Get rid of your fuel supply chain
Energy security or environmental sustainability? A tricky question, used by “fossilized” commentators to make you think that those are mutually exclusive. Well, these guys just trick themselves, as a sustainable energy grid is also the most secure. Main reason - it has torpedoed its fuel supply chain. Here is my new article, elaborating on this point (like anyone actually needs it, but I felt I had to get this down on paper, even for the same of my own clarity).
I have once worked with a coal-fired power plant, whose coal mine lay just 15 kilometers away. Coal was transported via a short stretch of a railroad. A risk of locomotive breakdown or any kind of trouble at the mine forced us to keep stocks of coal, which ate space and money. There were also other niceties, such as finding the window of your hotel room covered with black dust, after explosion works at the coal mine. Despite having a source of fossil fuel right at our doorstep, I wouldn’t call the energy supply system of that small city secure, and for sure it was (and still is) in no way sustainable.
I would argue that energy system security is as good as it’s fuel supply chain. Denmark is a case on point. The 1973 oil crisis has led Denmark to think hard about its energy mix. In the beginning of 1970’s oil fueled over 90% of Denmark. Today, more than 60% of energy comes from renewable sources, and there already have been many days on which Denmark ran purely on the energy of sun and wind.
Denmark energy experts, please feel free to correct me, but in my eyes, the essence of Denmark’s energy policy is avoiding the necessity of transporting fuel to the site of energy generation. Your coal, gas and even nuclear plants have to get their fuel shipped to them. Eliminating the need to buy fuel in far-away countries like Saudi Arabia (or even 15 kilometers from your power plant) eliminates several risks.
First, you eliminate the risk of fuel price change, and oil prices have made the name for themselves on price volatility even before the world learned of Bitcoin. Second, you do not have to worry that transport with your fuel will get stuck somewhere along the way. Oil tankers spill, or get blocked in canals, and even gas pipe explode, as we all have seen recently. Third, although we have fossil fuels in abundance, suppliers can experience shortage in times of accidents or wars, like now. Coal mines are especially prone to accidents, usually with high fatality rates. Finally, when you get your fossil fuel to your power station, you usually cannot burn it straight away, and have to store it somewhere. That is costly, and is also environmentally dangerous, as was proved by an oil spill in Norilsk not so long ago. Looking at all these risks makes me wonder who in their right mind would call a fossil-fuel based energy system secure, when it is obviously not so by definition? This type of energy system will always bear fuel supplier risks. Eliminating this risks seems a no-brainer. Going green, installing wind turbines and photovoltaic panels removes your fuel supply chain and associated risks. You get your fuel at the place of generation for free. There are no transport costs involved. Combining renewable energy technologies with battery storage or hydrogen gives you additional energy security.
Yet, the share of renewable electricity generated worldwide still shows only in single digit percentages. That’s of course due to the fact, that building solar and wind power stations has been a costly undertaking until recently. Recently however, this problem has been solved, even in places long opposed to renewable energy, like Russia, where it is now cheaper to build a wind farm than a gas-fired power plants. At the same time, current high energy prices are a textbook example of market signal, showing that current fossil-fuel based system is unable to provide reliable and cheap energy in a time of great stress.
Building renewable energy power is also faster. A solar power plant can be completed in 1,5 years. A wind farm may take longer, as you need to measure wind first, which could take you a couple of years. But once that done, it takes about a month to erect a wind turbine, taking in the foundations works. Manufacturing wind turbines is much faster and straightforward than manufacturing gas turbines or building nuclear reactors. So from the speed of the roll-out point of view, wind turbines and solar panels beat gas turbines and nuclear reactors. High energy prices today are caused by the problems along the fuel supply chain, both political and technical. This should serve as a reminder of the 1970’s oil crisis and of policies of countries like Denmark, which aimed to eliminate the fuel supply chain complexity and shift to a more secure and more sustainable energy system. It took Denmark almost 50 years to change its energy mix to a more sustainable and secure one. This time however, the transition period should be much shorter. Lower CAPEX and faster rollout rates, coupled with high energy prices, should mark the beginning of the widespread renewables adoption. Eliminating the fossil fuel supply chain will usher the age of secure and sustainable energy, hopefully making the current energy crisis last one that we have to experience.