Tony Seba’s startling view of market disruptions


Fifth Avenue, New York City, on Easter Sunday, 1900 U.S. Bureau of Public Roads. Photographer unknown. - National Archives and Records Administration, Records of the Bureau of Public Roads.
Fifth Avenue, New York City, on Easter Sunday, 1900 U.S. Bureau of Public Roads. Photographer unknown. – National Archives and Records Administration, Records of the Bureau of Public Roads.

Nothing ever changes … until it does so in a blink of an eye. Is energy next?

by Allen Best

SNOWMASS VILLAGE, Colo. — Tony  Seba has a dramatic way of introducing his talk about market disruption. He shows a photo taken on Fifth Avenue in New York City on Easter morning in 1900. The street is crowded…

…with horses and buggies.

“Can anybody see the car?” he asks. “There is one car in the picture.”

After identifying the lone car, he then shows a photo from Fifth Avenue 1913, also on Easter morning.

“Can anybody see the horse?” he asks.

Nobody can, because none were to be seen. “That is called disruption,” he says.



“What is a disruption? A disruption happens when a new product or service helps create a new market and significantly weakens, transforms, or destroys an existing product, market category and industry,” he explains, sounding like the university lecturer he is (Stanford).

“Does anybody know what a typewriter is?”

The disruptions can happen quickly. “Can anybody imagine being without your smart phone? Yet it did not exist eight years ago.”

Speaking at the American Renewable Energy Days conference at Snowmass Village, Colo., Seba made the case that the mainstream forecasts have often missed market-disrupting technology and business models.

In the mid-1980s, he said, AT&T hired McKinsey and Co. to forecast cell-phone adoption by the year 2000. McKinsey saw 900,000 subscribers.

“The real number was 109 million. They were off by a factor of 120 times. This keeps happening. AT&T’s landline telephone market was disrupted.  It missed out on a multi-trillion dollar opportunity.”

In the energy world, Seba sees market disruption from solar and other technologies far more powerful than conceded by utilities and policy makers. Consider solar, which has gone from a cost in 1970 of $100 a watt of production capacity to 50 cents now.

Solar—if still less than 1 percent of our electrical production—is rapidly gaining market share. PV capacity doubles every year.

“You have to ask yourself if solar keeps doubling every two years, how many more doublings before solar is 100 percent of the world’s energy—and not just electricity.”

The answer, he said, is seven doublings—achieved by 2030.

It’s not just  a story of technology, but also of a new business model: third-party financing for roof-top installations. No cash is required by the homeowner. Sabo predicts another 50 percent drop in solar costs by 2020, making it competitive with coal, natural gas and nuclear power—and, in many places, cheaper.

“Solar unsubsidized in many markets will be cheaper than the cost of transmission and, at that point, it’s the point of no return. That’s when you will see a lot of stranded (fossil fuel) assets.”

It’s already happening. He cited utility scale solar installations, where solar can now be delivered for 5 cents per kWh. And in July, Warren Buffett purchased solar electricity at 3.87 cents per kWh. “No other form of energy can compete with this. So even at the utility scale, it will be solar,” he said.

“All of this leads me to believe that solar will be by far the No. 1 form of energy, and by 2020 it will basically wipe out every other form of energy.”

Seba then turned to energy storage, electric cars, and self-driving cars, all of them major disrupters, he argues.

Lithium-ion batteries have dropped an average annual 14 percent in cost during the last 15 years, he said. Meanwhile, Tesla is building a $5 billion battery factory in Reno that will reduce battery pack costs by 20 to 50 percent. Now comes Tesla’s announcement of a microgrid battery, suitable for use in homes. The company got $800 million in orders in just the first week. Tesla may have to expand the new factory, he said.

New business models for battery storage similar to third-party financing for rooftop solar will cause massive disruption of utilities, he predicted.

Then comes transportation.The electric motor is five times more energy efficient than an internal combustion engineer, able to deliver 85 to 95 percent of energy into kinetic motion, compared to 16 to 21 percent for a gas-powered car. That translates into lower costs of operation: $15,000 in gas for Jeep Liberty over five years, according to Consumer Reports, as compared to $1,605 in electricity for a comparable all-electric Jeep Liberty (If one existed).

Too, electric vehicles will likely gain more range. In fact, a week after Seba spoke at Snowmass Village, German automaker Audi pledged to deliver a model with 300-mile range by 2018.

Electric vehicles currently cost far more. But prices will drop, he said. By 2020, the average all-electric car will cost $31,000, comparable with the average price of all cars.

But even by 2020, he said, the industry average for an all-electrical car with 200-mile range will be $31,000, equal to the average price of all cars. By 2023, the prices will drop to $22,000, or comparable to that of a lower-end car. The market will have been disrupted. And, he added, self-driving vehicles will be even more disruptive.

Can we possibly create all the electricity from solar panels? Seba argued that the space is easily available.

“In the United States,” he said. “We have up to 13,000 square miles of parking lots. If all you do is put up solar canopies on 10 percent of those parking lots, they can generate all the power that all electricity vehicles need in America,” he said.

Seba sees businesses leading the way. IKEA, the retailer, already has 100 percent solar. And prices are dropping. A business want lower prices and predictability, and solar is the answer.

This all sounds like a world seen through rose-colored glasses. Recall, in the 1960s, the predictions of personal aerial mobility devices. Some later speakers at the conference suggested skepticism about Seba’s vision.

But then, think about those photos from Fifth Avenue in New York. If  you want to dive down this rabbit hole of market disruption with Seba, I’d recommend his book, “Clean Disruption of Energy and Transportation: How Silicon Valley Will Make Oil, Nuclear, Natural Gas, Coal and Conventional Cars Obsolete by 2030.” I paid $22 to support one of my local bookstores (Book Train in Glenwood Springs), but you can promote a disruptive business model by shopping at Amazon. A Kindle version costs $8 and a new paperback costs $18.40 plus shipping.

By the way, here’s the car in that street full of horses:5th-ave 1900

This story was updated to correct a couple of incorrect statistics.



Allen Best

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