Good afternoon and welcome, welcome the Oxford Martin School, welcome to this afternoon's contribution to our Shaping the Future lecture series.
We've got Professor Malcolm McCulloch this evening. Malcolm is the leader of a serial leader of programmes at the Oxford Martin School,
and he's currently lead researcher on the Oxford Martin programme on the Future of Cooling and
also lead research on the automotive programme on integrating renewable energy across the whole.
University is the group leader of the Energy and Power Group, as well as being associate professor of Engineering Science.
He is also and I was going to say, putting his money where his mouth is.
But it may be waiting for money to appear where his mouth is because he's involved in many spin outs,
some six he was just telling me or alleged in this area.
So he's come today to talk to us about powering the future.
Switching on the renewables. So Malcolm. Right.
Evening, everybody. Those of you who know me know that I always thought of some questions.
So here is a question for the audience and talk to the person next to you and all those six statements.
Which of them are true? So carbon emissions A is carbon emissions grew by two percent, the fastest growth for seven years.
B carbon emissions went down in 2018. See, the strongest growth of primary energy was cold morning, Kristie.
That's what this is all to do with 2018 morning, Kristie was produced by hydro and renewables, then gas.
Primary energy consumption in 2018 grew double the 10 year average, and renewables grew below the 10 year average.
So have a look at those six questions in the post next year.
There are several that are true and several that are false. It's not just one issue on also.
So you got you got yourself 30 seconds, go ahead.
And even in the U.K., this is global growth story.
This is global. So.
He's. And. I wanted to write for 30 seconds off, and the answer is you don't have to wait.
OK, so this is just what I wanted to do is start to talk, but just saying, OK, what's actually happening globally?
And to think through what are the implications as we think about moving to a net zero carbon world?
And so this is data that's all gathered from BP statistical review of the world in 2019.
So this is kind of like the latest global data we have, so we can see if you have a look on the graph on the left hand side,
you can see that this is looking at electricity production and we can see that the top fuel used for electricity is still coal.
Shockingly, and other it's just under 40 percent is produced by coal, which is about the same that happened, you know, almost 20 years ago.
So you kind of think, Oh, OK, then you can have a look and say, OK, this red curve here, this is one of the fastest risers.
What is that? And if you look carefully, you will see this natural gas. So actually, natural gas has been increasing in the power sector.
You look at the blue curve, which is hydro, and you can see that remaining fairly constant.
The orange curve is nuclear has actually been decreasing over the last 10 years or so.
The rapidly rising one is is renewables or renewables all coming up fast?
OK? And others are including things like digestion and waste and that sort of thing.
So the first thing is, if you can look at your skills carefully,
you can see that renewables plus a strength in renewables plus hydro is actually less than gas at the moment.
So that answer was false. OK. Which is a it's catching up fast, which is a good thing.
And then if you have a look in the world, you can see what percentage of of energy was actually produced by that in different regions.
And we can see that Europe is near the top globally, as will, because something like just under nine percent is produced by renewables.
But what's interesting? You could see something like you, Russia down the bottom, which is actually a very large consumer,
and that's where a lot of coal is burnt has actually got almost narrowed animals there altogether.
So that's electricity, and it's kind of like there's a sort of a good news story,
especially looking at what's happening on that graph to say renewables are increasing.
But if you have a look at the total energy production, what you'll find is that basically the orange curve is renewables.
The blue is is hydro, and together they produce less than 14 percent of the total, the total energy that we have in the country, in the world.
So we're going to have to increase that by a factor of seven.
Hydro is not going to be able to do much because we've exhausted not all of the sites, but all of the big ones.
So renewables are going to have to make a dramatic difference if we want to displace, you know, there's coal,
there's gas and oil we want, it's going to be a really big challenge to actually displace all of those.
So if it comes to some of the answers, OK, the green ones are true.
So carbon emissions grew by two percent last year, the fastest growth for seven years.
Connoisseurs, what Paris has done for us or not.
Interestingly, a lot of it was because it was in a lot of areas, it was a lot colder than normal and therefore a lot of that was used for heat.
Carbon emissions did not go down in 2018, the strongest growth in primary energy was not call, it was gas and there wasn't renewables.
More electricity was not produced by hydrogen rules and gas loads getting very close.
Primary energy consumption grew double the 10 year average.
So that means last year would be the growth rate was double that than we normally expecting.
And you can see that from the know. If you look at the slope of the graph here, the top there you can see it is last year really made a step upwards,
which is again is a worry for how do we decarbonise the world with renewables?
And then unusually, renewables grew below the 10 year average.
OK. It was still at 14 percent, so it was still a significant increase,
but it was below what has been happening at the moment, indicating a slight slowdown.
So globally, this picture does not look great, although we can see renewables also having to catch up, but there's nowhere near fast enough.
So what I wanted to do was to say, let's have a look at the UK context in the next part of this of the slides,
because we're always been seen as one of the forefront in disruption in the
energy market and a lot of the models that we develop here get used elsewhere.
So let's understand what's happening here first and what I wanted to see.
So I took over a decade and see what's happening. So I got to be using more natural heat maps.
So these this is conveying about 500000 points of information in one graph and goes as pretty dense.
Let me just explain what's happening in the graph. So this is the total UK electricity demand from 2011 until yesterday.
OK. And on the horizontal axis is basically the say that we have and going from January 2012 all the way through to January 2020.
So each one of those is basically a year. And basically, you can see the year's coming through on the graph here.
This graph in the bottom here basically gives you what is the average daily consumption.
The data has got a few corrections, and so I ignore the things going to zero in on zero there just data points that have gone wrong.
OK. But you can basically see this a real seasonal element to it.
And the lowest point typically is you can see and you can see it in this one year where the colours, you can see the stripes coming down.
Any idea when the energy is a minimum?
Three a.m. on the 26th of December, only when the minimum energy consumption and that's kind of a a quite a standard pattern.
And that's basically because everybody takes a break off during the winter for those days.
And so the energy consumption is the lowest.
But around that, you can see actually the energy consumption is pretty high, and that's many, many due to heating.
The the the vertical axis is basically the time of day, so that starting off at midnight and going through to the peak of the day and in the evening.
And what this is doing is basically showing at every 10 minute period over the last 10 years or so.
The colour tells you what the energy consumption is for that 10 minute period. And the more yellow it is, the more energy we're using.
And so you can see things light in the evening, it tends to be much more use than in the morning.
And you can also see that winter is a higher usage than the summer. You can also kind of see these wavy pictures as you're going along those waves.
That's basically if you look carefully, that looks like a sinusoidal curve.
That's basically sunset.
So that shows you a sunset is and basically a lot of lighting turns on and sunset, and that's why we get a jump in what's happening there.
What's also interesting to see is as you start off from, you know, 10 years ago as well,
2011 to now you can see the intensity of the yellows actually decreasing.
So that means that our actual energy consumption is going down over time.
And if you look at the trends, you can see that actually we can indeed see that the energy is decreasing over time.
So the mainstay of the UK demand is coal. So let's look at what's happened to coal in the UK, and this is quite an interesting story.
So you can see in 2011, it was actually a pretty substantial contributor to the overall system.
But with time, you can see every year is going down and down and down and down,
and you can see there's actually a few days where there's almost no coal usage whatsoever. And so we can see that coal is in fact doing that.
OK, so we are seeing that actually, we are seeing the end of coal in the UK.
And so what is it? What's one of the things that's replacing it is going to be looking at wind?
So if you look at the same picture now for wind, we can see this going on and you can see that over the last 10 years,
you can see every year is getting stronger and stronger and you can see that actually things are
getting we can see that we're getting a definite increase in the amount of wind that we have.
The other interesting thing to notice is that during the day, if you look at the average profile,
which is the dark blue line over there, you can see throughout the day there's almost no variation in wind.
Once the wind turns on, it's on Oops. Sorry, it's going forward once and when someone turns on, it's on for a number of days at a time.
And basically, as friends are moving through, basically we get wind coming on.
But you can see that between days, actually, there's quite a lot of variation.
And the other thing to notice, if you look, you see the peak is run about in the January's.
And so this is if winter is when a lot of the generation comes through.
But in the summer, you can see actually there's actually a decrease in the amount of generation in the summer in the summer months.
Unfortunately, does Solar's only been collected for the last three years or so by National Grid?
And so this is what the solar graph is happening. And again, you can kind of see that it's been slowly increasing, but not nearly as rapidly as when.
The main thing to notice is that actually, we have proof of the solid data is peaking now, not in the winter, but in the summer.
And that's kind of nice because that means that actually the two can be complementary to each other to a certain extent.
What this is showing is that with a strong collapse in coal and natural gas is starting to to peak as southern wind is coming
through that basically the system is actually undergoing quite dramatic change and we need to talk through what that looks like.
And this is just a little pithy comment that I said made a few years ago and actually is becoming true to say when systems are matured.
In other words, if you look at our electrical system was basically power systems putting this like the 1930s, 40s, 50s.
So it's been around for at least half a century, and it means that if I look back, say, 10, 15 years ago,
you need a very narrow specialisms to eke out any new value in the system because it was extremely well understood.
And the challenge that we now have is the system is undergoing rapid change,
and therefore we need a much broader understanding of what's actually going on to understand not only how to eke out value, but where the value is.
And that's one of the key challenges that we have at the moment is that actually in the power system,
we don't really understand where the real value is.
And my instinct is that within 20 years or so, most of the value in the energy system won't be accounted by kilowatt hours.
That's not going to be the primary measure of the value in the system.
The other things. So what I'm going to do is some of the same as before, but I wanted to just talk through basically.
So why is this such a different system?
Because basically the good old days we basically had our coal fired power station, we had our transmission network,
and that basically enabled us to get energy from far away places and get them to the cities where they are.
Very truly, we simply had a retailer where we would catch the money from the end users and then distribute it
back to both the transmission and distribution companies and back to the generation companies.
And that's basically the system that it looked like.
So what are saying is, OK, maybe all we need to do is just swap out the coal fired power station for the wind, and that's exactly the same thing.
But what we saw was that in the wind and the solar, it was a highly variable.
OK, so that means we need to manage that variability and we need to be able to balance the system.
So what we need to do is actually extend the system quite a bit.
So what you're going to be doing now is reintroducing these new block, which is looking at balance balancing services.
Very simply, this one,
basically the network's arbitrage generation and load of space balancing services often draws net generation and load over time.
And that's quite a nice way of actually understanding what's what the challenge is going to be.
But in order to make that work, you need to understand where in the system the challenges are,
where the hotspots goes, where you need to balance and when you need to balance.
So that actually means that we got a new service coming in through that we not only have energy and finance,
we now need to have data coming through because data is going to be a key point to understand, how do we operate this a lot more efficiently?
So what I want to start doing is just concentrating a little bit more on balancing
services for a little bit because that's actually where one of the key deltas are.
So in one sense, we've been doing balancing for quite a while and that's been using pumped hydro.
Pumped hydro is basically to Norway is, I mean, pumped hydro power station in Indian Wells, and it has about 10 gigawatt hours of energy.
And basically, we can see that it's being used primarily in the evening peak.
Remember, that was when the peak demand was was coming through and has been used mainly in the evening peak to
be able to balance out so that we don't have to bring on the coal fired power stations and the like.
So that's basically what it was like. But how does it not change and how much energy do we not need as we go forward?
And this is some of the work that one of my fantastic faithful students Maryam has been doing is looking to say if we
were to consider primarily a wind and solar world what the future look like before I get into too much hot water.
Yes, nuclear will probably be in the mix, but that's still a question mark at the moment.
And this was just explore what happens if we look to the non-nuclear world and just looking primarily at gas and storage at wind and solar.
And so what happens is that this is basically the amount of terawatt hours.
So that's a thousand gigawatt hours that we need in order to balance the system if we just had solar and wind and nothing else.
So and the energy associated with this might be due to changing the demand profile,
changing generation profile as you can, but also being able to store energy over long time periods.
And what's interesting is that the amount of storage that we look like actually increases with time,
and a lot of studies that have been existing at the moment haven't looked at one year's worth of data.
But what we're finding is actually this multi-year variability within this within the seasons.
And that means that actually the longer the time period that you actually consider the moon storage,
you need to actually balance those long time periods.
The way we can basically see that as we know that we have very cold years of very hot year or very windy years or months, 20 years,
and that means that if you're going to do the system, that's going to be sustainable long term, we actually need substantial amounts of storage.
Now this particular case here is let me just decode a little bit for you is this is the number of years that you consider the grave,
but is basically the variability of between which ten years you use,
which 20 years you use, and that that gives you that variability that the but the black curve is like the mean of what it is at the top.
Yeah, you can see basically saying twenty five is seventy five W, which means that in this we'll be looking at.
Twenty five percent of the energy is produced by solar and seventy five percent of the wind is 70 percent.
Seventy five percent of the wind is used by wind and one times X means that we've got a system
where we exactly match the generation requirements of generation capacity to meet the demand.
And so there's no overproduction in that scenario. So you then need a lot of extra storage.
What we do on the on the left hand side is basically saying OK for the same balance of wind and solar, what happens if we move from the blue curve,
which basically says we have exactly the right amount of generation to match it and we increase the generation?
Now what's interesting,
seeing you go from one time to generation and adjust one percent on and they can see there's a huge delta in the amount of storage required.
So actually, over a generation is going to be one of the key things we're doing as increased the amount of over a generation.
So you find that the amount of storage that we acquire actually drops quite dramatically.
So one of the interesting questions is as we go forward is to say what is the balance
between solar and wind that we need and then how much how much storage to actually look at.
So if we say we look at something like a 30 year average and we look at a little bit more detail on how that plays out,
what this is showing is that on the horizontal axis is basically, say, the proportion of energy that you need that comes from the Sun.
The balance is coming from wind and then the colours are basically saying, OK, how much overproduction do we have?
Was kind of interesting is that when you get to something like one point two times to one point five times,
you dramatically decrease the amount of storage that you actually require and you getting down to 10.
But that's about between 10 and 12 terawatt hours of energy required to put that in context.
At the moment, we consume about one terawatt hours of energy per day, so that's about four or five days of energy that when.
Right. It's about seven to 12 days of energy storage will need in that in that kind of world in the future.
The other thing to notice is that if you look at something like the peak point years,
about twenty five percent of energy from solar and seventy five percent from wind.
You then go to say, Well, what does that mean in terms of the capacity of those two that you acquire?
Now what we saw from solar is that you.
Your capacity factor, which is basically what is the rated amount that you can actually get from what you actually get is only about 10 percent.
That's mainly because the Sun don't shine at night and also that you've got the mornings in the evening.
So that means we only have about a 20 percent reduction in the capacity effect of wind
is only about 10 percent for wind onshore and sitting around between 30 35 offshore.
It's not getting up to 40 percent or something like that. So that means that when you're getting into the kind of 25 30 percent share of solar,
that means that you actually have an equal capacity of solar and wind.
So if you've got 100 gigawatts of wind, you're going to have about 100 gigawatts of solar, but the wind will be giving you three times as much energy.
OK, so now that's kind of interesting to note because at the moment, we have a lot more wind capacity at the moment than we do solar capacity.
And so one of the things that we can see going forward is we are going to have to put a
lot more solar in the future if we want to avoid the huge costs associated with storage.
And that's one of the really interesting challenges that we're going to work through.
Now what does work has been doing is basically assuming and we know naively
that it's in demand as usual and we know that demand is going to be changing.
So what are the two big ones and what are the implications going to be?
Well, two big ones is going to be around electric vehicles and the other one is going to be around heating.
So let me just talk a little bit about electric vehicles. If we were to electrify the fleet tomorrow, some interesting not that we can, but if we did,
we would have between one and a half and two and a half terawatt hours of energy storage, almost for free.
So that starts to get us kind of like two, two and a half days of the 10 days that we need, but it tends to be short term storage.
But he said to me, Malcolm Van Hollen, isn't that being used for the journeys?
OK, well, if you look at, you know, if you're going to go and purchase a new vehicle,
you probably want to have something like a two to three hundred kilometre range.
But typically, in most days, 90 percent of the time, you'll never use it for more than, say, 20 kilometres.
So you have something between 80 and 90 percent of that. Energy storage is never used.
But at these used for the one or two times that you really wanted, so you kind of got this free storage hanging around, that's doing it.
The other interesting thing is that if you have that many vehicles, basically those vehicles would have a power rating of something.
If you use something like a seven kilowatt chargers with the standard one set to look like,
I mean through it means you would have something like 100 gigawatts of power available.
And that to give you an idea at the moment of total power station capacity is about fifty five gigawatts.
So that means electric vehicles will be. Almost double the capacity that we have form from power stations.
So the world is changing.
OK, in terms of energy requirements, we reckon it's going to be something like 20 percent increase in electricity that we need.
If you do it smartly, you won't need any more existing capacity,
generate existing capacity because basically you can fill up the load periods doing that during the night and you've got a huge amount of advantages.
So to me, electric vehicles can can kind of turn into one of the angels in the power system and solve a lot of problems in the power system.
Heating is is a slightly different challenge.
It's something between we're going to have to go between half and double that of the electricity consumption to do with to deal with heating,
depending how we do it and what happens with the what do we do with the building infrastructure within prove that or not?
And so again, that's going to be a quite a substantial increase in generation that we need.
But it's not 10 times the amount it's it's it's a manageable amount.
Again, the thing the interesting thing with heating is that buildings are pretty good at storing energy, thermal energy.
So there are ways of providing again, a flexibility service over the over a day or two.
The challenge is, is that it mainly happens in the winter rather than the summer, so your peak loads get quite dramatic.
So. And also remember, solar doesn't work very well in the winter, so we're going to have to rely on wind primarily to alter to meet the heating load.
There's an interesting question at the moment,
heating is a lot more uncertain because we know that there's heating is not necessarily going to be done by electricity in the future.
It could be done by other mechanisms. One of the favourites out at the moment is hydrogen.
I don't think hydrogen is going to work, but we might see ammonia or another gas coming in, also another fuel to actually replace it.
So whereas electric vehicles, I think, are absolutely coming down the line and you know,
there's almost a hundred percent certainty that they will be coming down the
line heating is going to be about 30 percent certainty that it'll go electric.
My view is that probably go electric in in a lot of places, but not all places.
And so what that actually looks like is the challenge. So that's basically where we're coming from.
So what I thought I'd do in the last part of the session is basically just talk through some of
the areas where we think the challenges are going to be really be in how we're going to do that.
And so what I just wanted to do is use the framework that we developed as part of the modern
school programme in integrating renewables and just talk through with some of the challenges,
also just a reminder of what there's going to be. We've talked about technology already, about wind and solar panels and wind and things like that.
But what I haven't talked very much about is market arrangements are going to be really critical.
In fact, that I think is one of the missing factors, and I'll talk to that in a moment.
The next one is just how do we do with social engagement in this?
And the last one is how do we deal with governance and policy? So what I thought I'd do is start off with our our framework and basically
along the verticals we can see is resource basically solar and wind storage,
what the challenge on storage than we have networks and then end users. And basically those are kind of like the key blocks of the energy system.
And then the verticals are basically challenges that we need to be dealing with.
And what I wanted to do was just quickly go through each of those intersections and basically give it a ranking.
And that's what I did a little bit more fun for the younger members in the group and use emojis.
So if we ever look and I'll just kind of talk through, these are different emojis. So if you look at things like resource and technology development,
if we look at the costs of solar and the cost of wind in terms of the underlying technology, it's rapidly increasing.
I mean, to give you an idea in 2018, the cost of solar panels, we're pushing 32 pence last year,
the twenty four pence, 24 cents, nothing in them, at 18 cents.
So that cost the cost of solar panels is coming down dramatically.
Wind is doing the same sort of thing. So I think in terms of looking at technology and resources, I think we're we're on the right trajectory.
Still a long way to go, but we're on the right trajectory in terms of storage.
I'll kind of put a kind of quizzical face because I think short term into the entry, into a storage.
I think we got a way to go forward and I think there is solutions coming through there.
If you're looking at week month season multi-year, yes, they're on missions that are viable at the moment and that's going to be a real challenge.
And I think that's one of the really interesting topics and things like using
hydrogen in the forms of ammonia or other forms and how we're going to do that,
that store long term storage as. Well, as saying, how do we exploit demand?
How do we change demand in order to meet that? So that's that's kind of like a quizzical phase networks and technology development.
So in terms of copper and wires, aluminium and transformers, that's happy.
The quizzical bits of the data, you know, the power sector is not designed to be able to use data and use it efficiently.
So the way they do that, I think, is good. That's going to be a real challenge for them and how they manage that.
I think for end users is that we've seen a rapid increase in smarts in homes and therefore the for them in terms of technology and intended use.
If we get the next line right, I think this is an opportunity.
There are a lot of developers working in the space. We will see technology solutions that are fit for purpose coming through really rapidly.
So I got off with the half his face. I need you to have a happy face on the wall, so it's going to get to the end.
So market arrangements, this is where actually things are a lot less happy solstice.
So if you look at things like resources is immense, solar panels is that once you put the solar panel down, you're not putting fuel in the side.
So that means if you had a solar panel that was rated to give you 10 kilowatts,
and at that particular point you're only producing eight, there's enough sunshine to give you.
Two can move to nine or 10. Basically, the marginal cost of you doing that is zero.
So because you got the results there, what's not clear is when you want to go to 11 because you don't actually have the panels in place.
So that means that your Long-Run model costs. In other words, the long term to put an extra panel in is high.
The short term operations one is low, and our market structure is basically designed for having or managing shorter and multiple costs.
In other words, of minimising the amount of fuel that goes into the system, not the amount of capital that goes into the system.
And we've been trying different ways and and spectacularly failing in my humble view in actually coming
up with the market structure that's actually going to be fit for purpose for a decarbonised world.
And it's going to be really challenging. If you look at storage.
That's probably even a worse situation is how do we actually set up a market value for storage?
That, coupled with the challenge down on the bottom, is really challenging.
So we used to have a strong market signal coming through to US charges.
That's basically distribution use of service charges, which basically says that at the night time,
it's if you're a company, it costs you more to use the distribution system than it does during the daytime.
And that incentivises, you choose storage so you can store some energy so you don't use that.
You don't draw energy from an interesting the day time. That was a great market signal, and a lot of players came up and started to develop it.
And what Ofgem has just done is remove that market signal, and that suddenly means that that market arrangement has disappeared.
So the value for storage is now almost nil and a lot of places.
And so that's that's going to be a real challenge. And how do we get that out networks again and happy face?
How do we actually provide a market structure that enables them to do the right
thing without enabling them to unexpectedly take a lot of rent from the system?
How do you do that in a regulated monopoly?
I think that's again really challenging, and there's a lot of work that's going on in that space.
No clear answers are coming through in the long term.
And then lastly, I think users are kind of sitting there saying, OK, what the heck is going to happen here?
How are we going to actually in this kind of quizzical look to say, okay, if the market arrangements were right, I would participate quite rapidly.
But but they're not right at the moment.
Social engagement I again, I kind of say, I think this is basically saying and we can see this quite strongly,
that actually social engagement is angry face. You know, we're kind of saying, why aren't we moving faster?
We can see there's a lot of social manoeuvres in this place, like talking to people, for instance, and Siemens,
who the headquarters were picketed because they were providing signalling to our system that was providing a line,
providing a system to mine a coal mine so we can kind of see that actually,
the social structure has really engaged to saying that climate change is an issue.
We need to start dealing with that. What's interesting to me is that actually a lot of people controlling capital flows have also picked up on this.
So there's some real angry faces,
which I think is actually going to be a significant driver to get the other sides to actually start to get going and we've lost.
Lost one is governance and policy, and that's basically to say that I think governance at the moment is kind of.
Being challenged from multiple sectors and multiple sides and saying, you know,
if you falcons feed in tariffs, yes, they were good for a short time period,
but they quickly got caught up because the price of solar were down so low and we still paying the price for that now.
So they made a number of steps going forward, which would have caused some challenging same thing around storage.
How do you actually intend buy storage in the right way? How does that work? Those are very unclear ways forward.
And put it this way, I have a lot of sympathy that it's a non-trivial problem that they're trying to deal with networks.
I think I'm covering this in terms of saying the way the network charging those to a couple together strongly because they are highly regulated.
So those two are the same story. And governance and policy is, I think people know that that users need to have an incentive,
but we're not quite sure how we do it in such a way that we actually do it equitably so that everybody can benefit from this from the future.
So to finish off some key points, change is happening fast.
OK, and we don't always know how to account for this. Storage is going to be absolutely critical.
There's going to be a blurring between demand and supply, especially in the role of things like electric vehicles.
Which brings us to point four, which is the electrical system cannot be decoupled from transport and heat for
absolutely all of the longer spend time and the more and more coupling they have.
But that's also a good thing, as well as a bad thing. So there's some real opportunities in those two sectors.
Market reform and governance really needs some radical reform and how that's going to come
forward and and how do you do it in a way that doesn't destroy the system as a going forward?
And how do you do it so that it adapts as things are changing is going to be really challenging.
The last one is kind of like, you know, we need, you know,
several hundred billion pounds of investments into the sector and it needs to have a de-risk environment
for that amount of capital to actually flow so that we can actually achieve what we're going to do.
And this is just the U.K., which is kind of at the forefront of it.
How did people like Russia and other places cope if we can't do it in a fantastic way?
And that's the end of my talk. Thank you. And if you say yes, you are.
Thank you very much, Malcolm, and we've got time now for Q&A.
Just to say, as usual, this is being filmed and webcast,
so if you're not comfortable with that to stick your hand up and he's away from Mike so that those people online will be able to hear the question.
So we have a question right here at the front. Daniel Schaaf, it's a question of the powering up to power down.
Yes, and suppose the electrification of cars amounts to 10 per cent car ownership.
So instead of 30 million, you have far fewer there utilised they actually used.
You have nothing in the battery that isn't used the L, the HGV, the light van, they don't even have electricity, they're hydrogen or some other fuel.
So you don't have your storage. It's all being used for transport because if you're going to spend your energy in imported
carbon and building it in the next decade in which some will overshoot the carbon boundaries.
So, okay, so this is a whole wrinkle that one has to think through the interesting challenges in mobility because
I spent quite all the time of mobility is we actually going through two or three massive changes,
but they're happening at different timescales. So electrification is coming up really fast.
So my kind of prediction is by. Twenty twenty five twenty twenty six half of all new vehicles sold in the UK will be electric.
OK, so that's not stock that's just coming in and especially after the announcement a couple of days ago about stuff that's that's accelerating that,
that timeframe. And the second trend that's coming through is the materialisation.
So basically, the younger generation are moving away from having stuff to having services, and that talks to your trend about going through.
But that's that's going to take at least another 10 years to really kick in
because that generation has to work through to become to become really dominant.
And the third one, which kind of enables is kind of piggyback to that one is basically the autonomous
vehicles and mobility as a service coming through a lot more strongly.
And but I think that's going to kind of be the tipping point is going to be
about 20 30 is if you look at the rate that autonomous vehicles are going to be,
you know, we had viable electric vehicles probably five or six years ago technically.
But now the marketplace is only starting to come through that one. It's going to take the same sort of timeframe going ahead.
So we're going to have this really interesting gap, I think between twenty twenty three and twenty twenty seven.
We're going to have a lot of electric vehicles coming on board. And then I think the cells are going to decrease.
But that gives us some time, some breathing space in between to actually accelerate the system.
And then one can start to look at to say, OK, hopefully by then we would have sorted out a proper market mechanism for storage,
which would allow for ground for ground based storage to kick in because ground based storage is going to be a lot cheaper than mobile storage.
So, so, so to me, it's a transition in the way it's part of the thing.
But it's fascinating that you've got all these curves coming one off the other and you know, it's kind of a challenge to work through.
Does that help you? There's a question just in my mind.
How would a carbon tax help to bring forward renewable growth?
So a carbon tax can help, but the question is.
Is that mitigated by suppliers?
So the question would be, is that if you have a supplier that is taking multiple sources of energy, do they just arbitrage the carbon tax away?
And so the end user doesn't really see the carbon tax and therefore doesn't really come forward.
What you could see, though, is that it could incentivise increased prices for non carbon sources to do that.
But the market structure at the moment is so, so challenged in this area.
I think, yes, carbon tax will make a difference, but not in the short term.
There's going to have to be bigger jolts to get the system working properly. And here folks are back.
Great presentation. My name is the one in the executive MBA programme at the Side Business School,
working on a start-up right now in the low carbon fuel space, primarily targeting trucks, ships and planes.
So I like hard to electrify transport sectors. It just sort of talk briefly about that, that market, the viability of it.
And then, you know, I know you don't have a crystal ball, but like just your thoughts on the electrification of those which transport sector,
the sort of trucks, ships and planes and the, I guess, the heavy goods.
Yeah. Yeah, exactly. Well, that's I guess. Oh, it's one of those spaces.
It's a bit like eating because there are multiple different technologies that are coming through simultaneously,
and it's unclear to see at the moment which is going to be the winners.
So one thing I mentioned earlier on is that in 2002, I built the first hydrogen sports car, so I've done all of work and hydrogen mobility.
And what all the hydrogen people don't tell you is how bloody hard it is to do.
The other thing just to give you a little marker just to show how things have changed
is one of the 20 to fuel cells with costing about a thousand dollars a kilowatt.
Batteries were costing about a thousand dollars a kilowatt hour because the battery storage, not power related.
Now, so that is worth a thousand dollars a kilowatt hour.
Now GM published Lost in November that they were paying under $100 a kilowatt hour for batteries.
So in that time frame, batteries have come down by a factor of 10.
If you gone from five PEM fuel cells like we would try to do, then.
Remember, there were a thousand dollars a kilowatt hour, a thousand dollars a kilowatt. I stole a thousand dollars a kilowatt.
They haven't gone down the knowledge curve. And that's the real challenge that I have around hydrogen based systems.
So to me, as you know, everybody thinks FTV is going to be impossible to do by electric.
And yet eLong is just his big heavy goods vehicle. All electric has just come out.
It's going to be an interesting challenge that Crystal Ball is very foggy at the moment, and I can answer the question.
But if it to me in my heart of hearts, I think the long term winner that is still going to wall to go is going to be ammonia.
Because the money is very much easier to carry than hydrogen. It has an energy density, you know, in the same order of magnitude as as gasoline,
you can use conventional technologies to burn at all sorts of things like that.
You can go through a green ammonia route. To me, the main advantage is that you've got a billion or multi-billion pound industry called fertilisers,
which will help drive that that greenness of ammonia.
And you piggybacking on the back of that. My problem of fuel so pampered is where's your billion pound industry to piggyback onto?
And there isn't one. Yeah, that's kind of like my instinct. Thank you.
How do you read Malcolm, the changing mood in the oil industry?
This week's announcement from the new boss of BP, for example, but they are coming pretty regularly at the moment.
Statements of that kind from. Yeah, I was in the oil industry.
What difference is it going to make? I'm. OK, so again, looking at my little crystal ball and that industry,
I think we've reached a moment that happened in the car industry about a year and a half ago.
So it's actually not two years ago, so what happened two years ago was like,
I'm using Elon Musk basically made 300 million dollars in four days without selling a damn thing.
And how did you do it? He basically said, if you wanted to buy more a Model three Tesla, you have to put a thousand dollar deposit down.
Everybody is expecting to get between 20 and 30 thousand people.
He got over 10 times that amount. And interestingly, this is the US all working very strongly with a lot of the the OEMs and the auto sector.
The change from a week before to a week after that happened was dramatic.
And now you can see that they have actually started to move, even VW is not producing electric vehicles.
That event was was really changed the mood.
To me, what's interesting is not the oil sector that's changed.
It's the investors and the investment managers have really changed the idea behind this,
and that is not driving the oil slick to say, Okay, we need to take account of this.
And they made music that's been happening since, you know, middle of last year.
You know, I read the Financial Times. You kind of see this drip drip drip of things and that's really coming to the fore.
And I think that's really driven that that actually. Well, may just need to make a change.
My kind of view is, you know, don't necessarily divest in the oil majors.
Rather strong on them to say you're not you don't need to be an oil major, you need to be a clean energy major.
They have a lot of capital, they've got a lot of lives that a lot of people, they've got a lot of capability to be able to do that.
And what we need to be doing is enabling them to make that change. Yeah.
Hey, so going back to your energy slide, you identified the importance of the energy use as a key part of the sector,
and you gave a smiley face relating to technology and a large part agree with you.
There's a lot of really interesting stuff space for someone like me who is a, you know, smart wind energy nerd.
But you go to things like local government postings and you come across people who are quite concerned about the pace of change.
So my question is, to what extent does the future energy consumer have a right to be disengaged with the system?
And does that go against Ofgem's kind of we protect the current and the future consumers of the British?
Right? You actually not talking about users, you're talking about governance,
essentially because they're saying, how do we actually regulate and governance the sector?
And I think again, remember I said, this is one of my murky fields because it's not easy to see where the right one going forward.
I'll just give you a little analogy is do we have an Ofgem that regulates the supermarkets or the well,
the guys who sell fruits and veggies in the store there?
What we do is we have a food standards agency, which makes sure that the quality of the product is right,
that they don't have any governance in terms of how you actually sell it and what price you sell it at.
It's not regulated, it's not regulated in that sense.
Yes, we are the CMA on Competition Markets Authority, but that's basically to ensure that there's enough people around.
So the interesting question is, if that's true for such a vital services, food wasn't that true for energy.
And then you can take it to the next stage, Ford is, as some of you know,
I do a lot of work in Africa and I was at a refugee camp and one of the really interesting things.
There were a group of guys. Your age basically had a solar panel, a nice German solar panel about this was I don't know where they got it from,
but they got it and they had a little shop going and there's a guy sitting in the back with a say, voters hair is really important in African culture.
And they had music going and the head of computer games,
and basically they were an energy provider in the local area there, but they are completely unregulated.
And so what's interesting is because of solar panels means that the investment
that you need to actually become your own energy produces now dramatically lower.
It's not billions of pounds that you need, it's hundreds or thousands of pounds that you need.
I think there's a really interesting question to say, do we go to a regulated market to something more like a consumer market or commodities market?
And that's an interesting question. And I know the answer is no, we don't.
But but I think there's some interesting aspects of that that we need to be bringing over.
And exactly the same thing comes into play to say, you know, should I be able to have my fridge,
have a different provider than my cooker than my hot water heater or my, you know, my heat pump?
You know, in that type of brave new world, you can actually see a lot more innovation coming through and actually then the question is,
I guess the what's consumer protection all about? And then one has to get into all of, you know,
wonderful things about how do we ensure that we have that nobody is left behind in this place and how do we enable that?
And that means to come through. It's it's a interesting space.
This is why I got a lot of sympathy with with the governance structures because there's
a whole lot of innovation that's coming through that's completely changing the game.
Yeah. A friend of Auburn, I think I follow on from that, Malcolm.
As ever.
What I'm interested in, if you could expand a bit on this issue that we've used to have a system with high capital costs and high running costs.
Yes. We're now moving to a system with just high capital costs.
Yes. What? What are the implications? Who's in terms of especially in terms of equity and consumers?
Who's going to benefit and who's going to lose out? And in what ways?
Oh, Brenda, you always often ask the question and the interesting one, huh?
OK, so the interesting thing is, you could say, OK, so let's have a look at another marketplace where you have something similar.
Not quite the same, but it's its equivalent and that is motor vehicles. So motor vehicles have a high capital cost.
And as far as the manufacturers concerned, there's a zero almost zero running cost as just your maintenance time,
you pay for the running costs directly to a separate one.
And so you can sort of think of saying, Okay, so how do we enable mobility to take place in in our society?
And basically what we do is we find we have different types of providers.
So we have people say, for instance, if you want to have your own vehicle, you can either pay the capital upfront,
which is the cuts that's, you know, probably 70 percent or 80 percent of the population so that you can't afford it.
But then you can go to something like a leasing model.
So one of the things that we could say, for instance, in the future is to say you don't buy energy, but you lease so many panels in the form.
Or you lose your panels on that, losing your panels on your roof has come through and is coming through or you go to say, actually,
you start to have a co-operative of people and they then act together as a group to be able to do stuff and then they share energy amongst themselves.
And this is the whole space around peer to peer networks and all that type of thing.
And what's really interesting in the work that we've done both here in New Zealand,
is that a tremendous amount of people who want to participate in that don't necessarily make money.
They're more interested in being philanthropic and society if they have excess energy.
I'd rather have my neighbour have the access or my local hospital have and then access rather than that.
And what's really interesting, it's really taking off in the indigenous communities in New Zealand because of that, that sense of community.
So what I'm saying is that I think one has to look through the lens of what all the appropriate said business models,
but ways of selling and trading energy and how do those play to the different sectors within the group so that
we can ensure that every person has an equitable solution to to provide the energy requirements that they have?
Yes. So that's I think it's it becomes a complex answer is what are we going to do?
But hopefully a better answer than the one we've got at the moment. Thank you.
Some. Right, the beginning, you can find renewables basically to wind power and solar power,
and you didn't talk about anything like, for example, wave power or tidal.
Is that because you don't think it has a viable or significant role to play in future?
So if you can look at my cost, you'll see that I've done a lot of work in Tidal.
So.
So if I go back to wave power, that the challenge with wave power is that there's no device that's been in the sea for more than a year and survived.
And that's that's that's been a real challenge.
As one of my colleagues put it, is that the one in 100 year event, one of the 100 year wave comes and usually often it's not one to 100 with wave.
So that's a real challenge. I mean, that marine environment is extremely challenging to work in.
If we look at tidal, what's interesting in that space is I do think that there is a quite a significant resource in localised areas.
So around the UK is a fantastic tidal resource off the coast of Canada.
Newfoundland is an interesting resource that places around Korea.
There's again a great resource there in some parts of the South China Seas and some great resource there.
And things like the straits between the two islands and New Zealand again is a very good resource.
So the resources that are the awesome, fantastic resources, but they are not going to, you know,
at the end of the day, they can at best they'll provide some 95 percent of the world's energy.
So they are very significant in the local context, but small in the global context, which is which is a challenge for them.
When how are you going to do big plays?
You know, if you look at the UK context, I think Tidal has a really strong possibility of coming forward if we can get all the things right.
One of the nice things is if you look around the coast, we get a delay of something like three hours.
If you look at various places around the coast, you get a three hour delay inbound with the high tide.
And the low tide is, which means that you can virtually get continuous power throughout the day and you don't get those troughs.
So and that will be a game changer in terms of the storage situation to the UK context.
So I do think there's some real possibilities there tidal more so than than than wave, but it's a globally it's a relatively small resource.
Front. Thanks very much.
You're talking about the market structure, that kind of being really badly set up for funding renewables.
Yes. Do you have kind of your own way of doing that would be different and say if, like the CEO of Tesco came to you and said,
I want to switch to renewables, should I build on my own or should I say it's a bunch of people's, what would your advice be to him?
OK, so let's just look at a potential market structures.
So one of the things is that we need to set up a market mechanism which addresses the long term model cost, not the short run marginal cost.
And that means how do you so in that kind of says comes back to leasing a leasing solar panel.
Buying solar panels is kind of the thing that you really need to be doing. Not the kilowatt hour.
And so one of the and the the one challenge that if I just shoot myself in the foot at the same
time is to say the one challenge of just leasing sort of leasing solar panel is that in the end,
user takes the risk of the weather conditions, which is we need to be able to manage that that place.
If I were so that's issue one. The second issue is that if you look at the cost of solar remembers that they're coming down to sort of like,
you know, they'll be sub 20 cents a watch this year.
That's dramatic. That means that effectively you can get solar at below two cents a kilowatt hour if you were to look at in the UK.
The challenges in the UK, we will never get a decision to pull around because of all the other challenges.
You know, you've got to get planning permission, you've got two Connexions, you've got to get a people set in place.
All these other things create a huge amount of risk.
So one of the interesting things that I'm working with is to say, can we look at a system where actually this might be a governance role,
where we basically de-risk all those big issues and actually then enable the
private sector to play a role in actually just delivering the solar panels?
And if you get to that kind of space, then I think we then I think if we could.
I think we could buy 20, 30, 20, 30, five, we could be easily zero if we can deal with that because the numbers,
the finances make sense if you can get the risk out.
So the answer to your CEO, yes, but lobby hard to make sure that you got the governance structures right first.
Now, I know there are a few more hands still going up, but we're going to have to close there in closing,
I do want to bring your attention first to our election next week, which is tackling a very different major environmental problem.
We have Professor Charlotte Williams.
Charlotte is a professor of inorganic chemistry, and she will be talking on future options for making plastics more sustainable.
And I would just like to, if we could thank Malcolm once I knew this would be a very good talk.
I didn't know he was so far on the cutting edge of science communication that his concluding remarks would be delivered in emojis.
So thank you very much, Timothy.