The energy trilemma is no longer an equilateral triangle – it’s an isosceles triangle and it’s skewed towards two sides, David Walker tells Kelvin Ross

 

It always comes back to politics” when you talk about the future of Europe’s energy mix.

So says David Walker, chief executive of DNV GL, as we discuss the impact of Germany’s energy transition. It’s been five years since Germany announced its decision to withdraw from nuclear following the Fukushima accident, but the so-called Energiewende was several years underway by then.

What does Walker think has been the impact of Germany’s new power blueprint?

“If you look at the effect that the transition has had globally, it has probably been one of the single biggest factors in influencing solar.

“The Energiewende push for renewables encouraged solar in Germany, which made Germany at one time the largest solar market in the world. It then encouraged Chinese manufacturers to produce solar panels on a global scale, pushed down the price of solar all over the world, and actually started the solar revolution by and large.”

So, from a renewables standpoint, the Energiewende has been great, but as Walker stresses, “the issue is the whole thing of brown coal.”

He says the German government was “very brave” in shutting down nuclear but has been unwilling to show similar courage in tackling coal, which he argues could be displaced by more renewables and storage.

“Hopefully brown coal’s time is limited but it’s going to be a very brave person that does it.”

Walker – who started his career as a geologist for oil company Amoco and was later president of BHP Billiton’s petroleum operations – says that when it comes to politics, “it would appear that affordability and security of supply are now more important than sustainability in many countries”.

“Affordability and reliability have become more important in the energy trilemma – it’s not an equilateral triangle any more, it’s an isosceles triangle and it’s skewed towards two sides at the moment. That’s where we are at.”

On the wider European energy mix, Walker says: “I think we will continue to see an increase in renewables, both wind and solar. The question for me is the discussion between lignite and gas, and the fact that gas has been pushed to be the most expensive fuel, effectively.”

He explains: “On a marginal cost basis it goes: wind, then nuclear, lignite, hard coal, black coal – and then you get gas at the far end. Are gas prices going to come down to allow it to compete with brown coal and hard coal? I think that’s going to be an interesting question for Europe’s future.”

“But if politicians want to look at the climate change issue, then they have to look at why we would want to be burning brown coal – the most polluting of fuels. Why are we importing coal all the way from America to burn in power stations in Europe when we have local gas or access to cheaper gas. That’s what politicians have to think about – where do they want Europe to go? They’ve set all these goals in terms of lowering emissions, but to me, it may have been better if we’d had the old system in the EU where individual countries had to meet their targets.”

One thing Walker is certain of is the importance of interconnections. He says that it is certainly possible to bring solar from the Mediterranean into north-west Europe.

So why isn’t it happening? Investment – or rather the lack of it – is the answer, although there’s no shortage of investment in other forms of power, and here Walker stresses that it is a case of picking a priority: “There’s going to be huge amounts of investment, but the investment in a nuclear power station versus the investment in an interconnector that could access someone else’s renewables somewhere else in Europe – that’s the question: which one should you put your money in?”

However, he adds that “there’s no doubt that Britain, Belgium and Germany are well placed in terms of accessing interconnectivity. That’s something we can see growing. It can displace the need for capacity markets and it can displace the need for conventional power, because you can use the renewables and interconnectors together on a scale that is greater than has been done historically.

“The technology is there.”

As he raises the subject of building new nuclear, I wonder if he thinks a new fleet of reactors – as the UK plans to build – is the right choice of bedfellow for the increased number of renewables coming onto the grid.

“I think that the jury’s out. But the big question will be, how do you replace those big nuclear stations over time? Is Hinkley Point and the next one or two going to be the future, or is something else going to come along in the interim?

“For the foreseeable future we are going to see nuclear, but the exact proportion – and whether they will replace 30- to 40-year-old reactors with new reactors – is still questionable.”

He adds that “if we can get the cost of offshore wind down further then I think it would quite easily compete with nuclear and be a more interesting part of the energy mix than it currently is.

“Offshore wind is clearly under-developed at the moment. The key thing for the industry is getting the price down. We have to improve and cheapen the cost of installation, and the cost of connecting them to the grid is almost double the cost of an onshore development, so that’s something else we have got to look it.

“It’s really a cost question for large-scale offshore wind. The actual turbines have been demonstrated – and floating offshore wind could be a whole new ball game: you can put it in deeper waters over the horizon. That’s quite attractive but you have to keep the cost down.

“But in terms of resource, it’s huge. The wind always blows harder and faster offshore – that’s a fact.”