Plugging Electrification into Our Green Future
Watt's up with the craze of wanting to electrify everything?
When talking about getting to net zero, everybody in the energy sector seems to be talking about decarbonizing electricity generation, improving energy efficiency, and electrification.
But what exactly does electrification mean? Is it just producing cleaner electricity? Is it educating end-consumers to turn off the lights when leaving their houses? Or is it buying a new washing machine that is more energy-efficient than the old one?
Today’s post will bring clarity around electrification, how it can accelerate the green transition, and what the benefits and challenges are.
Let’s go!
Before we dive into what electrification means, let’s clarify one important thing that we have not talked about yet at CC.
Emissions.
The Pollution Around Us You Cannot See
🚨Humans emit around 52 billion tons of GHG every year. 🚨
That is 52 gigatons in environmental science speak. Or 52 million metric tons. Slice and dice it however you want, it is still too much. Way too much to keep our pale blue dot liveable for our species.
Emitting GHGs causes the greenhouse gas effect. The result is global warming. Global warming causes melting of glaciers, rising sea levels, more severe storms, more droughts and heat waves, and making some parts of the world unliveable for humans.
Personally, I like the breakdown of global GHG emissions from the Rhodium Group. 100% of GHG come from the following five sectors (% share):
Industry (29%) = how we build things
Electricity (29%) = how we generate electricity
Agriculture (20%) = how we grow our food & raw materials
Transportation (15%) = how we move goods and people around
Buildings (7%) = how we keep buildings warm and cool
Depending on the source, these numbers differ slightly from one another. Experts have many different attribution models for which emission belongs to which sector.
My advice: pick one from a trusted source and stick with it.
Now that we got this one out of the way, let’s talk electrification.
Electrification Back in the Day
Traditionally, electrification meant bringing electricity to households and industrial consumers so they could turn on the lights and produce goods. As time went on and consumers demanded more electricity, we also emitted more and more GHGs since that electricity was dependent on fossil fuels.
Now we’ve reached a point where the definition has shifted. We no longer talk about adding houses to the grid. When somebody talks about electrification today, they most likely mean the following:
Electrification in the Twenty-First Century
Electrification today means substituting fossil fuels as sources of power with renewable sources to generate electricity. In other words, it’s the process of changing something that runs on fossil fuels to run on electricity. Like swapping out a combustion engine car for an electric one.
This concept applies to transportation, heating and cooling homes, and industrial processes, amongst others.
According to the International Energy Agency (IEA), a group of people with real insights on the topic, electrification is a critical tool that we need to deploy ASAP to stay on a credible path to restrict global warming to 1.5 degrees. It supports the overarching goal of reaching zero emissions from the energy sector by 2050.
Electrification is one of our key solution strategies because other technologies are not developed enough to help us in the transition process.
Carbon management technologies (e.g. CO2 removal), for example, will need to be massively ramped up in the years to come to reach the goal of removing enough CO2 from the air to offset unavoidable emissions. Right now, the technology is still in its infancy and cannot be deployed on a large enough scale. It’s just not commercially viable yet.
We need to deploy the tools and technologies we have today.
And why exactly is this important again? I’m so glad you asked.
The Upside of Plugging In More and More
Electrifying as many processes, vehicles, and buildings as possible comes with a bunch of advantages. Here are a few of them:
🔒 Energy Security and Independence
All countries around the globe import fossil fuels to power their industries. Increasing electricity demand by replacing fossil fuel-based heating systems or engines ultimately reduces reliance on their imports.
Europe experienced in 2022 what happens when oil and gas suddenly become much more expensive. The continent slid into a gigantic energy crisis, dramatically driving up inflation.
Renewable energy sources are much more robust to these supply fluctuations. When sufficient generation capacity is added, the wind and the sun are not going to be weaponized by fossil fuel-exporting autocrats.
When energy supply no longer relies on imported fossil fuels, each country, government, state, and community instantly gets more influence over their own energy supply. They no longer depended on the materials and mood swings of others.
⚡️ Energy Efficiency
Electricity has a higher energy efficiency than oil and gas. Think about a gas vs. an induction stove for instance. Induction stoves are safer, consume less energy, and improve the air quality in your home!
As a result of using more efficient devices and appliances, demand growth for electricity slows down. This buys valuable time to ensure more deployment of renewable sources and grid infrastructure improvements can be realised.
💰 Cost Savings
Higher energy efficiency means lower electricity costs for consumers. When you use less energy, you also pay less. And as we learned in last week’s post, when electricity demand is high, prices are higher. When demand is low, prices are lower as well.
So reducing demand means less reason to turn on those expensive and polluting peaker-plants!
🌱 Healthier Environment
Removing all those polluters from our streets and buildings results in a healthier environment. We will have cleaner air and much less noise pollution.
☁︎ Decarbonization
And last but not least, the most obvious one. The reason why we are even talking about this. Reducing and eventually totally avoiding GHGs.
What Might Slow Us Down in the Process
There is no scenario in which a transition happens without friction. The same applies here.
Speed of Renewables Deployment
One of the biggest challenges is how quickly we can deploy renewable energy sources to meet the additional demand. If we manage to electrify as many processes and devices as possible but DON’T manage to deploy renewable energy sources fast enough, then - you guessed it:
We will just add more dirty energy.
This is clearly not ideal. Hence why electrification is only part of the energy sector solution, along with decarbonizing the grid and improving energy efficiency.
Bottleneck Electric Grid
Another grand challenge is making sure we can transmit all of that extra supply to where it's needed. The electric grid needs to be extensively upgraded to be capable of handling the additional demand.
If we have a lot of green energy supply and a lot of electricity demand but can’t send the electrons where they are needed - you guessed it again:
It is pointless.
Electrification in Motion
Now that we know what some of the pros and cons are, let’s take a look at what that could mean based on some real-world examples.
Transportation:
The no-brainer: take a combustion engine vehicle and replace it with an electric vehicle (EV). The upside here is obvious. Combustion engines are burning gas or diesel. EVs are powered by electricity. The former emits CO2 and the latter does not.
The result? A healthier environment and cleaner air.
Not only do EVs run on electricity, but the built-in battery can act as an electron carrier and backup for when the grid is struggling. And in the long term, EVs are actually cheaper than a combustion engine car.
The gift that keeps on giving.
EVs have been on the advance for a few years now. And the pace is only accelerating from here onwards. The transition is happening faster than many experts had predicted a few years back. Global EV sales are forecasted to reach 66% of all cars sold by 2030. It’s great to see that we are moving faster in this sector than we had anticipated.
This is tremendous progress! But as one ambitious man once said…
We need to keep our foot on the pedal to build on top of the current momentum.
Buildings:
Just heating buildings alone is responsible for almost 50% of all emissions associated with the building sector.
The hot (or cold) topic of the past few years: Heat pumps.
Heat pumps are basically two-way air conditioners. When it’s hot, they move hot air from the house outside and circulate cold air into it. When it’s cold, the opposite happens. The unit is not creating heat, it is simply transferring it. More details about how they work in an upcoming post, so stay tuned!
The example is also pretty straightforward.
Replace your gas furnace or boiler with a heat pump. Heat pumps are more energy efficient than conventional heating units, they emit less CO2, and they help consumers save real dollars on their utility bills.
One point of concern is that upgrading your home heating or cooling system is not equivalent to buying your weekly groceries. These replacements usually take place every two to three decades.
A smart thermostat would combine all the benefits of upgrading to electricity-based heating systems and household appliances. Houses will get more intelligent, more efficient, and more data-driven to optimize consumption patterns and achieve lower costs, lower demand, and lower emissions.
Manufacturing:
The situation in industrial processes is a bit more complex.
Factories can still be heated or cooled with heat pumps and rooms can still be lit with energy-efficient LED bulbs.
The greater challenge is actually replacing heavy industry processes that require extreme heat or heavy machinery. There are just some processes that can’t be electrified yet.
Let’s just look at one crazy fact:
Steel and cement alone are responsible for 10% of all GHG!
That is just wild to me. Both materials are actually quite carbon-friendly to produce on a pound-for-pound basis compared to other building materials. But since we produce just so much of them, they account for one-tenth of all global emissions 🤯.
In fact, concrete, a mixture of water and cement, is the second most consumed material after water.
Part of the problem is that we use processes to produce steel and cement that are centuries-old.
There are ways to produce green steel or carbon-friendly cement today using electric furnaces and direct air capture of CO2. But these are not price competitive with conventional methods quite yet.
Either way, an update is long overdue.
As we continue to research and develop processes to replace carbon-emitting processes today, we need to deploy the current solutions as fast as we can.
So What Now?
Experts estimate that we need to triple our electricity demand (and therefore supply) by 2050 to reach net zero.
The demand will not only rise from electrifying more industrial manufacturing processes, more electric vehicles on the roads, and heat pumps heating homes but also from growing demand in emerging parts of the world. There is a direct correlation between a society’s wealth and energy consumption.
We will only get everyone on board to fight climate change if we can continue to promise upward mobility to citizens around the world.
We now have a good understanding about why electricity demand will certainly grow. And as we explored in today’s post, decarbonizing electricity generation, improving energy efficiency, and electrification are deeply intertwined. They go hand-in-hand.
We also know that the electricity grid is currently a bottleneck. And these types of infrastructural investments usually take longer than we have time for. So what to do?
Three words: Virtual Power Plants
What are they and how do they work? I’ll write about that next time. So hit that subscribe button to not miss out on that gem! And share it with some of your friends and family members.
Do you plan to upgrade to a heat pump or to transition to an EV? Let me know when, where, and how! I’m keen to learn about where to get the best tax credit!
If you want to learn more about where we are at in terms of progress to net zero - check out this comprehensive report from Breakthrough Energy.
It is a wrap for this week.
Stay electric,
Basti