How the sharing economy will jumpstart the energy transition
The management of energy production and distribution networks has always been complex. As it is not possible to store energy in the network, it was necessary to build a production and distribution capacity equivalent to the maximum power that may be required during peak periods. In Quebec, the record peak dates back to January 22nd 2014, when consumption spiked to 39 240 MW. In this context, the transition of the grid towards renewable energy requires huge investments and thus represents a possible significant devaluation of certain assets. This situation partly explains the slow progress of towards the energy transition.
Fortunately, the internet and mobile applications have encouraged the emergence of new economic approaches that maximize the use of the assets of individuals and small investors. This approach, that is generally described as ” sharing economy ” or ” the collaborative economy ” when it is commercial, should help maximize the use of these underutilized assets and thus greatly accelerate the energy transition in the coming years.
But first, what is the sharing economy? At a recent conference on the topic, public economics specialist and City of Montreal alderman Guillaume Lavoie has identified three fundamental criteria to determine whether a service is part of the sharing economy or the collaborative economy.
1. The service allows the use of under-utilized assets
Although the term “sharing economy” may seem misleading, it is understood that the services falling under this category are designed to share resources or assets that are currently underutilized: a house that is empty for family vacations, a car that is moving only 10% of the time, tools that collect dust in the garage or parking is free on weekdays.
For the promoters of the sharing economy, we live in a society of overconsumption. The sharing economy does not mean that we’re sharing our goods for free, but we find ways to make them accessible to others in different ways.
Given that we know that the power grid is largely underused for much of the year, we can see that the contribution of the sharing economy could greatly help to maximize the use of these assets.
2. Access vs. ownership
From the moment one seeks to provide access to underutilized assets, the services offered by this asset is valued more than the asset itself. Again, there is a reaction to the consumer society. More and more people realize that to enjoy the satisfaction of an asset, it is not always necessary to own it. You can rent a car, have a beautiful trip and have access to mobility without having to own a vehicle which is always parked in your driveway.
3. Lowering entry barriers
Economic theory is clear, for the free market to develop, we must minimize entry barriers to allow the greatest possible competition. Applications of the sharing economy allow all players, however big or small, to enter the market when conditions are favorable and also to get out easily without tying up significant assets. Unused assets that were previously difficult to make profitable can now be easily available on platforms that act as a real-time stock exchange. Of course, the ability to easily monetize unused assets puts a lot of pressure on certain industries that have invested heavily in those assets. But ultimately, as these assets become available without having to own them, a new equilibrium will eventually be created
Here are 4 applications of the collaborative economy that will help decarbonize our economy.
Micro power generation: Sharing of surplus between neighbors.
When we know how a grid works, we realize that there is need to maintain a huge capacity throughout the distribution network. We need a robust transportation network and a big street level distribution network as well.
So, the ability to share the production surplus in the network becomes very interesting as it further reduces the pressure on the upstream transmission network. This released capacity can thus be used to transmit electricity over longer distances and even export to other markets.
Various services related to the sharing economy can therefore be used to help monetize the microgeneration infrastructure. While we are still far from a smart grid in Quebec and other markets, it is likely that more and more citizens will be able to communicate in real time in order to synchronize their production and power consumption.
So, with the increasingly competitive cost of solar, many analysts see a tidal wave coming that will forever change the landscape of energy distribution. This change could greatly accelerate the abandonment of fossil fuels in electricity generation.
More on the subject:
3 collaborative services that will accelerate the electrification of transport
As we mentioned in the article titled «5 reasons why the electric car will accelerate the development of solar energy» innovations that will help develop the electrification of transportation will indirectly help create a cleaner power grid. The sharing economy in transport will therefore have an impact on the power grid.
Peer to peer carsharing and carpooling
Presently, the acquisition cost of an electric car is still a bit higher than a comparable gasoline car, especially if you do not include government incentives.
Above all, we must understand that many consumers do not have the habit or the money to acquire brand new cars. It is therefore not enough to have electric vehicles in the same price range as the new gas-powered vehicles. Until the market for used electric cars will not be more developed, many consumers will continue to use gasoline powered cars.
However, as the operating cost of electric cars is very low due to reduced energy costs and very low maintenance costs, the sharing economy will greatly assist some owners to monetize their purchase or convince many to make the leap to the electric car.
Two trends in growth will have a strong impact on the electrification of transport. Peer to peer carsharing will allow electric car owners to leverage their investments while helping to reduce the use of gasoline cars. Indeed, the users of these services using an electric car will themselves reduce their carbon footprint.
Carpooling has even greater potential. With GPS enabled mobile applications, it will become easier for drivers to find passengers during their daily commute. Again, carpooling can be very profitable for electric cars owners as the bulk of the transportation costs is the purchase of the car and battery.
These costs will be charged to passengers and will help to pay car payments for these drivers. Again, all passengers will benefit from these trips in electric cars and it will reduce their greenhouse gas (GHG) footprint enormously since a car removed from the road represents a 100% energy saving.
We should also mention that several studies confirm that these services help to break families’ dependence to the private car. Car sharing and carpooling users therefore tend to travel more in public transit and active transportations, which further reduces the consumption of fossil fuels.
Peer to peer charging stations networks
Upon the arrival of the electric car, an enthusiastic community quickly formed. As the charging stations were still rare at first, most electric cars owners were quick to make their charger available on sites like “Plugshare” or “ChargeMap”. But as with any phenomenon of the sharing economy, we see this form of sharing evolving towards a commercial transaction as the charging station represents a valuable asset. As the installation costs can be quite high, the idea of renting charging sessions on car rental applications such as ParkingPanda & Prkair is becoming more common. Again, these ways of monetizing a high acquisition-cost asset will make electric vehicles even more affordable.
We see the same phenomenon appear with the 400V level 3 fast chargers. While installation costs are now affordable for businesses, we see on the horizon the possibility of sharing the fast chargers with the general public based on its availability. While affordable vehicles with autonomy of 300 km and more coming to market, these new fastchargers will be more than welcome!
In conclusion, it seems clear that the sharing economy (or if you prefer the collaborative economy) is a unique opportunity to use our resources more responsibly and accelerate energy transition towards cleaner renewable energies.