Grid resiliency investment moves from talk to action.
The electrical grid in developed markets has been unchanged for 100 years, yet it is beginning to undergo transformation from a centralized system using obsolete coal-fired generation. Our antiquated system is either on or off, and cannot easily adapt to peak energy demands or storm damage. For periods of high demand, expensive “peaker” plants have been constructed, compounding the costs and problems of our legacy grid as they are expensive assets that are only used intermittently. The new smart grid is transforming electricity generation and usage, and this new grid requires fewer centralized generation resources because it relies on greater energy efficiency and generation resources that are decentralized. The smart grid is more flexible as electricity can be generated at the source of demand given the rise of solar generation. This distributed energy source is more resilient as the grid makes for a stronger connected system less prone to power outages or disruptions.
Increasingly, solar systems are being installed with battery storage, solving the intermittent nature of solar power generation. Battery storage systems allow several hours of electricity supply which was generated earlier in the day when solar systems run at peak productivity. Battery storage can also be called upon during severe demand periods, drawing power to the grid from the consumer and negating the need for peaker plants. The smart grid is evolving swiftly at the edge of the network, meaning consumers are adopting technologies to save and generate electricity. Utilities that embrace the new grid will ensure their business models are enhanced, customer relationships are deepened, and margins improved. This trend is all the more important given the wildfires experienced in California and Australia, or the recent superstorms of Southeast Asia, Puerto Rico and the Bahamas.
The rise of bioingredients and proteins.
From headlines about the great Pacific plastic island to beef shortages in Australia caused by the bush fires to the widespread swine flu of China, the world is now demanding alternative protein sources that have lower environmental impact, as well as a desire to move beyond plastic. Consumers are increasingly demanding bioingredients for goods from straws to foot wear and carpeting. Increasingly, consumers are shopping with sustainability as an increasingly important trait for purchasing decisions. As the appetite for less meat and fossil fuel-based packing increases, coupled with increasing consumer vigilance regarding product contents, consumer-products companies are seeking bio-based ingredients and adopting technologies to track and trace ingredients.
Many technologies to assist in these consumer trends stem from the biofuel startups of 10 years ago, with companies making strategic pivots to develop biocatalysts that allow consumer products to be manufactured more efficiently and safely than traditional materials. These technologies use big data to target chemical formulations and traits to create solutions such as lower drug manufacturing costs, healthier soy proteins or corn that requires less water and nutrients. The intellectual property at hand can develop ingredients that are safer, healthier and more environmentally friendly with much faster product life cycles.
Bill Page is senior portfolio manager at Essex Investment Management, which runs the Essex Environmental Opportunities Fund (GEOSX).