“General equilibrium”, an economics colleague explained, “is like a bowl of marbles, move one and we have to reckon with a change in every other one. Depending on the location of the original marble, the change will be large or small, but there will be always be a change.”
Thinking now of energy, a breakthrough in battery storage development would be the equivalent of moving a marble at the very bottom of the bowl. Anyone following the technical developments in batteries, and the vast resources now being devoted to this exercise, would expect to see this happening within the next five years (and probably sooner rather than later). In other words a breakthrough in the length of life and the economics of solar energy (and wind energy) storage is an almost certainty. But what then?
As important as technological innovations are, they are not the end of the story. In fact they are just the beginning. When battery storage possibilities improve, here are some of the impacts we can expect to see – a change in social attitudes towards energy usage; changes in manufacturing to take advantage of this; a great increase in the demand for solar panels; an increase in the willingness of some to go completely off grid; but also an interest of many more in adapting the present distribution network to serve localised production and sharing of power. Localised power production and distribution will enable greater security from events such as the recent power outage in South Australia and future impacts from climate change, as well as attacks on our critical infrastructure.
However, the change in demand for distribution networks will present a business model challenge for network owners which is why ‘economic innovation’ is now needed. No change will take place unless a profit can be made from it. Profit is not a dirty word. It is essential to good resource allocation.
So my question today is: what do we know of research into new business models that can promote and support the adaptation to distributed production and distribution that solar and wind power combined with good battery storage can make possible?