Renewable power has long struggled to shake off an image of idealism in the hard-nosed energy world. But the energy crisis has presented an opportunity to change perceptions: clean energy is not only about reducing pollution or hitting net zero emissions targets; it is also about making countries more secure.
Today, the price of gas is trading at roughly 10 times the level it averaged over the previous decade, after Russia cut supplies to Europe in retaliation for western sanctions over its invasion of Ukraine. Electricity prices, often linked to the price of gas, have also soared. And that has pushed energy security to the top of the political agenda.
Governments are now pumping hundreds of billions of pounds and euros into schemes to support households and businesses through this winter and the next. However, sections of the energy industry are calling for a longer-term solution. For renewable energy companies — and nuclear providers, too — this is a chance to demonstrate that they can be integral to an energy security policy.
Equinor, Norway’s state-backed energy company and a pioneer in technologies such as floating offshore wind and hydrogen, has been tailoring its pitch to governments in light of the crisis. As well as being a friendly and reliable oil and gas supplier, it offers wind turbines that can provide countries with a supply source less exposed to international oil and gas prices.
“Over time, more energy will be needed and that energy needs to be more and more decarbonised but it also needs to be secure,” says Anders Opedal, Equinor chief executive. “These days, we need to balance oil and gas production with a move towards more decarbonised energy, which is good for Europe’s energy security.”
Nuclear operators have also been quick to talk up their energy security credentials. Many industry experts expect a renaissance for a sector that fell out of favour in many western countries in recent decades, particularly after the Fukushima disaster in Japan in 2011.
Patrick Fragman, chief executive of Westinghouse, which is planning to build new reactors in the UK as well as in eastern Europe, argues that interest was already rising before Russia’s invasion of Ukraine, due to decarbonisation plans. Now, energy security is very much back on the agenda.
“Geopolitics has been driving energy markets for decades,” Fragman says. “It had been forgotten a little while, but now it’s made a huge comeback. That drives considerations of energy security and long-term planning. We have a situation where the western world has realised it has fragile market structures. Nuclear is an inconvenient truth to meet these challenges of energy security and net zero targets.”
The EU has already started to take big steps. Under its so-called REPowerEU plan, the European Commission says it aims to “drastically accelerate our clean energy transition” and be “independent from Russian fossil fuels well before 2030”.
While Europe is initially replacing Russian gas with cargoes of seaborne liquefied natural gas from countries including the US and Qatar, the longer-term part of the project focuses on cutting reliance on imported fossil fuels.
Under the plan, the EU wants to have 17.5 gigawatts of hydrogen capacity within three years and has increased the renewables target to 45 per cent of power generation capacity by 2030, from a level of 40 per cent previously. That would add more than 200GW in additional capacity compared with previous proposals.
Henning Gloystein at Eurasia Group, a risk consultancy, says renewables companies are keen to emphasise their role in energy security, particularly as they — like fossil fuel groups — have been targeted with windfall taxes.
Many are earning larger profits than usual as electricity prices have soared, but they are aiming to focus attention on getting commitments to speed up new developments and cut red tape.
“The message is ‘our profits will enable us to help you solve what is clearly a fossil fuel crisis’,” says Gloystein. “They’re already pushing this idea across Europe saying that they are the long-term solution, not just to hitting net zero targets but making countries more secure. But they need to be able to invest — and invest quickly.”
Others are more sceptical that cleaner forms of energy will be able to completely isolate countries from geopolitical risks.
There are already concerns about the dominance of solar markets by China. It is responsible for more than 80 per cent of the manufacturing chains for items such as cells and polysilicon and, with it having driven down costs, other countries struggle to compete.
China also dominates the market for many rare earth metals used in magnets that are critical for the construction of wind turbines and electric car motors.
In the nuclear sector, Russia is one of the biggest suppliers of enriched uranium, the key fuel used in plants, controlling more than 40 per cent of the global market, according to researchers at Berenberg.
Supporters of clean energy feel these challenges risk being overstated, however, when compared with the all-too-current threat posed by gas and other fossil fuel prices.
“It’s not going to be a short-term fix as it’s going to take quite a few years to build those plants,” Fragman says.
“But, done in the right way, we can have electricity that is affordable and reliable.”
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