In some Australian suburbs, you are in the minority if you don’t have solar panels on your rooftop. This modular, simple generation technology is tangible evidence of a transition inexorably occurring, involving several seemingly independent factors converging to revolutionise the way energy is generated and consumed.

This transition will parallel the emergence of the internet in creating far-reaching and unforeseeable effects. Because energy is so fundamental to the way we live, major changes to how we produce and use it will reshape numerous aspects of our society and economy. In a country like Australia, awash with energy, this transition could be profound.

Solar panels on rooftops in Australia have only become mainstream in the last five or so years, but in that short time they have become influential commercially and politically. As a result, solar is becoming a threat to many of today’s traditional energy businesses. Before that point is reached, two issues need resolving: price, although costs of solar have been falling rapidly they are still assisted by subsidies; and intermittent output, as solar panels cannot generate at night and their output drops rapidly under clouds.

If those issues can be resolved, solar on rooftops, which doesn’t need costly transmission to serve customers, could outcompete traditional options and be the technology of first choice. But this isn’t likely to spell the decline of the grid, which will add value to a more complex energy landscape by multiplying the value of other emerging technologies and allowing better business models for customers to emerge.

Cost-effective and modular energy storage will solve the problem of intermittent solar energy output. Users will be able to store solar energy for example during daylight hours for use when it is dark or cloudy. But when connected to a “smart grid” that can aggregate and coordinate the energy production and consumption of tens of thousands of users, batteries will also provide grid operators with a new tool to optimise grid investment and operations, increasing overall system efficiency.

So, while disconnecting from the grid using batteries and solar could seem appealing, particularly in remoter areas where grid connection costs are high, the grid may actually flourish by letting users hook in to access greater cost optimisations and reliability.

Cost, which has been an issue in solar energy take-up, is also a factor that has slowed the adoption of energy storage. But over the next decade, electric vehicles (EVs) will become significantly more common, and at the heart of each electric vehicle is a battery which can store enough electricity to serve the average Australian home for days. As EVs bring manufacturing scale, so will battery prices drop. While charging these batteries will obviously be a source of new energy demand, when attached to a grid they could also be a new source of supply and flexibility. This combination of values will strengthen the EV proposition, hastening the move from the internal combustion driven car as the default choice.

The key to unlocking the converged value of solar, energy storage and electric vehicles will be the “energy internet”—a vast network of devices that generate, store and consume energy, which parallels the feted “internet of things”. To make beneficial use of this network, entrepreneurs will need to be able to collect and transmit the data that devices capture about energy use on an open platform. Allowing this is likely to require significant regulatory reform and the evolution of new business models, some of which has already begun in Australia. But given such capability, the energy businesses of the future could deliver unprecedented efficiency in terms of both energy consumption and infrastructure utilisation.

This new energy future will be a boon to all renewable energies, not just solar, and the great irony of this is that although this will provide extraordinary environmental benefits when they are most sought after, the technologies involved will be adopted not just for their contribution to conservation, but more for commercial reasons. For the first time, a lower-emissions future looks like a better commercial possibility, both technologically and economically feasible, and greater alignment of global climate change ambitions is possible.

While not all firms will be winners in the new energy future, there will certainly be opportunities for enterprising businesses—be they new entrants or long-standing incumbents—to flourish by embracing the evolution now underway. This will take resolve, foresight, and good strategic and technical thinking. In future chapters in this series, Advisian will explore the details of the coming changes through such topics as the future of grids, fuel supplies and urban infrastructure, the importance of energy efficiency, and the advent of shared and autonomous vehicles.

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