Technological Change & the Energy Transition
Understanding energy technologies’ evolution will lead to better decisions in the energy transition
Renewable energy technology is getting cheaper, which is a beacon of hope for the energy transition’s goal of reducing and capturing carbon emissions. However, some questions remain to be answered.
For instance, How do we stimulate innovations in renewable energy or low-carbon technologies? and How can we distill exhaustive research on science and engineering for policymakers?
These questions can be addressed using Technological change analysis. Technological change analysis plays a fundamental role in improving the future and providing clarity to questions of uncertainty. Doing so helps craft a new narrative with direct actions to address the climate crisis.
But what is technological change?
Technological change involves the intersection of invention, innovation, and diffusion of an industry and the production process of its technology. Technological change is essential in any transition space. The expertise garnered from breaking down historical data to understand a system holistically (e.g., an industry) and its specifics (e.g., technology and how to deploy it) is highly significant. If we cannot visualize a world where the nature of all we have known has fundamentally changed, then we will not see the future coming. The scientific community, private investors, and policymakers rely heavily on these predictions for planning, investments, and general decision-making.
What is the role of technological change in the energy transition?
Making sense of the numbers
Current estimates indicate that electric power consumption will hardly be reduced in the future. For instance, the more electrical devices, the more electricity is required, and indeed the prices we need to pay for our comfort get higher. People get more dependent on fossil fuels to produce electricity year by year, and resources are overstretched when the power consumption increases.
Numbers don’t lie, and the world is speaking, almost screaming, loud, and clear of the need for direct action. If we don’t take immediate action on the energy transition, we might face the climate crisis from our daily news and environmental justice speeches to an unseemly degree.
A friend for moments of decision making
Many local and regional places have been through enough power grid failures—swamped in scarcity—with populations needing transparency, accountability, and a targeted shift toward distributed resources such as renewable energy. The results from technological change analysis, with all its uncertainty, are instruments of paramount influence at times of debate, discourse, and decision-making for energy transition, planning, and policies.
Furthermore, the COVID-19 pandemic gave us a hard lesson about how the Globe, facing scarcity of resources, needed a break from our adamant behavior of polluting it. In our daily activities, we observed a significant decrease in environmental pollutants during the pandemic. We think that if we consciously set the same effort or more, we can achieve the most remarkable things we want for the energy nexus. — Direct action entails a rapid response and involvement of many stakeholders, including researchers, industrialization, and policy decision-makers, and speeds up the deployment of renewable technologies locally and globally.
Predictive power and hindsight
Another topic of extreme importance in technological change and energy transition is the ability to foresee the benefits of renewable technologies and their surprises. Undoubtedly, technological trajectories have a degree of complexity and cannot be fully characterized by any single indicator. Still, knowledge of a few key technology characteristics can be advantageous for specific purposes.
In the context of climate change mitigation, energy transition, and energy policy, one of the most informative indicators is the cost per unit of energy or functional capacity. If we can better understand the future costs of energy technologies and their uncertainty, we might design cost-effective and robust energy and decarbonization policies.
Using wind energy to generate electric power is not something new. Researchers have witnessed cost reduction for offshore wind over the past eight years, with high expectations of advancements. And if our calculations are correct, costs might allow wind to play a more prominent role in energy supply than anticipated in tackling climate goals.
Without diminishing the valuable opinion of experts, they can bring onwards (a judgment about the industry and technology) and backward (lack of knowledge of how industry and technology evolve) takeaways over the discussion table, leading to critical decisions. Recent research by Wiser et al. illustrates the importance of considering cost uncertainty, highlighting the value and limits of using experts to reveal those uncertainties and yielding lessons for energy modelers and expert elicitation.
What knowledge of technology evolution is helpful, and how can it help?
a) Knowledge of technology components improves cost projection accuracy
Cost projection of energy technologies is so important for climate change mitigation. It is the reference of policymakers when announcing climate goals, setting funding priorities, and launching new programs. Moreover, it gives crucial information to the public about a technology’s potential, therefore impacting the public’s attitude toward that technology and its adoption.
However, developing an accurate projection of energy technology costs can be complex. For example, the cost of wind energy has many components, such as the costs of turbine components (e.g., rotors, blades, gearboxes), site preparation, and grid connection. Understanding how each element of an energy technology contributes to the cost can reduce the uncertainty of cost projection. It provides a clearer technology outlook and ensures efficient climate mitigation planning.
b) Knowledge of technology bottlenecks helps identify innovation opportunities
The transition from an older system to a new one is not always easy. The same is true for shifting from conventional to clean energy despite the apparent climate benefits. Our energy system is complex and old, designed over 100 years ago. To eventually achieve our climate goals, it’s essential to know what upgrades are necessary for the system to relieve possible bottlenecks that arise from adding more clean energy. In fact, by comparing clean energy and the mature and conventional ones, like coal and gas, we can easily see the intermittent and non-dispatchable characteristics of the former. Clean energy depends on renewable natural resources like solar and wind for electricity generation. However, neither wind nor solar is available 24/7. The fact that clean energy can’t be controlled by grid operators whenever they want makes it not as dispatchable as gas and coal. This difference challenges the resiliency and reliability of our power grid. To resolve the conflicts between the old system and new technologies, we need to jump out of the box and innovate using the knowledge of what has impeded the energy transitions.
c) Knowledge of inter-technology relations adds experience to the deployment of emerging renewables
Many studies on patents have shown that one technology can benefit from knowledge spillovers from other technological fields. As a relatively novel technology learns from its more mature precursor, it draws experience and can potentially skip to a later stage of the technology life cycle. Interestingly, we can hardly see a “novel” energy technology nowadays as an isolated island but usually with close relations with the others. Understanding these relations shed light on the commercialization and adoption of emerging renewables.
How can we improve the process of technological change analysis?
Technological change analyses are a vital input for Integrated Assessment Models (IAMs); this model integrates models of the economy with models of the climate and often includes plenty of technical details. This is an essential scaffolding to forecast emissions pathways and mitigation options. Thus, the models require information on the costs of the technology. These cost data can dramatically impact projections of future climate change, the need for adoption investments, and options of climate policies.
Any work that nourishes quantitative analysis is an excellent asset for studying technological change, even if it is not quantitative analysis. However, technological change study is mainly fed by data. The industry and government should put an effort to provide reliable and public information to future analysts like us, researchers and forecasters eager to be more accurate and precise in our estimates.
Undoubtedly, this effort will help decrease uncertainty in our estimates when investigating a technology or industry. In addition, and more importantly, it will help us fill the gaps the energy nexus needs and provide immediate and practical solutions.
Technology changes rapidly, and we must study it continuously to understand its benefits and costs.
Humanity can and should (maybe must) ramp up efforts at an astonishing rate - fast enough to make the technological changes needed to combat the climate crisis.
We must embark on this collaborative process: People together can change the course of history with direct action and the deployment of new technology. The modus operandi of the energy transition needs a booster, and historical data must guide our efforts under the circumstances we face.