A man walks past a coal-fired power plant in Jiayuguan, China. Coal prices in China have hit record highs in recent days. (Photo by Qilai Shen/Bloomberg via Getty Images)
Solar panels cannot generate power after sundown, and become less effective when it is overcast. Wind turbines cannot make electricity if the wind speed is too low (less than about 2.5m/s); and if the wind speed is too high (more than about 25m/s) turbines must shut down to avoid damage, says National Grid ESO, the UK’s Transmission System Operator (TSO).
Climate sceptics like to suggest this variability means renewable energy is inferior to generation from fossil fuels. “Renewable energy boom risks more blackouts”, wrote US energy commentator Michael Shellenberger in Forbes Magazine in April 2021.
Yet how should reliability – or in energy-speak, security of supply – be defined? Ongoing disruptions to energy supplies have resulted in soaring fossil fuel prices, highlighting how burning coal, oil or gas involves other risks that call into question their reliability.
Risky fossil fuels
“In Europe we still base our energy system on imported fossil fuels,” says Bram Claeys from think tank the Regulatory Assistance Project (RAP). “Renewables are arguably a more predictable source of energy because you don’t experience the price shocks we currently have”.
In recent days, the price of a tonne of coal crossed the $200 mark, after more than quadrupling over the course of 2021. Analysts blame tougher emissions standards, lower mine output (partly a result of China's ban on Australian coal imports) and strong Chinese manufacturing demand. Curbs on coal use have been imposed on hundreds of millions in China, even as winter approaches and people begin to switch on their heaters.
Meanwhile, Dutch TTF gas futures are trading at more than €85/MWh, up from €20 as recently as April. The soaring cost of gas comes from higher-than-expected post-Covid demand, as well as Chinese generators now switching from coal to gas to maintain energy supplies.
Gas prices spiked a year ago when China moved seven million households from coal to gas heating when it did not have the full gas supply. The same “could very much happen again this year”, says Henning Gloystein, director for climate and energy at political risk consultancy the Eurasia Group.
Europe’s reliance on Russia for fossil fuels is also impacting reliability. Russia is curtailing supply: gas transported via the Yamal-Europe pipeline dropped to 15,021 megawatt hours (MWh) per hour on 28 September, down from 35,131MWh per hour on Monday. There are concerns Russia is flexing its muscles to ramp up pressure for full approval of the controversial Nord Stream 2 pipeline.
“We don't really know whether the Russians didn't have enough gas, or whether they don't want to send it to us, but the problem is that we in Europe are not able to control it," says Gloystein.
“We are in an energy crisis caused in significant part by high fossil fuel prices and high carbon prices. If you look at the European gas market it is failing on all modern indicators of energy security: reliable sales practices, affordability and being clean.”
With pressure on coal and gas, the price of a barrel of Brent crude oil has now crossed the $80 mark; Goldman Sachs predicts it will peak at $90. The rise caps off more than a decade of intense volatility that saw oil peak at $145 a barrel in July 2008, before dropping 80% in the following six months. It then fluctuated between $80 and $120 from 2010 to 2014, before dropping to under $40 due to booming US shale oil production, later rising again, before crashing to $18 a barrel at the outbreak of the Covid-19 pandemic in April 2020.
For Ali Ahmad, an energy policy expert at the Harvard Kennedy School, fossil fuels have to deal with a constant cycle of uncertainty related to “commodity pricing, regulatory uncertainty, carbon pricing and public acceptance”. There is also a growing threat to producer states as “fossil fuel assets become at risk of being stranded as global climate action expands”, he says.
Renewables more reliable?
The road to net zero will see energy sectors like heating and transport increasingly powered by electricity. The International Energy Agency anticipates electricity demand will increase 2.5-fold by 2050 in a net-zero scenario, but although nearly all this would be met by renewables, technological developments mean this future power supply is not inherently “unreliable”.
“In both fossil fuel and renewables-centred models, there are challenges to reliability,” says RAP’s Claeys. “The difference is that the risks involved in a renewables-dominated system can be managed, if the right equipment and management is put in place.”
“Hybridisation, which is the combination of multiple sources of renewable energy or a storage solution, is a proven technical solution worldwide that can help address the key challenge of variable renewable energy,” explains Feng Zhao from the Global Wind Energy Council (GWEC).
With the price of lithium-ion batteries declining 97% over the past three decades, the world will see a boom in energy storage over the next decade. At the end of 2020, there was 460GW of solar capacity in interconnection queues, of which 35% was classified as hybrid. Some 93% of those hybrid projects were solar and battery systems, according to data tracked by the Lawrence Berkeley National Laboratory, a division of the US Department of Energy.
“Integrating storage now simply makes economic sense,” says Larry Sherwood, president of the US-based Interstate Renewable Energy Council.
Zhao adds that producing green hydrogen when power sources are at their strongest offers another potential means of storing energy for use when solar and wind output is low.
Modern grid technology is also making the challenges of a renewables-dominated grid more manageable, with network operators throughout Europe preparing for a zero-carbon grid.
“Energy transition is at the heart of our association’s work,” says Claire Camus from the European Network of Transmission System Operators. “Electricity grids and interconnections allow us to leverage a variety of energy mixes, increasing reliability of the overall system in a fast-paced energy transition.”
The electricity grid in Denmark aims to be fully renewable by 2030, with data showing that in 2020 around 60% of generation came from variable renewables. Jesper Nørskov Rasmussen from the country’s TSO Energinet says tools at their disposal will include “interconnectors, flexible consumption, new price incentives, new cooperation with businesses and industry, encouraging future hydrogen use, and thermal power plants that can be used for peak loads”.
A smarter, zero-carbon grid will see electricity demand follow renewable generation, rather than generation simply meeting demand, says Keith Whiriskey from environmental NGO Bellona. Boilers will heat water when the wind is blowing strongest, while electric vehicles will be charged only when the sun is shining.
“We have historically spent huge amounts on maintaining massive baseload power,” says Mike Hogan, a senior advisor at RAP. “Now that money will be much better spent dollar-for-dollar on hardening and expanding the transmission and distribution system for future low-carbon electricity supply”.
Extreme weather risk
Extreme weather like storms – which produce both extensive cloud cover and high winds – has a detrimental impact on renewable energy output. However, the distributed nature of solar and wind power means if a plant is knocked out, there is normally only minimal impact. Indeed, TSOs are planning for varied outputs from renewable plants all the time.
However, extreme weather can also impact fossil fuel and nuclear power – and when that happens, it poses a more significant threat to electricity systems because those thermal plants represent a much greater chunk of capacity that can come offline. As Harvard’s Ahmad explains: “Renewable energy is intrinsically more resilient than large thermal power plants as it is usually more decentralised, and especially so if we are talking about a country with a diverse renewable energy mix and an advanced grid.”
The risk of extreme weather means care must be taken to protect fossil fuel stockpiles from overheating, flooding, snow and extreme winds. Lower volumes and warmer temperatures in rivers and lakes can affect their ability to cool thermal power plants. This cooling problem can be particular acute with nuclear generation: a July 2021 paper in Nature Energy found that the frequency of climate-related nuclear plant outages is now eight-times higher than it was in the 1990s. In the summer of 2019, hot and dry weather meant French nuclear power generation was down 8%.
Thijs Van Der Graaf, professor of international politics at Ghent University in Belgium, adds that extreme weather can pose a major threat to fossil fuel supply chains. “US LNG export facilities lie in the ‘Hurricane Alley’, which poses problems every year,” he says.
The risks around extreme weather are increasing with climate change: reinsurers Munich Re recorded 920 natural catastrophes worldwide in 2019, up from 249 in 1980.
Texas isolated its power grid from the two major US national grids in 2002 to reduce power costs and deregulate the energy sector. A combination of this, and the fact that electrical equipment had been insufficiently weatherised for extreme cold, meant the grid was just minutes away from being overwhelmed by demand, before rotating outages were introduced on 15 February.
Governor Greg Abbott tried to blame wind turbines at the start of the crisis, but it later became clear it was outages in natural gas output, which provides 51% of Texas’s power and had not been anticipated in the winter planning of ERCOT, the state’s TSO. There were at least 200 deaths, the majority from hypothermia, and $20bn worth of damage.
“ERCOT’s winter contingency plan was to provide 90% thermal energy from gas, coal and nuclear,” says RAP’s Hogan. “The Texas crisis was caused by a failure of this thermal generation, and had almost nothing to do with wind.”
The current energy crisis in China and Europe will pass, and in a few months commodity prices will undoubtedly stabilise – but long-term, the geopolitical and extreme weather threats that are squeezing our energy systems will only escalate.
“At the back of all that is going on is climate change,” says Eurasia Group’s Gloystein. “This is what long-term policies need to be adjusted towards, both to mitigate impacts and to provide clean, affordable energy to consumers.” The Texas cold snap, Gloystein adds, was actually the result of unusually warm weather from the Pacific pushing cold fronts from the Arctic towards Spain, Texas and southern China, where they do not normally appear.
Meanwhile, geopolitical threats such as the fall-out between China and Australia, new alliances like QUAD and AUKUS, and Russian President Vladimir Putin’s continued international ostracisation mean geopolitical risks around fossil fuel supplies are unlikely to be resolved.
“Fossil fuel markets are set to become more volatile as the energy transition kicks in because of the huge uncertainty over future demand trajectories,” says Van Der Graaf. “Oil and gas markets may increasingly experience concentration of production in low-cost producer countries – such as Russia for gas or the Persian Gulf for oil – which are arguably going to be the “last men standing” in the fossil fuel endgame. This could increase the market power of Gazprom or Opec, and actually exacerbate energy security worries in a transitional period.”
For Rasmussen, on the front line of the transition at Denmark’s TSO Energinet, a renewables-dominated system will likely be “harder to run” – but he nevertheless still believes it is “the right way to go”.