Thinking about Tomorrow #1: Igniting a new energy era
At the COP28 UN Climate Change Conference in late 2023, leaders once again called on the world to transition away from fossil fuels at top speed — “accelerating action in this critical decade, so as to achieve net zero by 2050.” This directive reflects the urgency of climate action. Yet it does little to explain the tangible steps the world must take to phase out coal, oil, and natural gas from our energy systems.
This is why we are launching Thinking about Tomorrow — to share perspectives on the world’s critical climate challenges, the most impactful technological breakthroughs, and the stories of the next era-defining companies.
In this very first edition of the series, we will delve into:
🔥 Fossil fuels’ continued tenacity in the global energy mix
⚡️ Electricity as the driving force in the clean energy transition
💎 The indispensability of solving intermittency & decarbonizing baseload
💥 A brief (dumbed-down) excursion to fusion energy
🚀 The generational opportunity behind rebuilding our world’s industries
In doing so, we explore pinpoint areas where breakthrough technology can drive radical change in the global energy landscape. Numerous industrial sectors — among them power generation, transportation, manufacturing, and heating — have built the modern world fundamentally on fossil carbon. A transition to cleaner energy sources requires us to understand these industries — especially power generation.
Fossil fuels still dominate the global energy mix
Let’s look at some fundamental data, beginning with the share of the world’s primary energy consumption — that is, the total energy taken directly from natural sources without being converted or transformed — that historically has come from fossil fuels. Despite the growing adoption of green technologies, fossil fuels still power the majority of our daily activities, from driving cars and heating homes to generating electricity and manufacturing key materials such as cement, steel, ammonia, and plastic.
Only during the past ten years have solar, wind, and biofuels started to play a notable role in the world’s energy mix. Today the world is creating more renewable energy than ever. Yet it’s also burning more fossil fuels than ever.
Fossil fuels’ relative share of primary energy consumption remained roughly the same from 2000 (84%) to 2022 (85%). At the same time, overall consumption of fossil fuels rose by about 44%!
Explosive industrial growth in China, which burns fossil fuels for 85% of its primary energy supply, and other (formerly known as) developing countries drove much of that demand.
Even outside China, fossil fuels remain stubbornly ubiquitous. The United States burned fossil fuels for 82% of its primary energy consumption in 2022. In Germany, that figure was 79% — down only modestly from 84% in 2000 — despite decades of the Energiewende’s low-carbon energy policies. Clearly, sectors such as transportation, manufacturing, and heating have an outsized thirst for fossil fuels — and that demand will further increase at the global level. So if countries are to make any dent in overall demand, they must transition those sectors away from fossil fuels and toward clean electricity.
To do that, however, countries will need to multiply their dispatchable (baseload) clean power generation and solve the vexing intermittency challenge that renewables present. We will discuss those obstacles in more detail below, but in short, the world must create a great deal more electricity from clean energy sources and find ways to deliver that electricity consistently, even on days without sunshine and/or wind.
The environmental costs of the status quo are tremendous. Annually, the burning of fossil fuels releases around 37 billion tons of CO2, accounting for over 70% of the world’s greenhouse gas emissions. Despite countries’ commitments to change, various scenarios predict global emissions to remain above the 1.5ºC pathway that would limit the harms of climate change. According to the International Energy Agency, we need to reduce global fossil fuel use to 50% of 2020 levels by 2035.
This means that the world would need to significantly phase out 140 years of fossil fuel reliance within just 15 years.
Merely cutting back on coal, oil, and gas will not give us a net-zero future. Instead, we must fundamentally rebuild our entire energy landscape to effectively transition away from fossil fuels — transforming the ways we produce, distribute, and store energy alongside how we use it in our daily lives and industries. The scale at which these changes need to happen far exceeds the capabilities of the physical infrastructure that provides the world’s energy today.
We believe that this transformation will not happen without a new wave of technological breakthroughs and courageous founders driving those innovations to scale. Rethinking and replacing trillion-dollar industries is a monumental challenge. Yet these efforts offer an even greater opportunity. And truly they are the only way forward to 2050 and to the world that future generations will inherit.
Electricity is leading the clean energy transition
Achieving a sustainable energy system depends on global electricity reaching net zero — i.e., the state where emissions of CO2 due to human activities and removals of these gases are in balance — in 2040. Currently, the world emits more than 35% of its global CO2 by generating electricity, the largest single source of emissions. Yet power generation, given the unprecedented momentum behind renewables and its potential to decarbonize hard-to-abate sectors, also leads the clean energy transition.
The costs of installing solar and wind capacity have fallen so steeply in recent years that adding new renewable capacity is, in many cases, cheaper than fossil fuel options. The price of electricity from solar went down by 89% from 2009 to 2019. These advances allowed, for example, Germany to increase its installed capacity of solar photovoltaic systems from 114 MW(peak) in 2000 to 67,399 MW(peak) in 2022, raising its renewable energy share from 6% to 55%. Taking it one step further — and demonstrating what’s possible with a small, well-interconnected grid — Denmark now generates more than 80% of its electricity from renewables, with almost 60% of it coming from wind alone.
While this trend certainly shows the way forward, these victories unfortunately pale against the rise in fossil fuels elsewhere (see Fig. 2), and indeed they may obscure some hard limits to the large-scale adoption of renewables, namely intermittency — the pesky fact that while we can generate electricity from wind, we cannot control when or how insistently that wind will blow. And, as every vacationer can attest, we also don’t have control over the sun’s presence.
However, the success in scaling renewable energy efforts has fed some positive feedback loops. Cheaper clean electricity, complemented by several regulatory measures, has enticed consumers to increasingly opt for electric vehicles and heat pumps due to their potentially lower operating costs over time. This start of a flywheel effect is helping the world move away from legacy fossil fuel infrastructure, making clean energy more abundant and accessible.
A clean-energy future will run on electricity, and as we electrify industries such as transportation, manufacturing, and heating, we will see numerous benefits: increased efficiency, greater cleanliness at the point of consumption, and the elimination of bulky fuel storage and transport. But those industries will require a lot of additional juice to run.
That’s why on the 1.5ºC pathway, global electricity use is expected to triple between 2020 and 2050.
Thus, decarbonizing existing electricity generation is only part of the solution. The world needs to add significant carbon-free capacity to power newly electrified sectors, as the current electrification push is spreading fast: The past few years have seen repeated record growth in renewables, heat pumps, and sales of electric vehicles (EVs). We’re at an inflection point of a new era. While the 2000s were marked by advancements in photovoltaics (PV) and wind energy, and the 2010s were the era of batteries and EVs, the next decades will belong to clean energy technologies, driven by a perfect storm of regulation, industry commitment, and consumer awareness.
However, our existing energy system simply will not support a future-proof, decarbonized electricity grid. It’s not suited to handle the fluctuations of renewable energy, nor can it meet the escalating demand for electricity alongside the need for flexibility and sustainability. This gap between current capabilities and future needs represents a tremendous opportunity for startups to build novel solutions to the most challenging bottlenecks.
We focus on the practical and tangible aspects of this new era. We want to back the instigators of a fundamental shift in our global energy and industry landscape. We acknowledge that both software and hardware innovations are crucial to creating a future-proof energy value chain. While software innovation plays a crucial role in tackling areas such as decentralized energy resource management, demand response management, and providing consumption-side solutions,
we believe in the massive era-defining potential of startups building breakthrough solutions in the physical world.
These companies, deeply rooted in novel scientific and engineering advances, will lay the infrastructure for how we generate, distribute, and store energy in the future.
What keeps us up at night
The journey toward a sustainable energy future presents two pivotal material challenges: handling the intermittency of renewable energy sources and decarbonizing baseload energy. We believe that companies disrupting these spaces can unlock and capture immense value in the energy systems of tomorrow.
Handling intermittency
Intermittency is unquestionably one of the biggest challenges in the world’s energy transition. Inherently, the production of wind and solar energy is subject to natural variations that lead to supply shortages and volatile prices. (Photovoltaics, for instance, work only about 10–25% of the time on cloudy days.) This poses a formidable obstacle to countries trying to build a highly (99.9999%) reliable electrical grid on renewables. Germany, for example, after two decades of Energiewende (and nuclear phase-out) and despite newly installed renewable capacities, still continues to maintain almost all of its fossil-fired infrastructure to avoid the risk of supply shortages and power outages.
We may be able to solve for intermittency with a combination of better energy storage and enhanced transmission systems. For nations to run on renewables, they need extensive grids of high-voltage lines to transmit electricity from the sites of production to points of consumption. That transmission technology exists, but lengthy permitting, siting, and “not-in-my-backyard” (NIMBY) objections have slowed the construction of high-voltage lines.
Meanwhile, long-duration energy storage (LDES) faces hurdles in its technological maturity and economic viability. At present, no one can afford to store enough electricity to run a medium-sized city for a week or run a megacity for even half a day.
Consequently, most scenarios predict that global demand for natural gas will actually rise until 2040, as countries use it to balance renewable energy generation.
Thus, to phase out fossil fuels, the world urgently needs breakthroughs in grid-scale energy storage.
Grid-scale storage encompasses technologies linked to the power grid, designed to store energy and then supply it back during times when electricity is scarce. This includes “long-duration” energy storage systems, which are capable of supplying energy for at least 10 hours at a stretch. Currently, hydropower dominates this sector. However, the landscape is shifting, with lithium-ion batteries expected to drive the majority of storage growth worldwide. Despite their growing prominence, lithium-ion batteries face challenges, including high costs and the vulnerability of their input materials — lithium, nickel, cobalt, and graphite — to supply chain disruptions, posing potential obstacles to their widespread adoption. Besides lithium-ion batteries, there are several technological pathways to grid-scale energy storage:
- Pumped storage hydropower: Water is pumped from a lower to an upper reservoir to store energy. When it flows back to the lower reservoir it spins turbines, generating electricity.
- Redox flow batteries: Pumping negative and positive electrolytes through energized electrodes in electrochemical reactors.
- Compressed air: Storing electric energy in the form of potential energy (compressed air) and discharging through the expansion of the stored air with a turboexpander generator.
- Flywheels: Acceleration of a rotor to a very high speed and storing energy in the system as rotational energy. Reducing the rotational speed extracts energy from the system.
- Hydrogen: Conversion of electrical energy into hydrogen as chemical energy storage. The gas can then fuel a combustion engine or a fuel cell.
- Thermal energy storage: Storing electricity as heat in a medium and converting it back to electricity via a heat exchanger.
- Supercapacitors: These store energy by gathering an electric charge on porous electrodes filled with an electrolyte solution and are separated by an insulating porous membrane.
Several economic and technical factors affect the deployment of grid-scale energy storage. On the technical side, considerations include energy density, which determines how much energy can be stored in a given volume; efficiency, or how much of the stored energy can be used; discharge duration, which affects how long the energy can be supplied; and operational lifetime, reflecting how long the system can function effectively. No storage project will be built without first passing a review of its environmental impact throughout its lifecycle, from production to disposal. We must also consider a technology’s functional flexibility for applications such as load leveling, peak shaving, and emergency backup; its robustness to perform under different temperature conditions; and the resilience of the supply chain that will ensure the availability of necessary material inputs. And, at the local level, we cannot overlook the importance land use will have on whether a community accepts or rejects a given energy solution.
Economically, the levelized cost of storage (LCOS) plays a crucial role.
LCOS is a measure of the cost of storing energy, accounting for the total lifetime costs (including capital expenditures and operational expenses) and the total amount of energy the system can store over its lifetime.
LCOS provides a standardized way to compare the cost-effectiveness of different energy storage technologies regardless of their specific characteristics or applications.
As renewable energy generation continues to grow, the annual installation of long-duration energy storage technologies is projected to increase at a CAGR of 48% from 2024 to 2044, resulting in a $223bn global market. LDES is essential not only for enabling the large-scale deployment of renewables by balancing supply and demand over longer periods but also for enhancing energy security and ensuring system resilience, making it a critical component of the future energy landscape.
Decarbonizing baseload generation
The energy transition demands that we transcend simplistic solutions. Should we deploy more storage? Or decarbonize baseload generation? Critically, the answer is both. Decarbonizing the world’s baseload energy is an irresistible goal, given its vital role in meeting the foundational electricity demand of our societies, industries, and critical infrastructure. Storage technologies are essential for grid flexibility and balancing intermittency, but they have yet to match the energy density and output capabilities of large-scale baseload generation. Finally, we must note that the infrastructure for centralized baseload electricity generation is, crucially, already in place. Building a grid fully powered by renewables and storage will require substantial investments, regulatory changes, and an unknown amount of time.
A resilient energy infrastructure will require an integrated approach — one that blends the strengths of storage with the reliability of baseload generation. Countries that decarbonize their baseload electricity while deploying large-scale storage will become more stable and independent. They will rely less on fossil fuel imports and protect themselves from price fluctuations and supply disruptions. In this light, we should see decarbonizing baseload generation and solving for energy storage as complementary strides toward a sustainable energy future.
Historically, countries have met their baseload electricity — the continuous, reliable electricity supply essential for grid stability — using coal or nuclear fission power plants. These facilities are characteristically large and capable of producing a steady output of electricity.
The drawbacks to coal are well-known.
Yet global coal-fired generation reached an all-time high in 2023, accounting for more than one-third of total electricity production.
As a result, CO2 emissions from coal-fired power plants hit record levels, accounting for nearly 70% of total global electricity sector emissions (see Fig. 4). That same year, nuclear (fission) energy generated 9% of global electricity. Fission does not release CO2 as a byproduct and supposedly has prevented 70 Gt of CO2 emissions over the last 50 years. Countries need to deploy more nuclear power plants, the IEA states, if they are going to align with the net zero scenario. However, high costs, long construction times, and public opposition due to concerns over radioactive waste management hinder the effective deployment of additional fission capacity in some regions.
The world’s continued reliance on coal and nuclear energy captures a paradox at the heart of baseload generation: The sources that provide the most dependable supply of electricity also pose the greatest environmental threats. Decarbonizing baseload generation thus amounts to an environmental imperative that will define the energy landscape for decades to come.
Enter fusion energy, potentially the missing piece of the renewables puzzle — that is, carbon-free dispatchable energy.
Fusion energy brings the unique advantages of producing no CO2 emissions, carrying no risk of uncontrolled nuclear chain reactions, and posing no threat of long-lived radioactive waste, making it an almost utopian option for clean, safe, and abundant energy.
Join us on a brief excursion to scratch the surface of this fascinating field (or click here to skip).
How fusion and fusion reactors work
Fusion’s appeal lies in its energy density — just one gram of fuel may generate 90,000 kWh of energy in a power plant, equivalent to the combustion heat of 11 tonnes of coal. The major byproduct of the process is a miniscule quantity of helium, an inert, non-toxic gas. No wonder fusion is often referred to as the holy grail of clean energy.
Fusion involves the merging of two light atomic nuclei, also called fuel, to form one heavier nucleus. The primary fuels used in fusion are deuterium and tritium, both isotopes of hydrogen. These isotopes are chosen for their high reactivity and their fusion rate at (relatively) lower temperatures. When they fuse, they create a helium nucleus, release one neutron, and generate a massive amount of energy — bearing out Einstein’s principle (E = mc^2) that mass can be turned into energy and vice versa. The generated helium nuclei, called alpha particles, further contribute to the fusion process by transferring energy to surrounding fuel, helping to sustain and propagate the fusion reaction while the neutrons’ energy can be captured by the reactor’s walls.
Deuterium and tritium don’t merge easily. Both ions are positively charged, and naturally repel one another as surely as the positive ends of two magnets. Overcoming this so-called Coulomb repulsion requires energy. That is where plasma comes into play. Plasma, known as the fourth state of matter, develops when we heat the fuel. Under extraordinary pressure and heat — fusion reactors create temperatures of more than 100 million degrees Celsius, surpassing the core of the sun — electrons strip from atoms, molecules break down, and a cloud of very fast, charged ions forms: Plasma. Fusion occurs when the kinetic energy of those ions is high enough to overcome the Coulomb barrier.
The two major branches of controlled fusion research are Magnetic Confinement Fusion (MCF) and Inertial Confinement Fusion (ICF). Research on MCF began in the 1950s. This approach involves heating plasma externally via a current, electromagnetic waves, or injections of very fast particles. Magnetic fields then confine and thermally insulate the fuel, ensuring it doesn’t touch the reactor vessel’s walls. This is critical, as contact with the walls would cool the plasma.
Scientists began exploring ICF in the 1970s. This technique involves compressing and heating a pea-sized capsule filled with fusion fuel to extremely high densities and temperatures using a focused array of lasers. Nanoseconds before the lasers blow the capsule apart, a fusion reaction in the so-called hot spot occurs and spreads outward. The generated helium nuclei collide and release massive quantities of energy in an incredibly brief burst. The fuel becomes a dense plasma and burns up in a microexplosion. That’s why it’s called ICF — the fusion plasma is held together by only its own inertia (without magnets).
MCF devices, such as Tokamaks or Stellarators (see Fig. 5), sustain plasma within magnetic fields to facilitate ongoing fusion reactions. ICF by contrast operates on a pulsed basis, involving the sequential insertion and targeting of fuel pellets with high-energy beams to trigger fusion (see Fig. 6). In both MCF and ICF designs, the walls of a reaction chamber capture the energy from the rapid neutrons released during fusion. These walls, known as blankets, absorb the neutrons’ kinetic energy and convert it to heat, which then can be used to power turbines that generate electricity.
Researchers and engineers are also exploring other reactor designs — such as the field-reversed configuration, Z-pinch, or projectile-based ICF — that we will not detail here. Each fusion method, crucially, comes with distinct advantages and challenges. As research continually advances across all fusion fronts, we should not prematurely rule out any approach, as progress in one can benefit the others.
How to measure fusion power plant readiness
No matter their approach, reactors share a common goal of achieving the precise conditions needed for fusion and sustaining that reaction long enough to generate energy. Two concepts to assess a reactor’s readiness are the triple product and the fusion energy gain factor Q. As the name suggests, the triple product is a figure of merit equal to the product of the density of ions in the plasma, the temperature of those ions, and the energy confinement time.
Once these three conditions meet a value called the Lawson criterion, fusion reactions can reach a state of ignition. That’s the point at which the increasing self-heating through the alpha particles of the fusion removes the need for external heating, and the fusion reaction becomes self-sustaining. ITER, the international research and engineering megaproject in France and soon-to-be the world’s largest Tokamak, is expected to be the first experiment to reach the triple product value needed for a deuterium-tritium power plant.
Reactors also consider Q — the fusion energy gain factor. In short, Q weighs what you get out of a reactor against what you put in, across three scopes of consideration: plasma, engineering, and commercial. Q(plasma) describes the energy released by the fusion reaction divided by the energy that reaches the fuel. Q(engineering) refers to the electrical gain of a power plant divided by the electrical energy put into the system, thereby accounting for the need to extract energy from the reactor, turn that into electrical energy, and feed some of that back into the heating system. Finally, Q(commercial) measures the economic value of any net electricity left over after recirculation divided by the capital and operating costs of the reactor.
To date, fusion reactions remain mostly experiments that don’t incorporate electricity-producing components such as turbines and heat exchange infrastructure. So the most common reactor measure is Q(plasma). The National Ignition Facility (NIF) in 2022 achieved a Q(plasma) value of 1.5 (net energy gain) in an experiment that used 2.05 MJ of laser energy to produce 3.15 MJ of fusion energy. However, due to the efficiency of the NIF’s doped glass lasers, the input energy to the laser system was around 400 MJ, a figure that would affect Q(engineering) accordingly. It’s worth noting that MCF devices show a higher ratio of Q(engineering) to Q(plasma) than ICF devices. This means MCF devices more efficiently turn the energy used for heating into electricity.
The various fusion development areas share a common concern: fuel sourcing. A future plant could operate efficiently on a mere 250 kg of fuel annually, split evenly between deuterium and tritium. The more accessible input by far is deuterium, which can be distilled from seawater. Tritium by contrast naturally occurs only in trace quantities — and may be best generated during the fusion process itself. When the neutrons released during fusion hit a reactor’s blanket walls, they are supposed to react with lithium to produce tritium and helium. The tritium can then be removed from the blanket and recycled into the plasma as fuel. This crucial process, known as “tritium breeding,” remains under development. ITER will be the first initiative to experiment with this aspect of tritium self-sufficiency.
(End of the Fusion Excursion)
The question of when fusion energy will begin to feed global electricity grids of course affects its private investment viability. We are well aware that many timelines for fusion research have proven painfully optimistic. Yet as we size up this moonshot endeavor, we see several positive factors coming into alignment.
Advancements across several critical technologies are paving the way for a new class of fusion reactors: high-performance computing for simulations, machine learning that aids designs, high-temperature superconductors for magnets, and metal 3D printing for manufacturing. In addition to that, notable achievements in fusion experiments show accelerated traction in the field. The Joint European Torus (JET) recently set a world record for energy output in a fusion experiment, improving the gained energy by 400% basically within the same 40-year-old experimental machine.
This leap, together with the maturing of key enabling technologies, underscores the massive optimization potential in fusion reactors and provides a glimpse into what’s possible as startups are developing new devices with state-of-the-art technology.
The impact and commercial opportunity of fusion power plants is unmatched. Such a breakthrough promises clean, abundant baseload energy that would enable the widespread electrification of industries. And it promises to spur the development of new applications: Just imagine powering seawater desalination or direct air capture facilities irrespective of the availability constraints of wind, solar, or hydropower. Net-zero scenarios have set aggressive growth trajectories for low-carbon electricity generation, and renewables alone are a long way from entirely replacing fossil fuels. Fusion companies that offer a resilient, autonomous energy supply are poised to tap into a multi-trillion dollar market.
Looking ahead
Our exploration of the future of energy must conclude that transitioning away from fossil fuels towards a net-zero future is a monumental task. The COP28 directive underscores the urgency of this global mission. The journey ahead demands of us a prodigious ambition: We need to fundamentally rebuild the physical (and digital) infrastructure of our energy landscape.
This article navigated through the persistence of fossil fuels, the multi-faceted nature of a future-proof energy system, and the potential for breakthrough technologies to drive radical changes across various sectors, most notably in power generation and storage. We doubled down on the pivotal need to decarbonize baseload generation and to solve the intermittency challenge of renewables. From an entrepreneurial lens, this transition embodies an unparalleled opportunity for innovation.
For the world to succeed in those two areas — and thus make this energy transition a reality — we urgently need the next generation of era-defining companies to lead the way. The time is now.
We are committed to backing these visionaries. We believe in the power of scientific and engineering breakthroughs to radically disrupt our world’s largest industries. If you’re a mission-driven founder building the next climate deep tech instigator, we want to hear from you. Please get in touch with us to explore how we can supercharge your journey toward a brighter future with the help of today’s industrial and entrepreneurial giants.
Thank you for sticking with us to the end! You’re clearly as obsessed as we are about solving the sorts of big energy puzzles that keep us awake at night. We care about our sleep, so we’ve actually put our money where our mouth is, investing in bold founders working to disrupt grid-scale energy storage and fusion energy. If you’ve enjoyed this deep dive and want to stay in the loop with our reflections — as we will share more about these ventures soon — follow us on Medium and LinkedIn. Let’s keep up the work!
