2min chapter

A Sustainable Future cover image

Alex Grant, Equinor, on the Energy Trilemma

A Sustainable Future

CHAPTER

Is the Energy Transition Going to Be Inherently Volatile?

I think any transition is going to have its ups and onds and some bumps. But i think a key to it is to try and recognize why those bumps might come and how do we minimize and mitigate them. One of the problems, for example, we have our win farm doga bank, and we have a fixed off take on that whenever we produce electricity. Actually, what is will be much more valuable electricity in the future, is when the sun is not shining, or when the wind is not blowing. That's very hard to quantify in a cost. If you had hydrogen, forexample, that cost two times more or three times more than a wind alternative producing electricity, is

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Speaker 2
So i'm going to push you back on those two questions that you're composed ecause i think the very high level view is this, you know, that that observation from wakla smill, you know, that the transitions that we've seen from wood to coal, from coal to oil have spanned centuries. So the question is, is it your expectation that the energy transition is going to be inherently volatile, bumpy, whatever you want to call it, if we try and compress it over the next 20 to 30 years? I
Speaker 1
think any transition is going to have its ups and onds and some bumps. But i think a key to it is to try and recognize why those bumps might come and how do we minimize and mitigate them. And that is through this flexibility point, to try and build out the flexibility. One of the problems, for example, we have our win farm doga bank, and we have a fixed off take on that whenever we produce electricity. Forget the exact number, i think it's 54 pounds per kil hour. And that is often compared in the market to say, this is not a subsidy. Look, it's equal to the average electricity price. So we are only getting a guaranteed price equal to what the average price we get if we were just merchant. But it is actually a big subsidy because it guarantees us a price when the wind is blowing, which is when we produce our electricity, or will produce our electricity from dogabank. Actually, what is will be much more valuable electricity in the future, is when the sun is not shining, or when the wind is not blowing. That's very hard to quantify in a cost. If you had hydrogen, for example, that cost two times more or three times more than a wind alternative producing electricity, is that expensive or not? If you just pare it to the absolute l c o e, or cost of production, of course it is. If you recognize that that hydrogen, or electricity produced from hydrogen, will be producing at the times when we really need it. When prices are high, perhaps it is not. And if we can squeeze how much is needed in those points to smaller levels and have an abundance when wind is blowing is shining, that whole energy system will be something that can be at a level of expense that can be accepted, socialized and taken by countries and by society.

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