Business model and market perspective on zero carbon energy by Wolf Ketter

Business model and market perspective on zero carbon energy by Wolf Ketter

People working for a future using sustainable energy should be fearless, despite recent fear-inducing headlines that manipulate feelings, said Wolf Ketter, Professor of Next Generation Information Systems and Scientific Director Erasmus Centre for Future Energy Business at RSM. But there’s also a feeling of hope, of moving forward, he said, agreeing with the previous speaker, Maria van der Hoeven, of the disappointment of the US president’s decision to withdraw from the Paris Climate Agreement, but pointing out that there were ‘pockets’ in the USA at a state level that still wanted to go ahead with the Agreement and push for the energy transition.

Dramatic change

Prof. Ketter gave a recap of the state of evolution of energy landscape; markets are complex, there are wicked problems to solve and data can help. The energy industry of the past was a well-managed vertical arrangement; energy companies at the top generated and distributed electricity to passive customers at the bottom. “That’s going to change dramatically,” he said. Complexity has been added to the landscape and it’s now highly decentralised. Those people who used to be passive end customers are now prosumers who both produce and consume electricity. Behind the scenes, there’s an impetus for pushing the use of renewable sources of energy up to 100 per cent, “But I don’t know when that will be,” said Ketter. Academics working in the field are engaged in a tough debate over whether or not we can reach the energy transition by 2050. Prof. Ketter said even he is not sure of the date. “It could be possible to have 80 per cent renewables by 2050, or 100 per cent renewables by 2080. What’s certain is that we need 100 per sent sustainable energy,” he said.

A dance between supply and demand

Ketter described his research to model the effects on the market of more renewable energy, using animated slides to demonstrate price drops that can be expected from forward markets when renewables are added to the mix, and real-time or ‘spot’ markets that deal with commodities for immediate delivery. “Market volatility is a dance between weather-dependent supply and demand. But fossil fuels suppliers are reliable producing a constant energy output.” Wolf explained how prices might sometimes benefit the fossil fuel suppliers – ‘but we are smarter than that’ he said. “We need to add renewables in a sustainable manner so that markets don’t crash,” and described the transition as not ‘a big bang effect’ but an evolving piece which included elements such as storage, ramping-up and ramping-down supply, quickly adding energy to the market or removing it, incentivising customers, demand-side management, smart metering, market redesigns and designs for new markets.

Connecting the pieces

It boils down to the value of flexibility, he said. Flexibility can be reached from different angles but interdisciplinary dialogue is essential – thus the existence of the Erasmus Energy Forum, bringing together politics, academia and business. One idea to connect the pieces is the Power TAC competition, a market-modelling competition. The competition has been running for a few years but a recent new idea ‘captured a big part of the market’ explained the professor. A team from the University of Augsburg are ‘the new kid on the block’. “That just goes to show that there’s a lot of room for new innovations that can be tested in this environment,” said Ketter. Big steps, bright outlook His mantra ‒ and he acknowledges wishful thinking ‒ is to get to 100 per cent renewable energy. “I believe that we must do that, no matter what some people in some countries say. With what we already have we can already make big steps to realising that vision.” Answering questions from the audience, the professor said the energy outlook is very bright with many innovations for storage, distribution and generation.