We will experience a renaissance of nuclear energy, the expert predicts

We will experience a renaissance of nuclear energy, the expert predicts
We will experience a renaissance of nuclear energy, the expert predicts

Concerns about the heating season, astronomical prices of electricity or gas. Europe has not experienced such a heightened situation since the oil crisis of 1973. Electric power expert Michal Macenauer emphasizes that it is mainly Russian machinations on the gas market that are behind it, but he also mentions other factors.

At the same time, the strategy director of the energy consulting company EGÚ Brno predicts that the “Green Deal”, i.e. the transition to a climate-neutral Europe by 2050, is dead. “Attention, I mean in terms of time, not direction,” he says in an interview for SZ Byznys.

Hundreds of experts are discussing how the current crisis will transform electricity and gas trading at the energy conference. It will be hosted by Brno on Wednesday and Thursday. Macenauer spoke in a lecture block entitled Sustainability without Vulnerability.

In his Sunday speech, Prime Minister Petr Fiala said that we will handle the winter. Do we have enough gas reserves to maintain the consumption of previous years?

We haven’t, but we’re getting close. We now have about 90 percent of their capacity in the reservoirs, which is about 33 terawatt hours of gas, roughly half of the gas consumption in the heating season. However, gas will continue to flow to us. Not Russian, but mainly bought in the form of LNG (liquefied gas). With the combination of low imports and those stocks, we should see through the heating season, but we will be forced to save twelve to fifteen percent of consumption.

Photo: Martin Jašminský, Seznam Správy

Michael Macenauer

No. The Czechia can save some ten percent just by reducing the production of electricity from steam-gas sources, and households simply have to do the rest. Savings will hurt in that comfort will be reduced. If it will be winter with normal temperatures, ten to fifteen percent can be saved in the average household by reducing the heating temperature and heating surface. If households do not save enough, then industry will have to save, and there it is already a matter of limiting production, shutting down operations.

We have been talking about the energy crisis at least since Russia invaded Ukraine. But why has it deepened so much in recent weeks?

Eighty to ninety percent of it is caused by Russia’s manipulation of the gas market, interrupting and limiting its supplies. Gas has become a scarce commodity, its price has increased extremely, and since we need to produce electricity from natural gas at the level of the European Union and the European region, the price of electricity has also increased significantly. That’s why the price went up to multiples.

And the second problem in the background is really too hasty and radical demand for decarbonization (reducing the amount of carbon emissions) by the European Union. It’s about ten to fifteen percent of the problem. But it will deepen as demand for electricity skyrockets. And the availability of coal or nuclear resources will go down extremely. The Central European region, which was surplus in this respect, will be deficient in a few years.

A frequent question among lay people is now why we have such expensive electricity, when we produce it many times cheaper in Dukovany or Temelín. So isn’t the energy exchange now redundant?

The stock market is just a way of organizing the market. This is not evil or a conspiracy. There are hundreds or thousands of manufacturers on it. And there is the demand side, which is hundreds of millions of take-up points. Among them must be a trader who represents a portfolio of customers and buys electricity or gas for them. They are mainly secured outside the stock exchange, but some there as well. The stock exchange is decisive for the price level of electricity and gas, because it is the only universal tool for fixing prices.

The market always leads to the minimization of margins. If there are enough resources on it, it works. It worked until there was a shortage of gas. The solution is not to abolish the market, because we always have to come up with the price somehow. Now the government has decided to bridge the market in a certain way, to avoid the dictates of the price and to subsidize the differences. But money is needed for this, because both electricity and gas must be purchased further on the market.

However, one of the blocks of lectures here asks the question whether the free energy market will survive. So how do you see it?

I wish bridging the market takes the shortest amount of time. It would be appropriate if we did not go to the extent of making the liberal a kind of state market. No government supplier will be more efficient than a number of private producers. It works that way with all commodities. Governments now have to ensure the functionality of the market and that there are enough resources – so to arrange a stable supply of gas.

And have we as the Czechia taken a positive step towards that?

As the Czechia, we are moving towards this better than we expected. What CEZ and the government achieved with the terminal in the Netherlands is almost a masterpiece. It has a capacity of a third of our annual consumption. Now it’s a matter of getting gas into it. At today’s market prices, this is not a problem. But if we want lower prices, we need to focus on long-term contracts and build confidence to increase producer capacity.

Any chance gas prices will bounce back before 2019?

For gas, we are definitely not able to return to a price of around eighteen euros per megawatt hour. The minimum was even lower, artificially low. Russia’s manipulations probably already contributed to them at that time. If the LNG capacity market works, we can return to the level of forty to fifty euros.

Has the energy crisis reached a tipping point?

If we focus on the market price, we have definitely not won. It may culminate in 2023, maybe even 2024. The exact date is now in the stars. We predicted that the Russian gas supply would be throttled, but that it would be completely cut off was an unlikely scenario. Now it is highly probable. Due to the measures, we will wait until the next season. The question is how we will fill the reservoirs for the following season. It will depend on the course of the winter and on the speed with which other LNG terminals are put into operation and how well gas will be bought into them. It is not banished.

In the lecture, you also talked about the Green Deal. How will the announced transition to renewable energy sources by 2050 affect this year’s unprecedented situation?

I have long criticized how Europe has escalated demands for decarbonisation. The energy sector, which may have taken up to 200 years to build up to today, cannot be transformed into a decarbonized one by waving a magic wand in ten or twenty years. Media interest is often focused only on the electric power industry. Electricity consumption in the Czech Republic is over 60 terawatt hours, but the total energy consumption is around 500 terawatt hours. We will have to decarbonize the rest as well, not just electricity.

We are now in Europe at the beginning of a process that will not be very loud and will not be simple. The pace of decarbonisation will change.

You have said before that the Green Deal is dead.

Yes, but I meant in terms of time, not direction. It is not conceivable that we will still be burning fossil resources in the year 2100. But we won’t get rid of them either by 2050 or 2060. Real decarbonization will be carried out only by the generations after us.

The toxicity of the Green Deal is not decarbonisation, but its disproportionate speed, which Europe demands. It’s all political game based, no case studies. It is trade and energy cannot be managed in this way. The industry is uncertain and not investing in anything other than renewables, which is bad. We need to have a portfolio of different resources in the system.

At the same time, you are talking about the renaissance of nuclear energy. That could record the Czech Republic, right?

The discussion in the Czech Republic was never about whether we want a new nuclear source, but whether it will pay off for us. At today’s prices, the debate already seems absurd. I declare without hesitation that every nuclear resource is worth it. It has a sixty-year lifespan, and during that time the price level of everything else will increase several times.

If we want to decarbonize in Europe and at the same time partially remain an industrialized world, not just a paradise for Chinese tourists, the core is necessary. It’s not a choice.

So we just can’t get enough of renewable resources?

These will need a huge backup by the way. Let’s forget about cheap energy. It will be more expensive. In the normal winter period, photovoltaic production in a huge area, even at the level of Central Europe, can immediately drop to a level of around 20 percent of the expected output. Suddenly you need to back up 80 percent.

The time has come when we will have to include in the costs of this energy industry the costs caused by the unpredictable, random nature of the production of renewable resources.

You mentioned the huge uncertainty in the energy sector. What should drive her away?

Short-term savings and parallel supplies of gas from the USA, Qatar and other new sources.

Is Russia already out of the game?

Absolutely dead. Europe must not be dependent on Russian gas. All mining companies have given up on Russia and do not want to invest there. And China is waiting like a cat by the hole to weaken Russia. It will not be a significant customer of pipeline gas either. He sees well what can happen when Russia’s plans cross.

The article is in Czech

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