Renewable energy has long struggled to shake off an image of idealism in the hard-nosed energy world. But the energy crisis represented an opportunity to change perceptions: clean energy is not just about reducing pollution or achieving net zero emissions targets; it’s also about making countries safer.
Today, the price of gas is trading at about 10 times the average level of the previous decade, after Russia cut off supplies to Europe in retaliation for Western sanctions on the invasion of Ukraine. Electricity prices, often linked to the price of gas, have also increased dramatically. And this has pushed energy security to the top of the political agenda.
Governments are now pumping hundreds of billions of pounds and euros into programs to support families and businesses this winter and next. However, sectors of the energy industry are demanding a long-term solution. For renewable energy companies, and also for nuclear energy suppliers, this is an opportunity to demonstrate that they can be an integral part of an energy security policy.
Equinor, the Norwegian state-owned energy company and a pioneer in technologies such as floating offshore wind and hydrogen, has adapted its proposal to governments in light of the crisis. In addition to being a friendly and reliable oil and gas supplier, it offers wind turbines that can provide countries with a source of supply that is less exposed to international oil and gas prices.
“Over time, more energy will be needed and that energy needs to be increasingly decarbonised, but it also needs to be secure,” says Anders Opedal, Equinor’s CEO. “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 were also quick to talk about their energy security credentials. Many industry insiders are expecting a resurgence for an industry that has fallen out of favor in many Western countries in recent decades, most notably after the Fukushima disaster in Japan in 2011.
Patrick Fragman, chief executive of Westinghouse, which is planning to build new reactors in the UK and Eastern Europe, says interest was already on the rise prior to the Russian invasion of Ukraine, due to decarbonisation plans. Now, energy security is back on the agenda.
“Geopolitics has been driving energy markets for decades,” says Fragman. “It had been forgotten for a while, but now it’s made a big comeback. This drives energy security and long-term planning considerations. We have a situation where the Western world has realized that it has fragile market structures. Nuclear is an inconvenient truth to address these energy security challenges and net zero targets. ”
The EU has already started making great strides. Under the so-called REPowerEU plan, the European Commission says it aims to “dramatically accelerate our transition to clean energy” and be “independent of Russian fossil fuels well before 2030”.
While Europe is initially replacing Russian gas with cargoes of liquefied natural gas by sea from countries like the United States and Qatar, the long-term part of the project focuses on reducing dependence on imported fossil fuels.
Under the plan, the EU wants to have 17.5 gigawatts of hydrogen capacity within three years and has raised the renewable energy target to 45% of power generation capacity by 2030, from a previous 40% level. This would add more than 200 GW of additional capacity over previous proposals.
Henning Gloystein of Eurasia Group, a risk consultancy firm, says renewable energy companies are keen to emphasize their role in energy security, particularly because, like fossil fuel groups, they have been targeted with extraordinary taxes. .
Many are earning larger profits than usual as electricity prices have soared, but aim to focus 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 are already pushing this idea across Europe saying they are the long-term solution, not only to achieve zero goals but also to make countries safer. But they must be able to invest and invest quickly. ”
Others are more skeptical that cleaner forms of energy will be able to completely isolate countries from geopolitical risks.
There are already concerns about China’s dominance of solar markets. It is responsible for more than 80% of the production chains for items such as cells and polysilicon and, having lowered costs, other countries struggle to compete.
China also dominates the market for many rare earth metals used in magnets that are critical to the construction of wind turbines and electric car engines.
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In the nuclear sector, Russia is one of the largest suppliers of enriched uranium, the key fuel used in the plants, which controls more than 40% of the global market, according to the Berenberg researchers.
Clean energy advocates believe these challenges risk being overestimated, however, when confronted with the all-too-current threat posed by gas and other fossil fuel prices.
“It won’t be a short-term solution as it will take a few years to build those plants,” says Fragman.
“But, done right, we can have affordable and reliable electricity.”