'It's the end of energy and transportation as we know it' - Tony Seba
Within just 15 years conventional energy production and transportation will have been rendered obsolete by the revolution taking place in batteries, solar power and electric cars.
The startling thesis by energy disruption guru and Stanford University lecturer Tony Seba has been around for a couple of years but after originally being dismissed as crazy, is now catching serious attention from investors.
There is "no excuse" for any board of a utility in Australia not to know what's coming, he says, outlining a world with little centralised power generation, 100 per cent electric vehicles and minimal private car ownership.
"It's the end of energy and transportation as we know it, and it's coming very quickly," Seba said at the start of a week of investor meetings in Australia.
"It's going to be over by 2030; it has started already."
Seba's thesis is based on the transformation being wrought by four technologies: solar power, battery storage, electric vehicles and self-driving cars.
The change will be as rapid and as unforseen as the switch from horse-drawn carriages to cars in the early 20th century.
Mainstream forecasting bodies such as the International Energy Agency have it all wrong and are greatly underestimating the growth of solar power, says Seba, who sees solar as close to a "tipping point" that will drive a super-exponential uptake in solar power similar to the experience with smartphones.
Already, solar power costs have dropped from US$100 a watt to US45¢ a watt since 1970, a period when other forms of energy have surged in price 16-fold.
That means solar's relative cost per unit of energy production has reduced by 1300 times relative to coal, to 3000 times relative to natural gas and nuclear, he says.
"You wonder if you're in energy, when do you lose sleep, when do you worry about disruption?" says Seba, whose visit is being hosted by investor Arowana, whose biggest investment in its Australasian Value Opportunities Fund is wind power producer Infigen Energy.
Some oil companies are getting the message, he said, pointing to the recent €950 million acquisition by French oil major Total SA of battery maker Saft Groupe, and the new energies divisions of Shell and Norway's Statoil.
Seba sees the tipping point for solar is when the cost of solar goes beyond "grid-parity", when unsubsidised rooftop solar generation undercuts power from the grid, to what he describes as "god parity", when it it undercuts the cost of transmission and makes even zero-cost centralised generation redundant.
"At that point...it is in every consumer's selfish consumer interest to put up solar panels on every available rooftop because for those hours of sunshine... central generation will never be able to compete with rooftop solar," he says. "Solar is going to eat everything."
For those hours when the sun is not shining, battery storage steps in, including power from electric vehicles which can be used as a power source.
The use of large-scale power plants would be limited to providing extra electricity for cities, and for aluminium smelters, data centres and other plants.
Seba's theory is based on the assumption that energy storage costs - for lithium-ion batteries for example - continues to drop at about 16 per cent a year, driving a replacement of power plants on the grid by energy storage and plunging prices for electric vehicles.
He expects that by 2025, every new vehicle will be electric, with the remaining conventional car fleet to be rapidly wiped out as the self-driving car revolution disrupts transportation and pushes the world toward car sharing and mobility-on-demand transportation.
"People are just going to abandon their cars," he says, noting that Foxconn, the Chinese maker of the Apple iPhone, is targeting an EV priced at less than US$15,000.
Seba's thesis means the elimination of 60 per cent of the global market for petroleum that is used in road transportation.
The size of the car fleet will be slashed by 80 per cent, freeing up huge areas within cities currently dedicated to parking, with a knock-on impact on real estate prices.
Private garages can be converted into airbnb guest rooms.
"It's not just about transportation. It's going to have a lot of ripple effects in a lot of adjacent industries," says Seba, the founder and CEO of B2B ecommerce site PrintNation.com.
"This is not an energy transition. This is a technology disruption."
Seba is not predicting a mass exodus from the power grid, but envisages the role of the distribution utility becoming "more like an Uber or an airbnb", managing flows of power and transactions on the grid.
He says companies still investing in new centralised power plants and refineries are wasting money unless they can get a payback in less than 10 years.
"Usually when you invest in a thermal power plant you have a 30 - 40 year payback period," he says.
"Even if I'm wrong by a decade, there is no scenario where you can justify a 40 year, 30 year, 20 year payback for a thermal power plant. It's just not going to happen."
- Sydney Morning Herald