Energy investments in unstable resources are risky (Article) - Energy

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  • • Leaders of Western countries place all energy assets in a few investment portfolios
  • • Leaders spend huge amounts of money on unreliable wind and solar facilities
  • • Replacing a giant natural gas supplier with another that does not solve the problem
  • • Europe’s natural gas crisis is just the latest example of poor energy management

When a portfolio manager wants to put all of your energy investments into one stock, and puts the rest of your investments into one or two more, and then reports that those stocks are underperforming and fall into an unstable category, it could get him fired.

This is because the portfolio manager’s strategy reflects a failed risk management, and this is true of the leaders of Western countries, as they systematically place all their energy assets in a few high-risk investment portfolios.

So the citizens of European countries should ask themselves this question, and question this risky strategy many years ago, when their leaders began spending massive amounts of capital on unreliable wind and solar facilities.

And after the leaders of the European country have increased their dependence on Russian gas, they may face crises and difficult circumstances after the Russian invasion of Ukraine.

European leaders no longer want to import natural gas from Russia, so they need a new supplier. The Europeans hope that imports of liquefied natural gas from the United States will replace supplies lost when they cut their dependence on Russia, it is a huge mistake.

diversification of natural gas supplies

Energy supplies from Russia - Russian gas
Russian gas – photo from The Times of Israel

What all countries need is a diversified supply of energy resources that are stable, affordable, and reliable. Therefore, imports should follow the same strategy.

On the other hand, replacing one giant natural gas supplier with another does not solve the problem and may actually make it worse.

In this context, explains Dr. Anas Al-Hajji in a lengthy discussion on Twitter why US LNG is not the lifesaver that Europeans hope will be, and the reader can follow Dr.’s series of publications. Anas El Hajji is on Twitter for all possible issues.

It should be noted that the natural gas crisis in Europe is only the latest example of poor energy management occurring in all developed countries of the world.

Wind and solar deficiencies

The problem with wind and solar energy is that they only generate enough electricity for a quarter or a third of the time, often missing when they are needed.

Moreover, there is no economical way to store electricity on a grid scale, so thermal generation from natural gas and coal must be on standby to produce electricity when wind and solar power fail.

This is especially dangerous when the weather is very hot or cold; The demand for electricity increases suddenly, during severe weather conditions, and wind and solar energy are not available.

Russian oil - Russian oil production

Last week, I wrote about the weakness of the electricity grid in the US state of Texas; Because the state has spent tens of billions of dollars on wind turbines instead of reliable thermal generation.

The frost and ensuing blackouts in March 2021 led to the largest disaster in the state’s history, and the problem was not resolved, and customers were denied electricity last week due to unusually hot weather and insufficient generation.

And I think this summer there will be blackouts.

In turn, the golden state of California, which has been heavily subsidizing wind and solar power because it retires prematurely for reliable power generation, has experienced longer blackouts than Texas.

Like Europe, California has made itself more dependent on imports that will necessarily be absent when they need them most, and blackouts are now so common in California that they are generally seen as the state’s cost of living.

Shutting down nuclear power plants

Nuclear Energy - Nuclear Reactors
A nuclear power plant in America

If conditions do not deteriorate significantly, California is set to close its last nuclear power plant, Diablo Canyon, prematurely, reducing the state’s energy diversity, reliability and affordability.

For its part, New York State prematurely shut down the last reactor at the Indian Point nuclear power plant in April of 2021.

This generation of electricity has been replaced by natural gas, but New York has a limited supply in the amount of gas it can move through the lines because the state has been adamant about blocking natural gas pipelines.

New York is likely to experience blackouts this summer.

The same story was repeated around the world, as a result of blackouts in the UK and Australia, high electricity prices in Germany, etc.

Most western countries are trying to replace electric cars with petrol and diesel cars and trucks, it’s energy madness! If the electrical grid collapses, in this scenario, a large part of the transmission system will collapse.

The job of energy policy makers is like that of portfolio managers – to reduce risk and spread prosperity through a variety of reliable and highly diversified assets, so any policy maker who does not follow this wise strategy should be fired.. Let the firing begin!

* Mark Mathis is an energy author and documentary filmmaker.

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