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Adriaan Kamp

Exploring the perfect market for energy and energy transition in Asia (Part 2)

BY ADRIAAN KAMP

Doing nothing is not an option.

By doing nothing we will see that our today's "perfect" market will always burn the cheapest fuel first.

The so-called existing "merit order".

By doing nothing, we will also see the rise of hobby-ism and opportunism.
Consumers, communities, start-up and virtual energy companies starting to do their own thing. That , and to my mind, is not necessarily an improvement on the present reliable infrastructure build over 100 or so years. It adds chaos and unnecesary intransparancy and complexity to our energy system.

I don't believe that this is a best road for our society to move-up to the next level.

Postponing our abilities to blend sustainability, resource conservation and smartness into our present energy infrastructure is waiting for an accident or crisis to happen.

Postponing our willingness and abilities to reduce our eco-footprint doesnot look bright in the
eyes of our children.

So, and in summary:

I pledge for a clean sheet.

A clean sheet for our leading utility industries to work with.

To work, ring-fenced, in a region, and to create and define the "ideal" next phase of energy architectures, blending the local and centrally produced energy- and in new durable way.

And now something quite remarkable:

This approach would do also miracles in the energy transition challenge we presently face in our road transportation:finding ways to replace product oil.

Merit order

I would like to start the conversation on the merit order of things and in relation to Energy and Energy Transition management.

Why?

Well, let me explain.

In a free market capitalism, a society I presently enjoy living in, goods and services are
brought to the market by a couple of important principles:

1. There is an entrepreneur or company who sees the opportunity and find ways to create the product or service.
2. There is a demand for the product or services
3. The product is put into the market at a price customers are willing to pay
4. The product (or services) are and remains available and can be reliably purchased-
5. If one of the above fails- alternatives will come into play.

In other words: Adam Smith's Invisible Hand.

Now, that is remarkable stuff and has served us so well, in organising the free market society and our economic system - efficiently and effectively.

Add a little Schumpeter's creative destruction, and you've found yourself in a total system including feedback loop which allows learning and evolution.

But here comes a snag.

And that snag is perhaps the limitation of resources in our energy landscape.

Oil, gas and coal are all earth resources bound by volumes, and are not unconstrained. Their availability is dependent on our abilities to find, explore and exploit these reserves, and define the capacities which can be brought to market.

And that is not limitless.

And as the word indicated: Reserves is "stuff hold back for use later".

Now comes some thinking:

Today- the world is in acceleration, and the demand for oil, gas and coal is up at a level never
seen before.

As now also prognosed by the IEA, Asia (China, India, South-East) will continue to see an unprecedented hunger for these resources, as well as Africa, MENA, etc.

Now, if you want to be a little educated on what that may mean, I suggest you familiarize yourself with the movie: A Crude Awakening. A film by Basil Gelpke and Ray McCormack : a film asking attention for the reality of today and tomorrow that the age of easy and abundant oil may be over.

So, I would like to continue the conversation on the merit order of things.

And as you may have understood- I am having some reasonable doubts.

Some reasonable doubts whether today's free market, in it's pure play, serves our imminent and immediate needs in our society on energy and energy transition. 

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Power. The author was not remunerated for this article.

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Adriaan Kamp

Adriaan Kamp

Adriaan Kamp is Founder of Energy For One World and currently Program Director of Nyenrode Executive Energy MBA programs at Nyenrode Business University in The Netherlands. He is also an excellent speaker for World Energy.
 

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