Exponential Energy | Ramez Naam | SingularityU South Africa

[Music] we are going to talk today about the world's largest industry the energy industry is a six trillion dollar industry and it is being transformed right now it is being disrupted right now and this is vital because energy is a moral issue today we're in the 21st century and still 1.3 billion people on earth don't have access to modern energy to electricity now you see where those are spread around the world in South Asia and Africa primarily and South Africa has done an amazing job addressing this in 1980 only one-third of South Africans had electricity today it's 90 percent but you see that this needs to continue and go further because energy is not just about individual lives it's about development if you look at this map of the world the places that have robust economies are the places that are lit up that are electrified if we look at the economy of countries around the world their GDP per person versus their amount of energy there's an inextricable link if you want more growth if you want a rich economy that makes people have better lives you need to have access to modern energy but there's a second moral component to this because the way that we produce energy today is deadly the World Health Organization estimates that five and a half million people are killed by air pollution as a result of energy of combustion of fossil fuels every year here in South Africa somewhere between 20,000 people and 50,000 people a year die from air pollution at 20,000 that's more than the number of South Africans that died in traffic accidents it's more than number of South Africans that die of murder at 50,000 it's more than those two combined it's one out of every 13 deaths in South Africa is caused by air pollution and this fortunately this old way of reducing energy with fossil fuels is being disrupted right now here's an example of that this is Peabody Coal this was the largest coal mining company in the United States it was the largest privately held coal company in the world and over a period of three years Peabody Coal went bankrupt and not only Peabody called arche natural resources pioneer called the four largest coal companies the United States all went bankrupt because they were disrupted by innovation and energy in this case by an influx of cheap natural gas but that disruption now has shifted to clean energy which is disrupting fossil fuels around the world let's start with wind power yesterday Adriana told you that while the planet is finite we have an open system we're constantly receiving energy from the Sun and some of that heats up the atmosphere and drives winds around the world wind power was a footnote in the global energy mix just a decade ago but in the last 10 years it's grown by 700 percent in one decade an incredible surge and now it's five six percent of electricity around the world that happened in part because of government policy but also because this is an exponential technology that has seen an incredible plunge in prices the wholesale price of electricity in the u.s. is around five or six cents a kilowatt hour USS we'll come back to that number again and again and in 1980 wind power costs ten times that there was no economic incentive to deploy it but over the decades since then the price of wind power has plunged by an incredible 30 times and even if we back away all subsidies we have a 15 times reduction in cost and now in windy places like the u.s. interior wind energy is just the cheapest power you can buy and it's disrupting coal and gas we're building these larger and larger wind turbines that can harness faster winds and can turn more of that wind into energy and not only are they driving down the cost they're increasing the steadiness we always wonder about what happens if the wind doesn't blow but the fraction of time that new wind turbines capture energy is rising and rising and rising at the same time now we can look at how wind power is distributed around the world or how wind speeds are and there are hot spots around the world I just used prices from the US interior you can see in the upper left but South Africa also is incredibly blessed with wind resources you have incredible resources inland also at the Cape at Port Elizabeth these are world-class wind resources and that as a result means that wind power in South Africa is also plunging in price in the last six years the price of wind power in South Africa has dropped by about two thirds well what is what are these numbers mean let's compare it to the price of building a new coal power plant wind power is already cheaper than coal in South Africa and it's just going to keep getting cheaper and cheaper now that's power on land but there's even better resources offshore the best winds in the world aren't on land if you look at wind speeds around the world it's all on the coast just off the coast and if we zoom in again on the southern area of Africa this area around the Cape and the entire coast of South Africa these are class seven winds these are the best winds in the entire world an incredible natural resource now wind offshore has been incredibly expensive many times more expensive than onshore wind because these things you have to mount them to the seabed they're expensive to maintain and so on but that has changed just in the lab year so in the last four years the price of offshore wind power has dropped in half and now we had a milestone just in May or June of this year we had this wind farm did win an auction in the North Sea in the Netherlands actually owned but built by a company from Denmark dong energy and this came in with zero subsidies just matching or beating wholesale coal prices and nuclear prices in north Europe and the wind speeds in South Africa are every bit as good and the price of these turbines will keep coming down and down and down now I could go on about wind but I want to talk about solar power because solar powers pace of innovation makes wind power look slow and stagnant in the last 40 years the price of solar power has plunged in 1977 to buy one watt of solar panel cost about $77 now it costs 30 cents the 250 times reduction in price it's hard to overstate how massive this is this hasn't happened in the price of tractors or of building roads or of building buildings or of building factories there's almost no comparison to this except the digital revolution or perhaps the biotech revolution that arraignment talked about this is an incredible disruption happening using technology to harvest energy directly from the photons hitting us and that means that we're now seeing crossover by crossover I mean the point in time where without any subsidies in the sunniest parts of the world Solar is just the cheapest energy you can buy period let me show you in the US a new natural gas plant cost five or six cents a kilowatt-hour that's about what a new coal plant costs in South Africa in the west of China a massive solar plant is being built at about six cents a kilowatt-hour in the US two years ago the cheapest solar deal was in the southwest at about six cents a kilowatt hour I've had to update this slide about six times in those two years as new records have been set and earlier this year the City of Tucson and Arizona signed a deal at less than three cents even if we back away every subsidy that's four point three cents so cheaper than the cheapest gas or coal you can buy anywhere in the world and South Africa is sunnier than Tucson Arizona fact the price of solar in the US has gone down by five X these are a twenty year long contract for electricity in the last eight years India 3.8 cent solar and again coal there's about five cents or twenty percent twenty five percent cheaper than coal and South Africa is sunnier than India the price of solar contracts in India plunged by a factor of four in just four years Mexico three and a half cent solar by a Spanish company and Al chilly two point nine cent solar no subsidies half the price of coal or gas and then my favorite of these my favorite picture really these guys in Dubai not what you'd imagine solar to be blossoming and one of the coal or one of the oil capitals of the world but last September a record-breaking deal two point four cents a kilowatt hour less than half the price of coal or natural gas this was not just the cheapest price for solar ever on planet Earth this is the cheapest for electricity of any form ever using any technology on planet earth this is the disruption that's happening and it wasn't just one bidder there were four companies that bid less than three cents so this transformation is coming I told you that wind power grew by about 7x in the last decade solar power around the world has grown by 50x in the last 10 years you learned yesterday that you could take a hockey stick exponential growth you put it on a log scale it should look like a straight line well here's how solar looks this is an exponential growth growing at 35 or 40 percent per year it will slow eventually this kind of growth rate can't be physically maintained but there's not really any sign of that yet and this growth itself drives the prices down if we look at the price of solar or really of any exponential technology as a function of scale instead of time we see a straight line this is what we call Swanson's law on the horizontal axis it's how much solar has the world ever made on the vertical axis it's what's the price they're both on log scales and it's a straight line it's the same thing and airplanes and Model T automobiles with different slopes but what this means is that as you scale the price comes down and so there's this virtuous cycle for every new technology this is not limited to solar it's biotech it's AI it's robotics which is at first your technology is expensive you can only use solar panels on satellites you can only use carbon fiber in the space shuttle you can only sequence one genome for three billion dollars but then the price falls and that allows you to tap into new markets and when you tap into those new markets because now your technology is cheap enough for them then the demand goes up and when the demand goes up you can reinvest in Rd the industry scales and the price falls again and you ratchet into larger and larger markets that are acquire a lower price and that's what's happening with solar and it's now probably unstoppable the question is not will this transition happen with both solar and wind it's just how fast will it happen of course this is regional in the US the examples I used were in the southwest in Europe the solar revolution actually started in Germany are there any Germans in the audience any one of German descent well thank you thank you very much Germany is the last place I would build solar because it's about as sunny as Alaska but the German people decided they were going to do this and they started that virtuous cycle they scaled the industry bringing prices down and so we owe them a huge thanks actually because that has made this technology cheaper for all of us but if we come closer to home of those 1.3 billion people that don't have electricity 600 million of them live on this continent and this is the sunniest continent on planet earth and that means it will eventually have the cheapest cost of energy and that's a dramatic economic opportunity and if we bring it even closer to home South Africa incredible solar resources especially in the south and west now let's do a little bit of a comparison let's look at Germany Germany has about 45 thousand megawatts of solar which is enough to power all of South Africa with just solar and it's not a sunny place in fact if we compare side-by-side here South Africa and here's Germany to scale so this one little corner of South Africa gets more sunlight than the entire nation of Germany and about 1% of that rectangle would produce enough electricity for the entire country and if we look globally look at South Africa South Africa is sunnier than India its sunnier than the u.s. Southwest it's sunnier than China it's as sunny as Chile it's as sunny as Dubai South Africa has every reason to expect that it can be a solar superpower with energy costs at that 2 and 1/2 cent level disrupting other technologies and making it feasible to manufacture goods here cheaply to do other things with energy to run data centers other things that are electricity consumers that produce economic value and if we compare the cost to drop of many countries around the world you see India Peru the US were always cheap but here South Africa's cost of solar just plunging over the last few years putting it into a world-class so now we see globally this incredible plunge in the price especially of solar but also wind is disrupting things massively in January China canceled a hundred and four planned coal power plants that would have been eighty billion dollars of investment 40 of those plants the ones in red had already broken ground at least twenty billion dollars was just thrown away just last month in one month India canceled 14 gigawatts of planned coal capacity and the rationale was that the price of solar is literally in free fall and so the world's coal pipeline is just drying up we have almost reached the point where the world will just not build any new coal power plants and where solar and wind building new solar or wind will be cheaper than even continuing to operate a quarter perhaps of the existing coal fleet that we have this is disruption happening right now now I know that in South Africa there's some controversy about a nuclear plan a plan to build up to eight nuclear power plants and let me just say unequivocally I am a fan of nuclear power it's controversial but nuclear power does not emit carbon it's clean it's safe it's 24/7 and if I were in northern Europe say or in Japan I would think of this as a real option but nuclear has real issues and if we look at this plan to build nuclear power in South Africa at 600 billion Rand you can be sure that is not the price it would come in at it would come in at much much more than this and in fact nuclear reactors around the world are dropping and popularity that top line the thin orange line shows the fraction the world's electricity that comes from nuclear it's gone from 17% to about 10% and it's happened because new nuclear plants go over a budget they go over time and a large chunk of them perhaps a quarter never actually get finished because they run out of money this was supposed to be an 11 billion dollar project to build two reactors in the US and after spending 27 billion dollars and not being done it was ultimately scrapped all right the cost of nuclear has gone up over time instead of going down the average price overrun of a new nuclear reactor is about a hundred and eighteen percent the average cost overrun if wind is less than can solar about one that's what we're looking at so while nuclear makes good sense in many places this is not the place with your ample provisioning of both Sun and wind now people do ask what do we do when the sun goes down what do we do if the wind isn't blowing what will the offshore wind you have here when can actually be quite steady but we have options one of them is just to note that wind plus solar together are incredibly complementary this is from Southern California the wind blows mostly at night the edges of this and the Sun shines during the middle of the day so we're a 24 hour period they tend to balance or you look at Germany over 11 months though Sunshine's more in the summer and the wind blows more in the winter so putting them together you can satisfy an awful lot of grid demand but eventually we have to get to energy storage as well and this is now the most exciting thing happening in clean energy in my mind you all know who this person is Tony Stark some of you have heard that before Tony here I mean Elon is introducing the tesla powerwall battery it's actually full of Panasonic manufactured cells and it's not that they had one single technological breakthrough it's that we've had 15 20 30 years of continual exponential improvement in lithium-ion batteries in the last seven years since 2010 the price of lithium-ion batteries has dropped by 4 or 5 X that's what's making this possible and in fact if we look at that cost as a function of scale solar is the top line here the green triangles and batteries are the blue diamonds batteries drop at the same pace as solar so batteries are expensive today they're still extremely expensive still perhaps five to ten times too expensive to use for a large bulk storage but they're plunging and price in the same way that Solar has over the last two decades and behind current batteries we have a whole slew of new technologies coming after lithium-ion this fellow John Goodenough he invented the lithium-ion battery in his laboratory he has solid-state batteries that can hold three times as much power per weight well we have lithium air batteries in the lab that can hold ten times as much energy so that drones outside could fly all day long instead of flying for 24 minutes at a time or we have grid scale batteries that are big and heavy you don't care if it's stationary but lasts for ten times as many cycles that you use for 30 years bringing down the overall cost so innovation in the sector will continue and continue and continue now I want to come back to this point about cost so it all comes down to cost people will buy the cheapest energy and we used to always assume that clean energy meant expensive energy we should do it to clean up the environment we should do it for our kids and so on but if you look at the logic look at the numbers the cost of energy fluctuates over time but the cost of Technology does what it just goes down and so we're looking at the very real likelihood that clean energy will just be the cheapest energy period and now even very conservative organizations are saying this this is the International Energy Agency the IEA this is not what you would call an exponential organization I'll show you I so let's look at the IEA s-- forecasts for how fast solar would grow around the world read from the bottom in 2002 they forecast the light blue line in the bottom so Lou's going to grow a lot they said in 2004 they came back and said well it's gonna grow a little faster than we thought in 2006 that ok well still a bit wrong we're going to adjust it 2008-2009 every single year the IEA has lifted their solar forecast it's like some analyst is going to his Excel spreadsheet and hitting ctrl C control viii right something like that now who thinks that that last forecast 2014 that they've got it right they figured out the IEA has finally figured out solar is growing exponentially who believes that and these are the world's experts on energy okay got to people believe that the IEA is to get it out you're quite optimistic because they're nowhere close they still forecast linear growth they say the world is going to install the same amount of solar every year henceforth as it did in 2014 when the actual number is going up 35 or 40 percent but even these guys say solar will be the dominant form of energy by mid-century and the price will be unbeatable or these fellows Alliance printing is a private equity firm in the US they put out this report that had this graph that said welcome to the terrordome so a Public Enemy song if you know that across the bottom you have the cost of coal gas and oil and this is a 60 year time period and then across the right it looks like somebody's kid took a crayon and scrawled across their graph right so that is that's the cost of solar coming down over the long term and if we layer in wind and layer in battery energy storage you see this is a massive disruption that's happening this is almost like a Kodak moment right now energy is different than digital and so this disruption will take decades let me not exaggerate how fast trees you will be this is going to take 20 30 40 years but the disruption is inevitable now all of that has been about electricity but there is this other form of energy that we use which is oil that we use for transportation but that too is being disrupted Shaikh jamani who was the Saudi oil minister during the crisis of the 70s he says the Stone Age didn't end for a lack of stone the Stone Age ended because we invented bronze tools we left lots of stones lying on the ground and what he's warning his fellow Prince's is that we're gonna leave oil buried in the ground because we will have invented better technology and that's happening now really three interconnected technologies electrification of Transportation self-driving which carlo is going to talk more about next and rides as a service these three all connect together because when you ride as a service when you call a ride with uber you're paying per kilometer not upfront and per kilometer the cost of electric vehicles is already equal - and soon much cheaper than the internal combustion vehicles and if you have self-driving then rides the service become cheaper because you're no longer paying the driver and so will shift more and more to that model and in both cases when you get into a taxi or an uber do you ever wonder how much gas is in the tank you don't and so range anxiety about charging goes away so these three trends will amplify each other and even now before that has kicked in we see that electric vehicles are growing exponentially there are only 0.2% of cars on the road but they're now one percent of cars being sold and they're growing at an incredible 70 percent per year and that exponential growth rate is what dominates in the long run and now we're hitting this mass market point the Tesla Roadster was a 250 thousand dollar car the Tesla Model S was an $80,000 car and the Tesla Model 3 is a thirty five thousand dollar car that's the transformation of eight years and we have not just Tesla but half a dozen manufacturers working on vehicles at $30,000 twenty-five thousand is $20,000 with a 200-mile or greater range and that makes it mass market and here again the forecasters have just completely missed the boat in the US the EIA did a forecast a year ago how many electric cars would there be in the US with a 200-mile or greater range it's the red line at the bottom can you even see it it's 20,000 cars total by 2040 Tesla has taken pre-orders for half a million model threes so bet on the innovators and not the forecasters and here again we get this virtuous cycle because the most expensive part of an electric car is the battery and as you sell more batteries their cost does what it drops and as their cost drops the cost of the car drops as the cost of the car drops you sell more cars as that happens you're selling more batteries and this virtuous cycle kicks in and eventually these cars will be that cheapest cars because this is the entire engine and drivetrain of an electric vehicle it has 90 percent fewer moving parts than an internal combustion vehicle they're expensive now because there are boutique objects but when they're made at similar scale they will just be cheaper by 2030 a car like the model 3 with self-driving features that accelerates like a Porsche could be cheaper than a two-seater smart car that's what we're looking at and if that happens we're talking about major disruption countries see it Beijing is switching all 70,000 of its taxis to electric India has gone further India's energy minister said last month that by 2030 there will be no gasoline cars sold in that country only electric that's how fast the trends are anyway and if you play that forward then you start to talk about not peak oil but peak oil demand the point at which we've switched our transportation to electricity and we're using less and less oil Bloomberg thinks that could happen as soon as 2020 they're probably too optimistic so what do big energy companies say shel says it could happen by 2030 French supergiant total says 2025 to 2030 that's when the global demand for oil will peak and start to drop and at that point the price of oil will be permanently low and that has massive geopolitical ramifications for countries that depend on oil for their income obvious countries like Saudi Arabia less obvious countries like Russia that get 70 percent of their external revenue from oil and gas I want to close by saying some things about how you can take action in this sort of a situation we are in a crisis of multiple sorts the Chinese pictogram for crisis is both danger and opportunity and I believe we have both I've barely even mentioned climate change the fact that the planet is heating up and the massive challenges it poses for every nation around the world including South Africa and there's another challenge because if we want to keep the planet under two degrees Celsius of warming it turns out we have to keep three-quarters of the oil and gas and coal that we know of today in the ground well that is on the balance sheets of private corporations and sovereign nations some people say that's a 22 trillion dollars of assets a tree written off city recently did the math and they said it's a hundred trillion dollars of assets that have to be written off that might be a massive economic bubble but it's also creative destruction I'm also an investor in clean energy in early-stage startups and I come at this looking for the gap the gap between what people need and what they're able to achieve or acquire today and that gap is often satisfied by new businesses finding a combination of things so this is solar in the u.s. rooftop solar and rooftop solar in the u.s. flourished because of three separate areas of innovation one was technology talk about that all the time but the other two were policy and business models and those were just as important technology plunged in price of solar right partially to the German policy but there were also policy changes in the US as in many places you can take excess solar that your house generates and sell it back to the grid in most of South Africa you can't so policy innovation is needed but it was also business models this these are employees of Solar City a company run by Elon Musk's cousin and chaired by Elon and Solar City started with a conversation that Elon and Lyndon had where they said we want to do solar but we want to be a panel manufacturer what's the unmet need I said oh people can buy solar but it might take them seven years to pay it back that's not so bad but it might cost them ten thousand fifteen thousand US dollars up front nobody has that said Oh will finance it well Lisa two people will own it and we'll give them some of the savings and we'll skim the rest and that built a four billion dollar market cap company that later got folded into Tesla his 40 billion dollar market cap company it was a business model innovation that brought this all together and these three areas of innovation technology policy and business model they feed on each other and often what it takes is someone to show leadership to say I can start this virtuous cycle spinning and often those innovators reap tremendous multi-billion dollar in this case opportunities so I believe the future is bright on planet earth and in particular for South Africa thank you very much [Applause] fascinating is always right thank you thank you so we've got some questions actually that have come in all right we want renewable and renewable sources of energy because oil and coal will soon be over R&B just shifting the problem with mineral mining for batteries instead of coal mining it's a great question so are we just creating a new problem there is nothing we've ever done that has zero environmental impact but we are shrinking that impact tremendously and we look at things like lithium it's an opportunity now so I see startups working on how do we recycle batteries lithium batteries better how do we recycle old solar panels that's the way that I look at it we got another one here in the front row thank you very much you touched especially we spoke about a way but you touch on biofuels yeah we refer to alternatives like electric vehicles etc what about biofuels and and its impact on food security yes so most biofuels today I think are negative for food security and negative for the environment to be totally honest palm oil corn ethanol I think there is hope for third generation biofuels genetically modified allergies and so on but it's getting harder because batteries are plunging and priced so fast that for passenger cars it's hard to see how biofuels get into that market today but there are things like aviation though we don't see really a path to batteries so there is still a need for it there but it can't be the current biofuels that consume lots of water and compete with food crops for land today over here gentlemen in the third row middle given that the price of technology drops so percent precipitously when is the right time for somebody to invest if you invest today and wind and tomorrow it costs half as much aren't you going to be disintermediated that's an awesome question so the way that that's hedged is that when you invest in a wind farm or a solar farm you sign a long term power purchase agreement 20-year 30-year deal that locks in a price otherwise you're right the deflationary nature would mean that your current investment would get under that's the way that you build in that security so as a government you invest when you need new energy which South Africa does and when you need to clean up your act so your citizens have better lives and the sooner you do there's also a local drop in price that comes from experience expertise building capacity so to get the price lower in South Africa you've got to build some projects in South Africa as well [Music] you [Music]

Channel: Singularity University Summits

Views: 252,760

Rating: 4.8856812 out of 5

Keywords: exponential energy, the future of energy, energy, solar energy, green energy, futurism, technology, south africa start up, singularity university

Id: fwSkQa1tNmE

Length: 38min 9sec (2289 seconds)

Published: Fri Oct 20 2017

Reddit Comments

[u/azorean1]

Provides some interesting charts showing that the cost of recent commercial solar installations has reached 2.42 cents per kwh and makes a convincing argument that the exponentially decreasing costs of solar, wind, and battery storage will increasingly disrupt energy markets and the cost of transportation.

[u/JonassMkII]

Nice. You can't rely on people to do the right thing, but you can rely on people to do the cheap thing. I love it when the right thing is the cheap thing.

[u/firefrenzy2]

Solar is only a temporary solution. The sun will be gone in 5 billion years and we'll have to go back to fossil fuels. Is it even worth changing in the first place?

[u/MeteorOnMars]

This video is already out of date! They predict 66 GW of solar capacity added in 2017 when it will actually close in closer to 100 GW.

Insane! A video about how crazy fast solar is growing is under selling it by 50% in the first predicted year.

[u/metasophie]

We are going to end up in a position where no one in the world will build coal powered plants.

Australian Government: Hold my Shiraz!

[u/dopamine-delight]

Shit needs to hurry cause I'm always being quoted 20k$+ just to get solar on my house..

Ain't no one going to pay that..

[u/jbwb42]

The real cost in implementing solar are the batteries.

[u/King_Barrion]

The largest issue I'm aware of is finding enough batteries to store all that power during the night. Either that or we have a unified power grid or something like that

[u/mwason]

Except in Ontario where import tariffs increase prices. Prices should be $.90 per watt but retail is $5 per watt for a solar panel.