Europe’s wind bet meets a cold, hard lesson in energy


Europe has been trying to reduce its dependence on imported energy for four years. It has been partially successful, mainly because of the destruction of demand as a result of excessive prices. This month, parts of Europe doubled down on that plan just as the US grid presented an object lesson in the importance of reliable energy from all the sources Europe wants to get rid of, and soon.

Earlier this week, nine European countries announced would build 100 GW of offshore wind capacity as they seek to source more electricity locally rather than from imported energy products, namely natural gas. The group, which includes the UK, Ireland, Germany, Norway, the Netherlands, France, Iceland, Belgium and Luxembourg, will jointly build large-scale wind projects, according to the plans, as informed by Reuters. The group will also jointly use the energy generated by the turbines.

Meanwhile, across the Atlantic, the United States is going through some very harsh winter weather that has seen parts of the country ramp up generation from perhaps the least expected source: oil. new england generated a third of its electricity from oil as of Monday, with some reports saying the fuel’s share of the region’s electricity mix reached 40% at one point. Wind power and solar power, on the other hand, contributed 6% of the total.

Related: India Still Waiting for Cheaper LNG

In Texas, the state grid operator began preparing for little to no wind generation before the storm arrived over the weekend. ERCOT said so last week expected very little generation from Texas’ massive capacity, citing an estimated risk that cold weather could shut down as much as 60% of that capacity, which is 40.6 GW. Solar is essentially non-existent in snowy weather. As a result, generators have boosted gas, nuclear and even coal, because demand is skyrocketing as you might expect in these weather conditions.

What the US situation has shown the rest of the world is that baseload electrical capacity is important, and it is very important in times of emergency. Baseload electricity is the minimum amount of electricity that is constantly available on the grid, not just when the weather permits. Gas, coal, nuclear power, and oil (in New England and Saudi Arabia) are sources of baseload generation. Wind and solar aren’t, not even with batteries, and even with a dozen interconnectors, which is what the plan is for this massive 100GW wind power facility in the North Sea.

The motivation behind these plans, however, is understandable. Most of Europe does not produce its own baseload generation fuels. Germany has fairly abundant lignite reserves, but coal isn’t exactly a fuel of choice in the European Union’s largest economy, so the development of those reserves is out of the question, even though Germany fired up its remaining coal-fired power plants in response to wintry weather that disproved predictions of snowless, cold European winters in pretty decisive fashion this month.

Because Europe doesn’t have enough of its own resources or the desire to exploit what it has, most European countries are heavily dependent on imports from the United States. Last year, US liquefied natural gas accounted for 57% of all LNG imports into the European Union and Great Britain. As a share of total gas imports, U.S. gas posted a solid quarter, Reuters’ Ron Bousso informed this week

However, starting next year, US gas will account for even more of the European Union’s gas imports because Brussels has just sealed a ban on all Russian gas from January 2027, despite protests from Hungary and Slovakia, which rely on Russian gas to ensure affordable electricity for their industries and households. The ban was also finalized despite the record LNG purchases from Russia by Western European countries that agree to the ban, so high, in fact, that the European Union was the largest buyer of Russian liquefied gas last year.

With a major gas supplier away, European countries will have to lean more heavily on the United States during the tenure of a president who has made it abundantly clear that he wants the world to buy more energy from the US. European leaders would normally have no problem with this. What they have a problem with is the fear that Trump will decide to turn the energy dominance agenda against them by weaponizing US energy exports.

Skeptics point out that Europe’s reliance on LNG goes both ways, with US producers of the commodity also heavily dependent on European buyers. However, the two sides are not in equal positions. Europe has few alternatives comparable to America’s gas abundance, unless we count on Russia, which the EU has made clear it does not. US LNG producers, on the other hand, have alternatives in Asia.

Still, building more wind—much more wind than is already around European shores—is not the best answer to energy security, as what has happened in the US in recent weeks shows. A possibly much better answer would be long-term gas and oil supply commitments with a wider variety of suppliers.

By Irina Slav for Oilprice.com

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