During the recent two-day EMANZ Conference that I attended in Auckland with our Energy Manager, Tânia Coelho, I was struck by the surge of genuine enthusiasm for and commitment to renewable energy from the diverse group of Energy Managers and others who attended.
In this regard, our country is in the fortunate position that 85% of our electricity supply already comes from renewable energy, mainly hydro-electricity, geothermal and wind-generation based.
Successive National and Labour Coalition Governments have made a strong and binding commitment to New Zealand meeting its global carbon emission reduction obligations.
To achieve these commitments in practice, New Zealand will need a sustained and integrated programme, to utilise rapidly evolving technology in this area.
The following guest post by James Flexman, Wholesale Markets Manager, Mercury highlights some of the excellent work in the inter-related areas of solar power and battery storage, that their company is championing.
Innovative Battery Technology Has Potential to Disrupt Fundamental Aspect of Electricity Market
The crazy thing about the electricity market, the thing that sets it apart from almost all other markets, is its immediacy. Electrons are the ultimate NOW product. They’re right here, right now, turn on the switch, see the light.
New Zealand’s sophisticated spot market and all its intricacies have been developed to work with electricity’s time-bound quirk of physics and deliver reliable, affordable and mostly renewable electricity to Kiwi homes and businesses.
But now this non-negotiable is being challenged. There’s a ‘disruptive technology’ on the scene that, like a kind of Timelord, has the potential to substantially diminish the impact of time and timing on the generation, dispatch and ultimate use of electricity. We’re talking about the exciting new opportunity created by super-batteries that can charge up with electricity from the grid and store it, before being re-dispatched into the electricity market.
Grid-Connected Battery Research & Development
Last week Mercury launched its own 1MW/2MWh battery storage facility at our R&D centre in South Auckland. For context 2MWh of electricity could power 400 homes for a winter evening peak for 2 hours. On its own, it’s not going to change the world and it’s also definitely not for the short-term gain. The rate of return based on trading 2MWh of electricity in and out of the national grid means it would take many years to break even on the $3 million investment.
Being directly connected to the grid, and able to send energy into the market like a little 1MW power station makes this battery a Kiwi first. And there’s potential for much more.
So what are we expecting in the medium to long-term from this pilot?
The clue is in where the battery has been installed – in Mercury’s R&D Centre in South Auckland. For us, it’s all about the ‘R’ part of ‘R&D centre’: Research. And at a time when the Government is calling for greater investment in R&D in this country, I’d like to do a quick shout-out celebrating the constant ongoing investment in R&D undertaken by Kiwi businesses every day of the week.
The battery is a pilot, a toe in the water, part of the New Zealand electricity market’s ongoing exploration of battery storage as the technology evolves, to work out what part batteries will play in the energy generation eco-system of this country. We believe there’s potential here. Reflecting on the first generation in New Zealand (for power, not gold processing) at Reefton, it was a 20kW generator – and look what hydro generation has grown to and its role in our economy now.
Battery Pilot a Milestone for Innovation
And it’s a true innovation. Mercury is the first company in New Zealand to install a battery system that is directly connected to Transpower’s high voltage national grid and to use the battery to participate in both the energy and reserves markets. Others have explored other ways that battery storage could interact with our current energy landscape – Counties Power together with Genesis, Vector and Alpine Energy have all commissioned batteries that can participate in the energy market, but these are also used to manage local networks better.
Being directly connected to the grid, and able to send energy into the market like a little 1MW power station makes this battery a Kiwi first. And there’s potential for much more. The storage facility is on the site of Mercury’s mothballed thermal power station next door to Transpower’s Southdown switchyard which is capable of moving over 100MW in and out of the grid.
However, despite the facility being able to accommodate battery storage of this size (similar to the much publicised South Australian battery project that Tesla committed to (and did) build within 100 days), trading at this scale will only start once the R (Research) has turned to D (Development). But once this happens, (when battery technologies develop further and costs of large-scale batteries drop), the lessons we have learnt from our investment in 2018 will give us a fast start to capitalise on this exciting opportunity.
Grid-Connected Battery Research May Lead to Paradigm Shift
There is also some other work that Mercury has been doing that will benefit us as well as all future battery traders. This work (which also involves Transpower and the Electricity Authority) is addressing current regulations that need to be adjusted to accommodate the participation of battery stored electricity in all aspects of the NZ reserves market.
The use of large-scale batteries to store energy from times of lower usage and make it available when it’s most needed could make a real difference to the way power is supplied to homes and businesses over the coming decades, particularly as populations grow. At scale, the lowest parts of the demand curve will be raised as electricity will be generated and stored in batteries and the highest peaks of demand will be offset by electricity being re-dispatched from the batteries back into the market.
In a future world, when the investment that companies like Mercury are making in R&D has led to large-scale battery storage in New Zealand, this flattening of the supply-demand curve should lead to more efficient use of current generation capacity.
We see all these future developments as great reasons for our research investment now. And we’re proud to be pioneers in this field that has so much potential to change the New Zealand energy market to everyone’s benefit.
See how the direct grid-connected battery will work in New Zealand’s energy eco-system
I joined the energy industry 11 years ago this week, the time has flown by and a lot has changed since 2007. Technology has been the driving force and is currently revolutionising the energy market. While the fundamental mechanics remain similar, the way in which pricing is determined for end users (customer) has evolved rapidly and the future only suggests more change with Solar and other distributed generation becoming more cost-effective, battery storage, electric vehicles, blockchain peer to peer energy trading through to the potential of multiple retailers supplying energy to a single ICP connection.
The Mysterious Case of the Power Factor
Power Factor remains somewhat like a dark art in the industry, it’s a small charge often hidden on one line of your power bill, there is no graphical data on the bill that tells you about it and it often sneaks past the accounts payable or finance team as they just see the whole invoice cost and when it is due. Energy Retailers typically know very little about it if questioned, the common line is that “it’s a pass-through charge that we don’t control, you need to talk to your network.” Which is usually met with, “you need to talk to your energy retailer” from the network.
For the basics on power factor, my article What is Power Factor is recommended reading.
Power Factor Pricing
Some distribution companies (local area electricity network owners), mostly in the North Island, have been charging large commercial and industrial customers reactive energy charges for some time. These networks have typically centred around the central North Island, Hawkes Bay, Bay of Plenty, Waikato and Auckland. While the networks do apply this charge differently, typically it averages out to be $7 per reactive kilo-volt amp per month ($7/kVAr/mth). In addition to this, some networks charge a peak kVA demand charge as well and if power factor is low during peak demand intervals customers are hit with a double whammy as a poor power factor inflates the kVA reading.
In the last couple of years, there has been quite a bit of discussion within the market from distribution companies about the way in which they price and how they will maintain large network infrastructure in a distributed generation environment. For the most part, the bulk of all electricity customers pay a cents per kWh charge to distribution companies as a way for them to recoup the cost of maintaining the network. This pricing structure is simple, which meets the requirements of residential and small business customers as it is easy to invoice and easy to understand. However, this way of charging was designed before smart metering, before the digital revolution even. The smart meter rollout across the country is by and large complete, which opens the door to time of use pricing in order to try and drive better usage behaviour from customers.
Benefits of Demand-Based Pricing
While time of use capacity and demand-based pricing has been a staple of some distribution companies for large commercial and industrial customers, it is likely that we will see this type of pricing extend to medium and small commercial customers in the future. This type of charging will assist the network operators to ensure the security of supply as more customers install solar panels and batteries throughout the grid, reducing the amount of volume (and revenue generated from variable usage charges) being transmitted throughout local area electricity networks.
We are already seeing this happen as PowerCo Western (New Plymouth) has introduced a nominal power factor charge for small/medium time of use metered customers in the last couple of years. This mirrors the way in which Vector (Auckland) re-introduced power factor charging in 2010, pricing was gradually increased over a period of 3 years allowing time for customers to see the power factor charges appearing on their invoices and make steps to rectify the issue. WEL Networks (Hamilton) recently introduced nominated capacity charges for low voltage customers where customers are required to set their expected capacity requirements, like the gas industry’s maximum daily quantity, if the customer demand exceeds the nominated capacity then expensive excess demand charges apply. WEL also recently changed from charging peak kW demand to peak kVA demand, further underlining to customers that they need to keep tabs on their power factor or face paying more on the monthly power bill than they need to.
Power Factor Doesn’t Have to be Mysterious
In large measure, power factor is a relatively simple fix if you know who to talk to about it. It can be one of those easy savings made without having to change behaviours, train staff or make a structural change to the way in which you do business. There are other benefits too, such as increasing the effectiveness of energy requirements and negating the need to upgrade supply if you are short on capacity. It can also improve the lifespan of sensitive computer-controlled equipment and improve harmonics. While it can seem like a bit of wizardry is required to rectify power factor issues, those in the know don’t need a magic wand, it’s pure science.
In this exclusive new series of articles, I explore the electric vehicle (EV) options for specific business uses. We are grateful to the car companies* for supplying their EVs to test-drive, charge and parade around Auckland.
Part 1: Evaluating the BMW i3 electric vehicle
The reality for all businesses is that electric vehicles (EVs) have to deliver on the promise of performance, economics and relevance. Many business vehicles never leave town. Whether they are driven from business to business by busy salespeople or thrashed by couriers, what is required is a car that is reliable, fuel-efficient and a bit good looking.
That’s a tough call, up against an existing petrol range of cool kids like the Suzuki Swift, Honda Jazz and VW Polo: especially when new, entry-level petrol models sell for around $20,000 and the i3 costs about $75,000.
Price is not the only factor though.
To test the distance range capability of the i3 I arranged meetings involving a 120km return trip across town: Drury to Albany at peak hour. With the car’s stated range of 180km, I have to say that on my first trip I was not filled with confidence. I wondered whether the i3 could take on the challenge of sitting in that giant carpark known as Auckland’s motorway system, without my ending up on the side of the road, with a flat battery and subjected to the shaking fists of irate rubberneckers.
At the end of that day, I had travelled 120km at the speed of a lame greyhound in nose-to-tail traffic yet ended up with a remaining range of 127km. So, to travel 120km I used 53km of range. This sounds impossible, but the i3 cleverly uses the stop-start acceleration and braking to recharge its batteries – and there was lots of that going on.
Lookin’ good: what’s great about the BMW i3 electric vehicle
The two-door BMW i3 looks sleek, Euro and sophisticated. The software features are very cool, guiding you to the nearest charging station and, if required, planning your route to ensure you don’t end up using the optional two-cylinder petrol backup engine to limp home. The auto-park feature is also excellent, if a little scary the first time you take your hands off the wheel and trust the computer.
Charging it in my garage overnight was a breeze – just plug it into a three-pin socket and walk away. Just as easy was the 30-minute rapid charge at Counties Power in Pukekohe. I literally plugged it in, walked across the road, ordered and drank a cup of tea and returned to a vehicle recharged for free!
I mention free fast chargers and easy home charging for context. The i3 is energy efficient, saving masses of money on fuel, especially since the new local fuel tax had just kicked in. On average each week I spend around $150 on petrol. In the week I had the i3 my electricity bill went up by $10 while my Commodore sat sulking at home consuming no petrol. On an annual basis that’s a fuel saving of $7280. With residual value and fuel savings the economics of an EV look pretty good.
Money savings on petrol stack up quickly.
Uh oh: problems with the BMW i3 electric vehicle
On the downside, the i3 handles like it is skidding on marbles. Maybe it’s the unusually large wheels, designed to generate more energy, but I never felt comfortable behind the steering wheel in this regard. Road-holding was fine at lower speeds around town but very disconcerting on the open road.
For such an externally large vehicle there is not a heap of room for back seat passengers or for luggage in the boot. Space wise it felt like a reverse TARDIS – bigger on the outside than on the inside.
Overall the i3 appears as if HQ in Germany identified the need to make an electric vehicle but gave the job to a bunch of petrol heads who hadn’t signed up for building a hippy, nippy town car.
BMW: for $75,000 you can do a lot better. Having said that, the first internal combustion cars weren’t exactly things of beauty either.
I gave it a solid 6/10.
*The BMW i3 was kindly provided by BMW and Contact Energy. For detailed specifications visit bmw.co.nz.
Until now, articles on the Total Utilities website have always been of direct relevance to the utility markets where we have operated since 1999.
In this case, we have included Jonathan Eriksen’s latest quarterly investment commentary below because it puts in wider New Zealand and global context the macroeconomic trading conditions that impact directly and indirectly on the utility providers in New Zealand.
I have an economics background and have known Jonathan since I emigrated to New Zealand 25 years ago. He is one of the leading actuaries in the country and his independent investment advice track record is second to none in my opinion.
The relevance of this advice to future trading conditions in the local ‘energy’ sector is very clear cut. Global energy market trading conditions are becoming more difficult due to well-publicised political factors including but not limited to the ebbs and flows of the Donald Trump Presidency. The New Zealand dollar exchange is weakening versus the major currencies overseas. We have a small, remote niche economy which has nonetheless been consistently successful over the past 20 years.
Focusing on the Liquid Petroleum Gas (LPG) side of ‘energy’, we have an energy source which is non-renewable but which is far ‘cleaner’ than other non-renewables like coal and diesel. Global demand for LPG is growing. There is a great opportunity for LPG to replace coal and diesel locally during the coming 30 year period. However the Government’s recent ill-advised (in my view) prohibition on all new offshore oil and gas exploration will inevitably constrain future local LPG supplies and hence force us to import more. This in turn will increase the proportion of imported LPG (particularly in winter) and hence increase our exposure to LPG price hikes driven by global political and economic forces in general and the Saudi Aramco Index in particular.
Investment Returns
The NZ Consumer Price Index rose to 1.5% for the one year to 30 June 2018. This was mainly driven by housing, construction, and food price increases. Inflation over the past ten years fell slightly to 1.6% p.a.
A number of funds within the Aon Master Trust were added over the quarter, raising FUM by $45 million. Total Master Trust FUM increased by $280 million over the quarter. Funds with a higher proportion of growth style assets (eg shares and property) had the best investment returns for the year to 30 June 2018.
The one year weighted average return for all Master Trust Growth funds was 10.6%; Balanced funds 8.1%; and Conservative funds 5.0%. Single Sector Aggressive funds returned 12.0% over the past year on a weighted average basis, while Defensive funds returned 1.8%.
The Trump administration demands to end all imports of Iranian oil have put pressure on prices as some key buyers, namely India, South Korea and Turkey look to source oil from elsewhere. The effects of the restricted supply pool are evident with oil prices still rising. However, it is unlikely that major importers will be able to switch suppliers entirely – at least by the proposed deadline of November.
Here in New Zealand, we are seeing our dollar depreciate. International trade uncertainty is one catalyst of this. During times of uncertainty, demand for riskier assets diminishes and the Kiwi dollar is viewed as a relatively ‘risky’ currency compared to many larger economies with more liquidity in their currency market from more transactions. This month, Reserve Bank Governor Adrian Orr released a statement that the OCR would remain unchanged at 1.75%. Also given acceptable inflation and employment levels, we can expect growth-supportive monetary policy for some time.
The effects of oil prices, petrol taxes and a weaker currency will flow through to domestic prices. CPI inflation is expected to rise to meet the target midpoint of 2%. However, escalating trade tensions between the US and China are beginning to give investors cause for concern as they could lead to even higher inflation disrupting the global economy. Energy market players are looking at rate hikes by the US Federal Reserve to quell this inflationary pressure. The ripple effect will eventually hit us, resulting in the RBNZ raising the OCR.
The expectation of higher short-term interest rates is supported by the US 10-2 yield spread curve which is at its lowest point since the 2008 recession. Bond investors are becoming increasingly more comfortable accepting lower yields for longer-term bonds. Historically, significant troughs in the yield spread have been followed by an economic slowdown. This was the case in both 2001 and 2007 (although it is not always the case).
The past does not always offer accurate predictions of the future, but there is some evidence in support of less optimistic economic forecasts going forward. The changes in investor sentiment and outlook over this calendar year are particularly relevant.
Last year the world enjoyed synchronised growth, low inflation and stable low interest rates which supported economic expansion. Oil prices below $60 a barrel was considered sustainable and reasonable.
This year the price of Brent Crude has reached $75 a barrel, interest rates in the US are projected to continue to rise steadily and inflation is starting to rise. This is worsened by the beginning of trade wars which can only increase consumers costs. They also raise geopolitical tensions and may derail global trade.
In this current climate of low interest rates and weaker currency in Australia and New Zealand, overseas buyers have pushed up share prices. Our equity market offers attractive dividend yields at relatively lower price to earnings ratios. In other words, you get more bang for your buck. The inflow of foreign capital will help companies grow while people are buying. Conversely, it would be potentially harmful to equity markets should they sell their positions. However domestic inflows from the SGC (compulsory Super in Australia) and KiwiSaver are also supporting local markets.
KiwiSaver
Over the past few years funds with a higher proportion of shares and property have seen some stellar returns. This has led to a number of investors who are invested in the more conservatively invested funds to ask: why their returns are so much poorer in comparison; and whether they should switch to a more aggressive style fund to begin reaping these same rewards. Our response is this: hindsight is a wonderful thing! We suggest to investors who have invested more prudently over the past few years to avoid a switch to growth options now. There would be nothing worse than jumping into a fund with a riskier asset allocation profile, after years of investing cautiously, to find that the markets take a dive just as they make the switch. After 30 years of falling interest rates and almost a decade of rising stock markets a correction will certainly happen. The only question is whether it’s this year or next?
This excellent article in Energy News says it all for me. A reality check which deserves to be published in the mass media!
Unlike New Zealand politicians who are only interested in scientific research that validates their particular view of the world, this acclaimed Cambridge University academic knows what he is talking about and has no ideological axe to grind on Climate Change.
– Richard Gardiner, Managing Director, Total Utilities.
The following article was originally written by Gavin Evans and published on Energy News
Michael Kelly has nothing against walkways and cycle paths. Public transport also has a lot of benefits, but none are great options for New Zealand to be looking at as emission reduction measures, the UK-based technologist says.
There may be a lot of arguments for building a rail line from central Auckland to the city’s airport but it won’t do anything material for emissions, he told regulators and industry executives in Wellington last week.
New Plymouth-born Kelly, Emeritus Prince Philip Professor of Technology at the University of Cambridge, is frustrated by the absence of intellectual rigour in the responses being proposed to climate change.
The world does not have unlimited resources to throw at the problem and — as an engineer — he wants to see initiatives and options developed that deliver the biggest “bang for the buck.”
What he sees instead – here and overseas – are wish lists.
“There is so much of what I regard as a lack of engineering integrity in the debate, which really actually makes me angry and sad.”
Real action on climate change
Kelly wants to see action taken against climate change – but he believes the cost, the time-scales involved, and the uncertainty of some of the science – favours more of a focus on adaptation than mitigation.
For New Zealand the Productivity Commission’s focus on afforestation of marginal farm land is compelling and should be the main focus of further studies, he says.
The next priorities should be on research and development to reduce methane emissions from stock, and ways to increase exports of processed wood, thus extending the duration of emissions captured in timber.
But many of the other recommendations of the commission, and most of those of the Royal Society of New Zealand in 2016, are “futile gestures” he says. They are either too costly, unworkable, or – in the case of increasing renewables in power generation or reducing domestic coal use – already happening without much intervention.
Promoting walking, cycling and use of public transport are all positive for other reasons, but the emission reductions are small and only make sense in very dense cities. Kelly estimates the cost of the carbon saved here from such measures at more than $500 a tonne.
Auckland – Photo by Bernard Spragg
Kelly notes that in densely packed Tokyo, 90 per cent of all journeys are by public transport. In New York that figure is down to 55 per cent; in Los Angeles – 10 per cent.
“Which of those is Auckland most close to?”
Urban sprawl similarly reduces the convenience of walking and cycling for much of the community.
“As soon as you have a very large city, walking and cycling becomes a minority interest,” he told the seminar hosted by Spindletop Law in Wellington.
“I don’t mind putting cycleways and anything in for other reasons – but if you say you are doing it to reduce carbon emissions then you are just burning money.”
Social change
Kelly’s fourth recommendation for New Zealand – surprisingly – is a “serious national programme” to change community attitudes to profligate consumption.
Climate change, he says, is being driven by massive population growth and urbanisation in developing countries.
Anything New Zealand does is almost irrelevant at a global scale. He likens it to digging a hole with a spade and having people with wheelbarrows fill it in behind you.
But Kelly says individual choices do matter and social mores can be changed at relatively little cost.
He cites the change in attitudes to drink-driving, smoking in public spaces and unprotected sex since he left these shores for the UK in 1971.
“What we have got to do is get the idea that profligate use of resources is deeply anti-social.”
He’s not talking about banning cars, although greater aerodynamic design would greatly improve their efficiency.
But what if community attitudes changed so that people jeered at Lamborghinis and their owners instead of leering at them?
“We wouldn’t, as we do in Cambridge now for six weeks every winter, have this huge ice rink with huge pumps, making sure the ice stays frozen so we can go skating in Cambridge over Christmas.
“We wouldn’t do that sort of thing if we had an attitude that using energy for profligate use was anti-social. That is probably the biggest single thing we could do.”
People central to climate change
And at its root, the climate change problem is people – the growing world population and what it takes to lift those in developing countries out of poverty. Trying to do that without increasing emissions brings you head to head with the declining energy return that investment in renewables delivers – relative to energy-dense options like hydrocarbons and nuclear.
The day after Kelly’s presentation, the International Energy Agency reported on progress on the UN’s Sustainable Development Goal 7 – universal access to reliable, affordable, sustainable, modern energy by 2030.
While electrification rates in Africa – where 600 million live without power – overtook population growth for the first time last year, progress on all four of the UN’s targets are lagging.
At current rates, 8 per cent of the world’s population still won’t have power in 2030 – an improvement from 13 per cent in 2016. Lack of access to power, LPG and natural gas means that in 2030, 27 per cent of the world’s population still won’t have access to clean cooking – compared with 41 per cent in 2016.
And renewables – including ‘traditional’ use of biomass – will only account for about 21 per cent of final energy consumption in 2030, up from 17.5 per cent in 2015. Less than 10 per cent of demand that year was met by ‘modern’ renewables.
“Progress has been challenging, particularly in developing countries where energy consumption continues to grow rapidly, and modernising economies substitute fossil fuels for traditional uses of biomass,” the IEA said.
“Despite major investment, it has been hard for renewable energy expansion to keep pace with growth in energy demand.”
It’s a conundrum and at a scale few recognise, Kelly says.
China, where 600 million people have gained power or shifted to towns and cities in the past 15 years, already accounts for a quarter of the world’s emissions.
The belt and road project – a highway and high-speed rail link to be built between Beijing and Vienna during the next 20 years – will lift about two billion people along its route out of poverty, Kelly says.
The project, also involving development of 700 coal-fired power stations, will treble China’s emissions by 2050. By that stage emissions from China and its broader interests will be 500-times New Zealand’s current emissions.
Kelly struggles with what he calls New Zealand’s “gung-ho” determination to take local action on climate change when “it isn’t going to make a blind bit of difference.”
If “precious New Zealand dollars” are to be spent, they would be more effective funding a programme to get people in China to raise their central heating thermostats by 2 degrees during summer.
“What you would save there would dwarf anything that you do here.”
China may be leading the world’s investment in wind and solar, but its use of coal will fall only slightly during coming decades.
And that just reflects the scale of energy demand growth and the relatively low energy return from some renewables.
Global energy demand increased by about 40 per cent during the past 20 years and could increase by the same percentage in the next two decades, Kelly says, citing BP projections. And while renewables and gas are expected to show the greatest growth, by 2035 coal would still be the world’s third-largest source of energy after oil and gas.
Kelly says New Zealand – and Norway – are rare in that they each have low density populations and a lot of hydro – a renewable that delivers a relatively high energy return on the cost required. New Zealand also has geothermal.
Most countries don’t have those options. And the wind and solar that is being developed around the world has a far lower energy return on the energy used to build them – compared with more energy dense hydrocarbon options, nuclear or large-scale hydro.
It’s an issue recognised by others. Last month, HSBC specifically included coal-fired generation development in Bangladesh, Vietnam and Indonesia among its permitted coal-related investments. To do otherwise would be to ignore the real energy needs of those communities, it said.
Archival photo of Meremere coal-fired power station, New Zealand – Photo by W. Cleal
Kelly says people tend to look at the scale of China’s investment in renewables as some sort of “beacon of hope” without also recognising its on-going investment in coal, gas and nuclear.
“So this idea that somehow around the corner we are going to be having a new age of renewable energy is just simply nonsense.”
“Renewables do not come close to constituting a solution to the climate change problem for an industrialised world.”
Kelly observes that about 40 per cent of the world’s emissions still come from the smoke stacks of coal-fired power generation. Currently that CO2 can be extracted at a cost of about USD $60 a tonne to USD $90 a tonne. By 2025 those figures could be down to USD $25 to USD $40.
Promoting other options costing five to 10-times those figures is simply “burning money,” he says.
But all these initiatives also come at a cost to energy productivity and Kelly is concerned people haven’t thought about the long-term consequences of that.
Energy determines quality of life and intervention should only be pursued in the clearest of cases, he says.
And the energy system accounts for about 9 per cent of the global economy.
CO2 extraction reduces the efficiency of coal-fired plants by almost a fifth – taking their performance back to 1960 levels.
But the impact of lower-returning renewables could be more stark.
Productivity decline?
Kelly cites studies of Spain’s investment programme in solar in the 2009-2012. Even assuming free panels, the projects over their lifetime will deliver only five-times the energy that was used to build and operate them.
That’s in contrast to the 10-times return from a coal-fired plant, or 15-times for a gas-fired plant in the UK.
Kelly says there is an established correlation between a community’s energy productivity and the health, education and cultural benefits it can provide.
“The world is running on 11-1. We don’t notice this at the moment, but once solar energy becomes a large fraction of the total energy mix this is going to show up as a lack of productivity and nobody seems to discuss that.”
Another factor that may temper the take-up of renewables is the expectation that more than half the world’s population could be living in dense megacities by 2050.
In those communities, rooftop solar can’t deliver enough energy for all those dwelling in high-rises. Land surrounding cities like Beijing, Hong Kong, Singapore, Moscow, Rio de Janiero, London and Calcutta may also be too valuable for agriculture to give it up for solar arrays and wind turbines.
Kelly is optimistic new food technologies – like aeroponics – will ensure that the world’s megacities are self-sufficient for at least basic food stuffs.
They are also where the world should put its focus for emissions reduction, but he’s not sure renewables can play a big part in that.
He believes nuclear energy and fossil fuels will remain the mainstay for them. Carbon capture and storage may be an option, but it does reduce generation efficiency, its development is slow and it remains unproven at scale.
Given the impacts of climate change have not been as severe as some predictions during the past 20 years, Kelly says his “greatest hope” for the megacities, and the globe generally, lies in a demographic change underway for the past 40 years.
Everywhere where there is universal primary education and more people live in towns and cities the local population is in decline – where the average number of children per family falls below 2.1.
Kelly notes that in Italy the rate is down to 1.2 and in Germany 1.4. In Botswana and southern India the rates are nearing 2.2.
The UN is picking the world population to reach nine billion by 2050. But the rate of growth is slowing and in some models the range of potential outcomes includes a decline soon after.
“The chance is that in 2150 the population will be seven billion and going down – that is the answer.
“The change in the world demographic now is going in our favour,” Kelly says. “It’s a matter of getting through the next 30, 40, 50 or 60 years.”
Data protection is the process of safeguarding important information from corruption, compromise or loss.
Many of us will have watched with some concern the ongoing reports of hacking, ransomware (where a hacker locks or encrypts your company data and demands a ransom before releasing it) and data theft by outside agencies.
IT Security Threats Pose New Risks for Owners and Directors
As owners and Directors of businesses in this country, we cannot ignore the real risks presented to our companies by theft or destruction of company data. Stricter laws governing Director’s responsibility make risk management and mitigation very personal.
Henri Elliot, Founder and CEO of Board Dynamics commented to me recently, “It is essential Directors take a strong position on all forms of risk. Risk should be on the Board’s agenda each month and should be appropriately categorised. For example – is a staff member taking a list of clients a company policy issue? An HR issue? An IT security issue? In truth, it is all of the above and Directors need to take a holistic approach.”
Security Risks Are Mainly Internal
The scary thing when we consider the risks around IT is that it is not the sneaky Russians or the depraved teenage geeks who represent the real threat to most businesses. In fact, it’s often quiet Jane from Finance or good old reliable Mac from Sales who represent the real and present danger.
If you think I am being a bit dramatic (and my wife would agree with you) think again. Here are a few things that should give you food for thought.
Nearly two-thirds of employees surveyed, who leave an organisation voluntarily or involuntarily, say they take sensitive data with them.
That is a real wake-up call when you consider that your staff will almost inevitably have access to sales and customer records, design secrets and new product plans.
Nine out of ten Information Technology (IT) staff surveyed indicated that if they lost their jobs whether through redundancy or by firing would take sensitive company data with them.
Techies are extra smart, often socially inept and prone to impulsive behaviour when stressed. Just because Jason the geek is a bit dishevelled in the morning doesn’t mean he is not capable of revenge served cold.
So how does Jane, Mac or Jason walk out the door with your most valuable secrets? In truth, they probably don’t. Your worst enemy is email. Over a quarter of data, thefts have been as simple as attaching a file to an email and sending it home or to a friend.
Next on the IT security threat list for most small to medium businesses is that convenient friend, the USB stick. In many cases, these data downloads start quite innocently with your trusted person downloading files, so they can work from home. It’s only when they are preparing to leave that the true value of the customer list they downloaded becomes clear.
I can dwell on ways you can lose your company data, but in truth, this only serves to make you overly fearful. Instead, let’s look at a couple of the signals that your data may be at risk.
Signals Your Data Might Be at Risk
Negative Work Events
Laying off or firing staff, whatever the reason should be a signal that your data is at risk. A huge proportion of internal IT security failures come from a desire for revenge. If you are planning to terminate a staff member it is important that you monitor that person’s behaviour. A surge in large data files being downloaded or emails to an unusual address should be a huge red flag.
Complacency
In many cases, data security failures are just a case of staff members, managers, or owners who just don’t get it. Data is valuable only if you see it that way.
The signals of complacency are often clear. You should be troubled by people violating simple IT security policies like keeping passwords protected. It is the company who will pay and the staff who end up with their jobs at risk if you ignore the knowingly irresponsible behaviour.
Next month I will run through the key things you can do to reduce the risk of insider security threats without treating your much-loved people as if they are criminals.
