The ten most destructive ideas of energy future

Discourse on energy is constricted by clichés, taboos and mantras that are based on the past. They initiate incorrect chains of conclusions and create a misleading awareness of the present situation.

1. Renewable energy is expensive

In India, China and the US, solar and wind power already cost the same as fossil or nuclear power. This means production costs are below 60 euros per megawatt hour without subsidies. In Europe, wind power is the cheapest new power generation capacity. One third of all new global capacity and two thirds of new US capacity is solar and wind power. Do we still need to continue discussing this?

2. Digitalisation does not accelerate change in the energy sector

Digitalisation has changed all the sectors of society into which it has permeated. In energy system, this means that internet and cyber security's role will become increasingly significant. Compared to the current system, a distributed production system based on solar and wind power is easier to build to recover from a cyber attack. This alone would be a sufficient justification to switch over to a new energy system - the Internet of Energy.

3. The price of electricity cannot be below zero

As in wind and solar power energy itself is free of charge, the market price of electricity cannot be locked above zero. In renewable energy system, electricity production is greater than the consumption for a significant part of the time. Thereby the electricity price is determined based on consumption and storage behaviour.

4. Basic industry needs baseload power

At times in Denmark, wind power is produced 1,4 times more than what is consumed. This year the variable wind power has covered 40 percent from the overall consumption. The country has not collapsed. Quite the opposite: Denmark exports seven billion euros worth of energy products every year.

5. Cheap energy creates jobs in industry

In Finland's reference countries, there is no link between the gross domestic product and energy consumption. Cheap electricity has not guaranteed the profitability of fine paper production. Instead, era for the product came to an end. For example the paper company UPM produces more energy than it needs. In 2014, steel company Outokumpu would have needed someone to pay it 60 euros per megawatt hour for its electricity consumption in order to turn the result of the company positive.

6. Combined heat and power production is cheap and efficient

Heat produced using heat pumps is half the average price of district heating. This has not gone unnoticed by house owners. Today the majority of detached houses install heap pumps as the means for heating, even in district heating areas. Taxpayers may soon notice that they have had heating systems built twice.

7. Bioenergy reduces emissions

According to Natural Resources Institute Finland, the Finnish targets concerning the use of wood energy cannot be justified with climate benefits: burning wood biomass releases carbon dioxide and although forests grow back, their carbon stock has reduced. Finland's forest energy vision is quite the opposite to that of China and the US. China has announced that it will increase its forest stock by twice the amount of Finnish forest stock over the next 15 years. The US objects classification of forest energy as carbon-neutral. There exists a biocarbon bubble, which means that bioenergy is charged with expectations that cannot be realised due to the reasons mentioned above.

8. Oil refining is coming to an end

New records have been set in oil production. By 2020, 55 percent new production capacity will be built. In recent years oil price has been over one 100 dollars per barrel, for the past year only 50 dollars per barrel. Four-fifths of proven oil reserves can be taken into use at a price below 70 dollars per barrel. This inexpensive oil will be available for at least 50 years.

9. Energy is energy

Energy is politics. It is security, foreign, economic, employment, regional, innovation and environmental policy. This is why preparing a good energy strategy requires an exceptional amount of versatile expertise. Several changes are simultaneously affecting the energy field. The package is wicked to deal with.

10. Capitalism has led to climate change

The problem is the lack of capitalism. Air is a shared resource that is not owned by anyone. This way the impacts of the fossil emissions are not compensated by the ones who created the problem. Emissions and the price of energy would settle at the correct level if the producers of fossil fuels and the parties suffering from the emissions had a trade system for compensating the harmful effects of emissions. This kind of a model is probably impossible to realise. The market remains incomplete and the pollution of the shared atmosphere continues.

Further information:

Pasi Vainikka, LUT docent, VTT principal scientist, pasi.vainikka@vtt.fi, +358 40 582 5987

The text was originally published in Talouselämä magazine, issue 1/2016.