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It is way more complex than it looks … to be green

The increasing price of electricity in Europe over the last two years. Electricity prices are heavily impacted by rising gas prices because of the importance of gas-fired power stations as the marginal unit to meet demand. This is the most significant driver of the increase in wholesale electricity prices. Image credit: Ofgem

I had the opportunity to be part of the post-Kyoto climate protocol (signed in 1997) STS forums for 7 years in a row. It was, and still is, a place where some 500 invited science, technologies, government officials and social experts exchange ideas. Interestingly, the rule of the forum is that no one can be quoted: this is to ensure the maximum freedom of expression. Only a joint final document is released at the end of the three day event. I had the pleasure of hearing discussions among Nobel laureates in physics, economy, chemistry and twice I worked in a subgroup chaired by Carlo Rubbia, Nobel laureate in physics, dealing with the future of energy. I remember what he told me, on the sidelines, in one of those occasions:

“Nuclear power is not the solution to the future needs of energy, but there is no solution without nuclear power.”

I was reminded of that statement as I read a very nice article on the difficult balancing among economic needs and renewable (green) energy. It is a long article but it is really worth reading if you want to go beyond the lip service statements on the niceties of renewable energy and the ugly proposition of nuclear energy.

The economics behind energy is quite complex (not complicated, it is complex) since there are several interplaying factors at play. Our energy demand keeps growing (it slumped during the pandemic lock-down with parallel decrease of the GDP worldwide but it is now recovering) and the growing contribution of the renewable (mostly Sun and Wind based sources) are -paradoxically- increasing the price of energy!

Graphic representing the energy sources worldwide. Coal, oil, and natural gas remain the primary global energy sources even as renewables have begun rapidly increasing. Image credit: Jackson et al. Environmental Reserch Letters

It is not that renewable are more costly: it used to be like that but improvement in technology has lowered the cost to the point that it is in the vicinity of other -fossil based- sources in terms of cost. The problem with renewable sources is that they are not continuous (the Sun sets, the wind stops blowing) and therefore you need to have other sources handy to step in as needed. These sources are nuclear, coal, oil, gas.

Nuclear power, because of strong voices against it (mostly for waste disposal but also for safety concerns) is in decline (in Germany, Japan…) although the UK has recently approved a plan to build new nuclear plants (operational in the next decade).

Coal plants are not that good (economical to operate) on a demand bases, they should run continuously to be effective.

Oil would work in terms of use on demand but it is very bad for the environment hence it is not used in big plant (but it is used with private generators).

Gas is ok, it pollutes a bit less than oil and coal and gas plants can work efficiently on demand. This is why gas is being more and more used as renewable sources are more and more used. The problem with gas is that it is, at least now, more expensive (fracking, a technology for gas extraction, is creating environmental -pollution- problems and it has been stopped in many places). This is the reason of the paradox we are facing today: as more renewable capacity becomes available we are shutting down coal plants (that are providing cheaper power) and we turn to gas plant for on demand energy (to fill the gaps associated with renewables). This is increasing the cost of energy.

Also, another paradox is on the horizon: as renewable power gets cheaper (both because of technology and because of abundance during certain hours of the day), power production companies see their marging shrinking so that they rather turn to other sources, read fossils, to make the bottom line.

All in all, the last ten years have seen a strong increase in renewable but have not seen a decrease in pollution nor in energy price.

The graphic representing the global world energy sources clearly shows that the increase in renewable corresponded to a strong increase in natural gas. Oil consumption has also increased and will only start to decrease as cars will move from ICE to EV over the next decade. But that will require an increased production of electricity through renewable and … gas. Nuclear remains in the background but it will have to be reconsidered as we move into the next decade to face the increased need for electricity.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.