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The Changing World of Electricity

12th February 2018

Dougie Hawkins, Partner, Clyde Blowers Capital

The power generation industry has seen a growing number of exciting developments in recent years, and at Clyde Blowers Capital (CBC) we are encouraged by the increased levels of investment into the sector as it continues to evolve rapidly.  

It’s well documented that an expanding global population and growing urbanisation is placing a heavy strain on the world’s natural resources. Undoubtedly, we risk damaging our planet if we can’t get a proper handle on polluting emissions. In addition to these macro trends, people are relying on a huge amount of electrically powered appliances from hand held devices to motor vehicles and this is only set to increase. Whilst the development of electric vehicles, for example, is positive in that it helps lower the amount of carbon dioxide and diesel particulate emissions released into the atmosphere, unless we can source the electrical energy needed to propel these vehicles or power those devices from sustainable, low emission sources, we’re not really making the progress required to avoid burning more fossil fuels.

This is where forms of renewable power generation, such as wind, solar and hydro come in. As these industries grow, we are beginning to see the cost of all forms of renewable energy fall rapidly, to levels where it is now starting to compete, subsidy free, with conventional power generation. At CBC, we have observed this trend across our investment portfolio and in particular our companies Moventas and Cone Drive, are leading the way here, embedding newly developed technologies into more efficient products and services, playing their part in lowering the overall cost of renewable energy. 

Energy storage  - a catalyst for progress

Growth in renewable energy generation will be sustained through the development of power storage technologies, and this is where it starts to get exciting, as power storage is a catalyst for transforming the way we traditionally generate and distribute power.

Cost effective energy storage solutions circumvent the obvious drawbacks of renewable energy, given the need to generate power at times of demand, even when the wind isn’t blowing or the sun isn’t shining. Energy storage solutions allow you to efficiently generate energy and then store it when generating conditions are favourable then release that stored energy when it is required, ensuring that supply and demand can be more readily balanced.   

Evolution in energy storage technology is also helping to change the way we think about how we have traditionally generated and delivered electrical power to consumers. Increasing storage efficiency, scalability and storage density provides consumers with greater confidence in security of supply from locally generated and stored sources. This brings less reliance on the need for large scale methods of power generation that connect consumers through extensive national transmission and localised distribution networks.


With a more localised approach, power can be generated from smaller scale, localised renewable power plants and used to power dedicated buildings, industrial facilities or even small towns and villages, without the need to link up and extend expensive national grid networks.  And, indeed, where that localised facility can connect to a grid, surplus power can then be uploaded and sold to a broader market of consumers.

More than just batteries

Hydro electric power generation is one of the most developed and well known forms of power storage, although large dams can have a detrimental impact on local eco systems. We have read about the rapid development of lithium-ion battery technology, that amongst other benefits, is actively encouraging retail consumers to think about clean energy. But there are many other storage technologies at various stages of development and commercialisation.

At CBC we have followed the development of molten salt storage technology used in large solar thermal power plants, to underground thermal energy storage systems used to heat large buildings. And there are plenty more storage technologies out there, including fly wheel technology, compressed air energy storage and supercapacitors to highlight a few, each satisfying different applications and sometimes combining to solve more complex challenges.

The huge leap in the development of battery powered electric vehicles in recent years has been partly driven by investment into lithium-ion battery technology. Consequently, we have witnessed rapid falls in the cost of lithium-ion, by as much as 70-80% in the last 10 years, helping to commercialise the technology and open up a wider market opportunity.

Additionally, hydrogen fuel cell technology will likely challenge lithium-ion in the transport space, and that competition should bear positive results for continued product development and ultimately, for the green minded consumer.  In this area, CBC portfolio company  Ferguson Marine Engineering is bringing to market the world’s first zero-emissions vehicle and passenger ferry, powered by hydrogen fuel cell technology, having received support of EU grant funding.

With electrification becoming increasingly prevalent in both consumer and industrial markets, demand for electrical power consumption continues to grow. It is great to see the industry rise to the environmental challenges by innovating and developing new technologies and solutions that are helping drive sustainability into the future. These exciting trends are opening up new growth and investment opportunities for those industrial companies that are able to stay ahead of the trends. Without doubt, at CBC, we will continue to watch this space with great interest.

 

Notes to editors

For media enquiries please contact Tom Sutton, Head of Communications at Clyde Blowers Capital, tsutton@clydeblowers.co.uk / 07471228494

To connect with Dougie Hawkins - please click here.