On a recent Siemens Energy Podcast, guest Stephen Lacey admitted that he believes we largely have the technology we need to decarbonize our economy but moving forward will require a rethinking of our current regulatory and business models. He holds the position that it’s important not to be “ideological” about energy but to focus on facts. The reality is that there are limits to bringing renewables onto the grid today, and we need to keep all options on the table to make both an economic and business case for an energy transition that meets society’s needs. To that end, in this article we’ll take a look at some of the challenges we still need to reckon with as we journey to net zero.
It’s Not the Technology
Recently, reporter Oliver Sachgau sat down with Siemens Energy CEO Christian Bruch to discuss 5 uncomfortable truths about the energy transformation. Much like Stephen Lacey, Bruch believes we have the technologies we need to decarbonize. The issue is more about commercializing them at scale and bringing the price down. Lacey doesn’t necessarily think even price is the issue, except when it comes to nuclear and direct air capture technologies, as the cost for renewable energy sources like wind and solar have dropped precipitously in recent years. In his view, the rate structures and business models are what need to adapt. In Bruch’s view a bigger challenge will be in reskilling the workforce so as not to leave folks behind as we transition from coal and gas-based economies to renewables, and how to bring developing economies along quickly. Parts of the world are still struggling to move off coal, and China continues to build coal plants even as they struggle to bring renewables to the grid at a rapid pace.
“All of the Above” Remains a Valid Position
Our power systems, as Lacey notes, are still very dependent on gas. Even though European countries like Germany were early adopters of technologies like solar, they are still reliant on fossil fuels. Each region has its unique challenges, and fossil fuels can still play a role in our energy mix—along with efforts to decarbonize these traditional energy sources as much as possible. For renewables to become a bigger part of the picture, we need reliable battery storage to help balance their intermittency, and we need to be open to a role for nuclear power. Every step in the right direction is better than no action at all, so if that means relying on natural gas fired power generation to back up utility-scale solar as we wait for turbines to become capable of running on 100% green hydrogen, that’s a worthwhile step to take.
Our power systems, as Lacey notes, are still very dependent on gas. Even though European countries like Germany were early adopters of technologies like solar, they are still reliant on fossil fuels.
The Public and Private Sectors Must Work Together
One of the questions Stephen Lacey addresses in his podcast episode is whether he thinks the conversations he’s been hearing around the energy transition are moving the needle. He notes that when it comes to investment in renewables, we’ve acted quickly. Utilities though, can be slower to change. The rate of adoption of new technologies is not where we’d like it to be. At the same time, while businesses are all in on decarbonizing their footprint, they tend to be a bit removed from the conversation happening at the legislative and regulatory level. And the divide between governments of the developing vs. the developed world can be stark. The fact is no one can do this alone. While private industry needs to keep working on the technologies and business models of the future, politicians at all levels need to put the right frameworks in place to incentivize a speedier rate of change, help make pricing competitive with fossil fuels, and ensure a just transition where the demands of society are met without leaving populations behind.
As much as Stephen Lacey argues that energy policy in relation to the climate should be practical and not ideological, many would like to exclude natural gas and nuclear power from discussions on framing public energy policy. Many insist that the technology isn’t there yet and the costs remain too high to envision a workable energy transition any time soon, mainly because they discount the role that our existing energy mix can continue to play in a low carbon future.
The truth is that we do face a number of challenges on this journey, but there are also a number of bright spots. Companies like Siemens Energy are working hard every day to build the smart grids of the future that are capable of integrating a large number of renewables while maintaining efficiency and reliability. As the global demand for energy increases, we are collaborating with customers, governments, and bright minds around the world to find the solutions that meet the challenges of each nation along the road to net zero. We are putting our money where are mouth is in investing in new energy systems and ramping up the speed with which technologies like gas turbines can run on clean hydrogen and other climate friendly fuels. It may seem like we have a long way to go, but the pace of change is rapid and honestly, it’s an exciting time to be in energy.
The truth is that we do face a number of challenges on this journey, but there are also a number of bright spots.