report
1.5.3 Energy: General Market Description

Brief Market Description

The energy market encompasses a vast range of economic activity, from the extraction of fossil fuels, generation of energy - by burning coal to generate electricity, for example; distribution, and consumption. A simple value chain is shown below:

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Figure 1: Simplified Energy Value Chain

Figure 2 demonstrates global energy consumption (measured in quadrillion Btu's) over the period 1990 - 2006. World energy consumption has increased at rates of between 1% and 5% over the period, for compound consumption growth of 36% in 16 years. Fossil fuels continue to account for the majority of energy consumed, representing a share of 86.2% in 2006. This proportion has remained basically consistent, having been 86.6% in 1990.

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Figure 2: Global Energy Consumption (measured in quadrillion Btu), Department of Energy, International Energy Outlook

The threat of climate change (see for example the Stern Report[1]) has highlighted the environmental damage caused by a build up of carbon dioxide in the atmosphere. A substantial proportion of CO2 is generated by activities in this energy value chain; burning fossil fuels in a power plant, a factory or a vehicle. Therefore, and with varying degrees of success, renewable energy sources are being introduced.

The macro-level consumption figures obscure growth in renewable energies, albeit from a fairly low base. For example, 2008 saw wind energy capacity grow by 28.8% to 120.8 GW, with 27 GW coming on stream during the year. The market value of the wind industry was € 36.5 billion, and it employs 400 000 people. A third of new capacity was installed in Asia, doubling China's capacity to 12.2 GW.[2]

The European Photovoltaics Industry Association estimated that installed solar PV capacity in 2007 was 2.25 GW, and that the amount installed per year would increase to 7.3 GW by 2012. Hydroelectric power generation accounts for energy consumption of 29,728 quadrillion BTUs. This is fractionally more than the amount of energy produced by nuclear generation.

Efforts to price in the effect of CO2 emissions, including the EU Emission Trading Scheme, increase the costs of fossil fuel usage, further driving adoption of alternative technologies. There are also other pressures beyond climate change on the current energy economy. The world's oil resources are finite; as oil becomes more challenging to extract, prices will rise. Post-extraction, there is a global shortage in refining capacity to turn crude oil into usable petroleum products.[3]

Nanotechnology Impact

Nanotechnology has the potential for significant impact at all stages of the energy value chain:

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Figure 1: Simplified Energy Value Chain

Nanotechnology for Energy Extraction

A number of oil companies are investigating ways in which nanotechnology can improve the effectiveness of oil drilling. Technologies include sensors that can be injected into oil reservoirs in order to provide information about the location, consistency and presence of oil deposits.

Nanotechnology could also be used in the process of converting crude oil to petroleum; a filter which is composed of carbon nanotubes was found to filter large hydrocarbons from oil.[1]

Generation

One of the main applications for nanotechnology in energy generation is solar photovoltaics. Thin film solar technologies, using CIGS and CdTe, now account for 10% new solar installations, and are a very active area of development; especially in production optimisation. Dye-sensitized solar cells are another promising technology area, and dye-solar has already given rise to commercial products, albeit in far smaller quantities than thin film approaches. Nanotechnology has the potential to generate step changes in the efficiency and production cost of solar.

Nanotechnology can also assist in other areas of energy generation. Mechanical methods; wind turbines, and gas turbines, can benefit from improved efficiency due to material innovation. CNT-composite material for wind turbine blades can prevent shearing and increase the lifetime of the turbine. Sensors on a turbine blade could detect build up of fouling and improve preventative maintenance.

Supply

Energy storage is also affected by nanotechnology. Novel electrode materials are already commercially available and are increasing the power density and stability of batteries. Retrofitting nano-enabled batteries to hybrid Toyota Prius is increasing their range (and therefore their attractiveness). More generally, improvements in battery technology will increase the speed with which electric vehicles and hybrid-electric vehicles can take over from conventional combustion engines.

Fuel cells are another area that will benefit from nanotechnology innovations. The use of carbon nanotubes in the catalyst support structure as a replacement for metal membranes allows for higher temperature operation.

Consumption

Finally and more indirectly, nanotechnology can also reduce energy consumption. Vehicles whose chassis is made from more lightweight materials will consume less energy; machinery which employs nanotechnology in low friction bearings or lubricants will be more energy efficient to operate. Solid state lighting as a replacement for incandescent lighting reduces energy consumption, and also provides a positive feedback loop in which lower power requirements can be satisfied with local renewable energy sources - such as a roof mounted solar cell.

Drivers and Barriers to Innovation

Drivers for Innovation

The primary driver - and it is of immense importance - is the increasing awareness of the threat of climate change, and a policy climate which reflects that. Companies which are developing energy technologies which do not produce significant quantities of CO2; generating energy from the sun, the wind, water and vegetable matter; know that they will have access to a supportive policy environment and an investor community which is very focused on developing these technologies.

Subsidies decrease the cost of renewable energies; cap and trade schemes increase the price of energy produced with fossil fuels. However, there remains a price gap in which fossil fuels are substantially lower cost for important uses such as electricity generation. An important driver for the development of new technologies is therefore improvements in their cost-effectiveness; in the case of photovoltaics, this comes from reducing material costs, increasing production efficiency, , and increasing the efficiency of PV cells in use.

Barriers to Innovation

The largest energy companies are still those which extract and process fossil fuels. Whilst they may still invest in new technologies - and some are quite supportive of renewable energy - there is not as much substantial industrial investment in energy technology as there is in ICT, for example. However, this is offset by the large amounts of public funding that are being directed towards energy research.

Relevant Sector Segmentation and Applications

The impact of nanotechnology on energy was described in section 2.2. A segmentation of these applications would be the following - applications in bold are those considered in this report, others will be addressed in later years:

Possible Future Products and Time Range

[1] http://findarticles.com/p/articles/mi_m1200/is_7_166/ai_n6212592/

[1] http://www.occ.gov.uk/activities/stern.htm

[2] http://www.gwec.net/index.php?id=30&no_cache=1&tx_ttnews[pointer]=1&tx_ttnews[tt_news]=177&tx_ttnews[backPid]=4&cHash=cc6f0e93a2

[3] http://www.researchandmarkets.com/reports/451126