Fossil Fuels v Renewable Energy – Watts Up With That?

NOT MANY PEOPLE KNOW

By Paul Homewood

Can renewable energy ever replace fossil fuels?

Fossil fuels versus renewable energies?

Let me start by saying that I am neither for nor against anything. In a free market, the best technologies, solutions and products automatically come to the fore, without the need for subsidies, regulations and mandates.

If renewable energy is all that is promised, it will do the same.

Of course, there is no doubt that the cheap, abundant and reliable energy provided by fossil fuels has transformed society and made us all better than ever in many ways.

We dispose of them at our own risk!

Until now, our transition to renewable energy in the UK has been painfully slow and extremely expensive. Wind and solar power still supply just 3% of the UK’s total energy consumption after two decades of trying. Meanwhile, according to the Office for Budget Responsibility, subsidies for renewable energy were expected to cost £12bn in 2021/22. This actually understates reality because it doesn’t include all the indirect costs involved in balancing the network etc, meaning the real cost is probably more than £15bn.

It is of course true that the recent skyrocketing of gas prices has changed the agenda. But it is important to note that the current price does not reflect the cost of extracting the gas. It is the result of an imbalance in supply and demand. Such imbalances have occurred before, and a normally functioning market would rapidly increase gas production, driving prices back down to historic levels.

But even before prices rose, wind and solar power were claimed to be cheaper than fossil fuels. However, such claims do not take into account the additional system costs imposed by its intermittency.

Furthermore, claims that offshore wind costs have now dropped to around £40/MWh are simply not supported by evidence. The claims stem from the agreed prices for Contracts for Difference, the government’s subsidy mechanism. However, wind farms have no legal obligation to enter into these contracts; they are really just options.

Close examination of the company’s actual accounts continues to show that the capital costs to build offshore wind farms have not fallen significantly in recent years, with actual running costs likely to be around £100/MWh. To put this into perspective, wholesale electricity prices have historically been below £50/MWh.

Solar energy has certainly come down in cost in recent years, but the technology is a dead end here in the UK, due to our latitude. In winter, when electricity demand is at its highest, our solar farms typically run at just 2% capacity.

Solar energy certainly has a future in sunnier climates. But even in India, for example, the government has realized that they can’t run an electricity grid solely on intermittent power. Even its ambitious plans only project that 11% of its power will come from wind and solar power by 2040.

And of course intermittence is the main problem here. You can forget about batteries and other forms of storage, as they can normally only supply power for an hour or two. This is useless when the wind stops blowing for days and weeks.

Hydrogen is often presented as the answer to all our problems, replacing the gas needed to power wind farms and heat our homes. However, even the Climate Change Committee accepts that most of our hydrogen will have to be made by steam reforming natural gas.

This process is not only expensive, but also wastes a lot of gas. In other words, you need more gas to make hydrogen than you would if you just burned the gas in the first place. Worse yet, steam reforming emits carbon dioxide, so you have to install a carbon capture system which adds even more cost.

All in all, hydrogen made this way would be twice the cost of gas in terms of energy. But more importantly, it would still need as much natural gas as it does now, and more. Far from replacing fossil fuels, hydrogen increases our dependence on them.

The alternative is green hydrogen, which is produced by electrolysis. It is usually suggested that surplus wind power be used for this. However, the quantities of hydrogen that could be produced in this way would be small and extremely expensive given the intermittency of the process.

The bottom line is that we will still need gas, and a lot of it, to support a heavy renewable grid. In fact, the more renewable capacity we build, the more support we need.

And that’s just considering electricity. We need much more gas for heating and industrial use.

The biggest problem with using hydrogen, or electricity, for home heating is how to cope with peak demand in winter. On average during the year, the demand for gas is approximately twice that of electricity. But in winter, peak gas demand is seven times higher.

To get a scale of the numbers, gas consumption peaks at around 350 GW in mid-winter. Current government plans point to a wind capacity of 45 GW by 2035, producing on average just 15 GW and often as little as 2 GW.

Of course, you can store gas very easily, so that it can be switched on and off as needed. Green hydrogen, which would mostly be produced during the summer when electricity demand is low, would have to be stored for winter use, something for which there is no ready-made solution.

There are many vested interests claiming that hydrogen is the way forward and calling for an “investment” from the government. But what they are really looking for are the big subsidies that will come with it.

The simple reality is that we will continue to need fossil fuels for many years to come. In the long term, we will have to seek to develop new technologies such as nuclear fusion, or build small nuclear reactors and the like if we want to decarbonise.

Renewable energy has a role to play, but it can never be the complete answer.


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