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11 May 2015
Renew, increase, secure, decarbonise, make it safer and, while you’re there, reduce the cost of electricity please – all of these imperatives provide an exciting opportunity to make our future energy systems truly extraordinary.
We are at an unprecedented point in the cycle of energy supply: demand is expected to increase by 35 per cent by 2035 and in many regions around the world, existing energy infrastructure is coming to the end of its life and must be replaced. New safe, reliable, affordable, large scale power capacity will require technical innovation and smart practical energy choices by governments, individuals and businesses.
This is nothing new, but beyond the age old supply and demand challenge, we must now also generate power using less carbon. Add to this an accelerating pace of advancements in technology, international collaboration, and economic challenges and opportunities. There are more buyers and sellers, more competition — and more options — than ever before.
All of these conditions provide a compelling opportunity to make our future energy systems truly extraordinary. On the front line of keeping old infrastructure going and bringing new low carbon technologies to the grid, it’s the engineers who are transforming the possibilities and “keeping it real”.
Despite the rise of renewables, the global energy mix remains carbon intensive: more than 80 per cent of the world’s energy continues to come from oil, gas and coal.
Decarbonising the energy system presents huge challenges. But it also gives us an unprecedented opportunity to create a system that is smarter, safer and more secure than the traditional carbon-burning alternative.
Many of the renewable and low-carbon technologies needed to bring about this change – including wind, solar, nuclear and biomass – are already established. One of the biggest questions for engineers, says Martin Grant, CEO of Energy at Atkins, is getting the mix right.
“The debate tends to get polarised. The various energy sources available to us should not be considered mutually exclusive. Our view is that you need a mix of sources. Oil and gas will have to remain an important part of the mix in the medium term, but we need to be using less and we need to be looking more closely at technologies like carbon capture and storage to mitigate carbon impact.”
Gas is widely used for electricity generation, partly because of its low price and partly because emissions are half those produced by coal-fired power stations.
The continuing attraction of gas is underlined by shale initiatives in the US and by growing interest in offshore resources. The global energy giants recognise the importance of gas as a long-term play, a point emphasised recently by Royal Dutch Shell’s £47 billion bid for BG Group.
“We will need to continue to extract oil and gas, and we need to try and do that economically,” says Grant. “And we will need to use more gas than oil.”
The challenges associated with oil and gas are formidable: political instability in producing regions and crude price volatility are among them. “It’s difficult to manage an industry where six months ago the commodity was worth more than US$100 a barrel and recently it was half that,” says Grant.
The average age of a coal-fired plant in the US is 42 years; in the UK, the ten biggest coal-fired power stations are more than 40 years old. Finding greener ways to sweat these assets makes sense.
“Biomass conversion is a success story,” says Grant. “The only limitation is how much genuinely renewable feedstock you can get.”
Nuclear power will be a key component of the low-carbon future. Despite concerns about nuclear generation triggered by the Fukushima disaster in Japan and Germany’s subsequent decision to abandon nuclear power, global interest in nuclear energy is regaining momentum. China, Saudi Arabia, South Africa, Turkey, the United Arab Emirates and the UK are all pursuing projects. “Nuclear is such a big part of the future energy mix that the challenge is just to do it quicker and cheaper – and to do more of it.”
Long term, nuclear fusion could be the answer. Fusion – the process that powers the sun – promises safe and potentially limitless energy. “Atkins is helping to build the experimental ITER fusion reactor in France – and that moves us closer,” says Grant. “But it’s 30 or 40 years away from going commercial. Fusion is a gift to future generations. Right now we have to look at other things.”
Those other things are renewables – including offshore and onshore wind, tidal and solar – which are likely to become even more important in the future.
“The big solar programmes in Saudi Arabia and the United Arab Emirates are exciting,” says Grant. “The neat thing about solar in this context is you get maximum power when you’ve got maximum demand, because everybody turns up the air conditioning when the sun shines. And it’s close to grid parity – it’s similar in cost to electricity generated by conventional means.”
In northern Europe, there is less synchronisation between supply and demand: increased power requirements in the higher latitudes are associated with cold rather than hot weather. The weather systems that trigger icy winter days – anticyclones – are associated with low wind speeds, so output from windfarms is minimal.
In spite of this, the success of renewables continues to confound the sceptics. Renewables were the biggest contributor to Germany’s electricity supply in 2014, providing more than 27 per cent of output. In the UK, meanwhile, renewable electricity generation increased to a new record of 22 per cent in the fourth quarter of 2014.
Innovation will help to drive down costs. In the case of offshore wind, for example, the development of floating turbines could transform construction and maintenance – turbines can be built on land and then towed out to sea. They can also be towed back to shore again for overhauls, dramatically reducing costs, complexity and risk.
“Offshore wind is a big part of the solution. Tidal barrages, such as the one proposed for Swansea in Wales, also have a part to play. These things are expensive but the point is that the technology is well understood and we can generate large quantities of completely green electricity – and the cost will come down over time.”
“As engineers, when we look at the cost of new nuclear and some renewable technologies on a per megawatt basis, they are at this point in time, at least twice the cost of traditional generation methods,” says Grant. “To say that tomorrow we want exactly the same thing – energy there all the time – but we want it produced in a different way because we don’t want the planet to be destroyed and we want it to cost less, is unrealistic. How likely is it that this thing you want that’s better is not going to cost more? Unless you are incredibly lucky.”
As the majority of the UK’s existing infrastructure is decades old, the initial capital cost to build it has in a sense already been paid for. The cost of building the replacement new infrastructure that is needed to power the UK in the future is expensive compared to the ongoing running costs of the older assets. All of that means that in the long-term the wholesale cost of electricity has to go up.
Innovation has given us the opportunity to bring low carbon electricity into the mix. In the future, the gift of innovation will be low cost electricity. But the cycles of innovation are long and it’s important to understand the timescales – probably 20 to 30, 40 years.
What the future energy mix will look like remains to be seen, but what is certain is that the accelerating pace of technological and engineering achievement will reap extraordinary energy rewards for future generations.
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