Will more wind and solar bring energy independence?

In this note in today’s (Novemebr 28, 2022) “The Australian” newspaper, I explain why the increased use of wind and solar won’t being Europe increased energy independence – a point also made last week by the head of NATO and, I argue, implied by the International Energy Agency:

https://www.theaustralian.com.au/commentary/costly-proof-energy-autonomy-gone-with-the-wind-and-sun/news-story/fc8a7f4754cd3b55da8620a3afad1a3c

Costly proof energy autonomy gone with the wind (and sun)JAMES PHILIPS

Wind turbines producing electricity spin over a solar park on November 1 near Klettwitz, Germany. The country’s renewables plan will mean more reliance on international supply chains for materials, and more reliance on imported gas. Picture: Getty Images

In response to Russia’s war, renewables advocates say Germany should increase its reliance on wind and solar generation, and that this will bring energy independence. It won’t, for two reasons: fuel and materials.

The International Energy Agency has said natural gas “is seen playing a major role supporting a transition to net-zero energy systems”. In July, the European parliament endorsed proposed EU rules allowing investment in gas and nuclear power as part of the energy transition.

Wind and solar generation need to be supported by gas, so accelerating the transition to solar and wind is likely to increase demand for natural gas (unless a new technology is developed). That has been Germany’s experience to date: from 2000 to 2021, as wind and solar went from 0.7 per cent of energy consumed to 12.4 per cent, natural gas went from 20.8 per cent to 25.8 per cent.

In response to Russia’s war, Germany can do what it is doing: reduce its imports of Russian gas and increase its imports of gas from elsewhere. Implementing this switch has faced bottlenecks in the infrastructure for importing gas from new sources as well as the limited availability of supply to meet the sudden increase in European demand. The switch has reduced fuel reliance on Russia, but not resulted in fuel independence.

The IEA has also said a transition to renewables is a “shift from a fuel-intensive to a material-intensive energy system”. On November 21, NATO Secretary-General Jens Stoltenberg warned the energy transition to renewables could create a new dependence on Chinese materials, just as Europe is weaning itself off dependence on Russian fuel.

Wind and solar are intermittent and low-energy-intensive sources of energy. A system built on them requires a massive increase in equipment and therefore in mining and industrial production. Such an energy system needs a hugely extended transmission network to link dispersed generators, it needs more than three times the amount of primary generation capacity to compensate for the intermittency of wind and solar, and it needs storage and back-up generation capacity to power the grid when wind and solar are not generating.

Oil, coal and gas are found in many places around the world. The materials required for an energy system built on renewables are not. Since China dominates industrial capacity and supply of critical minerals, more wind and solar will mean more dependence on China. (As Jim Chalmers said at the Australian Critical Minerals Summit on Friday: “Critical minerals could be the opportunity of the century for Australia.”)

Between 2000 and 2021, Germany’s use of nuclear energy declined from 12 per cent to 5 per cent of energy consumption. Along with its pro-renewables policy, Germany had been running an anti-nuclear policy. This is no surprise, since Green political parties typically urge both.

Many solar and wind advocates claim these are the cheapest means of generation. To support the renewables-only agenda, advocates misrepresent the system costs of wind and solar by not including the full costs of transmission system expansion or of the “firming” of intermittent wind and solar generation (of which gas peaking generators are a major source).

Often, advocates say that only five hours a day of firming capacity is required. That reminds one of a warning sign of the Bernie Madoff fraud scheme – he promised 10 per cent returns regardless of the performance of underlying investment markets. The amount of firming capacity required is grid-specific, dependent on the diversity of weather systems within the relevant electricity grid and the frequency of solar and wind “droughts” within those systems.

There are now live examples (Britain, California and Germany are three, and Australia is trending) that demonstrate that just because wind- and solar-generated electricity is cheap at the point of generation does not mean a grid powered by those sources will provide affordable electricity. The experience is that the transition to renewables is highly price-inflationary.

None of this is to suggest solar and wind generation do not have an important role in reducing CO2 emissions. But there are now vested ideological, political, business and financial interests that have placed their bets on solar and wind.

As always when faced with an alignment of powerful interests, we should be sceptical. Because access to affordable and available energy is fundamental to human wellbeing, we owe ourselves (and especially the billions of people still living in energy poverty) a franker discussion about CO2 reduction, one not distorted by an anterior bias towards a particular solution.

In the meantime, for Germany more wind and solar will mean more reliance on international supply chains for materials, and more reliance on imported gas – not energy independence.

James Philips is a Sydney lawyer, historian, company director and writer.

Published by James Philips

When his younger son was four years old, one Saturday afternoon James found himself – for the first time in years – with several hours in which he was not working for his law firm or doing things with his young family. He picked up a book of his choosing. It was a history book. James was born in 1960 in Sydney, Australia. His late elder sister, Petrina (known in the family as ‘Beans’) taught him to read before he went to school. He was sick with asthma and bronchitis for much of his childhood, and spent a lot of time reading – especially historical stories. He liked to argue for his views, too. His father, Peter, had studied law after returning from service in World War II, and many of Peter’s and his mother Sue’s friends were lawyers. James decided early on that he wanted to be a barrister (a type of attorney who represents clients in Court). His uncle Bill spent many hours restoring a rotting sailing dingy, in which James taught himself to sail while on the family’s annual beach vacations. At school he did well in math and science subjects, but also in English and history (which is where his heart was). He was captain of his high school debating team, and acted in several plays. He also produced and directed a play, and assisted in the production of others. One of his actors only suffered mild rope-burn when the harness that James had made for a hanging scene slipped… James won a scholarship to Oxford University straight after school. He was not as motivated in his studies there as he had been at school, and did not feel any connection to England. Those factors, and two people, had a big role in his decision to leave Oxford after four of the nine terms of his course in Politics, Philosophy and Economics. The first person was a wonderful woman whom he fell in love with, but who dumped him. The second was Margaret Thatcher, whose government put up fees for overseas students to a level which James could not afford. James then studied for a liberal arts and a law degree at Sydney University. He made his first investments in the share market while at university, using money that he borrowed on a credit card. After graduating, he worked at a law firm with some outstanding lawyers, who were passionate about excellence, about their clients, and about building the firm. He stayed at that firm for thirty years, becoming a partner, then head of Mergers and Acquisitions in Sydney, then co-head of Corporate, and a Board member for eight years. He loved being a solicitor (a type of attorney who rarely represents clients in Court), and never switched to becoming a barrister. More importantly, he met Julie Claridge there. James was smitten, and they became engaged after James’s eighth proposal. They were married and then blessed with two wonderful sons. Like many Australians, James and Julie love to travel. They resumed travelling when their younger son was three. Both boys were – mostly – fine with the twenty-four hour flights that Australians take. James and Julie encouraged intellectual curiosity in their sons, and helped to teach them how to participate in fact-based discussions and debates. Family discussions have been wide ranging since the boys were young. While at his first law firm, James was able to advise many local and offshore clients. He also helped the firm to grow its offshore business. He made a trip to Myanmar to test a recommendation that the firm should open an office there: he recommended that it should not. He advised the first company from the People’s Republic of China to list on the Australian Stock Exchange. He later made many business visits to the PRC. For more than twenty years he has been a visiting lecturer at the law school of the University of Sydney (currently ranked 12th in the world), teaching two topics on equity capital markets law. He wrote a long chapter for a leading subscription publication, on public merger and acquisition law in Australia. He has convened and spoken on many panels, and at many seminars and conferences. When he became head of Mergers and Acquisitions, to encourage some of his partners to take oral communication training, he took the training himself. He learnt a lot about the importance of preparation before every meeting and every presentation. His law firm was an innovator in teaching its lawyers to present complex advice concisely and with clarity. He is a director of a leading Australian think tank, and Chair of two real estate investment trusts. James and Julie have always lived on a pre-agreed amount, paid their taxes, made donations and used the rest of their income to invest. James sees investment as trying to apply knowledge about a range of topics to predict the future, and to pick future winners. At the end of the Great Recession, James and Julie sold their family home to take advantage of depressed investment asset values. After coming second in an election for Chair of his law firm, James moved to a global law firm where he became head of Corporate in Australia. There he sat in open plan, with a team of very capable and motivated young lawyers. He discovered that they did not know much about history or literature. In 2018 James decided to embark on a new project – to write a book about an important historical topic, in the hope that he could help to spread knowledge about what made the world as it is. He resigned as a partner from his law firm, and began work on his new mission.

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