Resources are of broadly two kinds – those we use and those we use up. Electricity offers obvious examples of both. We use the resources that go into the physical assets of the electricity system – the generators, the network and the end-use equipment. These assets may require maintenance and eventual replacement, but they are durable, lasting years and indeed decades. On the other hand, we use up the resources that provide the fuel for fire-based electricity generation.
In generators that use coal, oil or natural gas, fire in boilers and turbines consume fuel resources and convert them immediately and completely into waste gases and ash. For nuclear energy, reactors and other hardware are durable, but the fuel is consumed as the chain reaction turns fissionable uranium into radioactive waste.
Hydroelectricity is different. Some resources go into durable assets such as dams and turbines. Water, while it sits behind a dam, can be seen also as a resource analogous to fuel in that as its level goes down its usefulness is 'consumed'. But the water itself is not consumed. Instead, the physical assets intercept the natural process of water flowing downhill and harvest its energy as the falling water gives up its potential and kinetic energy to turn the turbines.
'Run-of-the-river' hydro harvests the water energy without dam or storage. Much the same is true of wind power. You cannot store the wind. Some resources go to make the durable, physical assets of wind turbine generators and their networks but the resource they harvest is the energy of the continuous natural process of air currents in the atmosphere. Again, nothing is 'consumed'.
Solar photovoltaic (PV) generation likewise harvests the energy of the continuous natural process of sunlight - 'consuming' nothing. But unlike fire, fission-based power, hydro power or wind power – solar PV power operates with no mechanical moving parts, reducing requirements for maintenance and replacement and their concomitant resource 'consumption'.
Today's electricity market, however, treats electricity as a commodity – as though it were a resource to use up rather than just to use. The phrase 'electricity consumption' is commonplace. The flow of electricity is metered and measured and transactions are based on the number of kilowatt-hours passing through the meter. When electricity is generated with fire, dammed water or fission, resources are consumed. In such a case, to treat electricity itself as something to be consumed is at least consistent. This does, however, take for granted the durable long-term resources also required to deliver the electric service, namely the physical infrastructure of the system, which are not consumed.
However, with 'run-of-the-river' hydro, and yet more so of wind and solar generation, treating electricity as a commodity to be consumed is fundamentally flawed. Nothing is 'consumed' to generate this electricity – nothing physical at any rate. The resources to establish 'run-of-the-river' hydro power, wind power and solar power are used but not used up. They create durable physical assets that become infrastructure – infrastructure that produces electricity. The financial transactions involved are investments – not short-term transactions like those for commodities that are consumed. And the revenue streams for infrastructure electricity are determined by long-term business relationships – not short-term commodity transactions or markets.
Unlike fuel, electricity is not a physical substance but a process, occurring throughout an entire interconnected circuit. Treating electricity itself as a commodity means inserting a meter into this continuous process in order to quantify it and define a measured, metered unit to be bought and paid for according to whatever financial agreement or regulatory regime prevails. It also reinforces the concept – introduced more than a century ago by Samuel Insull of Commonwealth Edison – that provision of electricity itself over a local network is a 'natural monopoly', requiring a political franchise in which no one else in the franchise territory is permitted to sell electricity to users.
To assume an equivalence between fuel and electricity means that the essential physical assets of the system, as well as the materials used to manufacture and construct them, fade into the background. They are no longer 'electric resources' but simply building materials – steel and concrete and copper, for example, with nothing particularly 'electric' about them. Moreover, the devices that actually deliver the services, lamps, motors and electronics are no longer considered an integral part of the system, even in resource terms. The role of the system is to produce and deliver electricity – not illumination nor motive power nor information. 'Electricity supply' is the focus of entrepreneurship, planning and policy and the key resource is taken to be the fuel.
Throughout most of the past century this mind-set has prevailed. As well as coal in its various forms, other fuels – heavy oil, natural gas, and uranium each with its distinctive characteristics – are also used to generate electricity as a commodity for sale by the unit. 'Electric resources' are fuels. Even hydroelectricity is treated as though it were a fuel, measured in bizarre units such as 'acre-feet' of water behind dams. The resources required to build the dams do not count as 'electric'.
However, wind power and solar power each require unfamiliar material resources – not for consumption but as integral constituents of durable assets. As wind generation evolves, materials such as cobalt – and even more exotic ones such as neodymium for magnets – are commercially important. Solar electricity attracts commercial attention not only to crystal and amorphous silicon but also to materials such as cadmium and tellurium, that are much less abundant and were hitherto of minimal commercial interest.
Moreover, unlike the electric resources mobilized for most of the past century, the new primary electric resources in the form of wind and sunlight do not belong to any owner. The relevant ownership instead refers to the locations where the wind blows and the sun shines, locations which are not necessarily of any previous commercial significance.
Mobilizing wind and solar resources requires access to these locations, by acquisition or rent. It also requires physical assets such as wind turbines and solar panels, with their unfamiliar material constituents. The spectacular growth of wind and solar generation, coupled with the dramatic decrease of costs, has created a whole new demand for material resources hitherto of minimal or zero commercial significance. These resources, however, go into durable physical assets – they are not 'consumed' like fuel. Much the same consideration applies to the rapidly emerging technology of batteries, notably but by no means only those based on lithium, as innovation accelerates. A corollary consideration for most of these unfamiliar resource materials is that they are not 'consumed' like fuels. Indeed, when their initial utility is exhausted, they may even be recovered, recycled and reused.
Recognizing the increasing importance of this novel and unfamiliar category of resources, the World Bank in 2017 issued a report The Growing Role of Minerals and Metals for a Low-Carbon Future. It examines the resource implications for a wide range of materials, the global distribution of reserves and production, and in particular, the impact on developing countries possessing these resources. The report considers the differential resource requirements of different technology options for renewable generation, and points out that a system based not on fuel but on fire-free infrastructure electricity will require more – not fewer – material resources. The corollary implications for mining and environmental impact will be significant, entailing much closer study.
Comparing the resource requirements of traditional and innovative electricity, however, one consideration stands out. What will matter most in the comparison is unlikely to be exotic materials however rare. One resource is crucial to traditional electricity whether based on fire, fission or hydro generation: water in enormous quantities. A steam-cycle generator, whether burning fossil fuels or uranium, needs a continuous stream of water in millions of litres – not only for the steam cycle itself but also to cool the condensers. A hydroelectric generator needs even larger flows of water to turn the turbines. Recent years have seen both fuel-based and hydro generation curtailed, sometimes severely, by shortages of water. As pressure on global water resources grows more acute, these forms of generation are going to become ever less reliable and ever more controversial.
Wind and solar generation, by contrast, have modest-to-minimal requirements for water. Fabricating wind turbines needs water but in limited quantities: once in operation they use no water at all. Much the same is true of solar PV. In some locations, solar panels will require cleaning – again likely with a limited and potentially recyclable quantity of water. This particular resource advantage of wind and solar generation over traditional generation has received less attention than it deserves. It could become critical.
A further fundamental change is also in train – in effect a return to the model of electricity services that predated Thomas Edison’s central-station system: when Edison sold his customers electric light not electricity. Wind and solar generation and infrastructure generation provide electricity that does not 'consume' anything. Once again the possibility is emerging of complete systems of durable physical assets to deliver illumination, motive power, heat, cooling, mobility and information. Moreover, many of these systems will be local. They will combine generation, network, loads and controls in complete ‘microgrids’. If their generation relies purely on wind and solar PV, the microgrid´s operation may no longer include commercial 'consumption' of any resource.
That will have profound implications for the accompanying financial and business arrangements, which will be very different from those hitherto prevailing for traditional electricity worldwide. The 'electricity market' in commodity kilowatt-hours will fade out of the picture. It will be replaced by long-term contracts and investment, not only in generation but throughout the system, emphasizing efficient high-performance loads. The relevant resources will no longer be fuels to be consumed, but materials to become durable physical assets and infrastructure.
The political implications and consequences of this transformation will be fundamental and far-reaching. Some unfamiliar resources will become important and valuable. But resources now evaluated as worth trillions of dollars may gradually become worthless. The politics of electric resources are long since hotly contested. They will become yet more so.