It’s an economic inevitability that global demand for coal is going to drop significantly, but when it does, the renewables boom will open a whole new market for Aussie startups to dominate, according to Ramez Naam, co-chair for energy and environment at SingularityU at the NASA Ames Research Centre.
Speaking at the SingularityU Australia Summit in Sydney last month, Naam noted the importance of coal to the Australian economy, as what is currently one of the most commonly used fossil fuels in the world.
But, this industry is facing significant disruption, he said. In 2013, the global demand for coal hit a peak, and it has plateaued since then.
Ultimately, it’s in for “quite a fall”, he added.
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While there are a few things driving this, the change can mostly be attributed not to changing social mindsets, but to the steep decline in the cost of clean energy.
The prices of both solar and wind energy are “in freefall”, Naam explained.
People are naturally going to buy the cheapest energy they can, he added.
“To disrupt an energy sector you have to be cheaper … it’s fundamentally about economics.”
Already, in sunny parts of the world, solar power is the cheapest type of energy to produce. In Australia — one of the sunniest parts of the world — the price of building and operating new high-scale solar resources has dropped to as little as $0.03 per kilowatt-hour (kWh), wholesale.
That means building and operating new solar facilities is already cheaper than building and operating a new coal plant, “and edging on cheaper than the operational cost of a coal plant”.
Currently, solar power equates to only a little over 2% of global electricity, but that has increased 1,000-fold in the past 20 years, Naam says. And although growth has slowed down of late, solar use is still increasing at an average annual rate of 30%, and he believes the pace will pick up again as prices continue to drop.
Eventually, when the technology becomes more mature, he suggests we could be looking at energy prices as low as $0.01 per kWh.
“That is just a mind-blowing price that disrupts every fossil fuel, and opens up a whole raft of economic opportunities for Australia to use that abundant and cheap sunlight to export things and bring in jobs and money,” he said.
“This is the worst and most expensive that solar power is going to be,” he added.
The next Tesla
All of this adds up to what “starts to look like a ‘Kodak moment’ for the coal industry”, Naam said.
In Australia and all over the world, the industry is in for an impending crash.
“And that has implications, because one fifth of Australia’s exports are coal.”
In the face of this, he called on Aussies to put their heads together and “solve the unsolved problems”, of which there are still many on a global scale.
“There is real disruption for Australia ahead,” he said.
“Exports are going to ramp down, but you are a solar superpower and that creates great opportunity.”
Later, speaking to StartupSmart, Naam suggested there’s every chance the startups that come to define the renewable energy era could come out of Australia.
In this day and age, he said, Aussie startups “have access to the same resources, the same knowledge, the same tech, as startups in San Francisco”.
There may not be quite as sophisticated an investment landscape, “but there is capital available”, he noted.
And, there are people looking to support startups that solve sustainability and climate change challenges.
One of the major remaining challenges is how to store the energy generated from renewables for long enough to cover for cloudy days and night time, or for days when there’s just not enough wind.
In his talk, Naam noted that there’s inevitably more wind in the winter, and more sun in the summer, so combining these two sources across the grid could mean it’s possible to get about 70% of our electricity from renewables already.
But, developing batteries capable of covering the other 30% “is now the most exciting thing happening in clean technology, actually the most exciting this happening in energy”, he said.
Enterprises like Tesla are already making use of exponential technology to make battery-powered vehicles more accessible and — more importantly — desirable.
And Tesla chief Elon Musk has already famously made good on a bet with Atlassian co-founder Mike Cannon-Brookes that he could bring 100 megawatt hours of batteries to South Australia within a 100-day window, to help prevent blackouts in the state.
Australian innovators are particularly well placed to take advantage of what will become a battery boom, and to put Australia on the map in terms of renewable energy management, Naam says.
“Go found it,” he urges Aussie startups.
“Go be the next Tesla.”
StartupSmart attended the SingularityU Australia Summit as a guest of SingularityU.