The Tesla Revolution
Willem Middelkoop, Founder, Commodity Discovery Fund & Co-Author, The Tesla Revolution[easy-social-share buttons=”facebook,twitter,google,linkedin,print,mail” counters=0 style=”icon” template=”clear-retina” nospace=”yes”]
We have consumed the planet’s oil so quickly that the era of cheap oil is now over. Tesla’s rapid success shows the world of energy is changing to a post-fossil-fuel age, very fast. Ever cheaper and more efficient solar cells and wind farms are now the pillars of a renewable energy revolution. This will reshape economies, upset global power relations, and impact our own daily lives.
The world is all about energy. Cheap electricity has become the backbone of our economy. We need power 24 hours, seven days a week. Society breaks down when power is lost. No TV, internet, or cooling drives most people mad in a few hours.
The availability of cheap electricity on a continuous basis is taken for granted in high income countries. The supply chains of natural gas or coal ensure power plants are able to deliver almost-constant cheap electricity. In less-developed countries, people are used to outages of electricity. The majority of factories today operate continuously thanks to the automation of most processes combined with 24/7 power.
With a rising middle class worldwide from one billion to over two billion people, it is clear that the need for energy will keep rising – just like it did in the last 200 years. We can only hope that transition to renewable energy will be completed before we lose oil as our main source. Probably well before 2030 the energy to produce a barrel of oil will be higher than the energy delivered by that same barrel. At that point we have reached the end of our oil-based society and we will have entered a whole new era.
We have burned half of all easily accessed and cheap fossil fuels. A strong global movement has emerged. Many politicians, businesses and citizens are working towards a fully-renewable energy system. Their motivation can be found in a mixture of concerns over climate change, air pollution (especially in Asia), and worries over fossil fuel supply security.
“The tipping point has been reached for clean energy. Tesla Motors completed $14 billion USD of sales reservations worldwide for its Model 3 electric car in only a few days in early 2016”
In the 2015 Paris Agreement, nearly 200 governments present agreed to move towards low-carbon energy systems so as to reduce greenhouse gas emissions as fast as possible. Even the Saudi and Russian governments are on board: as Russian President Vladimir Putin said, “our ability to successfully address climate change will determine the quality of life for all people on the planet.”
The transformation of our energy infrastructure is here to stay. It can easily be grasped from the investment numbers in electricity systems.
In 2015 a total of $329bn was invested in renewable generation, versus only $130bn allocated to new coal and gas-fired power. We can also see it from the words of oil and coal chief executives who have accepted the new reality. In 2009, the then chief of Shell Jeroen van de Veer stated on television his disbelief in solar: “I need to become older than 100 years for solar panels to pay back their investment.” In 2015 Ben van Beurden, the current chief, showed how the company had changed its mind, saying solar energy “will be the dominant backbone of our energy system, certainly of the electricity system.”
The development of renewables can be seen in tender price agreements. In the Middle East, tenders delivered solar energy production streams for $0.03 per kWh, and in Morocco and Texas similar price levels have been reached for onshore wind turbines. This marks the tipping point for clean energy. Tesla Motors completed $14bn of sales reservations worldwide in just a few days for its Model 3 electric car in early 2016. The energy revolution has started.
One of the biggest challenges is meeting our 24/7 demand for electricity, given the fluctuating sources of solar and wind. The end of cheap oil and increasing needs of electric transport makes the challenge even bigger.
After writing The Tesla Revolution we understand much better why demand for copper will keep growing, why platinum is needed for future fuel cell production, and why oil under $50 is not sustainable. The world of energy is changing fast and we will see many more changes arriving soon. It’s time to prepare accordingly – for companies and investors.
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