Why the energy transition needs a joined-up approach

electricity pylons with glowing power lines

By Scott Poulter

There is a reason we talk about the energy ‘system’. A system is a combination of things forming a complex whole. It is made up of many components. That has always been true of energy, and it is getting more so with the climate crisis.

The reason for this change is the way we produce electricity. Pretty much since the start of the industrial revolution, electricity has mostly been generated using steam turbines. To turn water into steam, these turbines need heat.

And that heat has mostly come from burning fossil fuels such as oil, gas and, above all, coal. For around a tenth of the electricity produced worldwide, the heat for steam comes from nuclear power instead of fossil fuels.

Roughly 16% of global electricity, meanwhile, comes from hydro instead of steam turbines. But all these generation sources have one thing in common. The primary source of energy, be it fossil fuels, nuclear power or hydro reserves, are available pretty much on tap.

Hence, if you need more electricity you can shovel in more coal, add some rods to the nuclear pile or increase the flow of water from your dam.

This is a highly simplified description of what really happens, but the underlying point is that the primary sources of energy used for electricity generation today are dispatchable. You can increase or decrease them as needed. And that is all set to change.

To reach net-zero emissions by 2050, we need to largely eliminate fossil fuels from the electricity mix. That means replacing around 63% of generation capacity with something else.

Or more, in fact, since net zero will also require the decarbonization of transport, industry, heating and more. In terms of total energy consumption, we need to replace around 84% of what we use today. And where that comes from matters a lot for the energy system.

EV Charging

For a start, the electric grid will have to work a lot harder. As well as supplying all of today’s applications, it will have to cater for electric vehicles, a lot more heating and cooling, and many industrial applications that currently rely on fossil fuels.

There are some applications, such as shipping, that cannot be decarbonized through electrification. For these, the consensus view is that decarbonization will be achieved using low-carbon hydrogen or compounds made from it, such as ammonia.

The most sustainable way of making hydrogen is via electrolysis, which again requires electricity. Hence, the amount of dispatchable generation that must be replaced is not so much the 63% of the electricity system today but more like the 84% used for energy overall.

Most of that extra generation capacity will not come from hydro or nuclear power. The former is hard to develop at scale because most good hydro locations have already been dammed and further projects can put communities and natural habitats at risk.

Thus, although the International Energy Agency’s Net Zero by 2050 pathway sees hydro roughly doubling in capacity by mid-century, hydro’s contribution to the final energy mix will remain minor.

Nuclear power is also expected to roughly double in capacity, but long lead times for development and regulatory challenges facing new reactor designs will prevent it from being a major energy source in 2050.

Instead, the big beneficiaries of the rush to net zero will wind and solar photovoltaic (PV) energy.

These at present barely register as primary generation sources but are set to produce more than a third of all society’s power within three decades—and much more when it comes to electricity production.

Wind and solar PV have the benefit of being freely available and practically inexhaustible, but they cannot be turned on or off at will.

solar and wind power

The sun is only available half the time, on average, and when clouds and other poor light conditions are factored in solar panels can struggle to achieve a capacity factor—the actual energy output compared to their theoretical maximum—of more than about 25%.

Wind energy has similar limitations, although turbines located offshore may be able to achieve capacity factors of up to around 60%. This is still a far cry from being fully dispatchable, however. So how will the grid cater for our need for energy around the clock?

The answer is by combining things: adopting a joined-up approach to energy generation and creating hybrid plants that can make the best possible use of resources when they are available.

Hence, in a renewable portfolio solar PV may take care of daytime energy requirements while wind helps deal with lower nighttime loads.

And whenever it is windy or sunny, any excess generation gets stored in batteries or used to create hydrogen, helping to cover the spells when there is no wind or sun. Thinking of energy in this joined-up manner is key to solving our decarbonization challenge.

Plus, it is good for business, because electricity consumers want supplies at the flick of a switch—not just when it is sunny or windy.

Hence, companies that can mix and match clean energy generation and storage technologies to produce firm supplies will be able to command higher prices from electricity markets.

Renewable energy asset owners are increasingly aware of this, and many are looking to diversify their portfolios accordingly. But one challenge, for now at least, is that there are not many project developers out there that have a whole-system mindset.

Historically in the cleantech industry, developers have acquired skills in specific industry sub-sectors, such as solar PV or onshore wind. As renewables go mainstream, it will be of growing importance to bring a range of skills to the table.

In that respect, Pacific Green is ahead of the game. From the outset, we have built a multidisciplinary team, drawing experts from fields as diverse as concentrated solar power and battery storage.

This combination of skills gives us unique capabilities when it comes to planning and designing hybrid plants and helping asset owners create more diversified portfolios. To find out more about what we can do for you, speak to us now.