Tony Seba: Clean Disruption – Energy & Transportation

Tony Seba: Clean Disruption – Energy & Transportation


I want to take into the future of energy and transportation and when I say future I don’t mean fifty years from now I mean five years years from now but before I do that I want to take you into the past this is New York City 1900 is the parade we used horses for thousands of years as our main means of transportation we human beings there is one car in this picture can anyone see the one car in that picture okay I don’t have all night there there is one car in New York City Easter Parade 1913 years later can anyone see the horse in that picture 13 years later New York City went from a horse – one to all cars that horse doesn’t even look like a horse this is called a disruption a technology disruption and that’s my work let me take you to 1985 when yeah exactly when the then largest telecom company on earth monopoly AT&T had this thing called the cell phone and they hired McKinsey and company to essentially do a forecast what’s going to be the adoption of this thing called the cell phone in 15 years so by the year 2000 how many subscribers will we have in the United States so Mackenzie went off and did whatever it is that they do in charge five million bucks for and they came back and this was the answer 900,000 by the year 2000 the actual number was a hundred and nine million that’s not a small mistake that’s a factor of a hundred and twenty times right so when you see the projection from be you know International Energy Agency and so on and so forth think about that but what mainstream analysts are trying to sell you by being disrupted AT&T not only you know it’s landline business went down but also it may stout on some of the biggest legal market opportunities of the 21st century if you just look at the top 15 listed companies Internet and mobile essentially that’s two point four trillion dollars in market valuation and so by missing out on our disruption your business goes away but but also you don’t participate and new opportunities afforded by the new disruption and it’s usually the experts in the insiders very smart people usually who dismiss this what the disruptive opportunities you know why would anyone I mean ten years ago why would anyone buy the iPhone the 600 or iPhone when they could buy the hundred or Nokia right I mean then make sense so you know these are very smart people the internet let’s not make a big deal out of that so part of my work and again and again and again should I even talked about Kodak know just I mean some of you don’t even know what that is right the year 2000 was a record year in photography worldwide record record revenues record profits record number of print photos and 12 years later they were bankrupt so years later and if anybody had stood up there in 2000 and said there’s this thing called a digital camera which by the way Kodak invented yeah so it’s not like they didn’t know what was coming right so that’s another disruption so my work in many ways over the last decade or so has been to answer this question why do smart people in smart organizations consistently fail to anticipate let alone lead market disruptions so I developed a framework to understand technology disruption that there are many ways of disrupting I could talk about this for an hour I’ll just walk you through a few things and then I’ll dive into energy and transportation so one of the most important things to consider is technology cost curves so if you look at Silicon Valley Silicon Valley is built on this on Moore’s Law in Moore’s law says that on a dollar basis computing power has essentially doubled every two years for decades so it improves at about 41 percent rate per year with the same dollar right so when you look at it over 20 years essentially we can this $600 iPhone has the computing power what a computer 20 years ago was called $600,000 and 40 years ago that same computer would have cost six hundred million dollars in sixty years ago that same computer would have been six hundred billion dollars so that’s the power of technology clusters right expecially when they improve exponentially so in energy we have several cost curves for technologies that essentially all of which well as I’m going to show you enable disruptions of energy and transportation one of them is lithium-ion batteries which from about sort of come back to this the other one being solar photovoltaics which have improved dramatically since at least 1970 now one important concept is that of Technology convergence so single technology see in and of themselves are not what caused disruptions essentially when you have several technologies that converge basically and can enable the on a cause basis on a financially viable basis can enable certain functionalities that were not possible before so for the smartphone that year was 2007 that was the year when computing and digital imaging and touchscreen technology and lithium-ion batteries and so on made it possible for someone to create a smartphone it turned out so has been Google and Apple who created the Android and the iPhone but it could have been somebody else it could have been a Nokia for instance Motorola anybody really and so the concept of technology convergence is very important it’s when several technologies and business model innovation converge at one point in time to enable certain functionality or certain cost the other important thing is the concept that technologies get adopted as an s-curve so again when you look at mainstream projections say of EVs or solar and whatnot you see a linear projection no technology and history successful technology in history right that I know of has ever been adopted on a linear basis ever it gets adopted as an s-curve once you hit that tipping point essentially so this is the example of color TV so essentially it can move sideways for a long time and then when it hits that tipping point it disrupts the existing market and it gets about that it grows exponentially super exponentially and weeks and months in a few years and this is how the structure is having because people look at it in the leg are it’s only one two percent of the market and then BOOM it’s 80% of market in no time and that’s because of that technology convergence which made it possible for entrepreneurs to create new products and services now the interesting thing about s-curves is not only that they’re exponential but the it’s getting even steeper meaning that disruptions are happening even more quickly so if you look at the turn of the 1900s the s curves were long so it would take years decades for products to get adopted by the market and look at it now it happens in years I mean in some cases in months so the exponential is actually getting even more exponential these days and that’s because of the internet that because were more global society and so on a huge thing in disruption is business model innovation in business model innovation is every bit as disruptive as technology every day so uber little company called uber which did not even exist 10 years ago actually they started 2009 and today their bookings are higher than the whole taxi industry in America ok 8 years 8 years so whoever is going to tell you that disruptions and transportation cannot happen in 10 years we’ll look at Ober look at what they’ve done in less than 10 years and they’re just getting started they’re doubling every year it’s unbelievable so they’re a business model innovation that was enabled by two things the cloud and smartphones so essentially they took advantage of that convergence in the center mediated this very inefficient market taxi same thing with Airbnb that’s a business model innovation it’s actually an old business model their broker and we move out brokers for hundreds of years but not in this market so that business model was enabled again by a convergence of technologies that made it possible for someone to do that so business models is as disruptive as technology is so I took this framework that I created that you know it included bits and pieces of a lot of thought leaders and so on and essentially I wrote this book called clean disruption and that was three years ago and essentially that’s what I’m going to talk about today and follow-on work that I have done what it says is that there are four technologies five technologies plus business model innovation that over the next 13 years or so are going to disrupt all of energy and transportation as we know it and it’s going to happen for purely economic reasons essentially so let me walk you through some of these technologies batteries lithium ion batteries improved by about 14 percent per year from about 95 to about 2010 14 percent that’s the cost curve and then two new industries came into and that’s what they used for cell phones and laptops and so on and then two trillion dollar industries Auto and energy came in to lithium-ion and guess what happened next it accelerated so with the next few years they are accelerated to 16% from 2010 to 2014 and over the last Oh six years right now to our knowledge there are about 12 mega factory of lithium-ion batteries huge you know we hear about the Tesla Giga factory well they’re just about 12 going up around the world and this means what more investments more R&D more scale and guess what happened that cost curve for lithium-ion since 2010 to 2016 was 20% per year so it went down from about $1,000 to about $200 insane right and it’s still accelerating so we may yet so I’m going to show you how that can be disruptive so Dyson right dice and makes vacuum cleaners right they bought lithium-ion Company from Detroit and they’re going to invest a billion pounds in batteries and they’re getting into the electric vehicle market what Dyson died friend hello record I mean as in the Ottawa isn’t a card difficult to build how about a clean disruption right Dyson and sorry can resist yeah so I’ll tell you why Dyson and any high school kid actually can build an electric vehicle I’ll tell you that in a minute but so battery’s just the cost curve going down essentially you can map out over the next few years assuming that it’s going to continue at that rate what markets can disrupt so it’s again the converges for different markets happens at different times so storage for instance on a utility scale on the grid the grid is essentially a just-in-time system so every time we switch you know we flip a switch you know the utility generates more and in the summer especially you know when we use air conditioning and somewhere is pretty long here right there’s a lot of sunshine essentially it’s a just-in-time system where we generate basically microseconds before or after the demand what that means is that it’s a very inefficient industry it’s built for the peak so if you look at Canaries in New York just about a third of their generating assets are used less than six percent of the year six percent so some of it is used a few hours every year that’s a very expensive way to produce energy and you know up to now we then have storage – essentially compete with that peak essentially when we needed that summer peak and you know in my book essentially at six percent of the utilization is a disruption waiting to happen and in fact it is starting to happen and even conventional energy CEOs are saying that by 2020 there may never be another peak ur ever built in the u.s. peepers are usually natural gas and and so on but even now I mean this is not 2020 if you look at what happened in California last year the tune to natural gas leak and so on the Public Utility Commission in California ordered Southern California Edison to put up batteries essentially for the peak and Tesla built it in 88 days okay 88 days right try that with a nuclear power plant or with a coal power plant 88 days so the disruption of peekers has already started essentially this is disrupting what otherwise would have been natural gas speakers in California now it’s not just at that level business model innovation like I said is disruptive in there are companies who are providing storage as a service to companies so companies for instance in New York Connecticut demand charges so on a per kilowatt per kilo watt basis are up to 50% of the cost of energy not what you consume but denying charges so what these companies are doing is essentially saying alpharetta battery behind the mirror and essentially I will charge you if I save money if you save money I want 50% talk about the business model innovation right so essentially they’re going to the 7-elevens of the world and the hotels of the world in saying output is storage behind the mirror so that we can store when energy is cheap and then you can use it when it’s expensive and they say that that lowers utility bills by 10 to 50 percent now this is not efficiency I mean these companies are using the exact number of kilowatt hours but they’re using it in a different way they’re storing some of it to use later so I’ve done some numbers on the cost curve of batteries and by 2020 or so it’ll cost the average American consumer about a dollar a day it’s actually improving to basically store 24 hours of electricity a dollar a day that’s 30 bucks a month right now you don’t need to store a whole day you don’t need to store 24 hours to disrupt the utility all you need to store is 4 to 6 hours that’s it right because that’s the peak that is the most profitable part of a lot of utilities the peak right so 4 hours essentially are going to cause go 20 cents a day that’s it by 2020 boom disruption okay and people are going to do because it’s going to be in their best selfish economic interest they’re going to put up storage because it’s going to save them money okay and this is why you see whole islands going solar in months because the cost of solar plus storage is already cheaper than diesel generation which is what powers most islands solar plus storage is already cheaper than in that so you see and you’re going to continue to see a lot of islands though 100% we’re not talking 2050 you’re talking now because it’s already cheaper so batteries are becoming so cheap they’re essentially because of economic reasons everyone houses malls parking spaces buildings are gonna have storage and they’re going to have storage because it makes sense just like we have data storage imagine a computer without data storage well energy storage is going to be just like that just like data storage is two computer energy storage is going to be too healthy now what batteries are gonna enable is another disruption which is the electric vehicle disruption so first let’s ask is the electric vehicle disruptive yes it’s clean and all that but is it disruptive so Tesla what has been named the best car ever made best car not best evie best car ever made and Consumer Reports gave them a rating of 103 out of 100 right I’m not making it up that’s Consumer Reports right this is there a movie like that 11 right it’s not 10 it’s 11 cuz basically it was off the charts and that’s what electric vehicles are but of course who can afford an electric vehicle not me I actually don’t own a car I actually for 10 years I have not owned a car thank you now I did it for selfish economic reasons yeah I mean owning a car I’ll come back to to why that that is not really but but I did the numbers and it makes no sense to own a car so is the e disruptive so let me walk you through a couple sales for things and I have like nine one is that the internal combustion engine automobile is 17 to 21 percent efficient so essentially 80 percent of the gasoline and the tank or diesel goes up in smoke literally or heat eighty percent waste and the electric vehicle is about 95 percent efficient so 95 percent or so of the energy in the battery is actually turned into usable energy that’s five times now that has been the case for a long time the disruption has been happen but this is disruptive when you combine it with the fact that electrons are cheaper to transmit to distribute than atoms right so electricity is cheaper then gasoline or diesel we need to buy those two things what you find is that to charge an a per mile basis an easy is about 10 times cheaper then basically I scarce than internal combustion engine automobiles 10x every time you see a 10x in a cost basis you can see a disruption so this is your car and you don’t have a an electric vehicle the internal combustion engine automobile has 2000 plus moving parts 2000 the I speak of the evey has 20 let me repeat that 2020 that’s a hundred times fewer parts and the internal combustion engine are 100 times which means anyone who owns an Eevee knows it maintenance it’s essentially you know let’s say 10x cheaper right not to say free because a lot of IDI companies are offering free maintenance why because they can’t yes you know basically when you look at folks and I’ve talked to a lot of them who have used their Eevee for hundreds of thousands of miles they tell me that their biggest cost is basically tires that’s our biggest maintenance cost tires so try that with your I CFO and the other thing that’s disruptors that doesn’t get talked about a lot is that the electric vehicle can go about five hundred thousand miles now on average we drive about 10,000 miles a year ten thousand five hundred thousand we would need 50 years you know to take advantage of this and who uses the same car for 50 years not unless you’re in Cuba or something you not going to happen right so you know this is something about EVs that is underplayed and in fact Tesla and others are building a million-mile IDI now 1 million miles a hundred miles driving the same car does that make sense well I’ll come back to that and why that makes but if we still had the individually owned model that we have today where we all own our cars essentially and it was a one-to-one disruption essentially would we would EVs which competes with ice vehicles this is a coaster you know in 2014 I threw this coaster based on what I knew about lithium-ion batteries and so on and what it says essentially is that my twenty seventeen or eighteen the market would essentially launch several electric vehicles with 200-mile range at least because that’s what I thought was minimum you need to go to the mainstream consumer for thirty five to forty thousand dollars unsubsidized and that’s what I predicted even three years ago what did folks tell me about that prediction you’re insane right now it’s going to happen guess what did happen so let me let me tell you what did happen but what this says is essentially that even the low-end so the average American car is thirty-three thousand dollars to buy sticker price thirty-three so if you’re going to compare 33,000 evie against 33,000 eyes it’s a no brainer right because ninety percent less maintenance ninety percent less energy and so on and so forth more powerful and so it basically it makes total economic sense for you to buy an electric vehicle and because curve is even going further down and you’re going to have by 2022 200-mile Evi $20,000 $20,000 200 mile EVs unsubsidized so essentially what this says is that by 2025 or so I mean even if I’m wrong by a couple years by 2025 every saying that was row transportation buses and tractors and you know trucks and cars every vehicle is going to be electric boom over right every new vehicle now some folks may keep their cars for a few years but when they go to buy a new one it’s going to make no economic sense to buy a combustion engine but this is not what’s going to happen I’ll tell you what’s going to happen in a few so what has happened is exactly what I predicted which is 35 to $40,000 Eevee’s that go 200 miles by 2017 2018 so GM just has their bolt Tesla Model 3 announced $35,000 or so whoo-hoo-hoo basically here has given $1,000 to Tesla oh my goodness there you go there you go you ah you and 400,000 other people sorry I just wanted I just wanted to make sure you were awake I just flew in from Sydney I wanted to make sure I was awake actually so if they actually sell and the first day they had 180,000 people give $1,000 each and this gives you an idea of the latent demand in the market and they raised four hundred million dollars this is the biggest crowdfunding event in history they did not need an investment bank to raise four hundred million dollars talk about another disruption we can talk about that another time the biggest disruption though and the biggest enabler is going to come from autonomous vehicles today if you want you can take self driving taxi in Singapore today this is not in the future I mean the the deep learning machine learning artificial intelligence has improved just over the last five years more than it did all the previous 30 years I mean that’s what I studied at MIT computer science focused on AI and it the the problems over the last few years have been in saying and uber also has announced that they’re doing self-driving rides in Pittsburgh so basically this is happening today and a whole host of companies are doing it today 33 companies are investing billions of dollars and look at the names this is not just startup companies in Silicon Valley it’s gone mainstream and I’ll tell you why in a moment but they’re investing heavily Ford new CEO came from its self-driving division and the first tire that that that he made came from uber self-driving division so you know coincidence mmm right now Tesla back to Tesla they say Elon Musk that by the end of this year every Tesla will be able to go from a parking lot in San Francisco to a parking lot in New York with no human control this year we’re talking about 2017 even if it’s off by a bit and these things are happening right now now that’s only level three that’s not level five or four which is what you need to go fully autonomous essentially computer on wheels you know essentially there’s 20 moving parts for wheels it’s a computer built and Tesla says that they’re going to have level 5 autonomy no pedals no steering wheel by 2019 2019 now this is not again in the future for future now I’m assuming 2021 just for the next argument but you know Tesla may we’ll get there in 2019 and others may well get there before so this is happening very quickly so what about the cost so if you if you read the media if you read the mainstream analysts they will tell you that all autonomous vehicles are kind of expensive and I’ll show you two of the key technologies that essentially make an autonomous vehicle possible so this is what a self-driving car sees when it uses a technology called a sensor lidar in lidar is laser and radar so it emits basically laser pulses about Oh a million laser pulses per second that bounce back basically three to six hundred feet 360 degrees and they bounce back and essentially with that you have a supercomputer in the trunk and it creates a view of the world basically around it in real time so this is what an autonomous vehicle sees what is the cost of lidar sensors in 2012 Google said seventy thousand dollars and of course mainstream analysts said what not going to happen right not until 2050 or something right what did happen in fact was that the following year it was ten thousand dollars in the year after that Silicon Valley company announced a $1,000 lighter so from 70 K 2 1 K within a few years and but wait there’s more that same company announced last year the 250 dollar lidar and that is solid state which means you know it doesn’t move like the current lidar it you can focus it so it’s much superior technology at 250 dollars even if you use four of these right you’re still talking about a thousand dollars now what about super computing power which oh yeah and the $90 lidar is coming the size of a postage stamp you can use it with your iPhone I don’t know what you’re going to do with it but you can I mean you’ll soon be able to Sirius I mean so what about super computing power which is what we need to basically for these vehicles computers on wheels to actually happen so I’ll show you the cost curve for super computing power this was the world’s first one teraflops computer doesn’t matter what a teraflop says is you know geeky saying but yeah so trillion floating point operations per second if you want to know so this cost about fifty million dollars in the year 2000 and it was used that Sandia National Labs to nuclear simulations and so on so 50 million here two thousand last year a two teraflops computer this so did I say it was the size of this room yeah so it was the size of this room now you can hold two teraflops in your hand for 50 bucks to teraflops so so that’s how quickly it’s going or it has gone in the same company Nvidia announced that by the end of this year they’re going to have the 20 teraflops computer GPU that you need to run a self-driving car that’s what they say you need 20 teraflops it’s coming at the end of this year and on top of that it it basically has an operating system for artificial intelligence that you’re going to need for these cars so essentially almost any entrepreneur can build a self-driving car and in videoso says that they expect about a thousand x improvement by 2025 so over the next eight years a thousand times whatever it is that you know self-driving or other AI functionality is going to improve by about a thousand times since that’s just a hard work the real improvement in artificial intelligence has been in the software and you know a thousand times over the next eight years and things are going to accelerate this so disruptions have what I call disruption accelerators and open source is one of them so an entrepreneur in San Francisco actually with parts built his own self-driving car with $50,000 that he spent on Alibaba and Amazon and eBay third part $50,000 built his own one person one engineer in a garage literally in San Francisco and he said Oh I want to do is sell thousand dollar kits to retrofit cars and make themselves riding and then essentially he decided that I’ll just open source it so now anybody anywhere England India China Germany anywhere Kenya can download software for free to do essentially self-driving cars boom right and then a few hundred dollars for the GPU a few hundred dollars for the lighter you’re in business you’re in business I mean essentially a two thousand dollar investment could make your car autonomous now okay so why is that disruptive yeah we’ll be able to not drive and you know to Twitter or you know whatever it is Facebook or Instagram or anything not not while not driving because it’s not going to be a steering wheel but is that really disruptive you know let me tell you about my latest work essentially that came out about four weeks ago it’s called disruption of so basically I double clicked on clean disruption I started a think tank about a year ago focused on disruptions and our first essentially report is the disruption of Transportation and we call it transport as a service and this is what’s going to happen we use our cars we pay we meaning the average American family about $10,000 a year to own a car ten thousand dollars a year and yet we only use it for percent of the time four percent of the time and ninety six percent of the time it’s parked and in fact parking space is usually more expensive than your car okay that’s subsidized by society but of course you know we don’t know this but four percent asset utilization is a disruption waiting to happen so what’s the disruption the convergence of three things electric vehicles remember that $500,000 evie well individual owners we can’t really take advantage of that so electric vehicles self-driving and right here so imagine over or lift without a driver in electric so when that happens essentially vehicle asset utilization goes from focus another time to say forty percent of the time that’s a 10x improvement so cars are going to be running around picking up at home taking it to work picking somebody else up and taking them to the supermarket and so on and instead of ten thousand miles per year they’re going to be driving a hundred thousand miles per year and that’s where essentially an e V which can last five hundred thousand and soon will last a million right miles shines because they can last five years the same vehicle where else be internal combustion engine automobile usually lasts one hundred and forty thousand miles even if you push it you push it to two hundred thousand so even at two hundred thousand that is less than a year and a half if you run it like an over autonomous right it can’t compete against the five hundred thousand miles easy does that make sense so when you compare autonomous electric and on-demand with autonomous eyes on the and essentially the eyes can’t compete combustion engine cannot compete so we did the numbers comparing all you know permutations of on demand versus individual ownership and ice versus evey and so on and so forth and you know essentially if a company competes you know they say oh I’m going to be the uber you know off of and I’m going to use the same internal bus an engine automobile they can’t compete because this is the cost of AEV autonomous electric vehicle and this is the cost of a eyes so they either go bankrupt or they’re going to have to move their fleet to electric so in the end it’s all going to be electric because of that why for purely economic reasons so let’s assume that 2021 is when we have autonomous vehicles the technology and they’re approved by the regulators to essentially go on open open roads not all they could be geofence over the you know the first couple years essentially the day that autonomous electric autonomous vehicles are approved the cost of transportation on a per mile basis is going to be ten times cheaper with transporter service by ABS than it is to own a car a combustion engine car ten times now every time did I say that this is my work disruption okay so I have looked the disruptions all the way back Oh Gutenberg the printing press when the first book the first Bible came out of Gutenberg printing press it was ten times cheaper than a manuscript Bible 10x every time there has been a 10x improvement in cost on a same product or service basis there has been a disruption every single time I know of no other case of no case where a 10x did not lead to a disruption so on day one in 2021 that’s going to happen what are we going to do when if we owned a car already then you know we may drive it for a little bit but if you’re going to buy a new car 2021 essentially here’s what you’re going to decide do I want to spend 10 grand a year over the next five years or so on spent Oh $1000 a year over the next five years no-brainer right I mean essentially you’re not going to buy in your car period and even if you are driving the exert your existing car even if you’re driving a car that essentially your uncle gave you free free right that you already paid off that’s going to be up to four times more expensive on a per mile basis then AEV four times so you’re going to be like wait a second I paid off my car and you had the cost of gasoline and insuring and maintenance and so on is four times more expensive than taking this transporter service and by the way I don’t have to drive so as people give up their cars essentially what’s going to happen is that cars the used-car industry is going to collapse because nobody’s going to buy new cars it doesn’t make sense to buy new cars and in fact I I think that there’s going to be a negative value of used cars negatives not just zero resale value but negative then you have you’re going to have to pay people to take a car off your hand but but look at the the car companies they’re going to have to compete with two things used cars at zero and AEV which is ten times cheaper what do you think it’s going to happen who’s going to buy a new car so that’s the collapse of the auto industry on combustion engine automobile boom it’s over and it’s also the demise of the individual ownership of cars now every technology like I said successful and certainly a 10x difference in cost would be one growth in s-curves right gets adopted as s-curve so essentially what we modeled was that assuming 2021 is the year when autonomous vehicles are approved it may be a year or two after but whatever it is it’s going to be a ten year disruption so assuming it’s 2021 by 2030 essentially 95% of all passenger miles are going to be autonomous electric vehicles by 2030 95% boom there goes the internal combustion engine industry there goes you know the individual model of ownership of cars so we’re going to have cars as a service just like we have movies as a service and music as a service and software as a service and so on so it’s been pretty much of internal combustion engine and individual ownership of cars so if you have cars that are going around ten basically 40% of the time you’re going to need fewer cars so what we modeled was essentially what came out of our simulations we need the fleet that’s eighty percent smaller of course we’re going to have eighty percent fewer cars on the road yeah that’s because they’re going to go around yeah so you know what happens to parking space gone what happens to insurance car insurance god right and a whole host of other things get disrupted I did the numbers for Los Angeles and the the parking space that’s going to open up in LA you can fit three cities the size let’s go three cities right so I mean do they does LA want to create the wealth of three San Francisco’s or do they want a desert in the middle of Los Angeles so basically these are the decisions that you know that they’re going to have to start making and we’re all gonna have to start making because we’re going to have a lot of empty parking space demand like I said it’s going to collapse for new vehicles because we’re going to need to your new vehicles and so because the AV lasts longer essentially manufacturing new demand for new vehicles is going to go down by 70% so we need 80% fewer cars that last longer so we need seventy percent fewer cars so essentially what does that mean for oil here’s without me this is all about the economics I mean this is this is all about the economics oil demand is going to peak 2020 and essentially it’s going to go down about a hundred million barrels per day and it’s going to go down to about 70 million barrels 2030 by 2030 so it’s going to go down 30% so a lot of the investments that are being made now in oil gone right which ones well the explosive oil because in oil in the business all you need because it’s so in elastic on both the demand and the supply side essentially a two million barrel over supply in the market as we learned in 2014 can make the market crash that prices crash in that going to happen as soon as 2021 assuming that autonomous vehicles are approved 2021 so and the equilibrium price is going to be 25 dollars so any oil that’s produced that that can compete at 25 essentially is unviable unviable and it’s going to be stranded any oil that can compete at 25 is going to be stranded boom right now if you look at what oil is produced cannot compete essentially deepwater gone shale oil dawn sand dawn because they can compete a 25 period so essentially conventional oil it’s going to be the only oil that may survive in those markets because it can compete at 25 so the whole geopolitics of oil is going to change and you know depending on where you are in this market but essentially the disruption of prices is going to happen as soon as 2021 or two and so all the assets by the way what this means is all assets refineries pipelines and so on associated with the expensive oil are also going to be stranded now what would those be Oh higher customisations gone but what about pipelines what pipelines are going to be stranded anyone anyone so any pipelines that basically should I name names out of out of Canada to basically gone right because that oil is going to be gone so it’s going to be stranded anything out of Bakken essentially is going to be stranded oil pipelines and that’s going to happen over the next five years not 20 so if you’re investing on a 10-year basis well you know check that out okay so the last disruption that I’m going to talk about its solar so solar is a technology just like everything that I’m talking about to me these are technologies and you know I spend quite a bit of time in Denmark these days for whatever reason but solar this is a school in Denmark in Copenhagen now Copenhagen is three degrees south of – no Juneau Alaska right and this school generates 50% of its energy annual energy demand with solar in Denmark so you know the excuse is that well we don’t get enough sunshine or what not don’t actually you know basically there’s so much proof that you know in the summer what are you doing this up right 50 percent do you see the solar here where’s the solar huh it’s the walls it’s the walls essentially it’s integrated it’s the walls that’s a solar the whole building is one solar power plant it’s beautiful isn’t it yeah so you know doesn’t matter if you’re in Alaska solar works and it’s very cheap since the years 1970 in 1970 it was a hundred dollars for what and now it’s 30 cents that’s a 300 time improvement since I mean it’s gone down by about 11 and a half percent every year since 1970 in every year essentially you know the propaganda so it can’t possibly go down further guess what happens it keeps going down further without breakthroughs this is just the cost growth of solar and despite all the you know who have a negative press and all that Solar Singh’s thought base has doubled every two years since the year 2000 this is an a global basis that is basically a growth compounded of 40 percent per year doubled every two years since the year 2000 now solar is about all one and a half percent of generation so remember that nil internal combustion engine automobile in the middle of that Street in New York it’s about 1% one and a half percent now if it keeps doubling and it’s doubling every two years how long how many years until solar is 100 percent of the world’s generation of energy let’s do the numbers so what are a percent let’s double it every two two years three percent 1w6 12 percent 24 48 96 6 da please say I’m wrong by a couple years seven doublings that is 14 years so essentially by 2030 or so solar if it keeps growing like this and remember s-curves right exponential it’s going to be 100 percent of the world’s energy generation whoa right can it really do it I mean you can do anything on a spreadsheet but let’s let you know let’s see the economics right let’s do the the trends in conventional energy versus solar all of conventional energy notes and gas and coal and so on have gone up by about 6 to 16 times since the year 1976 to 16 times up while solar has gone down by 300 times right so when you put that together since 1970 school has improved by about 5,000 times versus petroleum and natural gas by about 1,800 times versus coal and again did I say solar PV is a technology it’s going to keep going down so you know we’ve talked about this thing called grid parity right and great diode is the point at which solar on the rooftop is a ski or the same rate or even cheaper than what would be the utility and you know it’s important according to Deutsche Bank by the end of this year 2017 solar will be a core the low grid parity and 80% of global markets that is not bad for an industry in crisis right 80% of world market solar will be at or below utility rate so it’s just a matter of economics it’s going to happen right and what a lot of folks are not talking about is that companies are going solar because it makes economic sense so according to PwC 69% of corporations are actively pursuing solar because it’s cheap right 16 it doesn’t mean that they’re gonna buy it now but at least it’s in the consideration set in companies like Apple are going on 2% and Facebook and you know Amazon and IKEA and so on why because it makes economic sense because when you’re Apple and you have data centers your biggest cost in a data center is what energy and can anyone say that they’re going to give you the same rate the same rate for 25 years no-brainer right for Apple to go have a percent solar it makes total sense and even cuz you know this is Mandalay Bay Casino which essentially put up solar and all its rooftop that generates 25 percent of its energy and they want to get off the grid I mean they want to basically buy in the open market because they’re like you know we can buy solar today which is cheaper than you know what we’re paying the utility and so because of this because we are at grid parity in so many markets the s-curve may actually accelerate it may go way beyond the 40 percent so I’m visiting new term okay I call it God very not great parity now what is that essentially when the cost of solar on your rooftop unsubsidized falls below the cost of transmission so think about that cost of transmission which is anywhere from seven to twelve cents anything that is centrally generated right call nukes you name it whatever anything even as they can generate a zero which is not possible but if they go to CERN to Switzerland and they bring that god particle and they’re able to generate a zero when you add that seven to 12 cents of transmission you’re still not going to be able to compete with self generation does that make sense that’s what I call God parity at that point and this is just solar generation solar plus storage and so by 2020 in places like Colorado you’ll be able to generate unsubsidized solar at four cents four cents on the rooftop central generation boom gone it’s going to be obsolete because there’s going to be so much generation in homes and businesses at the malls and parking lots and so on and so forth right because it’s going to make economic sense because when the Sun shines and I think it shines here about 2,000 hours per year essentially there is no cheaper form of energy generation than solar on your rooftop okay so essentially utility scale gone right anything central generation essentially can’t compete with self generation and even when you add the cost of storage which is going down by about 20% by about 2020 you should be able to buy solar plus storage at about seven cents seven cents so solar plus storage it’s going to be still less than the cost of transmission at that point everyone everywhere it’s going to make selfish you know when you make the selfish economic decision it’s going to be to go solar and that’s going to happen by 2020 this is only three years away and that’s when basically the curve the s-curve really accelerates because it’s going to in everyone’s selfish economic interest to go solar so every house and business and warehouse and in factory and so on is going to have solar because it’s going to be in their best selfish economic interest now what can happen in cities that can’t generate a hundred percent I’m not saying that folks are going to get off the grid most of us cannot generate all we need but essentially it’s going to be a distributed like the internet it’s going to be an Internet of energy an Internet of solar and Internet of batteries what happens with data centers and aluminum smelters and so on well we still need utility scale and what is happening in any large-scale generation is that essentially we’re falling under four cents per kilowatt hour in solar you know and just to give you an idea solar at about five point eight cents is equivalent to gas at five and it’s equivalent to oil at ten good luck competing with solar right and that’s at four point eight cents now we’re below way below that already in fact in Dubai they announced that three cent solar two point ninety nine cents that’s half of five point eight right and in Dubai in Abu Dhabi they announced a two point four cents per kilowatt hour two point four right I mean I I spoke with the CEO for utility who had just signed a three cent deal and he asked me do you think I paid too much so no no no hear me out in 2009 I published a book called solar trillions where I said that solar was going to be below three point five cents like 2020 and what did people tell me yeah what are you smoking right you know and that was in 2009 and guess what we blew past that okay and that sounded insane in 2009 when solar was at 30 cents but all you needed to do was do the cost curve of both solar and capital costs right so at 3 cents there is nothing nothing that can compete with utility-scale solar at this cost not gas not cold nothing can compete with solar at 3 so with recent period in the story so it’s actually anything any new investments have to go solar because any other investments are going to be stranded any nuclear any coal any natural gas is going to be stranded in a place where you have sunshine the way you have here without at least in in the desert and not only that solar some folks are saying oh but what about storage I mean you can only generate you in the day what about in the evening well guess what Tucson Electric just announced solar plus storage at 4 and 1/2 cents 4 and a half cents gone everything else gone so solar distributed other because of the economics is going to eat everything because it’s going to make genomic sense and that’s going to happen in most places by about 2020 it’s already happened and places like Australia Australia solar residential is 25 percent 25 percent of homes in Australia have solar I mean the equivalent here would be 20 million houses right now in Australia transmission is 12 cents solar is 7 cents so the concept of God parody which again sounded crazy three years ago it’s already here I mean it’s already happening and in some markets around the world and of course speakers already obsolete you know Pickers generate at 20 cents 40 cents 70 cents and when solar plus storage is four and a half cents and you know this is pure economics right it doesn’t make sense to build beakers anymore so let me let me wrap it up and let me go back to the future its 2017 and we’re here a lot of the technologies that I’m telling you about are still in the one to two percent or so market globally in some countries like Germany it’s 50 percent or 30 percent in Australia residential it’s 25 percent but globally it’s about one percent what a half percent which leads mainstream analysts say not going to happen anytime soon but the economics already here I mean the unsubsidized solar the economics already here and this is not an energy transition this is a technology disruption and it’s going to happen very very very quickly and the tipping point is going to be about 20 20 or so for both energy and transportation thank you [Applause] thank you thank you since thank you you you


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