Since the Industrial Revolution, the energy needs for human
activities have increased exponentially, and power sources evolved accordingly,
with “photosynthesis-dependant” energy sources like wood being replaced by coal
and later by oil and gas (Wrigley 2013). However, for a long time storing and
transporting energy has never been the object of any major technological revolution.
Fossil fuels are easily transported for long distances and store a large amount
of energy in relatively little space (high energy density). For more than a
century, there were no incentives to look for alternative techniques to store
energy, because fossil fuels were just so practical.
The growing concern for climate change in the last decades,
however, has emphasized that fossil fuels cannot be the final solution for the
world’s energy needs. Renewable energy sources, however, pose new technological
challenges, not only for the production of cheap energy, but also for the
difficulty in guaranteeing a stable supply. Solar, wind and tidal energy are
intermittent sources, introducing a problem that was never significant with
fossil fuels: energy storage. To a large extent, technical progress will
attenuate this issue over time, and many solutions are currently being
developed – from classic pumped hydrostorage and thermal,
to cleaner and more efficient batteries,
to more articulate solutions such as flywheels,
compressed
air, gravitational,
superconductive
magnetic. However the process of storage faces physical limitations and so
far these solutions are quite costly.
Ultimately, energy storage is not only an engineering issue,
but also a socio-economic one, which requires coordination across regions,
energy markets and consumers. Yet the economic profession has only recently
started approaching this topic. Lazkano et al. (2016) argue that innovation in
electricity storage will increase the substitutability of fossil fuels for
renewables, but may also encourage more research in non-renewable energy-saving
technologies. A recent paper by Geoffrey Heal (2016) proposes a broad overview
of the potential solutions for the challenges of energy storage. This article examines
not only the development of storage technology, but also the use of multiple
complementary renewables (geothermal, hydropower), increases in energy production
even with excess capacity, creating a geographically diversified portfolio, and
finally demand side management to reduce consumption at critical times.
All of these options can have important costs and drawbacks,
and open new interesting areas for economic research. Many questions remain to
be answered: what is the optimal combination of storage technologies? Should
government support innovation or encourage socio-economic adaptation, like
energy-saving behaviours? What types of markets would best cater for an
intermittent energy market which does not use fossil fuels as a back-up? Can
countries coordinate their storage sites across different geographical regions?
Certainly in the future environmental economics will speak more to this type of
issues.
