Why $5 trillion is my new favourite number
Relying on clean energy means we need a big investment in energy storage – but the numbers are daunting, writes Alan Finkel.
My new favourite number is US$5 trillion. It emerged from a back of the envelope calculation. Batteries, such as the new Tesla Powerwall, are an excellent solution to the problem of storing renewable energy. We need that storage for times when there is no wind and no sun. But how much storage does the world actually need?
It turns out to be a lot.
My recent calculation was sobering. Imagine if you took all the lithium-ion batteries produced in 2014 for phones, laptops and cars and instead used them to provide backup for the global electricity supply. They’d keep the world running for just nine seconds!
That’s not much use. To cope with the winter doldrums (when you face consecutive cloudy days with little or no wind) you would ideally want to have 10 days’ backup, a scale up by a factor of 100,000.
Assuming that the price per kilowatt-hour of battery falls to below US$100, US$5 trillion is the dollar value of batteries that we would need to manufacture each year for 10 years in order to ensure 10 days of battery backup for the global electricity grid.
That’s taking into account that manufacturers such as Tesla, LG and Samsung would build giant factories and drive the cost of batteries down sharply.
Yes, $5 trillion sounds daunting. But the energy industry is accustomed to such figures.
In January 2016 Bloomberg New Energy Finance reported that global investment in new clean energy is expected to grow to more than US$5 trillion by 2030, having reached a record US$329 billion in 2015.
And in May 2015 the International Monetary Fund reported that global fossil-fuel subsidies – money forked out by governments to help the industry – are dramatically higher than previously estimated, sitting at US$5.3 trillion (6.5% of global GDP) per year.
When a problem is big, all the more reason to invest heavily in the solution. And the investment has to happen at scale.
The roll-out of storage systems has already begun, but now is the time to massively ramp up the effort. Arguably subsidies given for generating electricity – whether through renewables or fossil fuels – would be better shifted to nurturing technologies for storing electricity.
Arguably subsidies given for generating electricity – whether through renewables or fossil fuels – would be better shifted to nurturing technologies for storing electricity.
Of course, there is never only one solution, and battery backup will operate alongside hydrogen storage, pumped hydroelectric storage, solar thermal storage, and high-voltage transmission lines to move electricity from windy regions and sunny spots to where it is needed.
In addition to meeting the problem head on, we can reduce its scope. We need to design our vehicles, homes, offices and factories to use less energy in the first place. We need to do this at scale throughout our global economy, not just in a few showcase buildings.
Not everything can be scaled to the desired capacity. Even if we put solar on every suitable dwelling, we would only produce about 8% of our electricity requirements. On the other hand, locating large-scale generators in remote areas could deliver a limitless amount of solar and wind energy.
Every year the rate of deployment of solar energy has exceeded expectations. Like Moore’s law for computer power, the amount of solar deployed worldwide has doubled roughly every two years for the past two decades. If it continues for another two decades, we will be producing all the energy we need from the Sun.
Numbers like $5 trillion are not a reason to be daunted. They help us understand the scale of the challenge and are a call to arms.