I was at a conference the other day and one of the big questions was whether we were in the middle of an energy revolution or whether it was a transition or as the German’s call it an Energiewende.  There was also some input on how our power world would look like in 2050 and the conclusion from one presenter was that we were not in a revolution and that we were going through an evolutionary period of change. I had to interject with two questions, if we had all of have been sitting in this room in January 2008 how many of us would have predicted that the oil price would be $50 today (it was $85 then) and that continental European power prices would be below €35 (they were €90 back then). Of course there was silence in the room as nobody among all the energy experts in that room would have got those questions right. The reason is that revolutions by their nature are unpredictable…

And that revolution is clear to me is caused largely by two technologies, one drilling technologies which have already radically changed the US gas market and increasingly the global oil markets and renewables which have already torn apart European power markets and are set to do the same in the U.S., Japan, China and other markets.

Drilling technology advances

  • Hydraulic Fracturing.  Fracking, as it is more commonly known, involves fracturing a rock using a hydraulically pressurized liquid which comes in handy with  “tight” reservoirs where the rocks containing the oil do not have large holes in them.
  • Seismic Imaging. This technique relies on the idea that sound travels through and bounces off different materials in distinctive ways and thus can be used to more accurately locate oil.
  • Measurement-while-drilling (MWD). This technology allows the drilling machine to receive and use real-time information on the drilling process as well as steer the well in different directions.
  • Digital Oil Fields.  The use of web-based visualisation platforms is becoming common and allows oil firms to effectively measure, analyse, control and use all of the data coming from the oilfield.

The result of these technologies is that it is now possible to access gas and oil that was previously inaccessible and to do so at economic rates. And the US production numbers speak for themselves. In 2008, the U.S. produced 6.7m barrels per day of oil (and oil equivalents). In 2014, it was 70% higher at 11.4m barrels. U.S. gas production has risen over the same period by 27% to 70 billion cubic feet per day. Now if that is not a revolution I do not know what is!


In terms of renewables we have already seen wind become competitive with fossil fuels across a lot of countries and as the technology has improved installations have increased. So for instance, in 2014 there were circa 43GW of new wind capacity installed across the globe. This is up 60% on installations in 2008 (27GW).

However the most revolutionary renewable technology is solar which is more flexible and faster to install than any other power generation technology.  It can be used to provide power to pocket calculators or for utility scale power plants. PV modules can be mounted onto our roofs or facades, or they can be configured in large-scale plants. Plus, installation is simple and quick. In 2014, the global market for solar was circa 45GW up  a massive 650% from the 6GW installed in 2008. We have never seen a power generation technology grow so quickly and this year solar is likely to become the No1 power generation technology in terms of new installations!

The result of these renewable generations can be clearly seen in the European power market where over the last 5 years nearly 100 GW of renewable energy capacity have been constructed across the European continent. Wholesale power prices have hit 10-year lows (to below EUR35/MWh!) notwithstanding the closing of significant nuclear generation capacity in Germany. And we have the amazing situation that it is the weather as opposed to the price of fossil fuels which determines the power price. And then we have the recent decision from one of Europe’s biggest power generators, E.ON to exit nuclear and fossil power generation to concentrate on renewables. Now if that is not a revolution I do not know what is!

The German’s call it an Energiewende, the energy transition. But in reality it is a revolution. The changes are so great that they are impacting the way we interact with energy at all levels – across each of industrial, building/home, transport and personal energy management environments. And there is more to come: electric cars, fuel cells, the expansion of renewables and the expansion of the new drilling technologies across the world not to mention efficiency technologies such as LEDs.

What does this all mean….we are in for big changes ahead. On the one side, the business models of incumbent energy companies will be under pressure. On the other hand, creative destruction will ensure that new ideas and business models will succeed. It is going to be an exciting place to be especially in an industry where the names, the ways of doing things and the technologies have not changed much in a century!

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  • energiewende ,
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  • energy revolution ,
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  1. Technology has indeed resulted in dramatic shifts in supply in the US of oil and gas; and dropping prices have made renewables feasible and more widely accepted. Hegel noted that changes in quantity could be so great as to be a qualitative change, so I agree “revolution” is a fair term here.

    But the whole revolutionary energy picture–both transportation fuels and electricity–is not clear without considering the profound drop in demand, and recognizing its inherent causes. This is the case in the U.S., but we also need to stop expecting developing nations to follow the exact same energy path we did – they’re not.

    Technology is changing everything about our lives, in the residential, business, commercial and industrial/institutional sectors. It’s not just telecommuting, telework, teleconference – we now use computers and smartphones for tele-shopping, tele-renting movies, tele-paying bills, tele-downloading movies, tele-paying your taxes and renewing your licenses, tele-chat with friends, tele-recheck your book at the library, tele-send your husband a picture of the broken board when he’s at Home Depot…….For industry, various ‘smart’ technologies is allowing everything from inventory management to route optimization to crop pesticide application has been made dramatically more efficient.

    Vehicle miles traveled per capita in the US have been falling since 2002. At first, they thought it might be the post-9/11 recession, but the trend has become de-coupled from both population and GDP.

    Land use patterns are shifting to “livable communities”, where people can live/work/shop/play without owning a car – local governments made an intentional shift in this direction, and it’s worked. Car ownership among young people has plummeted – they see car ownership as an expensive, polluting risk. With options like zip-car, they opt out of ownership, meaning they walk or take transit or make other plans….

    And finally, efficiency is cumulative – as fleets of buildings, cars and trucks, major and minor appliances (from chillers to scooters) are made more efficient, that decouples energy units from the outcome in goods and services (say, BTU per GDP).

    Take a look at the EIA AEO 2014 forecasts – http://www.eia.gov/forecasts/aeo/

    If we don’t incorporate this mega-trend in our planning, it will not be as soft a landing as it could be, especially for energy suppliers and their investors.

    1. Kimberly,

      You made a lot of interesting points, the most striking for me is what you said about developing nations and about the needing “to stop expecting developing nations to follow the exact same energy path we did – they’re not.”

      It is clear for me that they will go solar (with batteries and microgirds). They may even go directly to DC as opposed to AC. And they have a roll model for it already. It is called mobile phones…How many Africans or Indians have fixed line telephones? In addition, how many of them have credit cards? No they use their mobile phones…

  2. thank you for your very interesting topic. By the way in my PhD I am also working on photovoltaic industry in order to find radical technologies within this industry and I proposed a new method that predict these radical technologies graphically and my method got two grants as of now.
    I would be so happy if someone can help me to find a company or manager who really wanted to predict the future of photovoltaic industry.

  3. Gerard, I think we are indeed in a revolution, since the impact solar PV is making, shifts the business models of the incumbents of the energy sector. After denying this for the past decade, I see now first signs of serious change and of an adaption of power producers towards a more decentral approach. Certainly, the development of IT technology and the fact that home automation plays such an important role, makes a big difference.

    @Reza: check the EPIA.org website. They have a very nice study on the development of PV cost towards cost parity.

  4. Very good article Gerard. The way I see the energy revolution is really the power generation using solar panels. I believe that not too long in the future we will be able to generate all the electricity we consume in our homes using solar panels installed in our homes. Then the consumers will not depend any more on power utilities for electricity. One way I see is to use solar panels that will feed low voltage DC batteries and these batteries will feed all we need in term of electricity in our homes either by converting to AC or by using DC directly to our appliances.

  5. Hi…

    First of all, is there evidence of the sustainability of this trends regarding the oil business, despite the new extraction methods, are the global reserves enough to last at least 50 yrs???
    Can PV (and even thermosolar for that matter) or wind energy become base generation or at least a respectable percent of the total energy require by a country or a state…

    There are many bright lights along the road, to mention another bio-fuels far beyond corn ethanol, but until a technology or breakthrough, becomes sustainable, constant and sufficient to satisfy let´s say at least 20% of the actual demand, the revolution is yet to come…

  6. Ramon, thanks firstly for the comments. Let me address them as I see it. First and foremost the point is not whether there is enough global reserves to last at least 50 years. I think it is clear there is enough BUT the question is whether we can take it economically out of the ground and whether we can from an environmental point of view afford to do so.

    Your second point is a good one and that is can PV provide baseload power. The answer is no. But maybe that is the wrong question. Why do we need baseload power? Why can we not combine solar with other technologies such as batteries? Why can be not flexibilise the demand side of our power system?

    And I take you point with 20% But we are on the way. Italy generated 7.5% of its electricity in 2014 from solar..

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