Energy Transition Weekly: Your Guide to Green Markets

Can you tell me a bit about the newsletter and what your role in it has been? 

We draw some of the most interesting, most relevant stories from the real-time news wire over the week. Obviously, sometimes we need to update stuff or maybe merge stories, and sometimes there's some new stories as well, which we'll add specifically on the day.

We also have some dedicated market reports, for example we have pages on carbon markets, PPA markets and GO markets. And each week, we will have a comment on those markets, the main developments over the past week or and looking at what's likely to be in store for the coming week, or the near future.  

In terms of how many stories we take, obviously we're flexible, but on the whole it’s about eight pages each week. As an example, when the Fit For 55 legislation was announced, we dedicated two or three pages just to that, because it was very relevant for that week and knew that readers were keen to know about it.

On a standard week, we'll just look at what's happening across those last 7 days. So sometimes there might be something interesting happening in Brussels, maybe some new policies being announced which are relevant. Maybe Germany's announced something about its coal phase out. Sometimes, there's nothing specific, so we'll take a cross-section of some of the news.

In terms of what we include, it has to be things that are a bit more in-depth. We tend to include things where there's a bit more insight, rather than just saying what the news is. So you've got exclusive interviews with company executives, or analysts. Something you won't find elsewhere, which doesn't come from a press release. I like to try and keep as much exclusivity as we can in the newsletter.

So I guess there's a little bit more of a weighting towards policy and policy impacts? 

Obviously policy does drive so much of the market and what's happening. Any new investment decisions, any successes in moving away from fossil fuels do generally have to have that policy backing. So policy developments are important, but I wouldn't say it's just purely analytical. I mean, we do look for the news! 

Because it's a weekly it’s not like where we have the newswire, where breaking news is going to have an impact on the price, so it's quite important to get it out very quickly. With a weekly, you stand back a little bit, and you can look at what has impacted or what's likely to impact prices but with less immediacy.  

You also work on Montel’s Fuels desk, so you normally cover coal and gas. And I think that's probably something which gets a bit forgotten in the energy transition story sometimes. People think it’s all solar deployments and PPAs, but there’s also the other side, which is phasing these fuels out. 

Certainly fuels continue to play a big role. They still have probably the biggest clout on prices, and the reason why we have been seeing very high carbon prices at the moment is because we have high power costs. A lot of this is down to the fact that fuels are very expensive. Gas is at multi year highs, coal is at multi year highs. 

I suppose you see the interplay as well, between fuels and renewables. Like we've seen in the UK for example: there is plenty of wind capacity, but it was super low in 2021, it's been maybe 5%, on average, of capacity that's being used. And then you include the fact that nuclear capacity was offline too, so we've seen very, very high power prices in the UK.

Although the right boxes are being ticked, and the UK is almost coal-free now, the country is yet to wean itself off gas. If anything, it's being used more at the moment. So even though everywhere is in a transitional phase, fuels certainly continue to play a very important role. The fuels markets, especially coal, but also gas in the form of LNG, they're markets that are affected by global factors. So if China needs more, we're going to feel the pinch in Europe as well. 

So there is this huge amount of wind capacity in the UK, but it hasn’t been used? Is it just a case of the lack of flexibility and intermittency? Is it not coming on at the right times?  

It's purely that there just hasn't been enough wind. The capacity is there. And when the wind’s blowing, the UK can achieve 20% or more of the mix from wind. 2021 was just a low wind year. I think the cold weather doesn't help either. We always hear about the intermittency of renewables and that is a fact. And when, as it did last year, it coincides with super high gas prices, very tight LNG, nuclear plant maintenance...

I think there was interconnector maintenance as well, so we weren't getting so much power from Europe, meaning that it was a bit of a perfect storm. I don't know it's indicative of what's to come, but it certainly shows what can happen if everything isn't open while we're still in that transition phase. 

What do you see the next the next few years looking like for the transition? What are the big changes? Is it going to be things like hydrogen, are we going to see more storage coming online?  

It's difficult to say, because new technologies are coming on and being developed. Certainly it'll continue the trajectory we're on now, we're going to see a lot less coal, it's going to be phased out more and more. Probably a heightened dependence on gas initially, then we'll maybe see more hydrogen coming through as well, being used within the gas infrastructure, which will take over from gas increasingly. Lots more renewables capacity too. We've seen plenty of capacity in the pipeline for solar and for wind across Europe. Then there are things like nuclear fusion, which are in their infancy but could yet provide a complete solution!

There's question marks all the time over what and how much and how that will work. It going to be a mix of things, and that's what it's going to have to be because, as we were saying about the UK, you can see how things can become problematic if there's an imbalance of intermittent renewables. There will need to be either a base load from hydrogen, for example, or from battery power.

So certainly, battery storage on shore is going to be playing a much bigger role as well going forward. But we have the targets, I think it's just how each country will meet them. In southern countries solar power and things like that will work a lot better.