Natural gas prices have quadrupled in Europe this year and more than doubled in the US due to the global gas shortage stemming from Russia’s gas supply dependency, which provides a third of all Europe’s natural gas. This is clear evidence of failing to address climate change quickly enough by reducing our dependence on fossil fuels.
The EU has already set an ambitious target of reaching carbon neutrality using 80% renewable energy by 2050 and is increasingly encouraging investment in new solutions to achieve this, such as focusing on using hydrogen as a step away from natural gas and towards wider decarbonisation. However, renewable energy sources have also been hit recently, driven by weather and the unusually still conditions in wind farms.
Despite the headwinds of ongoing cost inflation and supply chain challenges, demand for clean energy sources has never been higher. We expect the global energy crisis to continue to act as an accelerant for the clean energy transition.
Global investment in renewable energy totaled $226 billion in the first half of 2022
reflecting an acceleration in demand for clean energy supplies to tackle the ongoing global energy and climate crises, according to Bloomberg Renewable Energy Investment Tracker 2H 2022.
As well as seeing profitable project investments, the first half also saw a record for venture capital and private equity investments into renewables and energy storage, with $9.6 billion raised – up 63% from the previous year.
However, is this enough to deliver cleaner, affordable and reliable energy?
McKinsey estimates that variable renewable sources will make up almost 40% of world electricity in 2040, up from 7% in 2019. This pathway has implications for the energy sector, and the need for grid-scale storage to offset intermittency in renewable production increases rapidly.
According to BloombergNEF estimates, energy storage will increase by 122x by 2022, requiring 11 trillion in production and storage worldwide through 2040 and a $662 billion investments.
Renewable energy on its own does not solve the energy supply problems. Creating a power system based solely on renewable power, although possible, would be expensive because of the need to overbuild power capacity.
Building a portfolio of flexible energy storage is critical to creating a low-cost net-zero system.
In recent years, companies worldwide have been focusing on green energy and how to store it.
UK’s National Grid in 2020 asked renewable energy developers to switch off their wind turbines or solar farms to avoid overloading the grid with green electricity when power supplies outstrip demand. It is pivotal that when not used, renewable energy needs to be stored for Europe to hit its targets 108GW of energy storage is required.
Current methods can’t store power long, so green hydrogen is one of the most promising methods to store energy.
Converting renewable energy into hydrogen, which can be stored in large quantities, is a solution to balance the irregularities in the energy supply.
Energy storage in the form of compressed air and green hydrogen can provide one of the cheapest forms of green energy storage. It can store electricity for longer than other storage methods. Grid-scale, hydrogen-fuelled compressed air and hydrogen storage in salt caverns is pivotal in supporting the transition to the broader hydrogen economy on a continental scale.
Other energy storage methods but not as effective include Molten Salt, which uses solar energy to heat the molten salt to 565c, which is then stored to make steam and run a turbine, Cryogenic batteries and Pumped Storage Hydropower.