 and this is Guillermo Sabatiere, your host for today. I am the Director of International Services for HSI, the Health and Safety Institute, Industrial Skills. And on today's show, Perspectives on Energy, we'll be talking about the European energy crisis and how that was a near miss. But is it really over? We'll talk more about this on the show. Welcome back. And as I'm sure most of you may already be aware, that Europe is right now undergoing a winter that isn't as cold as everybody had feared. So generally, they got really, really lucky. They definitely avoided energy collapse. For the most part, they had a lot of challenges coming up. Of course, with the war in the Ukraine and the Russian aggression out there, you're looking at the cutting of gas supplies to Europe. So as you can imagine, that of course had an impact on the energy supplies and of course, electrical supplies for the season for most of Europe. Now, mind you, some of the Russian gas is still flowing to other parts of Europe and namely, you know, some certain other nations, but definitely they have felt the pinch. More importantly, the fact is that a lot of their fleet ran on natural gas. So a lot of those combustion turbines, combined cycle plants, all use natural gas. And of course, any other conventional unit that once burned oil or coal had been gasified. Then they were running natural gas as the transition fuel before they went into renewables. Not to mention the fact that Europe on its own had quite, had more very aggressively towards those renewable goals and to limit their carbon footprint. But at the same time, they did what pretty much every other utility does whenever they have access to gas is that they rely mostly on that resource. It's a plentiful, it's easy to manage. It's relatively clean, or the cleanest of all the other fossil fuels. And it's quite easy to convert these older units to be able to burn natural gas. It's very, very, very beneficial to do this, right? Problem is, and now you're relying on a single source of fuel that's piped in. And that in itself presents a lot of problems, specifically reliability problems. So going into this crisis, right? And we've seen this all throughout the world as well. A large part of Germany, for example, had shut down his entire coal fleet. And they shut down all of their nuclear generators. So now they're relying on renewables, whether it's solar or wind. And a large part of that, I think, is nearly half of their fleet ran on natural gas. But it's not just the generation of electricity. Europe has heavily depended on natural gas for heating, which is part of the problem that they were going to be facing this winter. Had the temperatures plummeted as everybody had feared that there would have been a serious issue and perhaps some loss, a lot more loss of life given the fact that there would have been no energy to heat their homes, heat their businesses. The other challenge, of course, was maintaining the industrial temple in most of Europe. There were issues where they were rationing power in some cases, right? And a lot of those were voluntary. But with a lot of government assistance and bailouts and subsidies, they were able to make it through. So this on its own, they may have avoided this crisis. They avoided energy collapse. So just last week, Europe was on the verge of doing rotating blackouts, meaning that they'll basically cut off some customers, open up the feeders to certain substations, and then they'll rotate through those throughout the peak of the day or the morning or the night, depending on what they need, in order to not have their grid collapse, right? Simply when their demand is greater than their available generation or when their load doesn't meet the demand, there's no balance on there. And then they have to, one way or another, they have to balance that, either by bringing on more generation, buying more power, or just reducing that load over on as seen in this case, the only option they had left was load reduction. Now, granted, fortunately, they had a warmer weather and they didn't run into that crisis yet. But as you can imagine, right? There's been a lot of aspects here. So where did they, where did they get most of the gas? Now that Russia wasn't supplying it. And a lot of that came from the U.S. in the form of a liquefied natural gas, LNG, which on its own is way more expensive than the gas that was being piped in from Russia. And of course, the only way that gets there is through shipping. That fuel has to be liquefied, brought over. And then of course, there's a whole other process of refining it and that's all very carbon intensive and it very emissions intensive. And not to mention the fact that it is expensive, really expensive compared to natural gas. So that on its own, you know, it's gonna set them back on their climate goals. But at least they've been able to store a lot of this fuel to get them through the winter. Will it be enough? We shall see. And all of them have said that that's going to be close. The crisis is not over and they're definitely hanging on down the edge of their seats, given what's happening here. So what else is complicating the situation over there, right? Naturally, it's there by which they can get. Of course, a lot of the cost is being offset by subsidies. So these subsidies, whether it's a government bailout or in some cases Germany, for example, these bailouts constitute almost 7% of their GDP. That is considerable for a country like Germany. And other countries out there are still within single digits of other GDP when it comes to these government bailouts. But ultimately this will not be sustainable. Hopefully this armed conflict will come to an end and hopefully they'll be able to buy fuel once again from Russia. But this is a clear warning and a lesson learned of relying on a nation state that isn't always the friendliest when it comes to political issues. This also points out the other challenge, right? When it comes to portfolio diversity, if too much of your fleet is reliant on one single type of fuel, right? They got lucky. They were able to like use LNG and in place of their natural gas. Mind you, that wasn't a seamless transition. That probably has quite a bit of tweaking to get down at the plants to make that work. And I'm sure that has an issue on the maintenance cycle for all of those different units. But that being said, they're able to keep the lights on. Ultimately that is gonna present a problem down the road when it comes to maintenance issues or breakdowns or even overhauls that may accelerate that cycle forcing those outages a lot sooner. The other challenge that they're facing of course is the fact that they've had to bring some of the coal power plants back online just to be able to meet these demands. That's usually to the chagrin of a lot of the climate activists. But at the same time, it's either that or you end up without power. Well, of course they can always wear warmer coats but that's not usually an acceptable solution. Definitely when temperatures plummet and you have a vulnerable population in some cases, right? So, and on my final point here that I wanted to make this would be a little bit more in depth is the fact that France for the most part has a lot of nuclear power that fortunately they were able to sell the electrical output of those plants to the rest of Europe. However, a lot of those plants usually answer their maintenance cycle on these parts of the year and they're out for maintenance or refueling. So that once again limits the output they can generate. But this is not for the winter. And as I mentioned earlier, this is a warmer than usual season. So, and then they've had a drier than usual season. So what impact does this have in the near term and for the rest of the year? Well, one problem that we're seeing is water levels in some of these rivers, right? With the Danube or the Rhine even, you know that they have record low levels. And of course this is also seen in some of the reservoirs or some of the hydroelectric power. How's this gonna impact them coming into the spring of the summer, right? Well, it's already impacting them now because they don't have enough to run some of those hydroelectric dams to the power level they need. But more importantly is as they come into the summer, this crisis is going to extend all the way through that summer season. Namely, but because of the fact that they don't have the adequate water levels in some of these reservoirs, but also for the nuclear fleet, you have this warmer than usual water temperature in some of these rivers or bodies of water that they used for cooling. So as the cooling temperature is warmer than expected, the output of the plant is gonna be slightly lower than it's normally forecasted. So again, it's got another slight loss in the output of electricity for some of these generators. So this of course has brought up a lot of conversation, right? Regarding what's happening with their climate goals, clearly this proves to be quite a setback and it could be into the many years, perhaps a decade further than they had hoped. So again, another problem, right? Geopolitical crisis then again, leads to a climate crisis or an exacerbation existing climate crisis. But many are saying that this is an opportunity to revisit and rethink how we are approaching this whole energy and treating it as a national security priority, no longer a climate or economic, well, firstly it's an economic or infrastructure asset, but rather treated as a national security asset, both in Europe and pretty much in every nation in the world. For them having adequate energy that's affordable and reliable is of national security importance. So this is an example of that. So how do we achieve that? And I mentioned this before in previous episodes, right? Where it's like usually it's diversification, right? Don't rely so much on one type of fuel, don't rely so much on renewables, don't rely so much or don't rely exclusively on one or two types of resources. Renewables are great and the battery storage is great, but they have their own will not save the day. In fact, in some cases they are not as reliable as we had hoped. And to the fact that they tend to be a little bit more expensive than some of these conventional generating facilities. So it's great that we're adding them and it's great that we're deploying them as the economics of it makes sense, but to rush full speed ahead at any cost is a very dangerous and unreliable place to put ourselves in as we just saw when it was happening in Europe. So what are some of the solutions that we're looking at? And one example, for example, is bringing it back here to the US, right? Is right now Bill Gates is considering West Virginia to expand some of its nuclear energy efforts, right? And a lot of these are, of course, those small modular reactors. We're gonna see quite a few more of those pop up everywhere and we're about maybe three to five years away until we begin to see what acceptance of this. So that is something that is coming. I think Europe is gonna have to change the attitude towards nuclear energy, especially the fact that here we're really behind and Europe has done a good job of keeping up with the technology and challenges there. France has done a great job, in fact, France is fully embraced in nuclear energy and they're all the better for it in this particular instance, right? Germany probably will reverse some of those decisions when it came to nuclear energy, much like, for example, California did, right? They had one power plant that was shut down with the Alvo Canyon and they reversed that. And now, of course, it's a whole other challenge of government subsidies in the state to keep it running because it was no longer economically beneficial for the Pacific Gas and Electric to keep it online. So now they're being kept online thanks to help from the state because simply there wasn't enough supply to justify taking it off, right? So examples like those, right, where they're considering different types of generating resources, right? The other interesting thing is that the small modular reactors, right, can also bring power to isolated communities and the need to build large transmission lines, transmission facilities may be a thing of the past, given the fact that now you can actually build one of these SMRs in a rural community and have it be completely isolated without the need for all this huge infrastructure that goes into it. So for them, they can actually be on their own and reliable, but also if anything happens to them, they will not have a negative impact on the rest of the grid because they are indeed isolated. Eventually though, as these different small little communities with their small SMRs begin to grow, they will most likely become where they're connected and the compliment and contribute to the overall grids and maybe even go hand in hand with some of these are renewable projects that often find themselves in far off rural areas that are mostly uninhabited. For example, those is in New Mexico, Arizona, some of the deserts of California, right? So that's an example of some of those regions like that that require a lot of transmission lines to get that power back, whereas having an SMR somewhere, it's just meets that need right away and it's clean and it's fully modular. So as the fuel is expended, the whole modular can be extracted and then replaced with a new module, which is the size of a small shipping container. So this is something you may see throughout, not just the US, but you may start to see this throughout Europe. I know that China is working on this quite extensively. They've got like nine different types of technology that they're currently working on in parallel. So they're definitely ahead. I know that Korea has recently working on the nuclear reactors both in the UAE, which is Dubai. And then of course they're going to be the ones working in the nuclear reactor for Saudi Arabia. And there's more to come. So those are the large-scale reactors. Most likely they will also get into the whole business of doing the smarter ones and maybe even micro with the reactor in some cases. So different options here. Energy storage of course is a huge importance right now. The problem is that with some of the current technology is they have a limited number of cycles and the charge rate is much slower than discharge rate. So in those cases, you know, they're still developing that but one of my previous shows I had somebody here from Energy Storage Systems, ESS, where they have the an iron salt water battery system that seems to be pretty reliable and sustainable and has thousands of cycles. So of course when you're dealing with the utility size and weight is not an issue. You can be as heavy as it wants as it needs to be. It's not moving, it's just there to provide energy. So the problem is they try to apply automotive or even electronic device battery technology to utilities and that becomes extremely expensive. And mainly because of the fact that it's a technology that was designed to save space and weight, not really efficiency right in this case. So we should be seeing more of that as well. Now, when it comes to looking at changes, right? When we're looking at problems with some of these issues, I mean natural gas on its own has had its supporters and detractors, right? I mean, here recently we are unrelated to the change in Europe, but here recently we had a challenge right to the fact that I'm sure that made the news where it's like a certain federal agency wanted to ban gas stoves. And it's a good number of households in the U.S. And I'm sure many households in Europe use natural gas stoves for cooking. And then of course a lot of furnaces and heaters are also fueled by natural gas. So that's an example, right? Where now it's like coming to the U.S. for example, the natural gas of course became a flashpoint for the cultural wars once again, right? Trying to ban a gas stove for the sake of cutting back on emissions of course sparked a whole new debate that of course forced that part of the government to back down. So this became quite a contentious issue. And in no doubt, I'm sure Europe is going to face the same problem, right? At some point they're going to try and ban gas fire appliances, which of course we met with some severe opposition. But their role towards complete electrification is moving a lot further ahead in this case, especially when it comes to cooking and household appliances, but at the same time, for them that'll be something that is looking, again, the cost of energy in Europe is far more expensive per kilowatt hour compared to the U.S. in general or the average cost. So that's another thing to consider. For example, they're asking these consumers to give up inexpensive appliances and then swap over to electric appliances that will of course, the costs are huge. So the only way to make that happen really is to provide some kind of like subsidy or stipend to be able to get this done, which is of course would be another issue that may or may not be sustainable given the head they've had with this crisis, this energy crisis they just faced in Europe and they are still facing right. One of the things that I remember seeing myself here, I mean, and with everything else, right? You're looking at prices, I mean, price of energy impacts or price of everything else, where it comes food, transportation of course, and all these other different commodities that we didn't take for granted on a day-to-day basis, it gets expensive though. I mean, basically a simple loaf of bread has now almost doubled in price, especially in France, right? One good example of that was they were talking about the baguette. The French baguette is now, for example, there are shortages for some periods of time, but now of course the price of that is impacting, for example, these food distributors, and of course the consumer itself at the end of the day has to buy food, which is usually prepared, usually using energy from natural gas. So again, that has an impact. So as we can see that this crisis will be felt by Europe well into the middle of this year or towards the end of the year. Going back to the funding, right? Aspirating costs for securing energy supplies and cushioning consumers from price spikes, right? This is just an article from Bloomberg that I was reading. So Germany has allocated 264 billion euros. That's 7.4% of the GDP. The UK has allocated 97 billion, that's 3.5% of their GDP. Italy has allocated 90, that's 5.1%, then France 69, that's 2.8%. The Netherlands is 43 billion, almost 44 billion, and that's 5%. And of course Spain, that's on the list, as they've allocated 38 billion, and then of course that's 3.2%. But Germany was the one that was hit the hardest with this, right? And 7.4% of the GDP is quite a big percentage of subsidies, right? To be able to absorb these energy spikes to keep it low for consumers. So again, this is not really sustainable and it's really stretching their fiscal capacity, right? Through this rest of the year. So it's definitely something that we're concerned with and going forward is something that I'm going to probably report on again, maybe in a few more episodes. How do we as, I guess as consumers in the US, when it comes to energy, right? Well, it's a matter of understanding, right? Knowing how the grid works, knowing how the energy mixes work. Now at HSIs, industrial skills training, one of the skills we teach is power system operations, whether it's for system operators, dispatching the grid, understanding reliability and there we help train operators, engineers and even planners to be able to prepare for these particular changes. One of the things that we've seen, right? With legislators or even policymakers, a lot of times is that they don't understand the system they're affecting. And usually some of this training becomes very beneficial to them. So at least understand what an energy mix even means, what reliability even means. So again, I encourage you all to visit hsi.com and go into their industrial skills tab to learn more about the training we offer, specifically on the power grid and training system operators as well. So all right, well, thank you. This is all I have for today. I look forward to seeing you all again in two weeks from now in the next episode and if you have any questions, go ahead and please add some of the comments and I'll try and get and respond to them as soon as I can. Thank you all and have a wonderful evening. Bye-bye. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.