The energy transition has drawn widespread attention, as governments and companies around the world are making an earnest effort to reduce the world’ s dependence on carbon-based energy. But much of the focus has been on the headliners, like electric vehicles, solar panels, and wind turbines. And while they grab all of the attention, they’ re only responsible for a fraction of the work.
Much like a theatre production, where the actors onstage rely on the crew backstage, the energy transition and energy security more broadly depend on crucial yet often overlooked parts of the system. These components are just as vital as the headliners in the spotlight and may just prove to be better long-term investments.
For many countries, the stars of the transition are renewable power sources like wind and solar. However, wind and solar come with a challenge for grid operators – they don’ t work when the wind isn’ t blowing, or the sun isn’ t shining. At noon on a clear day, the UK can generate around half of its power from wind and solar but by the evening renewables often contribute significantly less. Yet the show must go on, and the lights need stay on.
So, what fills the gap?
Natural gas plants make for a pragmatic solution – they emit half the carbon of a comparable coal plant and can be switched on and off quickly to complement wind and solar. Much like a reputable understudy ready to take to the stage when the occasion calls for it.
In our view, this means gas producers and distributors like Shell, turbine makers like Siemens Energy, and developers of“ peaker” plants like Drax, who can supply extra power when it’ s needed most, will likely remain essential members of the backstage crew.
For systems without sufficient gas, energy storage can also serve as a ready understudy.
On a sunny Hollywood morning, California generates more solar power than it needs, using the excess to charge batteries like those in the Luna farm operated by Siemens Energy and utility AES.
Befitting its weather, the UK relies on water instead. Drax’ s“ pumped hydro” facility in Scotland buys power when it is plentiful and cheap and uses it to pump water uphill through a dam. Later, when power is scarce, and electricity demand is high Drax lets that water flow back downhill, capturing the power and selling it back to the grid.
Intermittency isn’ t the only challenge to contend with – distances matter too. We are moving from a system of compact power plants located close to cities, to one of more dispersedly placed wind and solar farms located far
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