Why the energy mix of the future is diversified

We’re seeing a global energy industry under transformation. And this isn’t the first time. Throughout history — from the steam power of ancient Alexandria to the Texas oil fields discovered in the 1900s — exploration, research, and technical innovation have driven our consumption of energy.

Today, the growing global economy and population mean global energy needs will increase 30 percent by 2040. To answer that demand, the changing energy industry must focus on new trends: decarbonization, digital disruption, interconnectedness, and grid modernization. How? By investing in a diverse resource mix.

Renewables and other low-carbon fuels make the right mix for the industry to stay on track.

These days, carbon footprints and environmental responsibility remain top of mind for many Americans, especially those working in the energy industry. The international call to limit the average global temperature increase to 2°C by 2100 means countries must drastically lessen greenhouse gas emissions over the coming decades. But various scenarios developed by the International Energy Agency (IEA) suggest that they must first build portfolios of multiple energy solutions before transitioning fully to carbon-free renewables. Today, renewables alone can’t meet our future energy needs, since most are susceptible to changes in weather and time of day.

That’s where diversification comes into play. Diversifying our energy mix to include an array of low-carbon resources — both renewable and not — helps build political independence, economic growth, and environmental protection. One of the largest energy companies in the United States, Southern Company, is doing just that by leveraging an “all-of-the-above” energy strategy and diverse energy portfolio to reduce environmental impacts, improve reliability, and promote innovation to meet the needs of its 9 million customers. Maintaining resource diversity is the key to reducing emissions while preserving reliability and affordability, and companies like Southern Company set the precedent for a low-carbon future.

An industry that diversifies like this becomes less dependent on outside suppliers, or single sources of fuel, which would otherwise make the country more vulnerable to market fluctuations and geopolitical crises. For example, take a look at the energy crisis of the 1970s, when political events in the Middle East and Iran impacted US fuel. In 1973, Arab nations cut off oil supplies to the US, tripling prices overnight. And in 1979, the ousting of Iranian leadership raised prices by 150 percent. Americans worried about an oil shortage lined up, car after car, to buy whatever they could. This panic resulted from a dependence on imported and single sources of fuel. Diversification and the services that complement it, on the other hand, could form a buffer against such shocks as well as control over energy usage.

“One source means you’re putting your eggs in one basket, so you’re more susceptible to market fluctuations and interruptions and various market conditions,” explains Chris Womack, executive vice president and president of external affairs at Southern Company. “When you have a lot of other resources to draw on, you’ve got an edge and you’re better protected.”

For Southern Company, the transformation has been immense. Over the last decade, it’s retired or converted over half its coal units to natural gas. Today, Southern Company’s resource portfolio is made up of 47 percent natural gas, 28 percent coal, 15 percent nuclear, and 10 percent renewables. And as its energy mix changes, so does the grid.

“You cannot put new technology on an old platform without updates and expect it to work seamlessly,” says Womack. “Grid modernization is just that: updating the grid so that it can handle the innovative advances in technology that allow us to continue delivering clean, safe, reliable and affordable energy to our customers.” Southern Company has invested nearly $25 billion into grid modernization to help reach low to no carbon use by 2050.

Innovative technologies like smart grids pave the way for resource diversity and carbon reduction.

Many energy utility companies have begun the hard work of transitioning away from coal and to more diverse sources of fuel. In fact, coal has taken a back seat to natural gas and renewables like solar and wind power as prices fall worldwide.

Energy efficiency is reshaping the entire industry. By reducing the need for imports, it’s led to greater energy security, as well as savings for households across the globe. And energy efficiency has pushed the industry toward more innovative and smart technology like smart meters and LED lighting so that consumers continue to use energy but at a lower demands.

In Atlanta, Georgia, and Birmingham, Alabama, Southern Company’s state-of-the-art Smart Neighborhoods are just one example of diversification ingenuity. The Alabama neighborhood features the Southeast’s first community-scale microgrid, made up of solar panels, battery storage, and a natural gas generator that function together to provide power. Advocates for smart grids like this say they’re efficient, accommodating to a variety of fuel sources, quality-focused, resilient to attack and natural disaster, and green. In a world with more energy demands, intelligent grid systems can also prevent power overloads.

The innovative diversification continues through technology like fuel cells — battery-like instruments that typically rely on hydrogen fuel and don’t need recharging — and small modular reactors, devices that harness nuclear power to release energy, process heat, and more. “Whether it’s fuel cells, whether it’s more battery storage, whether it’s more small modular reactors, whether it’s different nuclear technology, I think the future’s bright,” says Womack about the energy mix of the future. With a 95 percent projected increase in global low-carbon fuel demand by 2040, energy companies focused on diversification remain ahead of the curve in meeting needs and expectations.

Diversified, energy-efficient, and automated technology plays a vital role in consumer behavior. Today, that means having the both ability to connect to appliances and devices remotely and the control over energy usage. Such innovation remains a top priority for Southern Company, where engineers and energy experts are redefining what it means to be innovative in an age-old yet crucial industry.