Launching Energy Transition Notes and My 2024 Wishlist
Happy belated New Year! Wish everyone around the world a healthy and exciting 2024.
I’m starting Energy Transition Notes with twofold motivation: 1) creating a professional platform to connect with like-minded individuals in energy transition and share thoughts, and 2) holding myself accountable for jotting down my reflections and opinions on energy transition matters. I find businesses in energy transition particularly interesting because they are interwoven across many industries and geopolitical implications, and at the cross-section of the three enablers: technology, policy, and capital. Plus, with 2023’s global average temperature hitting a record 1.48 degrees above pre-industrial times, the urgency and importance of talking about these solutions are ever-high.
With that, I’ll start the Energy Transition Notes with a personal wishlist for 2024, a list of technologies and businesses that I am excited about and want to see more advancement this year. Coincidentally, this makes my birthday wishlist (today is my birthday!) – so I’m going to be extra greedy with 5 on the list:
Grid enhancing technologies
A big bottleneck for achieving speed and scale in the energy transition is around transmission. While the U.S. will need 47,000 GW-miles of transmission lines by 2035 and several major transmission projects have been announced, new transmission construction is hampered by complex and arduous siting & permitting processes, lengthy build-out timelines, and large capex required. One way to circumvent this issue is deploying grid enhancement technologies (GETs)1, which can unlock up to 100% additional transmission capacity with cheaper, faster, and less environmentally invasive implementation than building new lines. As we supercharge the deployment and dispatch of renewable energy into the grid, GETs will play an increasingly important role in delivering clean energy without bankrupting the ratepayers. FERC’s new interconnection rule that requires transmission providers to consider GETs as part of their grid upgrade assessment is also galvanizing news. Related to this, one thing I would like to closely monitor in 2024 is balancing authorities and regulators’ continued grid modernization push that increasingly advocates (or sometimes prescribes) the use of GETs, as well as the utilities’ adoption of the technologies.
DERs, VPPs, microgrids
Transmission alone cannot solve the hairy problem of delivering reliable, affordable, and clean energy to all consumers, so we must also localize the solution. Distributed energy resources (DERs) such as solar, storage, and EVs that can respond to dispatch signals for the local grid, coupled with virtual power plants (VPPs) that aggregate the DERs and enable them to participate in the energy market, provide a promising alternative to large energy generation sites. The US Department of Energy (DOE) is particularly bullish on this: Jigar Shah, the head of the DOE Loan Program Office (LPO), anticipates lending support on the order of $100 billion to advance VPPs, with 80-160 GW of DERs connected through VPPs by 2030. As we transition to variable renewable energy resources, we will inevitably witness a higher demand for aggregated, localized solutions connected through bits (vs. atoms and electrons). In addition to virtually aggregating the DERs, another way to offer flexibility, reliability, and resilience in the grid is by deploying microgrids. Microgrids can be useful in mainly two different scenarios: first is during extreme weather events (e.g. recent arctic blast in North America) when the power from the central grid isn’t available for days, and second is when the grid upgrade cost and speed cannot meet the local demand and needs. As we witness these extreme weather events become more frequent and potent, one area I want to discover more in 2024 is customers’ economic appetite for implementing microgrids, which typically come with a considerable cost premium.
Next generation of shorter-term batteries
Many believe that we have fully squeezed the juice out of traditional lithium-ion battery chemistry (e.g. LCO-graphite) and therefore more diversified chemistries will emerge for various use cases. While NMC and LFP chemistry batteries are likely to dominate the battery market for a few more years, some exciting news has been announced around earth-abundant and supply chain-derisked chemistries such as Li-S, Na-ion, silicon anode, and semi-solid-state batteries. But there’s a saying in the battery industry: “There are liars and battery suppliers”. The liars often hide one of the battery trilemma, namely energy density, cycle life, and charging speed. In addition, safety, scalability, and cost per cell are always a concern, leaving some of the battery technology startups stuck in the valley of death. However, tens of battery gigafactories in the US coming online in the next 1-2 years will push the lithium-ion batteries’ cost and technological maturity curves further to the right, which in turn will accelerate the transition to the next generation of battery chemistries. One headline I anticipate reading in 2024 is a large offtake agreement between a next-generation battery technology company and a large OEM (in automotive, wearables, drones/aerospace, or defense industries), which would allow enough funding and commercial certainty for the battery technology company to scale and deliver in the coming years.
Coal-fired power plant retirements
About 15 gigatons of global CO2 emissions come from burning coal, one of the biggest contributors to climate change. So hearing that roughly 50GW of coal-fired power plants in the US will be retired in the next ten years (including 2GW in 2024) is uplifting and simultaneously underwhelming news. We will need to accelerate that number, of course, to get to net zero by 2050, and many institutions have been pushing for this accelerated schedule. For example, the EPA introduced a new rule that limits the carbon footprint of gas-fired power generators, especially starting in 2032. However, the transition is difficult because retirement is often value-destructive (lots of negative dollars!) while a significant amount of the energy demand relies on coal. One avenue that some private firms have employed to tackle a part of this issue is the so-called “brown-to-green” redevelopment strategy, where they turn the coal-fired power plants into renewable sites, such as thermal energy storage facilities. Thermal energy storage is particularly apt for the replacement because of the existing grid connection, repurposeable equipment, and retention/continuation of the labor force in similar technical responsibilities. One thing to closely monitor in 2024 is what commercial agreements the private investment firms will create, as these large investment firms are known to avoid technological risk (while thermal energy storage technology does have some).
Methane monitoring and reduction
Methane reduction is probably the most effective “lowest-hanging fruit” of climate action that we can take short-term action on, given that methane is 28 times as potent as CO2 at trapping heat in the atmosphere and causes at least 25% of global warming. And the largest source of methane emission is from the usual suspect: the oil and gas industry. With the oil and gas industry accounting for 31% of the global methane emissions, IEA estimates that 70% of methane emissions from oil and gas operations such as venting, flaring, and leakage could be reduced with existing technology. Given this, methane monitoring and reduction has gotten governments’ support, such as the EPA’s Greenhouse Gas Reporting Program and the multilateral voluntary agreement Global Methane Pledge. In addition, the newly available methane monitoring and estimation tools such as Al Gore’s Climate TRACE now directly resolve previously hair-pulling issues such as traceability, attribution, and historical accuracy. One thing on my watchlist is partnerships between oil and gas supermajors with technology startups, whether on the methane data collection side or the equipment innovation side.
In the future, I plan on writing deep dives on each of the above. I’m also hoping that Energy Transition Notes reaches as many business professionals looking to better understand energy transition, so they can participate in the great effort to fight climate disasters. I plan on posting biweekly, contingent on the length and depth of the writing. I anticipate this in many flavors of writing, from technology deep dives to policy implication mapping, and from interview summary notes to conference reflections. Also, I know that when discussing energy solutions, the more the merrier – co-creators of Energy Transition Notes are always welcome!
For any inquiries, suggestions, or collaboration requests, feel free to contact us at energytransitionnotes@gmail.com.
Title image generated with DALL-E on ChatGPT using the prompt: “Draw me a photorealistic image with three continuous sections: on the left are coal-fired power plants and methane fume stacks, in the middle is advanced transmission infrastructure, and on the right are renewable energy resources and batteries.”
About the author(s)
Dennis Cha is a current MS/MBA candidate at Harvard Business School. Prior to Harvard, he worked at Google on hardware supply chain, with PG&E on electric infrastructure operations and wildfire analytics, with SoCalGas on asset decarbonization, and at Taslimi Construction on sustainable construction management. He is trained in civil engineering and data science, and began his career in structural engineering. Outside of work, he enjoys scuba diving, youth mentoring, and traveling.
GETs typically divide into two: wire solutions such as advanced conductors and non-wire solutions such as dynamic line ratings, power flow controllers, and topology optimization. These technologies offer varying degrees of benefits across incremental capacity increase, cost, speed of implementation, reliability, safety, and environmental impacts.