Energy Cost and Investment Prediction

The International Energy Agency (IEA) is calling for an increase in investment in energy development over the next 40 plus years (to 2050). There is nothing news worthy about that statement. Oh, I forgot to mention that they named a number needed to compensate for the energy needs of that time. And that number is news worthy.

$45 Trillion Dollars

Yep, $45 trillion dollars is what the IEA came up with. I don’t believe this number, but I do like the intention. If their goal was to get the issue into major news channels (NY Times, CNN, and the like) then they succeeded and the problem is very expensive. When people talk about the amount of energy generated, the means to get it, and the amount consumed it gets to be a tricky equation, especially when you extrapolate it out for time.

What I don’t like about reports like this is the unavoidable assumption of linear adoption or usage. But that hardly happens. For instance, think about the cell phone. Cell phones became much more consumer oriented in the late 1990s. This is after 10 years or so of being on the fringe. The infrastructure wasn’t built. But once they became semi affordable the adoption rate took off and the prices further plummeted. It is now about 10 years later and everyone has a cell phone and some people have two. There were two innovations that made this happen: the cell phone components became small and cheap enough to lower the cost and the financing of the phone units themselves became subsidized by the carrier with contracts. What the IEA is mostly talking about from an expense perspective is the build out of the infrastructure to begin with. But much of it is built or is unneeded entirely. There isn’t a silver bullet in the energy revolution. It is an assortment of smaller technologies and habit changes.

My prediction is that a few changes that seem irrelevant to the scale of the problem will be catalysts to another level of energy utilization. I think it will happen within 10 years and then take another 10 years for the realization of it to peak. Who ever invests in this turn will get very very rich. To the point of overtaking Bill Gates as the world’s richest man.


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