Transitioning $3.2 trillion in global electricity spend
Voltus CEO Gregg Dixon dives into some of the exciting data and insights that define this critical moment in our energy transition.
I don't know about you, but I'm fascinated by the increasing availability, granularity, and timeliness of data, information, and insights. The industry in which Voltus operates, the electricity industry, is going through a massive transition. The trends and statistics are mind-boggling and they're worth keeping tabs on because this market transition is moving fast and will impact the future of humanity more than any other industry transition. As we electrify more and more energy loads (e.g., vehicles, home heating, industrial processes) and shift power production to renewables, and as these things become more and more interconnected (distributed energy resources, or DERs), our lives will transform for the better in countless ways.
Feast your eyes on some of the data, information, and insights that we chew on each day:
- Humans spend $3.2 trillion each year on electricity globally. This represents 3.6% of the global annual GDP of $88 trillion. Electricity spend represents one of the top ten largest, non-government spending segments in the world. This fact also makes the energy transition challenging, because vested, incumbent interests have a lot to lose in this transition and will go to incredible lengths to prevent progress.
- As we electrify more and more of our energy consumption (e.g., transition from internal combustion engines to electric vehicles), we will see the amount we spend on electricity increase, but the amount we spend on energy, overall, decrease. In fact, our friends at Rewiring America have calculated that the average American household would save $2,000 per year when we transition to an all electric economy.
- We need to act much more quickly on climate change in the energy sector, which comprises nearly 75% of all greenhouse gas emissions. The risk of not moving quickly enough is the greatest risk facing humanity, even more than a massive global pandemic.
- Currently, the world has about 7,200 GWs of electricity generation capacity, 2,500 GWs of which are delivered from renewable resources, predominantly hydroelectricity. We'll need to grow renewable power much faster as massive amounts of fossil fuel-based capacity retires, while also hyperscaling distributed, intelligent energy resources that can act as the backstop and balancing resource that intermittent power sources need.
- Assuming electricity demand grows globally by 4% per year, and generation capacity keeps pace with this growth, we'll need about 10,000 GWs of electricity generation in ten years. That means we'll need 7,500 GWs of new renewables plus DERs. We’re currently adding about 200 GWs of renewable resources each year, meaning that at our current pace, it would take nearly 40 years to get there. And we'd be thirty years too late!
- With the expected explosive growth in DERs, and continued growth in renewables, our estimates show that we'll average approximately 500 GWs of capacity additions from new renewables and DERs over the next ten years. That gets us there a whole lot faster.
- Yet, we can do better. How? Well, look no further than the network effects of technology-enabled DERs that allow us to do more with less. Whole new categories of DERs are coming online that represent some of the largest sources of new capacity to power and balance our modern electric grid. Here are a few examples of the dozens of use cases we're building our software platform to support:
- In ten years, we'll see about 100 million electric vehicles on the roads around the world. If we simply look at the ability to curtail vehicle charging (setting aside exporting the power, or V2G), 100 million vehicles represents 500 GWs of DERs. If somehow we were able to export the average EV battery capacity of 50 kW, then we'd have 5,000 GWs of DERs!
- In ten years, there will be about 150 million wifi-addressable smart thermostats globally, representing about 150 GWs of controllable DER load.
- In ten years, assuming the cryptomining market continues its current growth trajectory, 2% of all electricity consumption will go toward mining cryptocurrency, 100% of which represents perfectly controllable DERs.
These trends are exciting, daunting, and, at times, a bit scary. The good news is that we can get to a sustainable energy future with existing technologies, while delivering energy that is less expensive and more reliable. Join us to help accelerate the transition!
Questions? Reach out to our team at firstname.lastname@example.org.