Putting power in consumers’ hands
The evolution of renewable energy is giving greater power to consumers, enabling them to decide when and how they use electricity and control what they spend.
Advancing technologies and falling costs can help turn consumers from passive to active participants in energy networks, with an important role to play in the new democratic, decentralised and digital grid.
“What’s changing in the energy industry is consumers are taking control of their destiny,” says Susan Kennedy, Founder and CEO of Advanced Microgrid Solutions. “They are becoming the producers of their electricity and this is an irreversible trend.”
Green energy is increasingly generated locally – even at home. This has led to decentralised distribution systems that can run independently from large scale transmission networks.
“Consumers can now decide how to use their electricity, when to store it and how to pay for it,” says John Wilson, Global Industry Head of Energy for Macquarie’s Corporate and Asset Finance group. “They can switch between sources and even sell excess electricity to the grid. It’s an exciting time for them and it will only get better as technology costs continue to fall.”
Smart meters, digital infrastructure and batteries are making the grid more intelligent, to the benefit of consumers, says Prashant Mupparapu, Senior Managing Director for Macquarie’s Commodities and Global Markets group. These technologies help utilities anticipate their customers’ reserve energy and tap into it when needed, maintaining grid stability.
“The world is moving from single-point source to more distributed generation,” says Mupparapu. “Smart, localised grids are giving choice, control and transparency back to the consumer.”
The transformation has created investment opportunities in a new class of energy infrastructure and is influencing how power networks are engineered, with grid lines fit to integrate large shares of variable renewable power and ensure flexibility.
“The grid will have to get faster to balance the fact that when the wind is blowing or the sun is shining you are going to get a significant step up in production versus those periods when it’s not,” says Ed Northam, Head of Green Investment Group in Europe.
As the uptake of smart technologies and local storage and distribution options increases, consumers are bringing renewable energy to the forefront of the electricity market.
New technologies make it possible for consumers of power to deliver some of the flexibility the electricity system needs, and take some control over their own energy security by investing directly in measures that can give a secure supply at home.
Powering Asia's growth
With more than 400 million people living in Asia without power, the region is leading global installation of renewable energy – and advancing the technological innovation.
While 870 million people gained electricity access in Asia’s developing nations between 2000 and 2015, economic growth and rapid urbanisation continue to boost electricity demand in the region.
“We are witnessing the largest migration in history in Asia, with 650 million people moving to urban areas in the next 15 years,” says Ben Way, CEO Macquarie Group Asia and Co-head of Macquarie Infrastructure and Real Assets in Asia-Pacific. “That gives you a sense of the magnitude of the opportunity.”
"Economic development needs infrastructure. You need a stable energy supply chain as much as you need roads and ports – and governments need it to be affordable,” he says.
More than 50 per cent of the global growth in renewable energy in the past two years has been in Asia.
The region’s large size and different stages of economic development highlight the versatility of green energy technologies.
Distributed generation is bringing power to less developed areas, says Ana Plecas, who works for the Green Investment Group’s UK Climate Investments, a joint venture with the UK government to support developing economies as they adapt to climate change.
“We have seen many smaller scale, disruptive trends that avoid the big, centralised systems, either because there is no grid there or because residents are too poor to connect,” she says.
Emerging economies are being driven by the need for new – and clean – energy installation.
“The main focus in the developing world is the pressing need to reduce pollution levels,” says Macquarie Chief Economist and Head of Macro Strategy Ric Deverell. “This economic and social necessity is likely to see China lead the way in renewable investment, whether it be the electrification of the car fleet, or innovative ways to integrate renewable energy into the power grid”.
The world’s biggest power market, China will be the largest investment destination for renewables, with the country’s wind and solar capacity expected to increase eightfold by 2040.
In advanced economies such as Japan, South Korea and Taiwan, clean energy sources are driving the transition from nuclear and coal, especially given their need to import fuel and manage the challenges of a seismically active region.
Taiwan has launched its first offshore wind farm as part of a government plan to install more than 1,000 wind turbines by 2023, enough to power around one million homes.
Most of these projects have a lasting impact beyond providing energy to local communities, says John Jackman, Head of Development Capital Asia for Macquarie Capital.
“As well as providing clean energy, we interact with the local community in terms of development, local jobs and the local supply chain,” he says. “We aim to transfer knowledge and ensure there are benefits for the population.”
Asia also appears at the front line of innovation in renewable energy, says Way.
“Some of the breakthrough technology is being developed in China, Korea and Japan,” he says. “This is true of technology in general but also within renewables.”
Japan has pioneered waste technology since its rapid industrialisation in the 1960s, driving an 84 per cent reduction in industrial waste to landfill in the 20 years to 2010.
Following the Fukushima nuclear crisis in 2011, Japan has further reformed its electricity system in favour of renewable energy generation.
Way sees significant scope for private sector involvement in the region’s energy development. “Over the next 15 years, Asia needs more than $US20 trillion to realise its infrastructure needs – including green energy,” he says.
“You have to create the confidence for institutional capital to help fund those projects. That’s the biggest challenge for Asia today, but also its biggest opportunity.”