Forbes on the Difficulties of Energy Forecasting in the Age of Disruptive Technology

There’s an interesting read in Forbes today on the difficulty of making predictions about the future of energy because of ever-changing technological developments in the energy industry. Former energy trader and now utility executive Chip Register has written an article titled “Technology Is The New Black In The Energy Economy”, and looks at how technologies have come out of the blue (and are still coming) that have completely turned the overall energy picture.

He mentions that billion dollar decisions are made in corporate boardrooms based on broad-based energy studies from organizations and companies — but that these studies are based on assumptions that disregard the disruptive nature of technological developments that suddenly come on the scene and change everything. He holds up fracking as one example: only a decade ago it was not on the radar, and now the United States has become the biggest energy producer in the world, something no one would have predicted just a few years ago.

Register asks: ‘Has the pace of arrival of disruptive technology increased to the point where the standard error on these [studied] is so wide as to render them virtually meaningless? I fear so.”

He does not stop with fracking. Looking into the future he sees that we could see the development of energy storage technologies that could allow renewable energy sources to become much more important and put a dent in the natural gas industry. He mentions that Bill Gates and others have put $35 million into a company called Ambri which is building a liquid metal battery factory. He also talks about a carbon capture and storage plant by NRG in Texas which will capture carbon dioxide from a coal plant and send it underground to help pump oil. Another technology he sees as being significant is the fourth generation of nuclear fission plants — again something Bill Gates is supporting.

I guess it should be of little surprise that he does not mention LENR here as having a possible impact on the future of energy. But I think this just illustrates his point. I suppose that even those of us who see that LENR could have an enormous influence on the future of energy could be missing the mark by discounting the fact that other technologies might come along that have an even greater impact.

Register’ conclusion is one that I think makes an important point:

“Fracking broadsided the analysts as a one-time event. Imagine the difficulty of long-range forecasting when wave after wave of transformation crash over the industry. Now imagine the danger of investing billions based on those forecasts. Beware the standard error. This is not your father’s energy economy”

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