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I’ve been having a recurring electric dream for about 5 years. I’ve wanted to start a new market research agency dedicated to household electrification. Last spring, I finally took the plunge and formed a new business which has been operating under the radar for over three months. We’ve got some amazing data and are nearly launch-ready. But recent events in the Med and at home in the UK, have so-frustrated me that I wanted to break cover pre-launch, and officially complain - or at least set out my thinking, given there’s literally no one to complain to! And while I’m at it, I want to use the occasion to put out a call for independents interested in electrification – other electric dreamers if you will – who work in market research, marcomms and renewables, to get in touch (more on this at the end).
My frustrations were crystalised last week when I saw a front page in The Times. It featured a photo of tourists in Greece escaping wildfires. The picture was sandwiched between two headlines: “Airlines scramble to help 19,000 flee in Rhodes” and, “Tories retreat from green policies to woo voters”. No irony was intended. While the government’s ‘retreat’ after the Uxbridge by-election was more about particulate levels than CO2, they now seem to be accelerating, full throttle, in the wrong direction, with reports today of them being about to issue up to 100 new drilling licences in the North Sea.
The planet is officially boiling and needs to rapidly decarbonize. In practice that means we need to electrify everything. This once seemed impossible but it’s now looking feasible thanks to a revolution in energy production and usage which is, at its heart, about the price of renewables. Offshore wind costs have fallen 73% since 2012 while solar and batteries have dropped 80% since the same date. The spot electricity price in the UK is currently about $90 per MWh. Before Russia invaded Ukraine it was around $60 per MWh. Electricity from PV solar (globally) is currently around $40 per MWh and according to RMI it is forecast to reach $20 per MWh by 2030. Renewable prices will continue to fall while hydrocarbons will remain within traditional ranges. This is re-shaping demand. Fossil fuel usage is already declining in Europe and will soon start to decline everywhere. And the prices will continue to drop because of the unprecedented innovation in the sector. Investments in renewables are eclipsing hydrocarbons by a ratio of 1.7 to 1. Solar alone currently attracts $1bn in capex every day.
The journey to total electrification won’t be easy: some industries will be difficult to decarbonise, and massive investments will be needed. But the shopping list is getting clearer: we’ll need more renewable power generation; more international interconnectors; more high voltage DC transmission lines; more grid capacity with faster permitting and planning consents; we’ll require smarter grid usage; more storage assets both centrally (e.g., hydro, grid scale battery storage) and locally (e.g. home batteries, thermal storage, vehicle to grid); we’ll need to digitalize electric assets; we’ll need new control systems allowing automated demand response as prices fluctuate. The list of change goes on and on. But all these technologies exist today and are either fully- or nearly fully commercialised. This is not some trippy daydream; it’s a realisation that’s driven billions in sovereign investments including America’s $500bn IRA, the EU’s Green Deal Industrial Plan, the vast transition infrastructure and renewables funds from the likes of Blackrock, Brookfield, Blackstone and Macquarie. I believe bulk of the hydrocarbon sector will start to melt away over the next few decades. Their boost after the invasion of Ukraine will be seen as a short-term fillip.
In England we don’t see too much physical evidence of the changes, beyond some strong investments in offshore wind (a technology that is intentionally out of sight and consequently out of mind). For example, solar in the UK is behind the curve. A recent UK Prime Minister called it “a blight on the landscape.” We’re not even seeing much growth in domestic rooftop installations. But it’s happening elsewhere: pop over to Holland and you’ll see significant rooftop arrays every few houses. China installed nearly 100GW of solar in 2022 (for reference, a typical nuclear power station might be rated at 1GW). China’s installation programme is accelerating – they’re currently on course to hit their 2030 target of 1,200GW of renewable energy capacity, five years early.
The quality of public debate around renewables in the UK is risible. Perhaps it’s because we’re home to two oil majors and the government feels beholden to defend them, and their tax revenues. But hydrocarbon’s best interests are our worst interests. While they present themselves as changed and in some cases greener than the average sustainability charity, in truth the sector spends 90% of its investments on hydrocarbons and only 10% on renewables. The ‘saviour’ technology of carbon capture and storage is problematic because it only adds cost to the current energy ecosystem, can be leaky and despite being around for decades has never really been adopted widely: there are currently just 30 schemes in operation globally, most of them test schemes. But the hydrocarbon guys are defending annual revenues of $5 trillion, and will continue till the bitter end. The main way they do this is by lobbying hard to sow confusion on climate science and undermining renewables. How often have you heard folks ‘reassure’ you that the jury is out on ‘climate change’, (the industry’s preferred, neutral-sounding term for global heating/ boiling)? Or that the hydrogen car or hydrogen boiler look like better bets than EVs and heat pumps? Or that batteries are more environmentally damaging than oil? None of these commonplace assertions are true – yet all get quietly promoted by hydrocarbon businesses. Despite their product being the cause of our woes, the deliberate misdirection they’re funding has a terrible impact on the quality of public debate which in turn has a catastrophic impact on consumer attitudes in the UK and globally, covering up bad governance and causing confusion and inertia.
But the source of the inertia goes well beyond hydrocarbon businesses. Think about the value of all the assets in the world that can only work with hydrocarbons: home and commercial boilers, cars, vans, lorries, most steel and concrete plant, most of global shipping and aviation. The resistance to fast electrification comes from anyone who owns one of these assets and doesn’t fancy the electric alternative when equipment reaches the end of its productive life. I’m talking about you or me – in both our home and professional lives.
The journey to a fully electrified world will happen regardless of Big Oil, government policy, or even consumer attitudes. The price differentials will ultimately dictate that. But the question is, how fast can we do it? Because we need to start tapering our use of hydrocarbons now, not in the 2030s or 2040s. Will cautious, hard-pressed consumers who are used to the drip-feeding of hydrocarbon-funded myths and owners of cheap to buy (but expensive to run) boilers, cars and ovens be willing to embrace an electric future? Professionally, I’m interested in the domestic sphere, in this very point: the decision-making process of householders looking to replace their cars and boilers, etc. Around decisions concerning rooftop solar and batteries, home investments in insulation, etc. Currently things are happening slowly. Very slowly. Despite the meteoric rise of Tesla and BYD, EVs have just a small (if growing) share. But this winter, nearly every gas boiler that breaks down will be replaced by another gas boiler rather than a heat pump. And most new build homes will have gas installed from the start. That’s a further 15 plus years of CO2 emissions, that we can’t afford and that could have been avoided.
It’s time for some good news. Today, there are huge numbers of people and organisations involved in climate justice, decarbonisation, and the transition to total electrification. They have a lot going for them: electricity is an inherently more efficient way to power transport and heat than using hydrocarbons. There is the willing, mainstream investment community. Electrification has the backing of science, the smartest engineers in the room, and a decent portion of government policy behind it. But to what extent can these good actors bring about change among consumers? How can they counter deliberate confusion, inherent unwillingness to change and schizophrenic government policies? Well, they can. And they’ll do it most effectively in the same way that marketers and policymakers encourage all change: by tailoring their offer based on deep consumer understanding. Price is on their side. Logic is on their side. Young people are on their side. The climate is on their side. And improved consumer data will soon be helping them too. Watch this space...
Postscript - If you’re a market researcher or work in marcoms or renewables and are interested in what I’ve been talking about – market research to shine a light on consumers and the transition to the electrified future - do please get in touch. Reach out in the Comments or message me directly. Thanks!
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