Industry: The third revolution

By Nicholas Norbrook

Posted on Wednesday, 26 August 2015 08:59

In July 1909, Louis Blériot flew the first flight in a petrol-powered aircraft from France to England. Over a century later, those who benefitted from his daring are attempting to fly around the world, this time using the power of the sun.

The Solar Impulse plane this year managed to fly 7,200km in 118 hours powered solely by solar panels. Just like its predecessor, it is an ungainly, spindly beast. But does it, just like its predecessor, foreshadow a new industrial age?

Economist and writer Jeremy Rifkin says yes. The author of The Third Industrial Revolution and The Zero Marginal Cost Society has been campaigning for decades for economic growth that does not deplete the world’s natural resources.

Though China may still be ploughing its way through copper and oil, President Xi Jinping has ordered underlings to read Rifkin’s books.

But as the arguments rage ahead of December’s talks in Paris over climate-change deals, should African leaders be thinking renewable energy or a quick build-out of coal-fired plants? Certainly, electrical power remains a major obstacle to Africa’s industrial development.

The Africa Progress Panel, headed by former United Nations secretary general Kofi Annan, argues that “on current trends, it will take until 2080 for every African to have access to electricity.”

In a few places, both the huge demand for power and the push for green energy are being met. The new urban rail system that cuts through the heart of Addis Ababa may have its downsides, but you would be hard pressed to find an inhabitant of the Ethiopian capital who was not at least a little proud of the new green and white trams zipping above Meskel Square.

Without the country’s massive investment in electricity generation over the past decade, the electric rail line would have been unthinkable.

The Gilgel Gibe III Dam was completed in June, adding 1,870MW to the grid. Cheap and clean public transport can now drive urbanisation in Addis.

But while Ethiopia remains the exception rather than the rule, Rifkin argues that Africa has the opportunity, as with mobile telephones, to leapfrog legacy infrastructure in the power sector.

In addition to big power plants like the forthcoming 6GW Grand Ethiopian Renaissance Dam, Rifkin sees a decentralised network of small-scale renewable energy generation.

Going off the grid

Expanded access to electricity will largely not come from the national grid but a kaleidoscope of off-grid solutions reaching far out into the countryside, enabled by the ever-plunging price of solar power. “A solar watt, one little watt of electricity, cost $76 to create in 1976.

It costs $0.36 today,” says Rifkin. He points to work in India where social entrepreneurs are hooking up villages to the power of the sun’s rays.

“You know how much this is costing them to connect up a village of 200 huts? $2,000. They lease them solar panels and a smartphone, and it pays them back within a year or two, cheaper than the cost of the kerosene they were using.”

However, the Third Industrial Revolution — a broadly-conceived confluence of activity in the renewable energy, communications and logistics sectors — is not just about hooking up rural villages.

Germany today produces 28% of its power from renewable sources. This is shaking up industries, with the big four German power companies — EnBW, RWE, E.ON and Vattenfall — producing just 7% of that green energy.

Adviser to green-energy pace-setters like Germany and China, Rifkin points to a similar disruption in the music and publishing industry caused by online newspapers and peer-to-peer music sharing. “Millions of small players [in Germany] have come together in electricity cooperatives: consumers, farmers, small companies, neighbourhoods,” he explains.

And energy dinosaur E.ON is joining the party too. “They sold off all their nuclear and fossil fuel, and they are heading towards this new business model,” says Rifkin.

He suggests that to survive the advent of cheap and shareable renewable energy, these big companies will need to learn to become aggregators and managers of power rather than simply generators and distributors, creating partnerships with a small cluster of houses draped with solar panels right up to the biggest corporations.

“They will manage the big data and create analytics with you so that each enterprise can dramatically increase their aggregate efficiencies and reduce their marginal costs to stay competitive,” he adds.

There are some signs that African power companies are putting the first foot on this ladder. In November 2014, Kenya Power, East Africa’s largest power distributor, announced that it awarded a contract to technology firm IBM to provide real-time analytics across its systems.

Africa’s green dawn

Because mobile phones and social networks are also deeply embedded in Africa, the continent should see growing consumer pressure on utilities, says IBM energy specialist Naji Najjar in a nod to Norwegian power companies that create smartphone apps with real-time billing info and the ability to control heating at a distance.

“We are not there in Africa yet. But the technologies are, and African utilities will [eventually] have to integrate them,” says Najjar.

Of course, Africa’s new green dawn is not for tomorrow morning. “Let’s not get carried away,” warns Morocco’s trade minister Moulay Hafid Elalamy.

He points to the upfront costs of renewable energy, which make it unfeasible to roll it out across the continent today. Bruno Koné, Côte d’Ivoire’s telecoms minister, agrees.

Given the population’s very basic needs, the government “cannot connect one village when it could be connecting five,” he says.
According to Robert Yildirim of Turkish conglomerate Yildirim, which is active in Gabon: “Africa needs industrial investment, and renewable energy cannot be the base load.” Rifkin disagrees, citing steel plants in the United States that are upgrading their technology to use renewables.

In Cullman for example, Alabama’s Apel Steel Corporation installed a 340kW solar panel system in 2014 to generate up to 98% of its electricity. Apel plans to save $3m on power bills over the 30-year life of the installation.

To the convergence of the energy and communication networks comes upheaval in the logistics and transport sector to fully ignite Rifkin’s Third Industrial Revolution. Advanced solar-powered drones and driverless cars are the technologies of today, and their costs are dropping fast.

Technology company Google has been testing self-driving cars for the past six years, clocking 1.8m hours of mixed autonomous and driver-led mileage, with just 12 accidents. “Not once was the self-driving car the cause of the accident,” says the company.

Future of logistics

These innovations are not foreign to Africa either. The Swiss National Centre of Competence in Research is supporting the Flying Donkey Challenge to create robust cargo drones that can carry 60kg because African economies are expanding faster than governments can build roads.

The September 2013 Westgate Mall massacre in Nairobi put the prize on hold due to new security restrictions on airborne traffic, but Chinese online retailer Alibaba has begun drone delivery trials in its home market.

More prosaic but no less radical are the car network services like Uber that have mushroomed over the past five years, allowing nearly anyone with a smartphone and a car to become a taxi driver.

In South Africa, Uber has hired security to protect its contractors from taxi drivers angry at the competition, which similarly ruffled feathers in France and Germany.

“For every vehicle shared, 15 are eliminated from production, which is going to disrupt the auto industry in the long run,” says Rifkin.

He points to a study by Larry Burns, a former General Motors vice-president, which found that 80% of vehicles in a mid-sized United States city could be removed with the incipient internet-of-things logistics platform – whereby sensors implanted in everyday objects send a constant stream of data that can be analysed to run, for example, traffic networks.

When you add other breakthroughs – such as the world’s first three-dimensional printed car, Local Motors’ Strati, which premiered at the Detroit Auto Show in January 2015 – the automobile sector, that centrepiece of the second industrial revolution, is facing serious disruption.

Morocco’s Elalamy hopes this will not be happening too soon. His concern is not with the high-tech remodelling of economies but capturing basic manufacturing jobs.

His government successfully attracted French auto manufacturer Renault to set up shop in 2007, and Peugeot is now planning to invest $620m in a new 90,000-unit-per-year factory in Kenitra.

Pointing to China’s decision to move to a more consumption-driven economy, with average minimum salaries rising from $140 five years ago to $500 per month today as a result, Elalamy sees this as a chance to get Africa onto the manufacturing ladder. “With African salaries of $200 a month we are becoming competitive, so its important that Africa doesn’t miss this opportunity,” he says.

Sharing economy

Just as Germany energy providers start to change models, “Daimler, General Motors and Toyota know there are going to be fewer cars sold – not tomorrow morning but in the next 25 years,” argues Rifkin.

“They are already asking: ‘Should we become the aggregators of the transport and logistics internet?’ They will own the cars, much fewer cars, and help manage that net- work for a service fee.”

An explosion of renewable energy use, energy efficiency and the falling away of the internal combustion engine: all of these are imperatives as well as nice ideas given the urgent need to avoid further heating of the climate.

For Rifkin, this is where the sharing economy – shorthand for companies privileging access over ownership – is so important. Companies like Lyft, Airbnb and a series of clothes, equipment and even toy-sharing websites have sprung up over the past few years.

While most of those major companies are in the West, Rifkin cites a Nielsen global survey that found that countries in Asia and Africa are more open to involvement in the sharing economy.

Côte d’Ivoire’s minister Koné laughs at Rifkin’s excitement: “The sharing economy, that is already us. We don’t use a dryer for our clothes, we have the sun! We even give a second life to old cars and white goods from Europe.”

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