A road map to navigate the energy transition
Energy transitions are complex processes that are difficult to characterize using a small number of features. Despite this, this study tries to provide a framework for the energy transition, pointing out that some long-run scenarios have a higher probability than others. The document is organized around four key propositions:
- The energy transition is driven by policies rather than by technology improvements.
- The energy transition disrupts liberalized electricity markets and undermines their economic foundation.
- Given the current technologies and technological perspectives, the energy transition to renewable sources is going to be incomplete.
- There is a change in consumer preferences for cleaner energy and this change demands new business models.
These four propositions lead to the following consequences:
- The outcome in terms of electricity prices and energy production will depend on the policies applied. There are multiple possible polices and potentially multiple paths of energy transition.
- A complete transition based on renewable energy may be technically possible, but politically difficult to manage in liberalized markets. These markets need a totally new design.
- There is a change in consumers preferences towards decarbonized energy, creating new business opportunities and jeopardizing traditional business models.
Energy transitions are complex processes and it is not possible to make accurate predictions on this phenomenon, but, in our opinion, this study adds value to the current debate since it provides general guidelines for policymakers, energy companies and investors.