Energy Transition Distilled

This article has been written by Béla Hanratty , and I'm sharing it here (with his permission, thanks Béla!), because it's one of the best overviews I've come across in a while, and it really helped people like me (who don't have an energy background) to grasp the topic. If you liked it, I suggest you subscribe to Béla's newsletter .

Investing in technology for the energy transition, and the decarbonization of the grid, is one of the core missions of our World Fund (our primer here , and some examples from our portfolio: CustomCells , SunRoof , cylib ), and we welcome startups to contact us for funding .

Energy Transition Distilled

Energy Transition, a simple definition: To supply the energy we need to fulfil the needs of society (including bringing billions of people out of poverty) without putting more carbon into the atmosphere (on a net basis).

We might break this down into “the energy that we need” and “without putting more carbon into the atmosphere”. One useful way to look at the component pieces for energy emissions and, hence, decarbonisation levers is the Kaya Identity. The Kaya Identity states that global (energy) emissions are a function of:

• Population
• GDP per capita
• Energy use per unit of GDP
• Emissions per unit of energy

The first three factors define “the energy that we need”, or the demand side. Population control is (obviously) fraught ethically and history has a few examples of unsavoury regimes having a go. The early environmental movement had an unfortunate depopulation element to it, driven by worry of Malthusian collapse and generally not giving humanity enough credit to be able to innovate our way to greater efficiencies. GDP / capita we want to generally go higher, drastically so in developing countries (“degrowth” might be advocated by some but, outside of a few well-heeled European urbanites, pretty much nobody wants that). And, incidentally, economic growth is cause of reduction of birthrate, so those elements are intertwined, especially in developing countries.

That leaves “energy intensity of GDP” as the lever we want to focus on to reduce overall energy demand. This we address through energy efficiency including dematerialisation of the economy (less physical stuff), avoiding wasted energy (e.g. by insulating buildings) and lifestyle choices like taking trains rather than planes or working from home, and also through electrification. We’ll get more into these in later posts. 

The final term of the Kaya Identity - emissions per unit of energy, or the supply side - is where most of the heavy lifting needs to be done.

First, a few basics:

• Units: The basic unit of energy is a “joule”. A “watt” is one joule / second, so refers to a flow of energy. A “watt hour” puts us back into stock rather than flow of energy, referring to one joule / second for an hour, or 3600 joules. This then scales to kilowatt hours (kWh) or 3,600,000 joules, which is what residential energy bills are generally denominated in. For context, in my modest home for a family of 4, we use about 3,000 kWh of electricity and about 4,000 kWh of natural gas per year. From there it jumps to MWh (1,000 kWh), GWh (1,000,000 kWh) and TWh (1,000,000,000 kWh). With that last one we are finally in a unit that we can sensibly use for national or global scale energy consumption. 

• Electricity / power ≠ Energy - this might seem like an extremely basic point, but electricity (also called “power”) is not the same thing as energy, and the terms are often used incorrectly, for example on the Irish grid operator’s otherwise excellent dashboard  describing “energy demand” when they mean “electricity demand”. Electricity is an extremely high-value form of energy as it is easy to transform it into various forms - kinetic, heat, light, etc - and is easy to transport. Heat energy, on the other hand, is “low-grade” energy and more difficult to turn into other forms of useful energy and more difficult to transport. (Yes, of course, heat via high temperature steam is used to create a lot of our electricity, but not very efficiently, about 3:1 thermal: electric.)

• Primary / Final / Useful Energy: There is another important concept to cover, which isn’t popularly understood and can be easily used to obfuscate or otherwise bamboozle readers. That is the difference between primary, final, and useful energy. Different analyses will use different measures, making it challenging to get an apples-for-apples comparison. 

1. Primary energy refers to the embedded energy in whatever the fuel source is; for example the chemical energy within coal. 
2. Final energy refers to the energy in its final form as delivered to the end consumer, be it refined fuel for a car or electricity to a home. 
3. Useful energy refers to the energy consumed in doing the actual thing that we want it to do - kinetic energy moving a car, lighting our homes, etc. 

• Losses are incurred at each step so that there is a big gap between primary energy input and useful energy consumed. The biggest losses occur with combustion of fuels. That can either be at the gap between primary and final energy, like burning coal in a power plant, or between final and useful as petrol in a car and kinetic energy moving the car forward. There are also smaller losses incurred in the transmission and distribution of electricity, AC/DC conversion and inefficiencies in appliances. The best visualisation of these losses comes from the energy flow diagram from Lawrence Livermore showing US energy consumption. Converting the units to TWh, it shows about 28,000 TWh of primary energy input delivering about 9,000 TWh of useful energy, or “energy services”. 

Global demand: Since what we really care about is the utility that we get out of our energy, useful energy is the underlying demand metric that we need to solve for and is not sensitive to the assumptions on the mix of energy sources. Today globally we use about 70,000 TWh of useful energy, with per person consumption varying from about 20MWh per person per year in Europe to 40MWh in the US and 2.5MWh in Africa and India (more here ). Because of population growth and increasing GDP (the first two inputs in the Kaya Identity), that is expected to increase to something like 120,000 TWh by the middle of the century along current trajectories. 

How do we deliver 70,000 TWh of useful energy today? With 140,000 TWh of primary energy. In the chart below, the zero carbon bit starts with the red of nuclear below. Pretty small, eh? The good news is that wind and solar have a much smaller gap between primary and useful energy so their importance is under represented here. I have deliberately chosen a version of this chart below that doesn’t gross them up to the equivalent of fossil fuels because this difference between fossil energy and renewable electricity is part of the transition narrative. Where we move to electrification and renewables, the gap between primary / final energy and useful energy shrinks drastically.

Final energy demand: Going forward, we can see final (and primary) energy demand plateau and shrink, even as we deliver an increasing amount of useful energy or energy services due to electrification and efficiencies. BP in their latest energy outlook see final energy demand plateauing at about 150,000 TWh along current trajectories, up from about 135,000 TWh currently (converting from exajoules in the chart below). Their more aggressive scenarios imply basically no growth in useful energy demand at a global level.

In order to get to Net Zero across the energy system there are a few broad vectors for decarbonisation. This particular cat has been skinned a few different ways by different analyses, but this is how I’m breaking it down. I will follow up with separate posts on each of these (perhaps more than one on each if needed). In rough order of priority:

1. Energy efficiency and electrification - reducing useful energy demand through efficiency and increasing renewables’ addressable market through electrification is in many ways the low-hanging fruit, easing the supply challenges and mostly resulting in net savings and better outcomes (e.g. more comfortable homes, lower total cost vehicles).
2. Generation of zero carbon electricity and heat - This is arguably the killer app for decarbonisation. Taken to an extreme, if we had sufficiently abundant zero carbon electricity, we could do whatever we wanted, including sucking CO2 from the atmosphere and either sequestering it or combining it with zero carbon hydrogen to make net zero emission liquid fuels. Unfortunately we’re a long way from that point of super abundance!
3. Green molecules - really for tackling the trickier parts of transport or industry, either through biofuels or starting with low-carbon hydrogen. 
4. Carbon management (capture and removal) - inevitably there will be some residual emissions either from mobile emissions or areas that are inherently difficult to decarbonise (e.g. cement) that will require either point-source capture or taking carbon out of the atmosphere through natural or engineered pathways. 

Energy Efficiency

We might think of energy efficiency as falling under two broad categories. First, is reducing the amount of useful energy that we require as a society; that is to say, the end amount of energy services we need to achieve our desired standards of living, whether that is in the form of kinetic energy for transport or thermal energy to heat our homes or drive industrial processes. Second, we can think of efficiency in terms of reducing the wasted energy that makes up the gap between primary energy inputs and useful energy services. These two categories work in tandem to reduce the demand for primary energy inputs and, therefore, fossil fuels since they make up 80% of primary energy globally. Because it tends to pay for itself and places less demand on the system, the IEA refers to energy efficiency as the “first fuel” of the energy transition.

No other energy resource can compare with energy efficiency as a solution to the energy affordability, security of supply and climate change crises. - IEA

Electrification meanwhile delivers inherent efficiencies as electrical energy can be converted to useful energy services with low losses, narrowing the gap between final energy demand (the energy that is received by the consumer via whatever form, electricity, liquid fuels, etc) and useful energy. For example, an EV is something like 80% efficient at turning electrical energy into motion, vs around 20% for an ICE turning the chemical energy in petrol into motion. However, the decarbonisation benefit is marginal where the primary energy input is a fossil fuel in the power plant producing the electricity to run the EV, especially if it’s coal. 

The real reason that electrification is so crucial to the energy transition is that we have the ability to produce extremely low carbon electricity. By electrifying transport and heating (both buildings and industrial), we effectively expand the addressable market of solar, wind, nuclear, geothermal and hydro. 

Below is one of the most arresting energy charts I’ve come across. This is (once again) from Thunder Said Energy and shows where Europe gets its energy from, shown as proportions of useful energy.

What is blindingly obvious from this is that the only sector to have any meaningful low-carbon penetration is the electricity sector. By electrifying end uses, we effectively move TWh out of the fossil fuel-heavy columns and into the increasingly low-carbon column of electricity generation. 

So what progress is being made within energy efficiency and electrification and what are the main paths available to us to push them forward?

Energy efficiency - the progress: In its latest Energy Efficiency report , the IEA suggests that 4% annual reduction in “energy intensity” (energy / unit of GDP, which you might recognise as the third term in the Kaya Identity from the previous post) is required under its Net Zero scenario. It estimates improvements in energy intensity of 2% this year as a global energy crisis creates urgency, but that progress had slowed almost to a standstill over the pandemic. Still, energy efficiency improvements meant that over the last 20 years final energy demand stayed pretty much flat in IEA countries, which include both developed and developing economies, even as the economies grew 40% in real terms. This is entirely down to energy efficiency as the structure of the group of economies stayed pretty stable, meaning that they didn’t pivot away from energy intensive activities. 

Encouragingly, a lot more capital is being mobilised towards energy efficiency, rising 16% to USD 560bn this year and expected to average USD 840bn in the second half of this decade. However, that is still only half of where it would need to be to get us on a Net Zero path. Note also that the IEA captures both efficiency and electrification in their numbers as both contribute to reduction of final energy intensity. 

Electrification - the progress: Here, honestly, it is pretty difficult to tell. Most of the data available is on primary energy, which doesn’t tell us that much about the end use. The below charts from RMI’s Energy Transition Narrative  document suggests significant progress but it looks more dramatic on a useful energy basis rather than final energy basis (note the numbers on Chinese industrial sector are final not useful - complicated, I know). Also, it seems at odds with numbers from TSE that has electricity’s share  roughly stable at 40% of useful energy over the last 30 years. 

What is indisputable is that we are in the early part of the exponential adoption curve for electrification of some sectors of the economy, most notably light vehicles. I can’t locate numbers for full 2022, but market share continues to increase radically, driven by Europe and China, but with the US looking like it crossed the 5% market share threshold last year. However, this will take a while to filter through to total share of electrification as cars are relatively long lived assets and ICEs still represent 98% of light vehicles globally. 

Similarly electrification of space heating via heat pumps is coming from a low-ish base, representing just 9% of global heating demand today. In their recent report on heat pumps , the IEA sees this doubling to 19% by 2030 with very rapid adoption particularly in some European companies looking to get off natural gas. Heat pumps, it should be noted, offer a double whammy of efficiency and electrification. Because they are not turning electricity into heat, but using electricity to pump heat from one place to another by turning a refrigerant back and forth from a liquid to a gas, heat pumps deliver more useful heat energy then they consume in electricity. In normally conditions, residential heat pumps will deliver something like 3-4x the amount of heat as they consume in electricity.

Energy efficiency vectors:

• Behaviour change: This is where we all have the ability to contribute and reduces demand for energy services or useful energy. It entails switching from more energy intensive to less energy intensive habits - taking a train instead of a plane, public transport or a bike instead of a car, heating or cooling our homes less aggressively, and consuming less material stuff.
• More efficient use of fossil fuels: whilst ultimately the goal is to move away from fossil fuels entirely, improved efficiency in turning primary fossil energy into energy services has delivered massive energy (and carbon) savings while meeting society’s needs. For example, replacing old, inefficient coal plants with modern coal plants was a huge lever in China achieving carbon intensity reduction targets and resulted in a cumulative saving of 1.5GT of CO2 over 10 years. Much more useful energy can be squeezed from fossil fuels by using the heat by-product from electricity production through combined heat and power systems .
• Design: A greatly overlooked lever for reducing energy demand as it isn’t a technology per se. Something that cropped up in a podcast with Amory Lovins of RMI that I covered here  is that using fatter, straighter pipes and ducts drastically reduces friction and hence the electricity needed to drive the motor. More on integrative design in Lovins’ paper here . Design also contributes towards less material use, including use of steel and concrete in buildings, and lighter, more aerodynamic cars and airplanes.
• Building insulation and HVAC (heating, ventilation, air-conditioning): HVAC is the biggest chunk of building energy demand globally at about 40% of the total and responsible for 5GT of CO2 emissions. The amount of energy required is heavily impacted by the envelope of the building (glazing ratio, air-tightness, insulation). In Europe, it takes 3-4x more energy to heat the least efficient homes that the most efficient homes. Then the heating and cooling systems themselves vary wildly in efficiency. Scaling up activity in this area is challenging, but several groups are tackling this through either integrated delivery, financed options or both. Redaptive , focussing on commercial buildings, recently raised an additional $200mm to fuel expansion. Sealed  is focussed on residential buildings. Dandelion Energy  do ground source heat pumps focussing on the chilly North East US, whilst Woltair  again focuses on providing more integrated delivery, operating in European geographies. There is an urgent need for more efficiency in cooling also, given that it represents one of the largest growth areas  for electricity demand (3x globally over 30 years) as more people in developing countries can afford it and as the world warms. There are several companies working on more efficient systems, but the biggest lever here is really energy efficiency standards in emerging markets and particularly Asia where the demand growth is coming from (4x over the last 20 years).

Electrification vectors:

• Transport: Transport accounts for 30% of final energy demand and is currently almost 100% powered by liquid fuels. The most tractable areas are those that are less energy intensive because of smaller vehicles and operate over shorter distances. The obvious area of progress, as noted earlier, is in light vehicles. EVs are on a clear path to dominate within the next few years. The areas of transport that are deemed eligible for direct electrification have been expanding as battery technology has been improving and costs falling. However, the boundaries will ultimately be constrained by energy density, both “gravimetric density” (energy per unit of mass) and “volumetric density” (energy per unit of volume). For example, jet fuel has a minimum energy density of 42.8 MJ/kg, which compares to about 1 MJ/kg for the best batteries used by Tesla. This puts long-distance flights out of scope for direct electrification, ditto long distance shipping. Hence we will still require molecules for these applications and others, to be covered in a later post.
• Heat: Heat represents about half of all final energy use  according to the IEA. Of that, it is split roughly evenly between heat use in industry and in buildings. Heat pumps have already cropped up a couple of times here as both an efficiency and electrification vector for decarbonising space and water heating. However, the technology is increasingly able to tackle certain industrial applications that require higher levels of heat. Even for processes that require much higher temperatures, a range of electrification technologies are available from electric boilers to arc furnaces and induction. Work by Dr Silvia Madeddu has found that >90% of industrial heat can be electrified (presentation here  and excellent podcast with Michael Liebreich here ). I also covered the work of Rondo Energy  in a previous post here .

But, of course, for electrification to play its role in the energy transition, it needs to be fed with low-carbon electricity. Supplying enough low-carbon electricity to cover existing uses and all of the expanded requirements through electrification is a daunting task. 

Decarbonizing Electricity

Decarbonising electricity follows after efficiency and electrification in this series but is actually the killer app for Net Zero. Energy efficiency may be the “first fuel” of the energy transition, but we can’t efficiency our way to zero. On the other hand, there is very little we couldn’t do with sufficiently abundant and cheap (near) zero carbon electricity, including, in extremis, removing carbon from the atmosphere via direct air capture and either sequestering it underground or combining it with low-carbon hydrogen to making net zero liquid fuels. We are still quite some ways from that sort of abundance, but, as per the sector chart in the last post , the electricity sector is the one area where some real progress is being made on decarbonisation. In this post, I’ll take a look at how we are doing so far and how we might think about the different ingredients for a zero emission power sector that meets not only today’s electricity demand, but the vastly expanded electricity sector of the future that has subsumed transport, residential heating, industrial heating, etc, plus met the growing energy demands of developing countries. I’ve been helped here by the timely recently publication of the IEA’s Electricity Market Report  just last week. 

Where are we at? 

• Currently the world uses about 28,000 TWh of electricity annually. 
• Coal is still king in the electricity sector, accounting for about 35% of global electricity generation, ahead of gas as the next biggest source at a bit over 20%. 

• Hydro is still the largest source of low-carbon electricity, followed by nuclear. However, both have experienced pretty meagre growth rates in recent years, compared to the exponential growth of wind and, particularly, solar. 
• Demand growth - although developed market electricity systems will need to expand to account for greater electrification of end-uses, the immediate demand growth will (continue to be) driven by Asia and China in particular, which is expected to represent a third of all electricity demand by 2025. 

• The good news is that, now that wind and solar are the cheapest forms in electricity in most places, we are collectively doing a pretty good job of meeting incremental electricity demand with low-carbon sources (new coal in Asia being offset by closures in US and EU). The IEA estimates that about 90% of demand growth over the next few years will be met by wind and solar with most the rest coming from nuclear.

• The bad news is that low-carbon sources, whilst edging out fossil fuels on the relative basis, still aren’t yet putting much of a dent in the absolute level of fossil generation and, hence, emissions in the global power sector. The IEA expects emissions from electricity generation to be broadly flat through to 2025. BUT, where incremental demand is being driven by electrifying end uses, and that incremental demand is being met by low-carbon electricity, then it still reduces emissions of the energy system as a whole. 
• The clear priority for reducing absolute emissions from electricity is to phase out coal. Coal is responsible for about 10GT of the 13GT of annual emissions from the power sector, which is, once again, mostly China, followed by India and other Asian countries. If we look at emissions from coal use in total (not only the power sector), China’s role in pretty striking:

Before we get into the pathways for driving electricity towards zero carbon, it’s worth touching on a few concepts. 

• Levelised Cost of Electricity (LCOE) - this is the measure that is meant to capture the overall cost per unit of electricity delivered. A good report to dig around on to get a sense of competing technologies is Lazard’s LCOE Report . One important qualifier is that LCOE metric only captures the isolated costs of the generation. It does not capture the system costs of integrating that generation into the system. When these are included, the actual costs for variable renewables are shown to be much higher than the LCOE would suggest and increasing with increased grid penetration. The calculation for LCOE can be split different ways, but is essentially made up of three components:
• Capital costs - There are two inputs into this. Firstly, the capital outlay - how much does it cost to build the generation capacity per MW of potential output, whether that be a gas CCS plant, wind farm, etc. Secondly, the cost of capital - what is the interest rate you are paying on the financing to fund the capital expense. The perceived different risk profiles between fossil and renewables here gives renewables a distinct advantage as investors demand a lower return on wind and solar. 
• Operating costs - for fossil power plants this is mostly the cost of the fuel - gas or coal. Nuclear operating costs include fuel, but it is a smaller portion as they also include waste disposal and decommissioning. Operating costs for wind and solar are a smaller portion of the LCOE as they get their ‘fuel’ for free. 
• Capacity factor - this refers to the amount of time the generating source is running and therefore the amount of energy the capital costs can be amortised over. This is an important concept that is often glossed over as the press so often reports changes in installed capacity. Installed capacity doesn’t reflect the overall contribution to the grid, as, for example, solar farms don’t produce any power at night. The capacity factor of different technologies varies radically between different countries or regions, but the below from the US gives a sense - you need 3-4x installed capacity of renewables to produce the same amount of electricity as nuclear:

• Life-cycle emissions: No electricity source is truly zero carbon as they all involve emissions at some point during their lifecycle. Solar panels require energy intensive manufacturing, wind turbines require copper and steel, hydro dams require steel and cement. According to NREL, the absolute lowest lifecycle emissions are jointly wind and nuclear, but everything not fossil fuel based is such a vast improvement on fossil that differences between them fade to insignificance. 

Material Requirements: Supply chains in general and for critical minerals in particular have really swung into focus in the last year. The energy transition is going to require a lot of stuff. The IEA recently flagged  copper and nickel in particular as having large investment gaps. You can see from below that nuclear has much lower requirements of critical minerals per unit of energy than wind or solar, and that isn’t even accounting for associated requirements for batteries.

So how do we get there? 

There are many different ways to skin this particular cat. The path taken will depend not on technology only, but also on political, public and industrial support. The most work has been done on modelling the decarbonisation of the US grid. There have been multiple detailed studies, each of which have multiple viable pathways to get to the end goal. The Breakthrough Institute does a good job of comparing  the central scenarios of three credible studies - Net Zero America , Vibrant Clean Energy , and this one  by a team from Evolved Energy Research and others. There is also another detailed study  by NREL released last year.

Almost all scenarios have on-shore wind as the biggest contributor to an expanded and clean electricity grid, with solar making up most of the rest and then nuclear playing a stable or expanded role, depending on the capacity to deploy renewables. In any case, we are looking at something like 70-80% combined for wind and solar, up from about 12% today. From here on out, there are two main areas we need to focus on. Firstly - expand wind and solar as much as possible. Secondly - build out low-carbon firm generation. 

Expand wind and solar

Wind and solar deployment is really hitting an inflection point where they will start to make up a meaningful portion of generation in the coming years. But their variable nature means that we need to make a lot of system adaptations to maximise their integration. We’ll take a look at these below. In addition to these integration measures, there are now lots of companies working on reducing the costs on the generation side by tackling those different levers - capex, opex, and capacity factor - to make renewables cheaper. 

• Transmission - renewable resources are very often not located close to demand centres and the land use requirements can be challenging in densely populated regions. This requires the transport of electricity over long distances. Transmission across regions also allows much greater flexibility in the grid to draw supply from different generation sources. There are various ways to squeeze more out of the existing grid including upgrading the wires the higher-capacity conductors (e.g. those being developed by TS Conductor ) and better optimisation of existing hardware (e.g. LineVision , SmartWires ). There are also a couple of companies working on high-temperature superconductors for long-distance transmissions - BEV-backed VEIR  in the States and SuperNode , based here in Ireland. But, whatever the tech, there needs to be a vast expansion of long-distance transmissions capacity. In NREL’s high-wind and -solar scenarios, they have transmission increasing by 2-3x compared to less than 10% increase in the reference scenario. Tackling the permitting challenge is critical if we are to achieve this. I wrote more about the topic of transmission here .
• Grid balancing: 
• Utility-scale storage: Already around half of new wind and solar projects applying for grid connections are paired with batteries generally with 4-8hr of storage to balance supply and demand over the day. New utility scale storage will be dominated by lithium-ion batteries in the near future given the momentum and build out of the industrial base, although (underreported) pumped hydro  still accounts for 90% of storage today. BNEF estimates a 15x increase in energy storage up to 2030, with most of that (60%) for utility-scale shifting of energy supply.
• Distributed Energy Resources (DERs) - can be used to either reduce demand or increase supply (more on those here ):
• Demand side response (reduce demand): reducing demand at times of lower electricity supply has been around a long time, traditionally involving the utility picking up the phone to a commercial or industrial customer. Increasingly this will be digitised as more smart devices are managed with software to allow them to shift the demand according to the grids needs - e.g. heatpumps / AC or EV charging (see fresh announcement  from Sonnen). 
• Virtual Power Plants (increase supply): VPPs cover the broad category of aggregating many distributed generation sources to provide electricity back to the grid. This generally will draw on rooftop solar, home batteries and eventually vehicle-to-grid (V2G) enabled EVs. Recently it was announced  that Lunar Energy teamed up with SunRun to operate its VPPs across 10s of thousands customers with home batteries. Other companies in the DER area - Leap Energy , Camus Energy , Octopus Energy , Therma  (using cold chain assets) and Arcadia . 
• Long-duration storage:
• Multi-day: Renewables penetration isn’t yet high enough for this to be a burning need, but we need to start work on it now so eventually we can cover multi-day lulls in wind, for example. Even a lot of the energy storage companies branding themselves as “long-duration” are really only reaching 10-12 hours of storage. The company that seems to have the most momentum for multi-day storage is Form Energy , which has contracts to deploy  two 100hr batteries with an output capacity of 10MW and capacity of 1000 MWh. One to watch closely, but that is at an earlier stage of development is Noon Energy , whose series A was led by our friends at Clean Energy Ventures recently. A few other companies that get out past the 4-8hrs of li-ion but aren’t quite multi-day - Energy Dome , Hydrostor , Quidnet Energy , eZinc . 
• Seasonal storage: Energy demands, particularly in densely populated northern latitudes, have large seasonal disparities for energy needs, as anyone closely watching Europe’s weather and gas storage levels this winter will be acutely aware. Ultimately we will want to be able to shift abundant summer solar to cover gaps in winter energy demands. Again, we won’t hit this level of dependence for some time, but it will be a challenge. This very long-term storage will likely take the same form that we currently store most of our energy in - molecules (we normally refer to them as oil / gas / coal). This could be hydrogen, or if we are happy to trade energy efficiency for ease of storage and transport, we could turn hydrogen back into synthetic fuels. This will be expensive energy, but will only form part of our energy use, if we go this way at all. However, it’s possible (probable even) that we’ll stick with natural gas to cover seasonal shortfalls. (I was surprised to see a pretty significant chunk of H2 seasonal storage in 3 of NREL’s four scenarios.)

Clean baseload / firm generation

Whilst the backbone of future clean electricity grids might be wind and solar, the majority of low-carbon electricity historically, and still today, come from hydro and nuclear. The only developed economies today with very low carbon intensity of electricity are heavily dominated by hydro and / or nuclear - Sweden, Norway, France, Canada, Switzerland. So there is a demonstrable path to having a very low carbon grid with little or no variable renewables, whist the reverse has not been demonstrated. Additionally, a number of baseload technologies create heat, which represents 50% of final energy demand, so can be used to provide that directly rather than going through the medium of electricity. Let’s take a look at the different options - now and in the future. 

• Hydropower - currently delivers 15% of global electricity and is about equivalent to all other low carbon generation put together. However the outlook  doesn’t suggest that hydro will be a major source of new generation over the next decade and beyond as it is very site-specific and most of the best resources have already been developed. There are some people working on electrifying existing dams (Rye Development ) and trying to extract power out of man-made water infrastructure (Emrgy ), but it will be a relatively marginal contributor. 
• Nuclear - ah, nuclear. Joint lowest lifecycle emissions, lowest land use, safest form of generation per unit of energy delivered, and, in many large economies (e.g. US) still the biggest source of low-carbon electricity. Nuclear energy is swinging back into favour as the global energy crisis underscores the necessity for energy security and resilience as well as decarbonisation. However, a long period out of vogue and a culture of excessive caution has allowed supply chains and skills to atrophy and left the nuclear industries with precious few successes to celebrate.
• Currently, most of the planned construction is in China (as usual) and India, but with the UK committed to expanding its fleet, along with France , Romania , Poland , Netherlands , Sweden , Estonia , etc, it looks like we’re on the cusp of a broad renaissance. There has also been a flourishing of new innovation in the space. SMRs that look like smaller versions of traditional reactors such as NuScale  and GE-Hitachi’s BWRX  are the furthest ahead. GE-Hitachi’s design looks like it will be the first to be built in the West, in Canada (why, yes, China does already have one well under way ), with NuScale having advanced talks with multiple countries and recently fully completing US licensing of its design. There are other designs of similar scale but newer designs, mostly using a high-enriched fuel (known as HALEU) and different coolants, such as molten salts or gas. These include, amongst others, X-Energy  and Bill Gates’ TerraPower  (both in the US’s Advanced Reactor Demonstration program), Terrestrial Power , and Moltex  (headed by a fellow Irishman and Trinity College alum!). These new designs also tend to have the capacity to be ramped up and down to compliment a renewables-heavy grid. Then there are others pursuing micro-reactors in the 1-20MW range, including Radiant , Ultra Safe Nuclear Corp  and Oklo , that could replace diesel generators in remote areas like mining operations or military bases, or serve large single users like university campuses. Another company in this last category with a design that utilises all existing technology is Last Energy , looking to build 20MW reactors to supply behind-the-meter electricity to industrial customers. One of the most exciting potential applications for advanced nuclear is to repower coal plants, allowing them to reuse the site, the grid connection and, depending on the age of the coal plant, some of the balance of plant. More about coal-to-nuclear here . 
• Natural Gas with CCS: what if we could get the benefits of fossil fuels without the negative externalities of emissions? Previous attempts to do post-combustion capture on power plants have ended in failure due to the expense of capturing the CO2 in a relatively dilute flu gas, needing to separate out the nitrogen and other pollutants. NET Power  have developed an oxy-combustion technology where natural gas is burned in pure oxygen, creating a pure stream of CO2 which is then easy to capture and sequester. They also use the hot CO2 as the working fluid to drive the turbine, which has advantages over steam, but also complications (as Rob West of TSE explains here ). More on NET Power here . Another company using an oxy-combustion technology is Clean Energy Systems , although they envisage using a classic steam turbine. We have a massive task to decarbonise energy and need all the levers available to us, including fossil fuels where we can make them compatible with our climate ambitions. 
• Geothermal: Today, geothermal represents a tiny portion of the global energy mix as it is extremely location dependent, requiring heat near the surface, permeability and water. There is only 14GW of installed capacity, with only 5 countries having more than 1 GW.

• But advances in drilling technology in the oil and gas industry are opening up the prospect of economically accessing new heat resources. A few companies using techniques from the O&G industry are Fervo , Sage , and Eavor . However, the most compelling, if technologically difficult, approach is to try to drill much deeper to access higher temperature heat. This has the dual benefit of being able to access geothermal energy anywhere, and allowing much more efficient conversion of the heat to electricity (more on that here ). The challenge is that, at those depths and temperatures, mechanical drilling equipment melts. Slovakian company GA Drilling  and Quaise Energy  (spin out from MIT) are respectively developing plasma and millimetre wave drilling techniques. If they are successful, they could unlock functionally limitless energy, and also be in a position to provide heat to repower coal plants. Whilst still early days, it’s exciting stuff!
• Fusion: Just because something is hard or far away, doesn’t mean it isn’t worth doing. Fusion definitely falls into this category. It won’t have a short term role in grid decarbonisation, but successful realisation would have huge implications for clean energy abundance and humanity’s long-term ambitions. Fusion technology has been making steady progress over the last several decades, but the inflection point where it starts to become interesting has only recently swung into view. Below shows the progress on the “triple product” conditions of heat, density and time of confinement that allow for fusion conditions in plasma. Note that it is on a log scale so these are exponential gains and also they don’t include recently improvement including the recent milestone (not breakthrough) of ignition  at Lawrence Livermore. 

There has been a proliferation of startups taking on the challenge of commercialising fusion energy, supported by the advances of enabling technologies ranging from power electronics to computer modelling to material science. The two broad approaches to fusion are magnetic confinement and inertial confinement. The first, as the name suggests, using super powerful magnets to contain the plasma to fusion conditions. Companies using that approach include CommonWealth Fusion Systems  (to date the highest funded company), Tokamak Energy  in the UK, and Renaissance Fusion , which is using a stellarator design. Inertial confinement relies on higher densities to create fusion as inertia holds together the plasma for tiny amounts of time. Prominent start ups taking that approach include General Fusion  and First Light Fusion , both of which are building pilot facilities at Culham in the UK. Another company of note is Helion , which has a slightly different approach using different molecules for its fusion reaction and a way to directly extract the electricity (rather than producing heat + steam). CFS and Helion are talking about net electricity this decade, but it remains to be seen.

Wow - that was a lot! Well done if you’ve made it this far. I hope you agree that it worth taking the space for this one as low-carbon electricity is really the key to our climate goals and broader long-term ambitions. However, our energy system today is mostly made of molecules (hydro-carbons) and there will be certain applications that we’ll struggle to electrify. We also use molecules for their own right and not just as energy carries - we call them chemicals. Decarbonising the chemical industry is a huge task in itself. I’ll tackle both these areas in the next post in this series.

Further reading - for readers wanting to explore further:

• Our World in Data  - many great charts that have been drawn from diverse data sources and a quick way to get a sense of differences between countries and changes over time. More of these charts will feature in future posts. 
• BP Energy Outlook  - one of the key energy publications during the year. 
• IEA World Energy Outlook  - a snapshot of the impacts of the energy crisis and the recent progress (or lack thereof) in decarbonisation energy. The IEA’s website  more generally is a virtually inexhaustible resource on all elements of the energy system.
• The World Fund Primer on Energy Transition - how the energy sector will (have to) change to tackle the climate crisis