As scientists continue to emphasise the urgency of the world’s ‘carbon budget’ in response to continuous global climate change, the shift towards green and renewable energy sources continues to gain momentum. While the shift will mitigate the effects of climate change, the greater advantages for business lie in cheaper and more efficient energy solutions. We spoke with General Partner Vitali Kivmann to discuss the opportunities and challenges of green energy.
Why is the shift to green energy solutions so significant?
As meteorologists and other scientists observe significant changes to the global climate, evident via extreme weather conditions across the planet, a level of urgency has been placed on human impact, and the ways in which humans contribute towards climate change, despite the astrophysical impacts outside of modern society’s control.
Following the 2015 Paris Agreement, countries and corporations have subsequently begun the transition away from fossil fuel energy sources, towards renewable energy sources, such as solar, hydro, wind and geothermal power, which produce minimal to no greenhouse gases. While the initial setup costs for implementing renewable energy production are expensive, over time it is significantly more cost efficient and cheaper than fossil fuel energy.
This is, of course, why so many companies will make the move towards renewable energy infrastructure - their bottom line. Once the initial investment is made in setting up renewable energy infrastructure, there are minimal to no ongoing fuel costs. Furthermore, as technology continues to advance, the costs of components needed have dropped dramatically in recent years. For example, solar panels are substantially cheaper now than they were, say 10 years ago. Operational and maintenance costs are also much lower.
Aside from the direct costs, governments worldwide are now incentivising and subsidising companies to switch to green energy, through tax credits and grants, saving even more money for energy production.
Renewable energy production is growing faster than ever across the world. Can we even forecast what is going to happen in the next 10 years?
While the globally agreed Paris Agreement means countries are obligated to go green, we know that geopolitical tensions have a significantly greater impact on energy production. As countries' relationships with other nations become strained or borderline broken, energy providers, specifically right now, fossil fuel energy providers, will hike up the price to their overseas customers. On the flip side, consumer countries may also [be obliged to] take a moral standpoint to cease trading with a country, including the consumption of their energy resources, in opposition to other countries’ international operations. Therefore, countries need to become more self-sufficient and construct and incentivise new energy production, and of course, the cheaper and more viable option, especially for countries who have little to no access to coal, oil and gas, will be renewable energy.
However, as technological development continues in green energy and the electrification of systems currently operating via fossil fuels progresses, it’s worth noting that in the next two decades, we will also approach optimal industrial thermonuclear fusion - the process whereby two light atomic nuclei combine to form a heavier one, releasing enormous amounts of energy in the process. Once this is achieved, it will subsequently render many of even the renewable sources as comparatively inefficient.
When factoring thermonuclear energy’s impact on current renewable solutions, the most important factor keeping these methods of energy production relevant is the same challenges it faces today. Renewable energy effectiveness is reliant on the necessary improvements to store and transport it. Currently, this is the major blocker in global adoption in renewables and as thermonuclear solutions progress forward too, storage and transportation optimisation of renewable energy will become even more imperative.
While we cannot predict the next ten years of renewable energy progression with absolute certainty, technological advancement, politics, supportive policies, increased investments, and international cooperation is more than likely to push the trajectory of renewable energy, and thermonuclear energy adoption up exponentially. Countries will move towards a kind of de-globalisation of energy generation, custom and distinct to their own needs.
Do you have any advice on how to invest in green energy?
When contemplating investing in green energy, it is important to focus on efficiency, marketable technology, and the degree of development of the technology. Investors should also attempt to identify whether the technology is an idea, a concept in early development, or a product which is close to being introduced to market, ready to generate revenue. Furthermore, it is worth assessing whether the technology has a chance to become sustainable yet, not only in terms of the environment, but also in terms of its ability to survive immediate changes occurring in the market or in the world.
Another point to consider is the large number of projects that exclusively focus on government support, subsidy programs, and fulfilling political desires, often with very high public relations components. It is crucial to carefully evaluate such projects, as they may be primarily aimed at accessing budget funds through appealing language and visuals, rather than genuinely worthwhile investments.
Investors should simultaneously be cautious about on-ground wind projects that rely heavily on subsidies. For instance, while offshore wind turbines may be more efficient and sustainable, onshore wind projects can often be expensive and their environmental impact may be conditional.
Which energy projects and companies are especially promising today?
For me, projects that take advantage of local peculiarities of certain places, such as ebbs, flows, geothermal history, etc., seem promising.
Furthermore, projects related to extracting energy from hydrogen are also worth paying close attention to. There is an abundance of this raw material on our planet, which is freely available, and its potential is limitless.
As well as technologies related to energy generation, it's worth considering technologies for energy conservation, such as new types of batteries. Despite the technological boom we are witnessing, our current-day batteries are still outdated. Electric cars could be a lot more efficient, and bigger if they didn't have to carry heavy salt batteries, such as Tesla’s nearly 800kg battery, or Polestar’s 385kg battery. Improving the efficiency of energy storage and the speed of charging could lead to a small revolution.
Which energy companies are you interested in?
I’m keeping a close eye on Hy2Gen. Their development of renewable fuels of non-biological origin (RFNBOs) is a potential game-changer for the industry and I’m excited to see where they go once all of their plants are built in France, Norway, Canada and Germany.
What do you think about the prospects for the development of micromobility?
Companies like Lime, Voi, Bolt, Zelectra continue to grow their fleets of micromobility solutions for use across North America, Europe and Oceania respectively. The logistics of the future using electric and other alternative sources of clean energy have great potential, but it is important to consider the degree of development of the technology and how close it is to the market. Ultimately once again, their efficiency and growth is dependent on the technological evolution of the batteries.