distribution grid would come with its own advantages. If your local power source is down, or you’ve run out of battery, it wouldn’t matter. It also means you can build renewable energy infrastructure where it’s most efficient, instead of where it’s needed. Offshore wind farms instead of onshore next to your house, for example.

Best of all, you don’t need pesky batteries which are still quite inefficient in many ways. Ways I don’t want to get side-tracked on.

There’s an interesting twist to the idea too. You might think that Nikola Tesla won the current wars. That AC power beat DC. But I’m not sure that’s true. Direct Current is making an epic comeback.

All sorts of modern uses of electricity in the electrification of everything are turning to DC. This one, which is due to revolutionise Britain in coming years, is our best example.

But it’s not the only one. Long distance transfers of power are more efficient using DC too. And if I’m right about an expansion of the power grid network, instead of a fragmentation of it, then a major rollout of such DC power transfers may be underway.

I’m looking forward to a debate with my colleagues about it. Hoarders vs distributors. But I may never get one. For a simple reason. The liquifiers are coming for both of us…

Never mind electricity distribution and batteries. Something far, far more important is about to happen anyway. Delivering a crushing blow to both the distributors and hoarders.

So says another one of our colleagues, Frontier Tech Investor‘s Eoin Treacy. He’s a liquefier… Another name I’m working on.

Eoin sees the problems faced by the electrification of everything as having a far more efficient, effective and cheap solution. A liquid, or iquid as the Japanese call it. They’re Britain’s main competitor in the industry. A least in the PR side of it. But Eoin reckons we’ve got the edge where it matters.

Here’s how the liquifiers see things.

What if you could turn renewable energy’s disadvantages into advantages? In two ways. By creating an almost infinite demand for fuel. Which in turn generates a source of power that you can transport and store easily. A liquid battery. A green oil. A… solution to our power problems once we’re running on renewables.

Then you wouldn’t have the likes of Germany paying Danish wind farms to remain idle in order to protect their power grid.

And you wouldn’t need a fraction of the resources that batteries will supposedly soon soak up, or which an upgraded electricity distribution grid would need.

Who do you think has it right? The distributors like me? The hoarders? Or the liquefiers?

Nickolai@southbankresearch.com

This isn’t Eoin’s only warning, by the way. Markets are looking toppy. And it may be time for you to take this evasive action.

Until next time,

Nick Hubble
Editor, Southbank Investment Research

Category: Energy

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