Michael Liebreich, the founder of Bloomberg New Energy Finance, has tracked surging global renewable energy investments for over a decade. After finally connecting the dots, he's become jet-lagged traveling to explain the morphing energy system to deep-in-denial utility execs until they gradually accepted the bad news. So much so that he's become the industry's explainer-in-chief, and his annual keynote at BNEF's The Future of Energy Summit, an invitation-only, A-list networking-fest in New York City, is one of the most watched events of the year, whether in person or streamed from the website.
Originally trained as a nuclear engineer, Liebreich shares his CEO-accessible message by plugging terabytes of unwieldy data into graphs and elegant scientific metaphors. Thanks to his communicative style, he triggered a collective sigh and nod from the audience during a talk with technologically blind-sided execs in 2014 (see the video above), when he first framed the growing renewables disruption as a "phase change."
Just two tumultuous years later, after watching a second powerful phase change start to rip into the transportation sector, he's released Electric Vehicles – It's Not Just About the Car, the ultimate big-picture executive summary (watch a background interview).
Sputtering internal combustion
Obviously, he's very, very bullish on electric vehicles (EVs). Beyond the recent 65 percent drop in battery costs, head-to-head, they simply out-compete internal combustion engines. They drive more smoothly and accelerate more quickly; owners shell out much less for maintenance, and, perhaps most importantly, EVs reduce urban noise and air pollution. So already enthusiastic big city mayors support the coming e-iterations of bikes, rickshaws, all the way to buses and short-hop commuter planes.
Without doing justice to the full article, here are a few highlights as Liebreich zeros in on the winners and losers, showing that:
the biggest beneficiaries are likely to be battery providers like Panasonic, LG-Chem and Samsung, [and] everything from software and sensors to asset tracking and cyberprotection, not to mention those who provide autonomous driving technology.
Followed by the obvious losers:
As internal combustion engines wither, there will be losers throughout their supply chain, manufacturers of gearboxes, fuel management assemblies, exhaust systems and catalysts...
And the destruction doesn't stop there. Liebreich warns that since fewer moving parts require less maintenance, expect to see car dealers and repair shops "decimated" in the future. He also imagines that the iconic, suburban car dealership might be abandoned and relocated in convenient locations like city centers and transport hubs.
Battered and reflexively wincing utilities will be happy to know that they'll be big winners this time. Liebreich estimates that EVs will add 2,701 TW-hours to annual global electricity demand by 2040, which should backstop profits at a time when grid defections and energy-efficient devices will knee-cap demand.
Replacing more than the family car
But it’s not just about simple power demand — there are new, profitable opportunities. A large installed pool of EVs and their batteries, many linked together into virtual power plants, will create increased demand-response capacity. EVs will be charged when the power price is low, and discharged back when the grid needs more juice. This will also limit expensive, new infrastructure buildouts.
As utilities secure their place in the new digital economy, a predicted reduction of 13 million barrels of oil per day by 2040 will rattle the big oil companies. He points out that a new scalable technology competing with:
internal combustion means there is a cap on long-term oil prices — currently around $80 per barrel but dropping fast. That
will drive a lot more downsizing and consolidation among international oil companies and oilfield service providers.
And Liebreich isn't just talking about replacing the family car. There are already 200 million electric bikes in China alone, and their use is spreading worldwide. Improved battery, motor and power control technology will take over motor boats, lawnmowers, snowmobiles, mopeds, and motorcycles too.
Electrification will quickly spread into heavier vehicles. Since federal and local governments want to eliminate noise and air pollution, buses and delivery vans — already starting to switch over — will go electric relatively quickly. Electric ferries are starting to appear in the EU, and Tesla, Mercedes, and others are working to build long-distance trucks.
Ironically, in the long-term, dropping oil profits will cause pain among both oil-exporting and importing nations. Venezuela may be a food riot away from IMF life-support, but developed nations will eventually have problems too.
Europe, where heavily taxed gas and diesel pay for up to 7 percent of government receipts, will scramble to find new sources of revenue. And the US won't get off easy either. Evaporating gasoline taxes that pay for interstate roads and bridges will cause a tax-phobic Congressional meltdown sooner rather than later.
Will governments survive this upheaval?
Image: Michael Liebreich, BNEF