Beware incompetents in power

One of the most important life lessons I’ve learned is a fact established by research and it is that people really dislike being wrong. Of course, what we dislike even more is being told — or heaven forbid, shown — that we are wrong. We’re all like that, to different extents. But the ones who seem to be particularly vulnerable to the frustration associated with discovering you are wrong are incompetent people in positions requiring competence.

One brilliant example of this is the EC executive president in charge of the European Green Deal, Frans Timmermans. This weekend, Timmermans told media that the EU might need to “revisit” its plans for renewable energy additions. Alas, it is not the revisiting I thought he might mean. No, the EU was going to add more wind and solar to its energy mix than previously planned, Timmermans said, as quoted by Reuters.

The previously planned figure is 40% renewables by 2030, which is already an upward revision (proposed last year) from a previous target of having 32% renewables in the EU mix. Brussels, it seems, is getting bolder and bolder. Alternatively, it is getting increasingly divorced from reality.

For starters, a big portion of the total renewable energy output comes from hydropower. However, hydropower is only mentioned as part of the mix when convenient, with the focus kept on wind and solar most of the time because that’s where the biggest capacity additions have been made. Fair enough, until you come to this interesting part of a report by the European Environment Agency from March this year.

Despite the EU having met its 2020 target, sustained action remains necessary. COVID-related impacts are likely to be short lived unless backed by structural changes, and an unprecedented transformation is needed to meet the 32% 2030 target. Furthermore, the European Commission recently proposed an amendment of the Renewable Energy Directive with a more ambitious target of 40% by 2030, paving the way for carbon neutrality by 2050.

So, the 32% target for renewables required “an unprecedented transformation”. Then Brussels went and upped the ante to 40%. That would mean an even more unprecedented transformation. Now, they’re thinking of upping the ante again, although Timmermans shied away from naming a figure. This would probably call for a most unprecedented transformation.

Meanwhile, in completely unrelated news, the world’s biggest offshore wind turbine developer, Ørsted, admitted it was stocking up on coal because of a shortage in wood pellets, which power six of its nine power plants in Denmark. The chief executive of the company said that it was a necessary short-term evil and that its plans to close its only coal-fired plant remained unchanged. What he did not say was that Ørsted was going to build more wind turbines in short order. Because it can’t.

Here’s an excerpt from the FT report quoting Mads Nipper: “Nipper called for governments to speed up the permitting process so that clean energy projects can be built more quickly. However, he acknowledged that because of the construction time required, wind power could not help to address the situation in the short term.”

“Converting an energy system, is not something that can happen in 12 or 24 months,” he told the FT in addition. “But we are in a hurry, we need to do everything we can to speed up that conversion.”

Company executives tend to be at least reasonably competent because companies are more sensitive to their bottom lines than governments. And yet the Danish major’s top man has either forgotten last year’s wind drought that served a blow to the company’s profits or would rather forget it. That’s standard corporate behaviour.

The EU, in the face of Timmermans, on the other hand, appears to deliberately overlook not only the wind drought from last year but every single factor that suggests a fast buildup in wind and solar (a buildup in hydropower would be a lot more challenging) may well be impossible. And why wouldn’t it, in the company of such corporate executives like Iberdrola’s Ignacio Galan.

"Increasing the renewables target to 40% by 2030 is ambitious but achievable. Technology advancements and cost reductions in wind and solar and storage mean that renewables is the most competitive form of electricity generation today," Galan said last year, when the EU unveiled its revised plan for 40% renewables in its energy mix.

That was in 2021, a year that saw record wind additions in Europe. Now, wind energy industry executives are complaining of rising raw material costs, logistics problems and “downward price pressures” from auctions, per a Recharge report. The report, by the way, is worth reading. The wind industry is not a happy one.

“The state of the supply chain is ultimately unhealthy right now,” said the chief executive for onshore wind at GE Renewable Energy at the WindEurope conference. “It is unhealthy because we have an inflationary market that is beyond what anybody anticipated even last year. Steel is going up three times,” Sheri Hickok also said.

These cost reductions that Iberdrola’s Galan mentioned last year, then, can be struck out because they are no longer a factor. What is a factor is cost increases, which are pushing wind park developers out of business or at best forcing them to shrink their business, according to the Recharge report.

“If the government thinks that on a dime, this supply chain is going to be able to turn around and meet two to three times the demand, it is not reasonable,” GE Renewable Energy’s Hickok said.

Apparently, this is exactly what the EC’s Timmermans thinks and he is unlikely to be the only one who thinks it: the REPowerEU plan envisages an expansion of wind power capacity in the EU from 190 GW to 480 GW by 2030. Despite the threefold increase in steel prices. Despite copper prices hitting an all-time high for a moment in March.

The spike may have been brief but it is telling: the world is running out of copper. According to a report by Goldman Sachs, global copper stocks could shrink to just over 200,000 tonnes, which is about enough for three days, yes, that’s days, of global copper consumption. And that report was written before the EU started revising its wind and solar plans.

For context, in terms of copper consumption at least, here’s a quote from a Wood Mackenzie report from October 2019: “Over 650 GW of new onshore and 130 GW of new offshore wind capacity will be installed between 2018 and 2028. This will consume in excess of 5.5Mt of copper, according to a recent analysis by Wood Mackenzie.”

So, the prices of raw materials are rising, which is pushing renewable energy installation prices higher as well. The industry — both wind and solar — is complaining about too lengthy permitting periods, which, I expect, can be easily fixed by governments.

There is, however, no quick fix for the cost problem, which is one that will only grow. And the response of Timmermans and his fellow eurobureaucrats appears to be sticking to the “More wind! More solar!” tactic and continuing to ignore all the flaws in their ambitious energy independence plans.

Photo credit: Ken Mull