Battle for Energy Part 1
Written and Edited by Sriniketh Sukumar
Where does the future of the energy industry lie?
Texas A&M SPE hosted the much-awaited Power Switch Conference last semester, which featured a panel of industry experts from the solar, nuclear and oil and gas industries, to form a think tank, and modern-day energy issues, and address the increasingly important question (especially to a crowd of petroleum and nuclear engineers). Excellent insights on the future of energy were presented then, and are presented now, as we begin to get increasingly busy with our schoolwork as the semester reaches its half way point.
The event began with a brief presentation by each panelist on their respective industries, followed by a question and answer session and discussion, moderated by Texas A&M’s own Dr. Barrufet. As always, Pizza was served at the start of the event.
Dr. Scott Nguyen, a Harvard trained physicist and entrepreneur represented the up and coming solar energy industry. Through his nonprofit company 1PlanetSol, Dr.Nguyen invents and implements technology that makes an impact on society. Prior to founding his startup, Dr. Scott was heavily involved in the oil and gas industry (mainly in the area of conventional shale gas), which gave him the experience needed to identify potential market gaps in the energy industry. His opening statement was that the energy landscape is not a linear trajectory, and there is no way any one source can grow without any competition with the others.
With that said however, Dr. Nguyen’s presentation shared interesting statistics on the growth of this sector. For instance, the market share (percentage) for solar in 2006 was negligible, but strong interest made it grow significantly, due to the recent industry incentive to reduce carbon tax. In the past 10 years solar energy’s growth has surpassed predictions, which was primarily driven by increase in falling prices as demand started to grow, which is significant, since in the beginning, the cost to setup an array of solar panels was greater than the setup cost for a coal power plant.
Statistics aside, however, the unique perspective shared was that people share no relationship with traditional energy sources, in the sense that we only consume energy in the form of electricity and heat. However, solar changes this reality, as our homes can become a power plant and thereby change our relationship with energy and form an association between consumer and producer.
One interesting feature about solar energy is that it has essentially created the ‘energy prosumer’. This may sound rather abstract, but when people have a relationship with energy, their interest and responsibility towards it increases. A personal anecdote from Dr. Nguyen himself was that his family always found ways to reduce their power bill by consuming less than what their solar panels gave them. That’s not a comment on the reliability on solar panels, which through the implementation of Dr. Nguyen’s and other innovative technology, can produce more than the average householder’s consumption.
Another argument put forward was that despite the initial setup cost, solar panels gives a considerable return on investment through energy cost savings, which is of immense use, as many Texans spend upto 30% of their income on energy compared to 4% nationwide. Indeed, as 1.3 billion people lack access to electricity worldwide, solar could be the solution to their problems by providing an adequate and inexpensive energy source.
Solar energy is currently at a tipping point. Falling prices and consumer network effect will drive growth. Dr. Nguyen predicts three major avenues for growth in this industry:
- The use of solar panels in electric vehicles
- The development of a dynamic bidirectional power grid, which will resemble the internet
- Storing solar energy is an unexplored technological domain. The ‘winning formula’ so to speak will be a combination of solar, storage, software and creative business models.
Mr. Mark McBurnett, CEO of Nuclear Innovation North America and Texas A&M alumnus represented the nuclear industry. Mr. McBurnett opened by stating that it takes a lot to make a system work, there needs to be a combination of energy types. No one kind of energy suffices to supply the world’s energy needs.
Some of the statistics provided are that there are 99 reactors in the USA that supply 20% energy needs and is responsible for over 2/3rds of the US emissions free electricity. There are currently 449 units worldwide, with 56 being developed today.
While the marker structure for nuclear is high in capital cost, some advantages include that it is reliable, has a high capacity factor, has little to no carbon footprint, has a large positive impact on the local and state economy, low fuel cost and a long (60-80 year) operating life. One major disadvantage is that due to the high initial setup cost, it takes a very long time to obtain a satisfactory return on investment.
Nuclear is also a rich area for research, and some technological innovations include GEN III reactors, which provide more safety and are more robust in their mechanism to withstand natural elements like Earthquakes and flooding. Accident tolerant fuel designs lead test assemblies now and show deployment in 2020’s. Substantial improvement in tolerance to loss of cooling events. Smaller modular reactors are also being developed that offer a faster ROI, lower setup cost, faster construction and variable in size. Research in nuclear engineering also has multiple applications in fields as diverse as health care (Ex: radiology) and industrial processes (Ex: Quality Control). So, in summary, nuclear if we put aside social stigmas, nuclear is a rich avenue for development in upcoming years.
Oil and gas were discussed, and insightful discussions ensued in the question and answer session that followed. Stay tuned until next week to find out more!