Energy Crisis Opening Doors for New Opportunities

• Published Date: January 25, 2023

Currently, an energy crisis is banging against the door of the world, and it has forced countries on the backfoot. The situation is rather complex and calls for deliberation, to say the least.

Europe has had perhaps the worst impact of this crisis, but it has major consequences for markets, policies, and economies all over the world. As so often is the case, the deprived and most vulnerable will suffer the most. Although we have been in a perpetual energy crisis, the Russia–Ukraine War has made the situation far worse, especially for Europe.

There is a need for looking back at the policies made, amid the increasing prices of electricity. It may be termed as another side-effect of the war between Russia and Ukraine, which has jolted the relationship between Russia and the EU and posed a big question mark on the long-term dependence on fossil fuels for generating both heat and electricity.

This is partly because of the stoppage in the Russian gas supply to the EU, which would, in time, definitely impel world leaders to focus ever more strongly on the energy transition. However, only time will tell how the innovation, trade and investment, and behavioral shifts power the world toward a net-zero-emission energy system.

Energy Crisis before and beyond Russia–Ukraine War

Delays in Power Plant Commissioning

Few countries have experienced a substantial delay in the commissioning of power plants that were supposed to cut down the gap between the supply and demand of energy. Due to this, the old power plants are under increasing stress to meet the daily power requirements. This is why load-shedding and grid breakdowns are common, even in developed countries with relatively advanced transmission setups.

Energy Wastage not Given Heed

Most people are not aware of the significance of excess energy consumption or wastage. It is only deliberated over the internet, newspapers, and seminars. Unless it is given a serious thought, things will remain the same or become even worse in the time to come. As per an article published by Business Insider, almost 300,000 Petajoules of energy is wasted each year; consider the fact that just 1 Petajoule is equal to 1,000 trillion Joules!

Simple things such as switching off the lights and other appliances when not in use, making proper use of daylight, strolling to cover a short distance instead of driving, making use of CFLs and LEDs over the traditional HID and halogen bulbs, and checking for energy leakage or deliberate siphoning can help save a lot of energy in the time of crisis.

Increasing Energy Prices

It may not grab much attention, but the increase in taxes, strikes, political events, and extreme weather conditions can bring about a sudden increase in the energy prices and have an adverse effect on the supply. Let’s talk about the increasing prices of energy further.

Europe is facing the brunt of the increasing energy costs and a potential waning of consumer spending, as a result of households’ increased energy-related expenditures. The growing power prices are now having a negative impact on electricity-intensive industries, such as manufacturing. And, numerous companies have, for the time being, curtailed the production of ammonia and fertilizers, citing the falling margins because of the sharp increase in the prices of gas.

Moreover, in China, the government is not able to cope with the increasing prices of coal. As a result, power producers are not left with sufficient coal at hand, which has led to blackouts across provinces.

India has also witnessed a shortage of coal. India’s domestic coal mining, accounting for 80% of the supply of the nation, has not been keeping pace with the energy requirement, and the higher coal prices in the international market are jolting the imports big time. Power plants relying on imported coal have slowed or halted operations, and some relying on domestic coal are running out. Several states have suffered serious power shortages of late, affecting both industrial and residential customers.

Increasing Prices of Coal, Crude, and Natural Gas

The high prices of gas and coal result from an amalgamation of supply and demand factors.

Investments in oil and gas have declined recently because of the increase in prices. Due to this, supply has become more vulnerable to various circumstances. Additionally, strong enough policies have not been formulated by the governments to increase the utilization of clean sources for filling the demand–supply gap.

Prices of natural gas have reached a new high, exceeding USD 250 per barrel of oil. Similarly, the price of oil rose above USD 100 per barrel in 2022. Moreover, to cope with the reduced Russian gas supply, Europe imported an extra 50 billion cubic meters (bcm) of LNG in 2022 compared to 2021; 1 bcm is itself equal to 678,000 tons! Coal prices have also hit record levels. The high prices of coal and gas are responsible for 90% of the increase in electricity costs worldwide.

Against this backdrop, both natural gas and coal demand had strong gains in various countries in the first six months of 2021, as the global economy recovered. Coal and natural gas consumption increased by 11% and 8% respectively, as opposed to the similar phase in 2020. This rise was also powered by numerous events, such as cold winter in the Northern Hemisphere, the curtailment of hydropower production in Brazil because of droughts, and lower generation of wind energy in Europe.

However, the supply of oil and natural gas was hindered. The lockdowns pushed maintenance work from 2020 into 2021, which impacted the supply when demand was in the recovery mode. The impact was much more noticeable in the U.K. Furthermore, unexpected outages at LNG liquefaction plants, unpredicted repair works, and project delays further hindered LNG supply.

The gas supply affected by outages in 2021 was up by about 27% compared to the average during 2015–2020. Russia’s Gazprom reduced its short-term hydrocarbon supply and has not restocked its storage sites in Europe to the previous levels.

So, What Is the Solution?

Now that it is almost clear that the Russia–Ukraine War has relatively little to do with the global energy crisis compared to the general increase in the raw material prices and the continuously rising demand for electricity, exploring alternative sources, preferably the cleaner ones, and deploying efficient electricity storage technologies could help us out of the woods, again, relatively.

Role of Batteries in Mitigating Energy Crisis

Amid the energy crisis, energy systems call for a change. But, what is the role of battery storage in the shift toward renewable energy systems and the smart grid, and how can it mitigate the energy crisis?

Renewable power is doing a lot of good for the climate by replacing fossil fuels with cleaner sources, but these resources are variable in their electricity output. These sources do not generate power continuously; they either supply too little or too much for an energy system. Battery energy storage systems are able to store the power generated from renewable sources. This energy can be released when there is need, thus potentially preventing a possible power cut, or, in extreme cases, a grid breakdown.

Li-ion batteries are one of the most-popular storage technologies, since they have a high capacity, high energy density, improved efficiency, and low self-discharge rate. They are already powering EVs, and with the V2G technology, the idle energy in these systems would be fed back to the grid.

Why Is BESS Important for the Power Grid?

BESSs must be seamlessly integrated into the power grid for achieving a more-efficient supply.

Energy storage has an important role to play in the contemporary electricity management system, since it does not only help balance the power generation variability but also allows people to use the energy as and when required, without the reliance on the grid (in the case of small, residential- or commercial-scale systems).

On the other hand, large-scale BESS allows for the storage of ample renewable power, thus enabling enough supply to a large industrial facility. Additionally, the energy stored can be put to use for regulating the voltage of the grid, which might become unstable because of the variable output of renewable energy sources, such as solar and wind.

Similarly, a small-scale BESS can be fitted in homes, hotels, or other kinds of commercial buildings for controlling power consumption and storing the power generated from solar arrays. This way, the local production and consumption of power may contribute to a resilient and ample power supply.

What Will Advanced Smart Grids Do?

Supplementing the functionality of ESSs, an advanced smart grid will have the potential to utilize distributed power networks, from where the produced power can be shared locally, for instance, amongst different buildings in a specified area. This would essentially be achieved with virtual power plants, which are nothing but a computer system that integrates numerous small-scale renewable electricity establishments and directs the output where the demand is the highest.

Battery storage has, therefore, arisen as an important component in the shift away from fossil fuels and toward cleaner energy, from utility-scale establishments down to those just big enough for individual homes. Therefore, even if the supply from utility-grade power plants erodes, these distributed power sources can help plug the gap.

Can Nuclear Energy Serve Well in Crisis?

With the world in the midst of an energy crisis, nuclear power can help countries make a transition to renewable energy systems.

In nations choosing to increase nuclear power usage, the reliance on fossil fuels and emissions of carbon would decrease substantially, and electricity systems could incorporate increased shares of wind and solar power. Deploying clean energy systems will be hard and expensive without nuclear power.

Nuclear is the second-largest source of low-emission power, with plants in 32 nations. However, around 63% of the capacity for generating nuclear power comes from plants over 30 years old. Hence, a number of both emerging and advanced economies have announced strategies around giving a substantial role to nuclear power, along with financial incentives to entities wishing to invest in it.

19 countries presently have nuclear reactors under construction, with China being home to most of these…12, followed by eight in India, as of 2022. The momentum of atomic power will be stimulated further in the coming years by the recent increase in the prices of oil and gas and the global focus on reducing their consumption.

Hinkley Point C1 and C2, located in the U.K., are the largest under-construction nuclear reactors, each with a capacity of 1,720 MW. Similarly, France’s, Flamanville 3 is the second largest nuclear reactor, with a capacity of 1,650 MW.

Despite some political and public opposition regarding the construction of nuclear reactors, there is no denying the fact that the future of energy generation will be safe in the hands with nuclear power.

It is a fact that the world is undergoing an energy crisis, but as they say, with every problem come a variety of opportunities, which could be best capitalized on by the suppliers of batteries, EMS, and VPP solution providers and those seeing a future in nuclear power.