Transitioning towards the solar economy

Solar economy

The global demand for energy and the consumption of electricity, in particular, are increasing, but so are the concerns for climate change. At Fortum we believe in a more efficient future energy system that is based on emissions-free and renewable energy sources. We call this the solar economy, a description of a society that tackles two major challenges simultaneously: the need to improve resource efficiency and lower emissions. The transition towards the solar economy has already began in Europe, and it will change the way electricity and heat are produced and used.

In conventional energy production, the combustion of non-renewable, fossil fuels, such as coal, oil and gas, in centralised units provides the main source of energy. This conventional energy system, and particularly the use of coal, burdens the environment and its total efficiency is poor. Because it is also based on finite resources, it is unable to meet the demands of population growth, fast urbanisation and climate change mitigation, all of which require higher resource efficiency, less pollution and solutions to global warming.

The solar economy provides solutions for increased demand of energy, climate change mitigation and resource scarcity. In the solar economy, energy from the sun is used either directly as solar electricity or heat, or indirectly as hydro, wind and bioenergy, and in the future also as ocean energy (tidal and wave energy). The energy system will be more dynamic and smarter than today. Electricity and heat can be produced both in a centralised and distributed manner. In the coming years, demand flexibility will further improve as new solutions are developed for storage, aggregation and heat accumulation, for example.

The transition to the solar economy is ongoing, but it will take years. During this time traditional production forms will be further developed and used alongside the renewable production. Production forms that are able to balance the increasing intermittency of the energy system, forms such as hydropower, will be even more important during the transition.

Of the renewable energy forms, hydropower and bioenergy have in many respects been mature technologies for decades. Solar and wind power, which are today still subsidised, are quickly reaching maturity; with declining production costs, they will be integrated into the energy market over time and on their own merits. The use of wave energy and large-scale geothermal energy are still in the test phase; their advancement into commercial technologies may be more than a decade away.

The conventional retail interfaces will also change in the solar economy. Digitalisation enables new scalable services to consumers, and the growth of decentralised generation means that many consumers will become "prosumers" with their own production as well as consumption.

In addition to technology advancements, changes in the energy markets and infrastructure will be needed over the course of the coming decades to carry the investments the transition requires. The length of the transition period and the total costs depend on political decisions, society’s priorities, and investments in technology and R&D.