© Supplied by AP Photo/Paul White Trying to assess the state of the global energy market is not easy.
With perhaps the exception of the United States and Russia, I don’t think it’s unreasonable to say that whilst the global energy market is showing signs of positive change – especially in terms of adopting new technologies – it remains volatile, largely because of the economic, social and political pressures created by “energy transition”.
Significantly, in the US, there’s now a presumption in favour of increasing oil and gas production, and earlier this year, President Trump even announced his support for ‘America’s beautiful, clean coal industry.’
Trump has also terminated the Section 45V clean hydrogen production tax credit, enacted as part of former President Biden’s Inflation Reduction Act, effectively handing global leadership of hydrogen development to China. Words fail!
Irrespective of all these headline changes, I actually think it could take another year before US energy policy settles down sufficiently enough to be able to make any reasonable assessment of which direction it’s heading in.
However, in terms of market opportunities, the US is, for the time being at least, somewhat of a mystery, so, little doubt that US policy is currently in a mess.
© JLN Photography/ShutterstockRussia, whilst having substantial renewable energy resources including solar, wind, hydro, geothermal and biomass, still relies heavily on fossil fuels.
But, with its economy having been badly damaged by sanctions imposed on it because of its war against Ukraine and the direct cost of the war itself, it would appear unlikely it has the capacity to invest and grow its capacity much beyond where it is now, with nuclear at 18% but wind and solar at less than 1%.
On the other hand, China is roaring ahead. We’ve already seen its progress in the electric vehicle sector, in solar technologies and in wind. Now, it’s moving on rapidly into green hydrogen.
According to China Daily, China’s green hydrogen sector is “on the cusp of rapid development, potentially blossoming into a 12 trillion yuan ($1.64 trillion) emerging industry as the country strategically prioritises hydrogen as a cornerstone of its future energy system, according to industry experts and company executives.”
Evidence of this on the ground points particularly to growth in technologies such as hydrogen fuel cell vehicles and refuelling networks.
In fact, by this time last year, China had already constructed 426 hydrogen refuelling stations.
That would be enough for the whole of Scotland.
The roll out of fuel cell vehicles also exceeded 20,000 by the end of last year and is continuing to climb rapidly, whilst, of course, China remains the world’s biggest battery manufacturer.
The danger here is that China will simply leave countries like the UK behind as the squabbling here over hydrogen versus batteries continues.
The Chinese have obviously decided there’s room for both, and ultimately the customer will decide.
In the UK, being offered that sort of choice seems unlikely.
That won’t help people accept the energy transition, nor will it help politically to keep the right wing at bay.
To an extent, the Chinese approach is being duplicated in mainstream Europe.
© Albert Llop/NurPhoto/ShutterstocGermany is the European leader in hydrogen filling station rollout, and France has just mandated the expansion of the hydrogen light van market.
France is also building a huge sustainable aviation fuel plant so things are moving on the other side of the Channel, albeit fairly slowly compared to China.
In Spain and Portugal, and, apparently, a small part of France, recently experienced one of the most widespread electrical blackouts ever reported.
As the report on why it happened hasn’t been released yet, I’m not going to speculate on the reasons other than to say I disagree with those claiming it was all down to an excess of renewables.
The International Energy Agency recently said in a paper at its energy security conference: “Systemic challenges will emerge from balancing increasingly renewable-dominated grids during extended low-generation periods”, and “current vulnerabilities stem from premature retirement of dispatchable generation without adequate replacements.”
I crudely interpret that as saying that the renewables aren’t the problem, but the lack of backup is.
This isn’t rocket science. It’s been as clear as day to me and others for a long time that unless you can back up renewables with some medium-term energy storage, then it’s doomed to fail.
Interestingly, the plan announced by Ed Miliband, the UK Energy Secretary, to put solar panels on every new build roof plays into this perfectly.
Panasonic are in fact in the process of demonstrating what’s needed with their new microwave factory in South Wales, where they are using solar energy to both power the factory and produce hydrogen, which they store to drive fuel cell banks when solar isn’t available.
Sweden has similar projects, and the French company H2Gremm has developed a domestic system.
So, it would seem the answer to how to use renewables on the grid question is to not use the grid and for me, that sums up the entire energy conundrum.
We simply haven’t yet learnt that to achieve the transition effectively, we need to rethink almost everything we assume about the entire energy sector: how we structure it, how we build it, how we operate it, and how we finance it, and that’s where the real opportunities will be found.
Simply modifying yesterday’s solutions isn’t good enough.
