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Deep Electrification – How Europe can break the Russian Fossil Fuels Addiction

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Gerard Reid's picture
Leader Alexa Capital

Gerard Reid is is focused on assisting people and organizations in the energy and mobility areas who are struggling to understand and come to terms with unpredictable and rapid change going on...

  • Member since 2019
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  • Mar 14, 2022
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As the Russian army continues their daily bombardment of Ukrainian cities, the European Union and individual European countries are obliged to scramble to secure energy requirements for the months ahead as we have become addicted to Russian Fossil Fuels. But there is good news, as even in worst case scenarios we will not freeze or run out of electricity next winter. However, the real question is what happens after next winter, and the years after that. Our answer is to deliver Deep Electrification, and we have a road map to that critical destination, which we now set out below.

Fossil Fuel addiction is a serious problem and the Russian war on Ukraine is a wake-up call. At present we burn fossil fuels every day to run our economies, despite the serious negative impacts on our environment and in particular the climate. In Europe we spend $1bn every day on gas, oil and coal which we are buying from Russia.

It is obvious that we must burn fewer fossil fuels and transition to clean energy sources and en route to reduce energy losses across the energy system. Currently over 60% of primary energy used today is lost on the way to its final application. To achieve both objectives, we need to deeply electrify our energy system.

Deep electrification means electrifying as much as possible of our energy system. We must start with transport, heat and cooling, and heavy industrial processes which are the easiest. The advantages of electrification are multifaceted, but the key advantage is energy efficiency. As a rule of thumb an electrical vehicle uses less than a third of the energy used by a conventional vehicle running on diesel or petroleum. If we deeply electrify our energy world, then we will need less energy which in turn will save the customer a lot of money. In addition, deep electrification is the only realistic way to achieve total decarbonization, the Net Zero objective. Fortunately, this is the approach favoured by non-governmental organizations such as the IEA (https://www.iea.org/reports/net-zero-by-2050). So, now to our road map.

  1. Stop reliance on fossil fuels to generate electricity

The priority must be to replace fossil fuels by generation of clean electricity alternatives and ensure that increasing demand for electricity is met through these sources. The good news is that there is no shortage of clean energy sources, and these are often lower cost.  It is more a question of how best to harness the sun’s energy, which is the source of nearly all useful energy on our planet. Without the sun we would have no food, no animals, no trees and no biomass feedstock. Besides, the process of photosynthesis, taking place over many millennia of the Earth’s history, has left us with a valuable store of fossil fuels like coal, oil and natural gas. The amount of solar radiation that strikes the earth continuously is about 173,000 terawatts which far surpasses the approximately 20 terawatts that humanity requires. We also have other the renewables technologies such as geothermal, wind and hydropower, as well as nuclear which, while controversial, will stay a core part of many countrys’ energy plans for the foreseeable future. 

  1. Embrace Flexibility

Since the bulk of electricity will come from low-cost renewables such as wind and solar that fluctuate with day–night cycles, weather patterns, and the seasons, what we need to do is redesign the power system, which is was built for a different era. The key word here is flexibility which is a state of mind: it implies the readiness to abandon old ways of thinking and embrace new ones. For instance, by creating new market mechanisms that enable the fast deployment of flexibility technologies such as batteries, hydrogen, digital meters, smart charging stations and vehicle to grid. A critical tool is demand response. Many residential and commercial loads are flexible — for example hot water tanks don’t really care what time of day they are heated. By networking these devices, their demand requirement can be timed to when the supply is available. Further, by networking across multiple locations we can ensure we don’t turn them all on at the same time.

  1. Invest in Grid

A system filled with widely distributed renewables needs a bigger and a more intelligently connected grid, starting with electricity distribution systems which need to be upgraded to deliver 2-3 times more electricity than they can at present.  Transmission networks will need to be constructed to move cleanly generated electricity from where the best renewable resources are located, such as in northern Norway and Sweden for hydropower, or the North Sea for offshore wind, to European population and industrial centers. Governments and the EU will need to work together and introduce emergency legislation to speed up the grid build out which historically has been bogged down in planning delays for years. 

  1. Focus on the Low Hanging Fruit

Some sectors, such as steel and cement production or shipping, are harder to decarbonize than others. Part of the reason for this is that these are traditional industries where the technologies are not in place to reduce dependence on fossil fuels, or they require synthetic fuels that require electricity to make the molecules they currently need.  This is a very expensive game which compounds existing inefficiencies. If we are to accelerate away from our dependence on fossil fuels, then we should try to directly use that electricity for “easy to abate” sectors which are the quickest and easiest for us to decarbonize. Those sectors are road transport, buildings, (particularly space heating) and industry. This is not a dream. All processes with industrial and building heat requirements below 1,000 degrees could be electrified with technologies available today.

  1. Change Fiscal Incentive Structures

Across Europe we must introduce taxes and subsidies which favour clean energy sources over fossil fuels. Existing tax structures are often difficult to change either politically or due to resistance from conservative tax offices and finance ministries.  This is particularly the case with retail energy where governments such as Germany or Denmark insist on burdening customers with massive levels of taxes and charges which make electricity unattractive against fossil fuel alternatives. We should get rid of VAT and all taxes on electricity. Simple. It is also critical, if we want to decarbonise quickly and effectively, that fiscal tools are aligned with fossil fuel reduction goals. A suite of fiscal incentives such as tax credits need to be used to kick off early-stage markets such as EVs and batteries to enable related technologies to reach critical mass.  Fiscal incentives such as accelerated depreciation should be introduced to incentivise private capital investments, both in business and in the home.

 

 

  1. Reform the Power Markets

The current competitive electricity system became established in the fossil fuel era whereby the last and most expensive bidder in the power market at any one time determined the power price for all players.  The idea was that power generators would compete based on their fuel costs and it worked well until recently.  But what we are seeing in Europe today is extreme price volatility with very high prices largely being determined by very expensive gas and low energy prices being determined by how much wind there is available in the system. This market volatility makes it very difficult for customers to secure the power they need at fair prices and makes it complex and expensive for generators to deliver the power they must deliver to meet contractual obligations. It is absurd that a low-cost hydropower provider should receive the same high price in the market for power traded just because the price of gas has gone up.

 

In the present, volatile environment, it is a huge challenge to make long-term investment decisions in new clean generation, storage and the other flexible technologies. The good news is that there is no shortage of capital across the world. In fact, the world is flooded with low-cost money looking for a home. Our challenge is to make sure that this capital is directed into replacing the global capital stock of all fossil fuel powered devices from vehicles to boilers with low and where possible zero carbon alternatives.  The scale of investment and the cost of this transition is heavily influenced by the cost of capital. The higher the capital cost, the more expensive the transition. Low-cost capital is critical for the rapid introduction of clean energy technologies such as wind, solar and EVs which have higher relative upfront investments costs than fossil fuels but lower lifetime costs.  

The shift to a much more capital-intensive energy system from today’s fossil fuel world can be achieved and should be our objective. We have provided the road map to leave the current and inefficient electricity power market to ensure that low-cost capital flows can deliver our Net Zero objective through Deep Electrification. We want to help as many as possible on the journey.

 

 

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Jim Stack's picture
Jim Stack on Mar 14, 2022

Gerard, This is a great answer for many countries even the USA. The addition to Fossil Fuels and giving Billions to communist countries and terrorist areas is a big problem. The pollution is also very bad. 

   I have Solar since 2001 and drive electric. I don't have any problem with the high gas prices or power company rate increases. In FACT it gets better EVeryday.  

Peter Farley's picture
Peter Farley on Mar 15, 2022

Continuing work from home, dropping the thermostat 1 degree, maintaining lignite production at 2018 levels for 3-4 years while renewables catch up etc etc etc can all help from tomorrow..

Valery Andrus's picture
Valery Andrus on Mar 18, 2022

Investments in breakthrough technologies in the energy sector.

 

I propose to consider the possibility of investing in two innovative projects in the field of renewable energy. The place of implementation of projects is Ukraine, the city of Kyiv.

 

Project 1.

Andrus Molecular Generator (hereinafter MGA). This is a new autonomous source of electricity, which is not yet on the market. The generator produces electricity without the use of solar lighting, wind currents, water and hydrocarbon fuels. The gravitational currents of the Earth are used to produce electricity, there are no moving parts. Theoretical justification - new scientific ideas about the structure of matter, energy, gravity, and so on - https://neutronscience.com.ua/books/.

Demonstration of the possibility of creating an MGA - https://youtu.be/N447flDIb28.

Creation of a sample for demonstration is at the final stage.

The goal of the project is to create three autonomous types of MGA - for gadgets, for living quarters, for electric vehicles. Sale of technologies at auction to the largest electrical companies in the world.

The term of the project is three years from the start of financing.

The investment amount is 70 million US dollars.

The investor's participation in the capital of LLC BSA is 26%.

Business plan http://neutronscience.com.ua/wp-content/uploads/2018/03/Business-plan-MGA-2018.pdf.

 

Project 2

Innovative project of the 7th wave of innovations “Electric reactor on a chain reaction with a thermal power of 50 MW – ERCR-50”.

Creation of a fundamentally new reactor for thermal power plants, including nuclear ones. The new reactor heats water for the turbines of a thermal power plant without the use of hydrocarbon fuel, without nuclear fuel, no harmful emissions, no nuclear waste. Electric heating (MGA project). For the reconstruction of a thermal power plant, including a nuclear one, it is necessary to replace the existing reactor with a new one. The power plant continues to operate with the new reactor. There is no need to close thermal, including nuclear power plants. Now thermal power plants, including nuclear ones, are environmentally friendly. Clean energy.

 The term of the project is three years from the start of financing (creation of the reactor), in the future, contracts for the replacement of reactors of thermal power plants, including nuclear ones, in all countries of the world.

The investment amount is 60 million US dollars.

The investor's participation in the capital of LLC BSA is 23%.

Business plan, reactor drawing - http://neutronscience.com.ua/wp-content/uploads/2018/03/Business-plan-ERCR-50-2018.pdf.

 

We are waiting for offers.

Sincerely,

Sergey Skorodumov,

Bilan Dmytro,

Valery Andrus

Scientific Director of LLC "BSA", Ukraine, Kyiv,

https://neutronscience.com.ua/books/

valeriy.andrus@gmail.com

linkedin.com/in/valery-andrus-835508153

Yooper Logic's picture
Yooper Logic on Mar 22, 2022

Only 2 "minor" points to consider:

1 - Cost... today's inflation is just a glimpse of what would happen as energy supplies are limited.  And "Embrace Flexibility" is another term for "rolling blackouts".

2 - Land / Sea Use... a typical gas fired, 1,300 MW electric generating plant, capable of providing 32,500 MWh of reliable energy, sits on ~0.5 sq mi, 1.3 sq km, of land.  An equivalent solar asset, with marginal reliability, would require over 30 square miles, 79 sq km, of land, or half the size of Liechtenstein!

The law of conservation of energy states that energy can neither be created nor destroyed - only converted from one form of energy to another.  Fossil fuels are merely "stored solar energy".

Peter Farley's picture
Peter Farley on Mar 30, 2022

1. Embrace flexibility is to heat water, make ice and pump water for municipal supplies as well as charge batteries when power is cheap rather than a fixed time, it has nothing to do with rolling blackouts. 

2. A gas plant capable of generating 32,500 MWh per year never actually provides 32,500 MWh in fact Germany's 31.7 GW of gas has run at 20% capacity this year despite recent closures of nuclear and wind farms knocked out by a Russian cyber attack. To produce 32,500 MWh from a tracking solar farm in Germany would require about 14 MW of capacity. Installed on pasture land at 6m row spacing that requires about 35 ha, or 0.35 square km leaving the grass and/or sheep with shade in summer and windbreaks in winter, thus increasing agricultural yield. In other words you calculations are completely wrong.

In practice most of the solar will be on roofs, south facing walls and road and rail embankments, solar canopies over paved areas, floating solar on water storages etc etc, 80-90% of such locations would not be suitable for gas power generation. In fact solar canopies and floating solar add value to the land by keeping cars cool in summer and snow free in winter, floating solar reduces evaporation and algae formation in ponds and rooftop solar reduces transmission losses.   

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