A top analyst breaks down the 3 little-known industries that are quietly shaping the future global energy economy
- Electric vehicles and big renewable energy projects are easy to imagine and attract the public's attention.
- But behind the scenes, lesser-known and more technical industries are shaping the future of the global energy economy.
- Those industries include hydrogen, so-called smart-grid tech, and building energy management, according to an analyst at the research firm Cleantech Group.
- Business Insider breaks down each of these obscure industries and explains why they're so important in the clean energy transition.
- Click here for more BI Prime articles.
It's not hard to imagine a 500-foot wind turbine, a shimmering solar panel, or a fleet of electric vehicles. And without a doubt, these technologies are helping to usher in a clean energy economy.
But the energy sector is sprawling, and some of the most important shifts underway today are playing out behind the scenes in industries that aren't consumer-facing and highly technical.
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In a recent report by the research firm Cleantech Group, an analyst outlined three of the most important ones: hydrogen, smart-grid tech, and building energy efficiency. Sure, these industries may not be bringing anyone to the edge of their seat. But they are churning out startups that are quickly transforming the energy sector.
Business Insider caught up Louis Brasington, the Cleantech Group analyst. He explains what these industries are - and just how important they'll become in the next decade.
'Green hydrogen' has the potential to scrub some of the most carbon-intensive industries of CO2 emissions
Hydrogen - the lightest and most abundant element in the universe - is an important ingredient for all kinds of industrial products ranging from ammonia to steel. The industry is worth $145 billion and is growing at a rate of 25% per year, according to the Cleantech Group report.
The problem is that nearly all hydrogen is produced with fossil fuels like methane, natural gas, or coal, according to the International Energy Agency (IEA). As a result, the hydrogen industry is responsible for releasing about 830 million metric tons of carbon dioxide each year - or about the same as the UK and Indonesia combined, the IEA says.
Fortunately, there's a way to make hydrogen gas without polluting. Through electrolysis, you can split molecules of water into hydrogen and oxygen. And if the electricity powering that reaction comes from renewable sources, then the hydrogen you've created is "green."
Turning hydrogen green is a huge opportunity for carbon savings, Brasington says. It also creates value for surplus renewable energy on the grid that would otherwise be wasted.
But there's a lot more you can do with green hydrogen. When it's burned or used in a fuel cell, hydrogen produces a lot of energy with only water and heat as byproducts. That makes it a great candidate for zero-emissions fuels.
Hydrogen fuel cell vehicles may sound familiar, and that's because they've been around for years. The industry has been plagued with several "false dawns," Brasington says - in the 70s, 90s, and early 2000s. Each time, the public's interest in hydrogen waned when oil became cheaper and more available, the IEA says.
Now there's a renewed interest in the technology, especially for heavyweight vehicles and trains, for which traditional lithium-ion batteries are less suitable, and experts say it might stick.
Plus, hydrogen fuel cells can also be used to electrify and heat homes, Brasington says, though that technology has yet to attract substantial support.
While there are strong signals that green hydrogen is going mainstream, Brasington says there are still a few hurdles in the way - such as cost and the difficulties around storage and transport.
That's where startups come in, he says. The company Hydrogenious, for example, is developing a liquid hydrogen carrier that makes it "more efficient and cheaper to transport" the gas, he said.
Another startup called Sunfire "promises lower onsite hydrogen production costs compared to legacy technologies," according to the company.
The grid depends on new software to manage the influx of renewable power and EVs
The "smart" in smart grid tells us, well, pretty much nothing about what this technology actually is.
That's probably because it's not just one technology but a bunch of different - mostly digital - tools that use data to make the electric grid more automated and predictive, saving utilities money.
Brasington highlights one segment of smart-grid tech that's poised to explode: distributed energy resource management, or DER management.
"Distributed energy resource" is a fancy way of describing something that could store or discharge power to the grid that's not part of the region's central energy source, such as the utility. That includes things like Teslas, in-home battery packs, rooftop solar panels, and even refrigerators.
As you can imagine, more DERs are coming online every day. The challenge is: How do you integrate them all into the grid to optimize the amount of energy that we need to produce at any given time?
"When we talk about DER management, we're talking about how well software can manage and orchestrate systems participating on the grid," Brasington said. "It's all well and good to have loads of solar and batteries at residential homes, but if you can't efficiently integrate that into wider grid systems it's going to be impossible to get the full efficiency out of those systems."
DER management is supposed to be a win-win for energy consumers and utilities. Theoretically, the consumer would be compensated for discharging energy back to the grid, while the utility has more power sources to draw from in times of need.
Brasington used Australia's grid as an example of how this could work. The country gets a large chunk of its electricity from solar, and that means there are pretty extreme energy swings.
Often, he says, energy is wasted.
"You're going to get points in the day when you're actually producing too much energy," he said. "If you can efficiently manage and aggregate energy using energy storage and other DER assets efficiently, you can basically displace the load to be used more efficiently at other points in time when you might have these swings."
A big benefit of DER management is that it's wire-free - in other words, utilities don't need to invest millions into new transmission lines. They can just pay for software, which a growing number of startups offer.
"You're now seeing these software innovators be able to efficiently aggregate small and large DER assets together into one platform," he said.
Brasington says most startups in this industry fall into two categories. The first is what he calls "grid participation" - companies developing software to integrate DERs into the grid. The companies Kraftwerke and GridBeyond fit into that category, he says.
The other category is "grid control." They sound pretty similar, but essentially these companies develop tools to control the flow of power between different energy sources on the grid. He mentioned the startup Opus One Solutions, which is working on this approach with partners including the utility giant National Grid.
Buildings account for more than a quarter of energy-related emissions, globally
Buildings account for as much as 28% of global energy-related emissions, according to the IEA, which is evidence of a huge opportunity on the road to decarbonization.
Brasington says "increased regulatory pressure is forcing owners and operators to rethink how they manage energy." But, like DER management, making buildings more efficient is another win-win - in this case, for consumers and the climate - and so the market is also growing on its own.
For all customers, be they commercial building owners, homeowners, renters, or even roommates, wasting energy means wasting money. Now a slew of startups is offering solutions to energy management for each of them.
In the commercial and industrial sector, startups use tools like AI and small sensors to improve the efficiency of everything from the lighting to the HVAC system, Brasington says.
The startup Carbon Lighthouse, for example, offers a service to make buildings more energy-efficient. It doesn't require payment upfront or any capex. Instead, it uses the savings in reduced energy bills - which could come from replacing inefficient light bulbs or installing motion sensors on vending machines - to cover the cost of service.
Then there are a handful of startups that sell smart thermostats, such as Ecobee and Tado. They, too, promise energy savings. And another startup, called Sense, makes a smart sensor that monitors the electricity usage of individual appliances in your home by honing into their unique electronic "signatures."
For the first time in history, companies are gathering large swaths of data on consumer energy usage. And they can use that data to sell more-tailored products or services back to them.
This story is part of Business Insider's clean energy coverage. Do you have a tip about companies in the industry? Reach out to this reporter at firstname.lastname@example.org.
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