Asset utilization Vs Energy transition

Collaborative economy, also called the sharing economy, is growing, and it can be understood as a synonym for resource efficiency and increased asset utilization. It also allows the energy transition. How? An example; car sharing, offers increased asset utilization of the vehicles and fosters the energy transition with more sustainable mobility.

In the energy sector, and in the case of utilities, this is not very common, but let’s try to look at some trends;

For example, grid interconnections, as proposed with the EU Energy Union policy, is part of a more collaborative economy. It means the sharing of power capacity and available renewable resources in an extended market. Of course it is not peer-to-peer, but instead “grid-to-grid”. Interconnections improve asset utilization (of the most competitive assets at least, as well as avoiding investments in peaking capacity) and also help toward the energy transition as abundant renewable power can be exchanged between countries.

Image by Gabriel Schouten de Jel

Image by Gabriel Schouten de Jel on

For Spain, with high generation overcapacity, to increase interconnections is key to making use of existing power capacity and avoiding wind spilling, for example.

However, there is another example of improved asset utilization where there is a conflict with the energy transition…

Asset utilization could be understood as extending the lifetime of nuclear power plants, or running Combined Cycle Power Plants (CCGT) at high capacity factor, or coal power plants. However, in order to transition to a sustainable power sector, coal and gas generation have to go, sometime in the (near) future. This will even be before they are utilized to a reasonable extent, so the transition will not allow an optimal asset utilization of some power plants.

The solution to this conflict, in my opinion, is another way of sharing economy; for example, underused CCGTs should be re-located to other countries, at a lower price than new units, obviously (already wrote about this, in spanish, some time ago). It avoids stranded assets, and is a more efficient use of resources in the receiving country.

For example, why Egypt should pay a premium for fast delivery of gas turbines, when they could re-locate CCGT from Spain, where they are barely used? More cost efficient, quicker to put in service, the asset is utilized and the energy transition continues. Once Egypt also decides to phase out gas generation in the future, the asset will have been utilized to a reasonable degree.

Another example of collaborative economy driving the energy transition?

Instead of single solar + battery installations for individual households, the community owned self-consumption installations avoids underused capacity and storage and at the same time promotes the energy transition by empowering consumers, increasing renewable penetration.

One last example, collaborative economy can work for crowdfunding distributed renewable energy projects, democratizing power generation and increasing competition in a traditionally restricted market. In Spain Som Energía is leading a project for unsubsidized solar with this formula.

To innovate, in the energy and utilities market, we should also re-think business models from the sharing economy perspective.

How else do you think the sharing economy can be applied to electricity?

6 pensamientos en “Asset utilization Vs Energy transition

  1. The EBRD has published recentlly a report highlighting the risks for governments, that own most carbon-intensive power generation and infrastructure assets. These assets can turn into stranded assets as a consequence of prices on carbon or phase-outs, for example. Thus, it is important to take into account the energy transition in asset acquisition and management.

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