Highly regarded
energy analyst Javier Blas recently wrote in Bloomberg about the risks of
electrification. The call among climate activists, in particular, to ‘electrify
everything’ is unfeasible for a number of reasons. Among them are some of the
risks described by Blas. Since I can’t access the paywalled article, I am going
off the summary by Doug Sheridan, an analyst who focuses on energy, economics,
and policy. Javier writes that following the recent International Energy Agency
Summit on the Future of Energy Security in the UK, governments are beginning to
take the risks of electrification more seriously. He notes that green energy
enthusiasts do not take these risks into account, and so-called climate deniers
do not take the risks of growing fossil fuel use into account. He says the
reality is somewhere in between.
The Risks of Electrification
1) Meeting
the growing demand for electricity – much of that
demand in developing countries like China and India is being met with coal,
with all of its environmental and CO2 emissions risks. Even in the U.S., with
electricity demand growth expected to rise significantly for the first time in a
couple of decades with AI developments, electrification, and
re-industrialization, planned coal-fired plant retirements are expected to be
delayed.
2) Ensuring
reliability with growing intermittent resources powering grids –
since wind and solar are both intermittent and variable, these risks are real.
Wind availability sometimes drops unexpectedly, causing problems. If
dispatchable power plants (coal, gas, nuclear) are shut down to meet green
targets, it makes power grids vulnerable to weather-induced availability
problems.
3) Transmission
is Often Inadequate to Support Renewables –
Inadequate transmission means that new renewables projects must wait months or
years before they are connected to the grid. There is also public opposition
and NIMBYism against transmission projects and large renewables projects that
slow down adoption and grid integration. “Spending on the last few miles of
connection is sorely missing. The world badly needs many more transformers and
low-tension distribution lines.”
4) Balancing
Supply and Demand of Electricity – this refers to the fact
that electricity must be balanced in terms of supply and demand on very short
time scales to keep the system working. Balancing with high levels of variable
generation (wind and solar) requires resource adequacy, which often involves
redundancy and fossil fuel and/or battery back-up, which can add significant
costs to the grid. Those costs will be passed on to consumers.
5) Electricity
Price Volatility – electricity prices have swung wildly
compared to fossil fuel prices. This can lead to higher costs for consumers and
difficult investment decisions by power generators. Renewables and the need for
backup natural gas plants are the main reasons for the price volatility.
“It's good news that gov’ts are
openly talking about the risks of well-intended green policies. Now, the job is
to start addressing them. Flagging the problem isn't climate denialism. It's
electricity realism.”
References:
It’s
Electricity Realism, Not Climate Denialism. Javier Blas. Bloomberg. April 24,
2025. Energy
Security: It’s Electricity Realism, Not Climate Denialism - Bloomberg
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