The first global “green” energy crisis is not the last!

Here we are sinking in the next energy crisis. This time it will be ”green”.  Gas prices are rising like cryptocurrencies, oil has exceeded levels unseen since 2018. How will it end? And most importantly – when?

Georgy Bovt
candidate of historical sciences, political scientist

What is happening these days and weeks in Europe? Off-scale gas prices (some ten days ago, some doubted whether they would surpass $ 1,000 per thousand cubic meters, and on October 6 they came close to 2,000). And ill-considered, hasty abandonment of traditional forms of energy in favor of green energy.

Coal prices, by the way, are also hitting records. In some countries (in the UK, for example) they are even thinking about the reopening of coal mines. China also made a significant contribution to the rise in coal prices by banning the export of coal to one of its largest producers. They themselves, they say, do not have enough.

Energy companies are a big winners. The value of shares of the Gazprom is breaking records. Together with the oil industry, it pulls the entire domestic (Russian) stock market with it. The question is how long this feast will last during the coronavirus plague. The 30-fold increase in the gas price compared to May 2020 can hardly be called normal. Even taking into account the fact that in this case we are talking about futures, and the growth of the real price is much less. It is still very significant, and cannot pass without leaving a trace for the rest of the economy.

I must say that the European Union itself planted this bomb when, quite recently, it began to demand that the market switch to short-term contracts, which are obviously more volatile. Most recently, this has been superimposed on such a purely technical exchange factor as massive margin calls at hedge funds. Those who decided to play “bears”, believing that prices simply have nowhere to rise higher, were cruelly mistaken. For tens of billions of dollars. 

Preconditions for this crysis were formed back in the northern summer

The preconditions for the market acceleration were formed back in the summer. It turned out to be unusually hot increasing, in particular, the demand for electricity air conditioners. This was superimposed on a sharp increase in demand from China. It was the first to emerge from the coronavirus economic torpor. Already in the summer, the main supplies of LNG were switched to Southeast Asia. Some in the EU considered it important to counter “gas dependence on Russia.” The reduction in supplies to Europe reached 20%. These volumes were not replenished by anyone, including the Americans, who previously praised their LNG as a means of liberation from the “energy diktat of Moscow.” Americans (and everyone else) could not resist big price increase in Asia.

It is also worth noting that Europe’s own gas production continued to decline. This happened due to the depletion of explored deposits and against the background of the refusal to develop new ones for the sake of the “green energy transition”. That resulting in reduction and then a complete cessation of such investments. 

Who they will blame?

Gazprom made its own small contribution. It has never booked additional volumes of supplies through Ukraine this year. Everything is clear according to the letter of the 2019 transit agreement with the Ukrainian Naftogaz. Strictly speaking, Gazprom was not obliged to do this. A contract is a contract: business, nothing personal. Also, the Russian gas monopoly short-term cut by 10% in August supplies through the Yamal-Europe pipeline and stopped selling gas through the electronic trading platform for a year in advance. It should be noted that gas supplies from Russia to Europe in January-June increased by 17 billion cubic meters compared to the same period last year. By the end of September the increase was already 18 billion cubic meters – while other suppliers did not increase exports. So Gazprom did not violate any obligations.

However, the inevitable search for the “extreme” in such a situation may force some in the West to again “blame” Moscow. . And also China, which buys up everything on the market with a vacuum cleaner. Not America, which, although it did not fulfill its promises, but they were not contracted. . And you certainly cannot blame those who do not want to abandon the provisions of the Third Energy Package (EU). According to that Gazprom will not be able to use more than half of the pipe’s (Nord Stream 2) capacity. Yet for the sake of life-giving competition!

The short-term consequences of the energy crisis are quite predictable. This is, firstly, the surge in inflation around the world, which is already pumped up by trillions of emissions of dollars, euros and yen, committed to support economies (and stock markets) in the midst of a pandemic.

Transition to “green energy” will be long and expensive

A number of countries have started talking about rationalizing energy supplies. China has actually started to do this. And his example is very revealing and clearly demonstrates that the transition to “green energy” will be difficult, long and expensive.

Power generation in China is more than 70% dependent on coal. It is the dirtiest source of energy in terms of greenhouse gas emissions. However it is one of the cheapest. The CCP has set a goal of achieving a carbon neutral economy by 2060 – ten years after the European Union. Well, once the party (CCP) has set a goal, it must be fulfilled. Investment in the coal industry is falling and so is production. So far, it has not been possible to fill the shortage with renewable energy.

The example of China and Europe suggests that all of this is just the beginning of a long journey towards green energy. The current crisis can rightfully be called the First World Crisis of the Green Transition. And such excesses will repeat and grow. The process will continue not for years, but for decades. Energy systems – at least temporarily, until the right balance is found – are becoming more vulnerable, not more resilient (including to the vagaries of the weather). And it will be very difficult to find and maintain this balance.

Where will electricity come from?

Only one conversion of road transport to electricity will lead to an increase in demand for it by 20-30%. Where will it come from? How difficult will this very “energy transition” be made by growing inflation (as a consequence of the general rise in energy prices) in combination with increased price volatility? Nobody knows yet. That is, with a high probability, the “energy transition” will be accompanied not by economic growth, but by an economic recession or stagnation against the background of shocks in certain sectors of the economy.

Spurred on by loud political slogans (and the corresponding actions of state regulators), investors are heavily investing in “renewable energy”. That is certainly good thing but they are stopping investing in traditional ones.  Wind and solar electricity must be stored somewhere, it is not coal, which can be taken out of the ground as needed. This means that huge storage capacities are needed. 

In business, this is called unpredictability. And it costs money. The technological solution to this problem takes time – and also money. Until recently, a model worked in Europe. Gas generation served as insurance for renewable energy. However, insurance does not work properly in the face of such a sharp rise in prices.

Of course, the scale of the catastrophe that happened should not be exaggerated. And all the more, you shouldn’t bury the “green energy”. At stake is survival on planet Earth and preservation of its climate in a form acceptable to the human race. As the current crisis is overcome, new long-term solutions will be found. 

Russia & India have huge potential in energy sector

The potential for increased cooperation between Russia and India in the energy sphere is immense. Investors in both nations looking to expand mutually beneficial projects, India’s energy minister, Hardeep Singh Puri, told RT.

There’s a lot of ongoing cooperative work in the sector of petroleum and natural gas [between Russia and India]. It contains tremendous potential.”

He noted that Russia has many ongoing projects in the energy arena in India and is looking to further invest in the country. As it was expressed at a number of meetings with Russian companies at the EEF this week. According to Puri, India’s investments in Russia’s energy sector amount to some $16 billion. Russia has invested around $14 billion in India. 

Puri also stated that India’s import dependence on liquid hydrocarbons and gas is about 85%. Only about 1% of the country’s energy imports come from Russia. As India forecasts its economy to grow to $5 trillion in the next three to four years, he expects the country’s energy per capita consumption to grow “exponentially,” giving further ground for boosting energy cooperation between the two states.

We’ve got the roadmap in terms of the potential [in the energy sphere]. Both sides would want long-term agreements which provide predictability, stability and prices,” Puri said.

Russia and India are strategic partners in energy secotr

He added that he expects a “fascinating dialogue” about expanding energy inflows to India in the near future, as the country’s energy demand makes it a rather attractive market. 

No matter where you find oil and gas, somebody has to consume it. Many existing markets have reached a point where they have their sources, they have imports. India is one country where you can’t go wrong on the demand assessment. So potentially it’s a fascinating dialogue to have,” Puri said.

India is in need of energy and energy sources are here [in Russia]. Russia and India are strategic partners in energy and nobody has a second opinion on that,” he concluded.

During the EEF plenary session on Friday, Indian Prime Minister Narendra Modi also spoke positively about energy cooperation between India and Russia. He said it can bring stability to the global energy market, calling it a “major pillar of our strategic partnership.”

In his virtual address, Modi said Indian workers were taking part in gas projects in the “Amur region, from Yamal to Vladivostok and onward to Chennai.” He added that Indian authorities “envisage an energy and trade bridge.”

I am happy that the Chennai-Vladivostok maritime corridor is making headway. This connectivity project, along with the International North-South [Transport] Corridor will bring India and Russia physically closer to each other,” Modi stated.

Pakistani Stream: Russia Goes South – Just Beginning

Sergey Savchuk

The foreign press reports that Russia continues to work to build up its strategic presence in key points on the world map. In this case, we are not talking about the army and the navy. It is about energy and specifically about the “Pakistani Stream”.The other day in Islamabad, a bilateral meeting ended, at which groups of technical specialists from both countries confirmed their readiness to implement the project, for which the development and coordination of technical issues and documentation will continue. The main difference from the memorandums of previous meetings is that geological exploration will begin along the route of the potential gas pipeline. That is, the future pipe makes its first step from paper to the ground.

Initially, the idea of ​​the project arose at a difficult time. In 2015, an intergovernmental agreement was signed on the development and construction of the North-South gas pipeline. With a length of almost 1,100 kilometers and a cost of about $ 2 billion. The implication was that Russian contractors would build a transit line from the port of Karachi to the city of Lahore. The peculiarity of the technical idea was that it was necessary to additionally build a regasification terminal in the port. There LNG would be delivered using sea LNG carriers. After being transferred back to a volatile state, it would go strictly north to the Punjab province.

For the next two years, the project moved very slowly. The parties could not agree on the size of tariffs for pumping gas. It is noteworthy that Russia demanded an increase in cost, otherwise the project was economically unprofitable. Then the next US sanctions were imposed on the Rostec corporation, the key executor on the part of Russia. That further impeded the implementation. 

Renaming the project – Pakistani Stream

Last fall, the parties revised the terms of the agreement again. This time exclusively at the request of Islamabad. The share of Pakistan’s participation in the project has grown from 51 to 74 percent. The condition of attracting and using only Russian materials, components and equipment is strictly stipulated. It was decided that Russia’s investment will not exceed 25 percent. Pakistan will cover all other costs. In the spring of this year, the project was renamed “Pakistani Stream”. The energy ministers of both countries announced their readiness to start construction in the very near future.

Pakistan is a country with a population of over 220 million. If you mark on tracing paper the location of all Pakistan’s power plants, and then superimpose this tracing paper on a physical map of the country, a critical imbalance will be visible to the naked eye. 20 stations operating on oil products. 22 thermal power plants operating on natural gas. Nine coal and three nuclear power plants. Pakistan needs light in the homes of its citizens and reliable sources of energy.

The implementation of the “Pakistani Stream” with a capacity of 12.4 billion cubic meters of gas per year will provide fuel for new power plants. That, in turn, will feed industrial enterprises concentrated in Punjab, on the border with India. If the project turns out to be successful, nothing prevents the gas pipeline from being extended to the capital. The transport shoulder from the city of Multan to Islamabad is just over four hundred kilometers.

Possible avalanche of global transformation

There is not the slightest doubt that the revitalization of the region is connected both with the political changes in Afghanistan and with the completion of the construction of Nord Stream 2. Russia has clearly shown that it is capable of completing any projects, even under the pressure of massive sanctions. India is striving to become the main metallurgical power in the world It simultaneously needs the iron ore of Afghanistan, coking coal and blue fuel from Russia. Pakistan wants to reach a new level of industrial development. This again requires natural gas, and all neighboring countries themselves are experiencing a deficit in it and clearly do not intend to share it with Islamabad. 

Afghanistan, in principle, is ready to absorb any amount of resources, since the electrification of the country, thanks to the incessant war, is at a medieval level.The American withdrawal from Afghanistan was the stone that moved an avalanche of global transformation. If the Taliban manage to keep the country from another all-out war of all against all, then in the very near future we will witness a battle for new energy, trade and industrial markets.

The Russian nuclear industry to switch to the development of new civilian power reactors

The license of Rostekhnadzor for the creation of the BREST-OD-300 power unit was issued to the Siberian Chemical Combine of Rosatom (Siberian Chemical Combine, Seversk, Tomsk Region)

Aleksandr Uvarov, editor-in-chief of the information portal on nuclear energy AtomInfo.ru, told RIA Novosti that “Construction of a new reactor is starting in Russia and thus a new,“ land ”direction of reactors with heavy metal coolant is being opened, which is still nowhere in civil nuclear power. has not been mastered in the world ”   He recalled that Russia is the only country with successful experience in operating heavy-metal cooled reactors used on a number of Soviet nuclear submarines.

The power unit with an installed electric capacity of 300 MW with the BREST-OD-300 reactor should become the key object of the experimental demonstration energy complex (ODEC), which is being built at the SGChK site within the framework of the strategic industrial project “Breakthrough”   In addition to the power unit, the ODEC includes a complex for the production of mixed uranium-plutonium nitride nuclear fuel for the BREST-OD-300 reactor, as well as a complex for the reprocessing of spent fuel.

The complex will make it possible to create a closed on-site nuclear fuel cycle, which will make it possible not only to generate electricity, but also to prepare new fuel from the fuel discharged from the reactor core. Earlier it was reported that the launch of the BREST-OD-300 reactor is scheduled for 2026. The BREST-OD-300 reactor is intended for practical confirmation of the main technical solutions laid down in lead-cooled reactor plants in a closed nuclear fuel cycle, and the main provisions of the inherent safety concept on which these decisions are based.

The features of the reactor make it possible to abandon large volumes of containment, a melt trap, a large volume of support systems, and also to reduce the safety class of non-reactor equipment.   Lead coolant has a number of advantages. First, it slows down neutrons a little, which is fundamentally important for the operation of “fast” reactors. In addition, lead has a high boiling point (about 1.8 thousand degrees Celsius), it is chemically inert in contact with water and air, and does not require high pressure in the coolant circuit.  

The combination of the properties of a heavy lead coolant and dense heat-conducting nitride fuel creates conditions for achieving full reproduction of nuclear “fuel” and excludes the most severe accidents – with an uncontrolled increase in power (as in Chernobyl) and loss of heat removal from the reactor core (as in Fukushima). This is the essence of the natural safety of the BREST-OD-300 reactor.   The integral design of the reactor plant makes it possible to localize coolant leaks in the reactor vessel volume and to exclude the dehydration of the core.

This excludes accidents requiring the evacuation of the population, and this actually means that the radiation safety of the environment is guaranteed not by technical means and methods, but by the very absence of activity above the already existing natural levels.

Vietnam’s vast wind power potential

A giant wind-farm off the south coast is one of more than 150 wind power projects planned in Vietnam; the 1GW Vinh Phong project will be funded by a Russian-Belgian JV, but Hanoi needs to improve its clunky electricity grid so renewable projects can be fully incorporated in coming years

(AF) A plethora of international players are beating a path to Vietnam to take part in its renewables ramp-up – the largest in Southeast Asia – which includes both solar and onshore wind and now even an offshore wind project development.

The most recent to show interest includes Russian state-owned oil and gas producer Zarubezhneft and Belgian marine contractor DEME Offshore.

The two signed a memorandum of understanding (MoU) to build the proposed Vinh Phong project. It is a 1-gigawatt (GW) offshore wind farm proposal with a cost of $3.2 billion. Vinh Phong is located in southern Vietnam, northeast of Ho Chi Minh City, the country’s business hub.

The two partners look to commission the first phase of the project, with 600-megawatts (MW) worth of capacity, by 2026, prior to a second phase with a further 400MW capacity by 2030. If plans hold tight, it could be Vietnam’s first offshore wind farm and it is anticipated that more will follow.

Zarubezhneft said it will share investment costs with a specially formed investment vehicle called DEME Concessions Wind. Under the MoU, the two firms will get oil and gas producing venture Vietsovpetro and DEME Offshore to manage the construction process.

Vietsovpetro, a joint venture between Zarubezhneft and state-run PetroVietnam, already operates several offshore oil and gas blocks in Vietnam.

Zarubezhneft

Zarubezhneft set a goal of entering both the wind and solar sector in Vietnam, Cuba, Southern Europe and Russia. These plans, not surprisingly, suffered setbacks due to the onset of the Covid-19 pandemic last year and a subsequent pullback in global oil prices amid the worst slump in demand for oil ever, which caused a drop to multi-year lows. However, global oil prices have recovered, with the global oil benchmark, London-traded Brent crude, now hovering above $70 per barrel, with price appreciation and forecasts that demand will increase for the rest of the year.

Vietnam’s clean energy transition

Zarubezhneft’s disclosure comes as Vietnam undergoes systemic changes in its energy sector. This stems from a forecast natural gas supply shortage that will impact its power generation capacity with potential brown and black-outs, mostly earmarked for the more populated south. However, Covid-19 related economic contraction has pushed that forecast back at least a year or two.

Vietnam’s energy quandary also stems from steady economic growth and more energy consumption, as well as geopolitical interference. Over the past several years, China has prevented PetroVietnam and its foreign partners from developing natural gas resources in Vietnam’s own UN-mandated 200 nautical mile exclusive economic zone (EEZ) in the South China Sea, a problem not dissimilar to that faced by the Philippines.

To offset this supply shortage, Hanoi initially focused on developing more liquefied natural gas (LNG) infrastructure. Currently, two LNG import terminals are being constructed in the southern part of the country. With at least six more approved, and possibly more considering projects pending approval at various provincial levels. Vietnam also has as many as 22 LNG-to-Power projects in its soon to be released Power Development Plan 8 (PDP8), to 2030 with guidance to 2045.

Over 150 wind projects proposed

Vietnam has marked advantages in its renewables ambitions over many of its neighbors in the region. It is including a vast coastline of some 3,260 km (2,030 miles), excluding islands. It is ideal for both offshore and near-shore wind-power development. By way of comparison, only around 3% of neighbouring Thailand’s land mass has suitable wind speeds needed to drive turbines, which greatly hinders the country’s capacity to develop wind power.

Vietnam’s solar radiation in most parts of the country is also ideal for solar project development. And it has contributed to its quick build-out, which seems to have peaked last year.

Much of the country’s recent success with solar can also be attributed to Hanoi approving generous feed-in-tariffs (FIT). These tariffs encourage investment in renewable energy by guaranteeing an above-market price for producers. Since they usually involve long-term contracts, FITs help mitigate the risks inherent in renewable energy production.

Tax exemptions to reduce investment risks

The government has also approved FITs for its wind-power development, with those tariffs up for review at the end of October. It also offers various tax exemptions to reduce investment risks.

Yet, Vietnam’s wind power development pales in comparison to its solar build-out. By the end of 2020, wind power accounted for just 1% (670MW) of the country’s energy mix. It is compared to 16.6GW for solar, including rooftop solar, according to the US Energy Information Administration (EIA). Under PDP8, the next power development plan, the country aims to ramp-up solar capacity to 18.6GW and wind capacity to 18GW by 2030. Vinh Phong, for its part, is one of as many as 157 wind farm projects proposed in Vietnam.

Three weeks ago, the Asian Development Bank (ADB) signed a $116-million loan with three Vietnamese firms to finance the construction and operation of three 48MW wind farms, totaling 144MW, in the central province of Quang Tri.

The projects will increase Vietnam’s wind-power capacity by as much as 30%, helping it to also offset the country’s still troubling reliance on coal needed for power generation. Coal still makes nearly 40% of the country’s energy mix, and that figure looks likely to remain steady until to at least the middle of the next decade.

The ADB’s move three weeks ago was its first wind-power project in Vietnam and comes just a month after the bank said it would stop funding most fossil fuel projects in the region, even natural gas, under most scenarios.

Electricity grid needs urgent improvements

However, as promising as Vietnam’s renewables build-out is, several problems remain, including power grid curtailment. Simply put, the country needs new transmission and distribution infrastructure to accommodate additional capacity and transmit the new power to where it’s needed.

The problem is already being felt by a number of power projects that have had to curtail production since transmission lines are already operating at capacity. Especially in areas where there is a concentration of solar power. This has resulted in less electricity being produced, less revenue earned and an inability of some project backers to service debts incurred to build projects.

Similar problems – depending on each location’s specific grid development – could see otherwise bankable wind power projects, (onshore, near-shore and offshore) unable to obtain necessary funding to go forward.

But the Vietnamese government is now starting to address this problem. It recently  adopted a new law that improves and prioritizes grid development. And grid development is now a priority in the draft PDP8, the first time it’s been included in the country’s PDP.

However, expanding grid capacity is both capital and time intensive. Build-out times can range to as much as five years or more. Other countries are also confronting similar situations when building renewable power projects, including heavyweights such as Germany and the UK.

There are some short-term solutions for grid congestion, however, such as utility scale battery storage, grid enhancing techniques, plus topology optimization software. All of these improve grid resilience and reliability, and prevent bottlenecks, but the long-term solution is still expanding Vietnam’s transmission grid.

How Rosatom built a huge 150 MW wind farm

How much more is planned in the near future?

In the second half of 2020, Rosatom built a wind farm, unique in its scale. It is in Adygea, which became the largest in Russia and one of the largest in Europe.

Russia is considered to be a fan of traditional hydrocarbon energy. This is true given the huge reserves of natural gas, oil and coal in the depths of the country and on the continental shelf, mainly in the richest Arctic zone.

However, in recent years, Russia has been investing heavily in the creation of large facilities in the field of alternative renewable energy. 

One of these facilities is the Adyghe wind farm. 

The construction of wind energy facilities in Adygea was carried out on a land plot with an area of ​​14 hectares. In total, Rosatom has installed 60 facilities. Each wind turbine is 150 m high and rated at 2.5 megawatts. 

In total, all 60 wind turbines generate energy with a capacity of 150 MW.

The length of one blade is 50 m, and each object weighs over eight and a half tons.

The blades for the Adyghe wind farm were ordered several years ago in India, but since 2020, such blades have been produced in Russia at the Ulyanovsk plant, which has already shipped the first batch of domestic blades for wind power facilities in Denmark.

The new wind farm in Adygea can generate about 350,000,000 kWh annually.

The commissioning of only one of this wind power plant allowed to increase the volume of electricity generation in the entire Republic of Adygea by 20%

It is important that Rosatom does not stop at the development of alternative energy facilities. 

So recently, a large wind farm with a total capacity of 86 MW was built in the Ulyanovsk region, and very soon a huge wind farm will be built in the Stavropol Territory.

In terms of its size and production capacity, it will surpass the new Adyghe wind farm and will generate annually up to 210 MWh.

An equally large alternative energy facility, which is being built in the Republic of Kalmykia, is on its way. 

And the largest wind farm until 2023 is planned to be built in the Astrakhan and Rostov regions. They will generate 350 MW each year.

The cost of building each of these huge wind farms is estimated at 30,000,000,000 rubles.

For comparison, the largest wind farm in Europe, built in the UK in 2013, generates about 630 MW.

Generally # plans Rosatom for the construction of wind farms is very ambitious. In the next two years alone, Rosstat plans to build and commission wind power plants with a total capacity of over 1 GW.

Why Rosatom’s new laid-down reactor is the safest in the world, and when will it enter series

Russian giant Rosatom is rightfully considered the world leader in nuclear energy and a number of other high-tech areas, as evidenced by an extensive portfolio of foreign orders

Rosatom was the first to master the serial production of the latest modern third generation fast breeder reactors. 

Now our concern has begun construction of the world’s first power unit of the next generation – the fourth.

A new power unit is being built in the city of Seversk in the Tomsk region. 

The installation was named Brest OD 300.

The new reactor operates on fast neutrons and has a lead coolant.

Rosatom considers this # type of reactor to be completely safe. Accidents like Chernobyl and the Fukushima disaster using the Brest reactor are excluded.

The new reactor was based on the principle of natural safety. 

Foreign competitors of Rosatom do not possess such technology and continue to build thermal neutron reactors in which water serves as a coolant.

The advantage of fast reactors is the ability to reuse spent nuclear fuel as new fuel, thereby achieving a closed cycle. 

In addition to being economical, fast reactors are safer than existing thermal reactors. The possibility of unpredictable and uncontrollable acceleration of neutrons is excluded, which is equivalent to the loss of the coolant. 

The risk of a parazirconium reaction that provoked the disaster at the Fukushima nuclear power plant is also excluded. 

The work on the design of the fourth generation reactor has been carried out by Rosatom since 2010. Rosatom plans to commission the Brest power unit by the end of 2025.

One of the important advantages of the new reactor will be its ability to run on fuel # uranium 238, which is much cheaper and more widespread on our planet, in contrast to the rare uranium 235.

In the next few years, Rosatom plans to organize the serial production of the newest Brest reactors in Russia, and after 2030 start exporting them to foreign partners.