The Energy Paradigm Shift... we're witnessing it
The Energy Paradigm Shift...
we're witnessing it
In 1962 Thomas Kuhn wrote about the power of paradigms in science in his book, ‘The structure of scientific revolutions’. In short, the concept says that things change in paradigm shifts rather than gradually. In the period that Kuhn called ‘normal science’, everything looks fine. Then cracks appear when some evidence arrives that things are not quite how they appear to be. In that phase the majority of people who are attached to the existing paradigm resist, rubbishing those attacking the existing theory. Over time, however, the weight of evidence builds until the new paradigm emerges and is then quickly accepted by the majority. This simple idea transformed scientific debate and modelling.
Although Kuhn wrote broadly about science his idea is readily applicable to other fields including the energy sector. The energy industry has certainly entered a paradigm shift in the last 5 to 10 years. In the old paradigm, renewables were regarded as expensive and only ever likely to represent a small percentage of supply. People who argued otherwise were regarded by the energy establishment as unrealistic or even dangerous dreamers.
In 2020 we have witnessed renewables under-cutting fossil-fuelled generation and accounting for a growing proportion of electricity supply. It is normal during a paradigm shift for the ‘old guard’ to fight hard to defend their world view, even as the evidence mounts against them. The defenders of the old paradigm, like the former US Administration, the coal companies in the US, and gas supply companies everywhere, will continue to attack the new paradigm for a while yet with their considerable financial resources – but it is now more than clear that they are on the wrong side of history.
The new paradigm is one in which the world is increasingly electrified and where: renewables can supply 100% of electricity demand; demand can react to supply rather than the other way round; there is no such thing as “base load”; electricity can be stored in numerous ways at different scales; and consumers become “prosumers”. It is also one where hydrogen has a significant role to play in storage, in certain areas of transportation and in hard to decarbonise industrial sectors.
The new paradigm is one in which the world is increasingly electrified and where: renewables can supply 100% of electricity demand; demand can react to supply rather than the other way round; there is no such thing as “baseload”; electricity can be stored in numerous ways at different scales, and consumers become “prosumers”. It is also one where hydrogen has a significant role to play in storage, in certain areas of transportation and in hard to decarbonise industrial sectors.
A paradigm shift in the energy sector, where the capital investment requirements are high, requires a massive shift in investment flows. We are seeing that shift now. Investors on the wrong side of that shift will likely end up with stranded assets and environmental liabilities whilst those on the right side stand to make good returns while at the same time creating a beneficial environmental impact.
