In ten years’ time, Kenya’s petroleum demand curve will have started to invert, as electric vehicles (EVs) replace petrol and diesel vehicles. It is an eventuality that is as certain and inevitable as the mobile phone technology swiftly consigned landline telephony to museums.
By 2030 vehicle manufacturers will be winding up manufacture of new petrol/diesel vehicles, mainly by order of governments which have decreed dates when registration of new petrol/diesel vehicles will cease. The policy and regulatory drivers for EVs are climate change commitments to reduce carbon emissions in the road transportation sector.
Global conversion to EVs has already made significant progress over the past five years, especially in China and Europe. A full scale rush by vehicle manufacturers to develop the most cost effective and convenient EVs (cars, trucks, motor bikes) is targeted towards future EV market share control. To shorten the transition time, governments are providing incentives, while car firms offer trade-ins of petroleum powered vehicles for electric vehicles.
In Kenya, it can be expected that by 2030 EVs will have started to populate our roads, and that the beginning of a gradual death of retail petroleum business will have begun. This is why Kenya economic and energy planners need to visualise a new road transportation energy scenario in their planning.
Oil marketing companies cannot bury their heads in the sand, for indeed demand for petroleum fuels and lubrication will gradually diminish. They will need to re-engineer their medium and longer term business models, as service stations will diminish their traditional significance as points of fuels and lubrication services.
EVs will be charging their batteries at home, car parks, or dedicated vehicle charging locations. It is the vehicle industry and their agents that will assume a bigger role in serving the motoring customers by availing EV charging capacity. Provision and service of EV batteries will become major supply chain activities.
Kenya Pipeline Company and indeed all petroleum products infrastructure investors will need to mull an eventuality of reduced petroleum throughputs and revenues. Even the Treasury should visualise a future with significantly reduced tax harvests from fuels, a headache that will be significant. For Kenya it will be a case of reduced forex requirements to fund fuel imports, as powering of vehicles reverts to locally produced electricity. Power generation and distribution companies will definitely leap the EVs benefits.
However, the biggest beneficiary from EVs will be the climate change with reduced carbon emissions, as long as the incremental electricity is generated from renewable sources, not from fossil sources (oil, natural gas, coal). Yes, technologies are delivering green and clean solutions.
As the microchip technology has made mobile telephony affordable and convenient, so will the ongoing advances in battery storage technologies make electric vehicles affordable and appealing. Energy storage research is fast delivering cheaper batteries; with increased driving kilometres between charges; longer battery lives; and more compact batteries in size and weight. By the time the EVs hit the Kenyan market they are expected to be competitive with petroleum powered vehicles in terms of initial and running costs.
Going forward, battery storage technology and applications will significantly transform business and human activities. Smaller and compact batteries with shorter charging times will store more power that will permit economic activities away from the power grid. Solar charging of high capacity batteries will permit an expanded range of solar energy applications.
Energy storage batteries of as much capacity as 50/100MW will permit solar or indeed any intermittent electricity source to be generated, stored and transferred to the grid during peak demands.
Indeed, electric battery storage technology and applications will be a major growth technical sector with many job opportunities and requiring new skills.
As road transportation goes electric around the world, the markets for crude oil will weaken, spelling the beginning of peak oil demands and subsequent decline of the oil industry as we have known it for years. It will indeed be a different scenario for Turkana oil reserves, as global crude oil markets shrink.
Finally, electric vehicles will be with us within the next ten years, an eventuality Kenya needs to begin preparing for.