Plugged In: the energy news podcast
Coming from the heart of the Montel newsroom, Editor-in-Chief, Snjolfur Richard Sverrisson and his team of journalists explore the news headlines in the energy sector, bringing you in depth analysis of the industry’s leading stories each week.
Richard speaks to experts, analysts, regulators, and senior business leaders to the examine not just the what, but the why behind the decisions directing the markets and shaping the global transition to a green economy.
New episodes are available every Friday.
Plugged In: the energy news podcast
2050 vision: solar, wind and …. ammonia
What will happen in 2050 when Europe's power system will be close to 100% renewables? Listen to this week's pod as we turn the Green tea leaves towards a low-carbon world and discuss the potential for energy storage using hydrogen and … ammonia.
Host:
- Richard Sverrisson, Editor-in-Chief Europe, Montel.
Guests:
- Gry Aamodt, Vice Preseident Global Drivers, Statkraft,
- Nora Kamprath Buli, Editor Germany, Montel.
Hello listeners and welcome to the Montel Weekly podcast, bringing in the most topical energy matters in an informal setting. My name is Richard Sverrisson. I'm joined today by my colleague Nora Kamprath Buli, who is Monte's Editor Germany, and our guest today is Gry Aamodt. From Statkraft a warm welcome to you, Gry.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Thank you.
Richard Sverrisson, Editor-in-Chief Europe, Montel:You are, you are the author of a recent report. Are you not about more the global energy systems and the future. It's sort of, it's, it's a view of a vision of what's gonna happen up to 2050 into a, into a net zero carbon world. Could you tell us a little bit more about the background to this report and why StarCraft A power company has written a report about to the, the global. The Total Global Energy System,
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:StarCraft has for many years, been really deep on power market analysis on a quite long horizon, 20, 30 years. But what we've see in the, the last years is that an increasing degree, the whole energy complex is important for the development within the power sector. So what happens? Within buildings, industry and transportation is crucial for the development within the power sector. So the last years we spent much more effort into understanding the whole complex. And a part of that work is than
Richard Sverrisson, Editor-in-Chief Europe, Montel:this low emission report. So it's kind of a holistic approach. Yes. Taking everything into, into consideration. Yes. Absolutely. So, so what are the main characteristics or if I were to ask you to, to summarize the main findings of your, of, of the, of your report?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:First of all, a most important driver is technology. We say that we are optimistic when it comes to technology development. But still realistic as this shall add value to our insights. And then we see how the world pans out. So we don't say that this needs to end in a two degree world, or this needs stand in a zero emission world. We just say, we see the huge trends that we've seen within technology cost development the last years. And we see what happens if we actually let that continue going forward. And then we end up in the world that has emissions that are consistent with a two degree
Richard Sverrisson, Editor-in-Chief Europe, Montel:pathway. It's been a few months since you released the, the report. Have you, have you made any changes or have you updated any parts of it?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:And no, we haven't, uh, when we analyze up until 2050 that the changes today needs to be really, really big to have a huge impact. Exactly. Yeah. So we haven't done that. And this is. Usually exercise, but of course if there were huge incidents that we thought we should take into account, we would do that.
Richard Sverrisson, Editor-in-Chief Europe, Montel:I mean, part of it is in, in the, in the sort of current environment, uh, on the, on the sort of policy side and also from the grassroots development, there's a big. You know, you have the Extinction Rebellion, you have Greta Thunberg, you have, you know, there is a lot more attention on, on the climate crisis. Do you think the pressure is building on politicians to create the kind of framework that you are talking about in your report?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Yes, that's I think an very, also an important driver. What we see in the public. Get opinion these days. And that is important for many reasons. One reason is what you say that it puts pressure on politicians to actually take actions and it enables them to take decisions that has been very popular. But the power in the public opinion also is forceful when it comes to people requesting climate friendly solutions, climate friendly. Products, products that are produced based on sustainable energy and also changing behavior when it comes to transportation and so on. So, so of course the public opinion and, and the momentum we see there is extremely important for how this can develop going forward and how far. The development can, can be.
Richard Sverrisson, Editor-in-Chief Europe, Montel:What struck me in the report was also, you talked a little bit about the tendency in the, in, in the world to, for more conflict and that there's a lack of cooperation on the, on the climate issues here. Do, do you think this will last, or do you think some of these, the, you know, there are often some very strong characters out there in, in the world, and do, do you think that this will be exacerbated, uh, in the years to come?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Currently, we don't see any big changes coming up. Mm-hmm. So, uh, so it. Doesn't look that good currently. However, when we model this until 2050, we need to believe in something on that horizon, and that's not given that that's the same as we see today. So there's a huge uncertainty when it comes to this, and this is extremely important for how the, how the world will develop.
Nora Kamprath Buli, Editor Germany, Montel:You mentioned that you know, that China, the US and and India are the world's biggest emitters, and now we've talked about the sort of grassroot pressure that, that we are seeing. Is that working in those countries as well, do you see that they are making an effort as well to bring down emissions or is this more of a European phenomenon?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:It's more of a European phenomenon although we see these tendencies also there. What is. Good currently is that the costs of renewables are now so low that in most places in the world actually it's cheaper to install new renewable capacity than it is to install new thermal capacity. And eventually, actually in not too long, it'll be cheaper to install new renewable capacity than to run existing gas and power plants depending on where you are. So. That is also an important driver and Melbourne more important drivers in these areas, at least now.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Hmm. So that's kind of the, on the technology side. Yes. So there's certainly with wind and, and solar. Yeah. So
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:we, we expect this development regardless of kind of the other drivers, regardless of political driver and, and, and public opinion. Although those are also
Nora Kamprath Buli, Editor Germany, Montel:important in these countries. I guess the US are a good example where we have seen coal pushed out Yes. Despite efforts otherwise to, to maybe keep the industry going. Yeah. Where I think the technology costs for, for renewables have played quite a big, uh, part as well.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Absolutely. And, and
Nora Kamprath Buli, Editor Germany, Montel:gas.
Richard Sverrisson, Editor-in-Chief Europe, Montel:And you see, um, insurers pulling out of fossil fuels and that's exactly, so that's something that's maybe gonna gather momentum as well. So the
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:capital market will also be important when it comes to this development. I think one fourth of investments in US last year. Professionally managed assets. They were in invested according to sustainability.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Absolutely. I think, you know, shareholders and Will and the public in general will add more pressure onto, onto these investment funds, et cetera. Mm-hmm. To, to, to, to, to pull out of, of, of these thermal fossil fuel type of, of funds, you know, investments. So there are.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Important drivers that is driving this in the right direction. The question is just how forceful are they and how quick will the
Nora Kamprath Buli, Editor Germany, Montel:change be? Speaking of quick, I mean we've mentioned, or, or you said that sort of developments you're seeing would take us to the two degree scenario, but you also looked at a 1.5 degree scenario. You said most of the measures or assumptions aren't really different. Big difference is speed. Yes. And I guess again, technological advancement. Yes. With what we've just discussed, do you think there's a quite big or good chance that it would sort of accelerate by itself, or do governments have to push for that extra speed? There are two
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:main challenges actually, to get into the 1.5 degree world, one. Is that it's a big change. It is a big change. And that takes time. You have to install a lot of renewables across the world. And also the electrification we're talking about, that will take a lot of time. For instance, 100 millions personal cars needs to be changed from conventional cars to electric vehicles. And that is a big challenge. What is good is that. We see that it's much cheaper to try to reach the 1.5 degree target than it is not to, because you have to cope with the climate change, which is extremely expensive and kind of under communicated when we're talking about, uh, the cost of actually going there. But in order for this to happen. And that's kind of final big challenge is of course, political challenge in this big change because there will be costs. And there will be benefits and how to actually distribute that across in a way that seems fair to. People between nations, within a country, between individual, that's the big challenge. Uh, and that will determine how fast we can get to the zero emission world.
Richard Sverrisson, Editor-in-Chief Europe, Montel:I mean, I think the, the global energy trends are, are, are fascinating, but. Often our focus is more on, on Europe, what happens here. Yes. Uh, and obviously, I mean, starcroft is a, is a global player player. Of course, starcroft was one of the companies that yesterday urged a greater tightening of the 2030 targets, especially when it comes to decarbonization. So calling for a 55% reduction rather than 40, uh, compared to 1990 levels. Do you expect this to happen by 2030? I know your, your company's. Obviously they're mostly renewable companies that are calling for this, but do you think that, uh, this is, this is likely, do you expect the new commission to come in and maybe make some some key changes?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:What we see is that in order for Europe to cost optimally reach their 20 50 0. Or carbon neutrality target, it would be needed to, to tighten the 2030 target. So it makes sense to do it. But of course it's politically challenging.
Richard Sverrisson, Editor-in-Chief Europe, Montel:So StarCraft mentioned the 55%. You know, raising the ambitions at 55% reduction. Are there any other factors that could, could come into play here, do you think?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:In general, it's a question of what kind of tool you use to reduce emissions. So of course, subsidies, direct subsidies would kind of change the premises for the carbon price. But I don't have a view on the exact.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Okay. No, sure. That, thats fine. I mean, I think it still, it is all a matter of discussion of course, at the moment as well. Um, but some people have. Talked about, you know, the linear reduction factor being increased and perhaps border to carbon taxes so that you have a more of a global level playing, playing field. But of course, these are only, you know, discussion points at the moment. Yeah. But,
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:An important point is that in general it's cheaper to start early to do things rather than doing things. Right before 20 50.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Yeah, exactly. And then it might be too late anyway. Exactly. Yeah. Yeah. Absolutely. Yeah. A key part here is connecting not just the, the energy or the power sector, but also the, the heating and the transport. So if, if you are to meet this 1.5 degree target or two degree target, do you think. This is realistic across the board. I mean, it's in some countries it's easier to do in others. I mean, uh, have you only got any views on this? If we, if we keep it in in mind? Uh, what's happening in, in Europe
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:in general, we see due to the falling technology costs, we have cheap energy available in the power sector. The last decade the wind costs have fallen by 50% solar, fallen by 80%. So this is a huge change. And then in order to decarbonize transportation, buildings and industry you can utilize that cheap energy also in these sectors. Of course we have the challenges that we discussed previously that we need to get there from a political point of view. And that will be more difficult in some areas than in others. But in general, if you are to decarbonize, you should definitely choose electrification for the processes where you can actually electrify. Because that's a very low hanging fruit and you have some other low hanging fruits such as energy efficiency. And you are more expensive solutions, nuclear CCS. And so.
Nora Kamprath Buli, Editor Germany, Montel:Would this due to power demand? If we electrify everything? I mean, obviously we're now looking at a scenario where we want mostly wind and solar and other renewable sources to provide the power at the same time. Yeah. More and more power might be required. Yes. How do you square that?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:No, we say that solar and wind will cover that demand and we will need to build much more. In Europe. We increase the demand by 60% from today until 2050. Which is. A lot. And then we also need to replace the existing fossil stack in the power sector with wind and solar mostly. So it's
Nora Kamprath Buli, Editor Germany, Montel:a big change. What makes you so confident that we will get to that renewables growth? Because taking the example of Germany, at the moment, the country's planning to exit coal and is pushing that agenda more or less successfully. But they've also seen almost a stop in, in growth and onshore wind power. And that's. Both from a political side, but also from grassroots opposition. Yeah, so we have on the one side climate protest is saying we want more, we want faster, but. On a very local level when it comes to building infrastructure necessary, you've got opposition. Do you think that might dissolve or how can you overcome that?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:That opposition will, of course, change from now until 2050, but it might also get stronger. So it's not a given, not direction. You'll see that in northern part of Europe. We are lucky to have quite cheap offshore wind available at least in some years. So that might be a solution. And of course, solar in installing solar is not as controversial as wind, so that might be a solution to that. We expect a lot more solar, but also more wind.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Okay. And what start craft's position here on offshore wind? This is onshore.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:I think it's quite balanced. We expect a lot of offshore wind coming online, especially than in the northern parts of Europe where it is. Starting to get cost competitive compared to onshore wind. And we expect less in areas where it's more expensive and where there's plenty of space. Onshore, like other parts of the world.
Richard Sverrisson, Editor-in-Chief Europe, Montel:What are the implications on this for the energy system as a whole? So if you have primarily zero carbon generation stack how do you balance that when they're, when it's not sunny? When it's dark. When it's cold and there's no wind? Yeah. I mean, what, what happens then?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Yeah. Here, we're actually quite lucky in South Dakota because we actually have the detailed power models. So we can actually check out what happens. Okay. And what's interesting is that that challenge is much smaller than what people tend to think. So you can live with like 80, 90% almost intermittent renewables and still kind of have a system that's. Quite good fitted together.
Richard Sverrisson, Editor-in-Chief Europe, Montel:That's quite stable. Yes. Even, and the lights won't go out,
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:surprisingly stable, but then you need 10, 15% full style. Okay. So in, zero emission world. First of all, we expect the demand, this new demand from industry buildings and transportation to be more flexible Than the current power demand. But we also see that we will have need for some backup capacity. That's zero emission, could be hydrogen, for instance. Zero emission gas. Hydrogen from renewables. From renewables.
Richard Sverrisson, Editor-in-Chief Europe, Montel:I mean, you also touch on ammonia here. What, how does that, what role does that play in, in, in the storage of, in the storage of power?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Ammonia is in our area is an energy carrier, could be used as an energy carrier. At least in my head, it's. Hydrogen just in another form. Okay. So you produce hydrogen and you do something with the hydrogen and you still have a lot of energy content. And you can use that in a fuel cell in order to get energy out instead of using hydrogen in the fuel cell. And ammonia has to. Other characteristics than hydrogen, so it can be easier to carry, for instance,
Richard Sverrisson, Editor-in-Chief Europe, Montel:and not so, you know, not so dangerous maybe, or, yes. Yeah. And that hydrogen pmo, they form part of the 10, 15%. Yep. The sort of, sort of backup could, could do, could do. Yeah.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Or you could have biomass with CCS or you could have, or biomass without c, CS, other solutions, but they are in general quite expensive.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Hmm. So that's the cost factor. And I just wondered, you know, you obviously StarCraft is a major trader of power in the European markets. How Will this zero carbon world or net zero carbon world, how will it affect the buying and selling of electricity? Have you had done any sort of modeling of this? Does this, I mean currently, you know, you have. Exchanges, your brokers, you have companies, you know, you have grid lines, you know, what's your view here?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:No, if anything, I would say that we will have increased need for at least the trading between countries. Because in Interconnectors and grid will be extremely important. That's also, of course, an extremely important answer. All the intermittent challenge. We build a lot of grid in our models. Because that's. Low cost compared to the alternatives.
Richard Sverrisson, Editor-in-Chief Europe, Montel:Although it's not cheap either. It's not cheap either. That's true. I didn't say that.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:But I think there will be a absolutely continued need for marketplaces and there will be a need for both customers and producers to, to lay off their risks.
Richard Sverrisson, Editor-in-Chief Europe, Montel:So they could go small scale, maybe more on the distribution level as well as have the larger
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:yeah. Could, could be
Richard Sverrisson, Editor-in-Chief Europe, Montel:movements. Yeah.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Yeah. And it will be. Be more complex because you have other players in the market than you have had up until now.
Nora Kamprath Buli, Editor Germany, Montel:Hmm. With hydrogen sort of taking over, what will be the role of, of gas? I think your report touched a little bit on, but you know, important at the beginning and then it sort of falls off. But how quickly will that happen now? There's even talk of maybe not financing any fossil fuels including gas. From a sort of European investment bank side. What does that do to the industry
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:In the end, again, in 2050 there's hardly any room for gas or emissions. And then you don't have room for gas with emissions. So that's as simple as that. But how far is that transition will happen and what you do the first 10, 15 years? That's a difficult question because it's of course better to burn gas. To get power than it is to burn coal from a emission point of view. So it depends on what options they are actually left with. When you're closing down nuclear plants In Germany, so we see that you
Nora Kamprath Buli, Editor Germany, Montel:will need gas for a while still. Is the the price of CO2 A factor that can help that development? The report again, sort assumes that in the low emissions scenario, I think the price of CO2 would be, was it 120 to 180? No, that was actually in the 1.5, so it's, yeah. Okay. 52 6. Okay. So. Yeah.
Richard Sverrisson, Editor-in-Chief Europe, Montel:So is that a gradual rise to then a maximum of that by 2050? Yeah. Yeah. And not kind of, not an average out, so No, no, no. Okay.
Nora Kamprath Buli, Editor Germany, Montel:But why would prices continue to rise to higher levels when less and less demand? It's generated as you exit the mission or strongly meeting technologies.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Oh, that's because we include also the industry and buildings and transportation sector and have a holistic view on this. So it's kind of given some assumptions to begin with there, but uh, then we kind of utilize, or we see, of course, that. The CO2 price is a very cost efficient measure to get to solutions that are the cheapest. Also within buildings, industry and transportation.
Richard Sverrisson, Editor-in-Chief Europe, Montel:So obviously some industry as well. It's very hard for them to lower some of their emissions. I mean, in the cement and some, the chemicals industry. Very, it's very hard. So there'll always be that part, maybe there, and that will have to be, they'll have to cover those costs with a high carbon price or cover those emissions with, yeah. Do you expect new nuclear plants to come into the picture here?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:They are
Richard Sverrisson, Editor-in-Chief Europe, Montel:coming 30 years.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Yes, exactly. That's the answer to that question. It takes too long. It's it can, the climate crisis now at least. Because it takes, yeah. You know, the, the projects in uk it takes far too long time. Oh,
Richard Sverrisson, Editor-in-Chief Europe, Montel:Finland and France, they're the ones there that just miles behind schedule and over cost runs
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:and also Exactly. It's also cost. Costly. It's huge pro projects and it's costly, so we don't see that as a kinda market based solution, but there might be a political solution in some areas.
Richard Sverrisson, Editor-in-Chief Europe, Montel:How about floating wind or solar? I mean, what, what do you, that's obviously, I see you have a floating solar plant already in Albania, don't you? Yes, we do. And I think APO is, is developing one in, in reservoirs in Switzerland as well. Float. They don't float,
Nora Kamprath Buli, Editor Germany, Montel:but they've put them on the, on the walls of the reservoir. Okay. They're not okay, but still it's new areas where you could fit a large scale solar.
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Yeah, and I think it's related to your question on where do you actually build these renewables, because the costs currently are very high for these technologies, and the way of getting costs down is to deploy a lot of them. So that will be the crucial question here. How fast will AOT or a high volume of these technologies. Be deployed. And currently, as long as there's enough space on land or for conventional bottom fix, this will not happen to a great degree, but it'll, it can happen if there's need for it from a space point of view. So it'll probably come, but the question is how fast, when is it needed? And how fast can the cost reduction happen?
Nora Kamprath Buli, Editor Germany, Montel:And who's going to up. Yes. Upfront those costs. Yes. Yes. For projects that initially aren't sort of call like germinated for solar
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:at the beginning
Nora Kamprath Buli, Editor Germany, Montel:of
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:this decade,
Richard Sverrisson, Editor-in-Chief Europe, Montel:someone needs to get the ball rolling here. Exactly. Yeah. Fascinating discussion. And they look into, you know, how the energy system would look like in the future. I think the cops starts moved from Chile to Madrid. What are your expectations here? Are we likely to see any big announcements or any major breakthroughs here?
Gry Aamodt, Vice Preseident Global Drivers, Statkraft:Of course I hope to see that we of course, see that in order to reach the climate targets, the NDEs needs to be tightened compared to what we see today. So we're hoping for it. It's, of course, as I said, the whole development is depending on. People feeling that this shift or this change is fair. And in order for it to be fair, it needs to be perceived as fair also between countries. So it's extremely important that most countries in the world Takes part and the committee. To, to what they have pledged in the Paris agreement.
Richard Sverrisson, Editor-in-Chief Europe, Montel:That's about all we have time for today. So once again, thank you very much Gri for joining us and to you Nora. Keep up to date with all our stories on Monte News and follow us and Twitter and LinkedIn and subscribe on Apple Podcasts and Spotify. Goodbye.
