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When presenting this question to product managers, engineers, and business developers in market leading companies in the European energy sector, I discovered a world of potential for many different applications; not only in remote areas where they would normally be implemented but also in grid connected spaces with operational needs to be fulfilled.
I learned how complex microgrids can be, especially if based on intermittent renewable energy sources. But I also discovered how flexible they could be and how they could help the wider energy system that is becoming increasingly challenged both by generation connected at low voltage levels and new demands for electricity for heating and mobility.
We’ve done it... We’ve reached the end of 2020. As we all breathe a collective sigh of relief and look forward to the year ahead, it’s time to take a glass half full approach and celebrate the success we’ve seen in the new energy transition over the past year.
I was recently joined by my colleagues Charmaine Coutinho, Head of Consulting, and Lindsay Sugden, Head of Heat, to do just that.
Since our last new energy letter, the European Commission has published its long-awaited Renovation Wave Strategy, revealing of the extent of Europe’s decarbonisation ambitions in existing buildings – arguably the most challenging sector to decarbonise. The renovation wave strategy is making ripples, which could become a tidal wave of transformation for our existing building stock, with energy efficiency and the uptake of low carbon heating standing to make vast gains.
But this scale of change will only be unlocked if the market is swept along too – if member states follow through on the strategy recommendations, and if private investment is unlocked at the scale envisaged. So which parts of the renovation wave strategy give me something to be optimistic about?
I spent 20 years in the old energy world of oil and gas. (I know – mea culpa. On the plus side I so far have 10 years in new energy, so only another 10 years to go before I am in credit...). During the first 20 years of my career, I experienced first-hand the critical role of banks and financial investors to fund projects or invest in infrastructure. It’s hard to think of two worlds – oil and finance – that are more closely intertwined.
However, over the last 10 years, it’s been apparent to me that investor interest in the new energy world is largely absent. Yes, there are clean tech investors, and some of these have even made decent returns, but the sector generally has not prospered. Indeed, for many people, it has a negative reputation.
The German football team is out of the World Cup. Was it what you expected? Unlikely. Had you predicted this would happen based on the players selected, Joachim Löw’s ability to coach, or the huge investments made to secure a top-tier national squad? Probably not.
As we published the ‘New Energy’ Business Model Service’s latest report, this got me thinking about who is investing in what within ‘New Energy’ and if how much you invest in something is really an indication of future success?
A couple of weeks ago Mercedes-Benz announced to invest €500 million into a new battery manufacturing facility in Germany, which is part of a wider strategy to invest €1 billion into battery production globally. This was followed by the announcement last week to also expand into the U.S. energy storage market.
The scale of the investment – compared to €5 billion R&D expenditure for the entire Daimler Group in 2015 – is an incredibly strong statement for the group’s electric vehicle and energy storage strategic plans.
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