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I am an energy company. At least I will be soon.

How we generate and flow energy is changing, driven by technology changes that are happening so fast, it is hard to see them happening around us. One day soon we will wake up and find it hard to imagine coal power stations ever existed. Just like today we can’t quite imagine there was a day when TV screens were curved and telephones had mechanical dials.

I make things on the Internet for a living but have recently been exploring the future of energy. I am no energy expert but it has fascinated me to watch the disruptive forces that began with the internet start to make their way into the massive challenges of global energy provision.

Media and entertainment was once a one-way push from big media companies and now we largely entertain ourselves through user-generated content on YouTube, blogs and social media. Energy is about to do the same thing as renewable energy sources will create ‘user-generated’ power sources in our homes and communities and the grid that once ‘broadcasted’ energy from big power stations will flow energy between us, like the internet does with data. Energy is just about to become peer to peer and this is how I will become a power company.

The Exponential Technology Shift That Is Happening

The technologies driving this are solar power and battery storage. Until now, these have been prohibitively expensive to become a viable alternative to ‘broadcast power’ from big power stations.

Over the last 20 years, the cost has been exponentially falling and we will soon be at a point where households can capture energy from the sun and store unused energy in batteries at a price that is the same or less than other sources.

By 2020 solar will have rapidly become as cheap as ‘broadcast’ energy sources. From Ramez Naam

The chart above shows the rapid decrease in cost per kilowatt hours (kwh) for solar towards the average cost of electricity in the US. If this rate of change continues for another 20 years, solar power will be half the cost of coal.

Similarly, the price of the battery storage of solar energy has plummeted. With this, our homes can use the energy we harvest from the sun, even when the sun has stopped shining. The cost of batteries has halved in the past 10 years and this decrease is accelerating. Initiatives like Tesla’s ‘Gigafactory’ in Nevada to mass produce batteries for homes and vehicles may bring the cost of electricity from a battery down below the average cost of electricity today over the life of a battery.

So, in the very near future, it will be the economically (as well as environmentally) logical thing to do to install solar and batteries in our homes.

The Two-Way Grid

As compelling as it is as an idea, coming off the grid is arguably as appealing as having a standalone computer not connected to the internet.

What attracts us to coming off the grid is not the act itself, it is saving money and not using fossil fuels. Let’s explore the grid in a world where the edge of the network makes as much power as the centre.

The Internet was invented by the US military as a communication network that could route around faults. If one part of the Internet fails, only that part is out and the rest of the network re-routes the data to bypass the problem.

The equivalent of this in electricity is the grid that carries power to our homes and businesses. This has traditionally been a one-way network that largely transports power from power-stations to consumers – and it was harder for the network to route around problems as easily as the internet. If a power-station went offline, or a substation at the heart of a community had a failure, the lights went off.

What if the grid was more like the internet? What if electricity flowed up and down the network and could more efficiently route around faults? What if it the grid was smart and self-healing? All of this becomes possible when the grid technology communicates better internally, and if power is generated at the edge of the network. The wires that connect our world still have enormous value in a world that has homes that are largely self-sufficient, powered by the sun.

Fewer points of failure

With power being generated and stored all over the network, there are fewer points of failure. It is hard to imagine a catastrophic failure on a peer-to-peer power network. Even if a whole (wind powered!) power station went offline, customers are less exposed due to the distributed sources of generation across the network available to share the load.

Less Waste Handling Peak Load

Today we need whole power stations, where significant portions of capacity stand idle just to be ready for possible spikes in electricity requirements. Our society can save on building more power stations and additional network investment if we can ‘flatten’ our use of energy by managing the time of our demand through smart homes, or managing the time of our supply through battery storage.

Sunny Countries Become the New Energy Zones

Australia makes a lot of sun. Our solar advantage could supplant the competitive advantage that was once the domain of low cost coal for electricity generation. This expertise could be shared with other countries that are still building their energy infrastructure.

Community Grids

We won’t just be sharing this energy one-to-one. Sites in the community that have more space for solar panels and battery storage could play a larger role in the provisioning of power to the community. Schools, for example, could become like server farms on the internet, generating more power and storing power for faster redistribution to other parts of the network. In this new energy world, schools could use this to offset costs and support additional investment in education.

More Not Less

As we create the future, we will certainly use electricity more efficiently. However, that doesn’t mean we will ultimately use less electricity, we are likely to use more. In the decades to come we will be plugging in our cars and even recharging them as we drive along the road. As we find better ways to generate cheap, safe, renewable electricity we will replace fossil fuel powered trains and planes, cookers and home climate control.

We’ll use more not less. But we will do it smarter. And my home will be one of the millions of energy companies that makes it possible.

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