Sponsored Content
Russell Waite, of Affinity Private Wealth, explains why the transition to greener forms of energy is likely to be a lengthy – and turbulent – process, with a few backwards steps along the way
THERE is a fair chance that, if you are planning a break in London, your to-do list may include visits to renowned landmarks such as the Tower of London, St Paul’s Cathedral and Buckingham Palace.
Perhaps you will also indulge in a spin on the London Eye, treat yourself to some retail therapy on Oxford Street and enjoy the bright lights of the West End. But while such attractions continue to draw in the crowds today, in the 1880s, it was a completely different area of the capital whose lights were proving something of a curiosity.
To explain further, just three years after the invention of the carbon-filament incandescent light bulb, the Holborn Viaduct power station, named the Edison Electric Light Station, emerged as the first coal-fired power station to generate electricity for public use. This was used to power streetlights along the viaduct, a novelty in a city whose other street lamps sourced their light from burning coal gas.
Sadly, these electric lamps, fascinating to Londoners who reportedly made significant detours to witness the display, remained in place for just six months. The City of London Corporation could not sustain the higher cost of powering them and reverted to gas lamps. In fact, the power station lost so much money that it closed just four years after opening.
Why recount this story?
For us, it is a powerful reminder that energy transitions are far from “smooth” and, even when an alternative technology brings with it clear advantages, other factors can get in the way. This backwards step in the transition of energy in the late-19th century resonates with today when economic pressures, coupled with geopolitical issues, are impacting progress in the journey towards net zero.
Russia’s invasion of Ukraine forced many European countries to rewind the clock where power supplies were concerned, as the natural gas on which they had previously relied was no longer available. In response, Germany temporarily reopened decommissioned coal-fired power plants in a move which a report by Energy Brainpool, commissioned by Green Planet Energy, says released an additional 15.8 million tonnes of carbon dioxide into the atmosphere.
While Germany is unlikely to resort to such measures again, as it has successfully secured alternative gas supplies, the impact of this disruption has been felt in more ways than one. The environment was clearly a “victim” of the emissions from the coal-fired power stations – as were households. A year after the invasion began, domestic energy costs were said to have risen 12%.
And it is not just individuals who are feeling the strain on their budgets. Companies such as Danish turbine manufacturer Vestas and offshore wind specialist Orsted have seen their share prices fall dramatically over the past 12 to 18 months. Supply-chain disruptions and escalating costs attributable to the invasion have put pressure on the profit margins that offshore wind operators – key contributors to the energy transition story – can achieve.
Indeed, when the UK auctioned licences to develop offshore wind farms earlier this year, no bids were received because the government was not offering a high enough guaranteed price to buy the electricity from the provider. Put simply, as was the case for Edison’s power plant in the 1880s, the economics did not add up.
With the idea of an offshore wind farm off the coast of Jersey very much on the table, the economics are likely to feature highly in the debates. While some people may object to the proposal on aesthetic grounds or argue that there “must be better forms of power than a rotating blade”, we must not be distracted from the need to transition to greener power.
Where else can we see “transitions” taking place?
Interestingly, our willingness (or not) to adapt and adopt new technologies can be illustrated by looking at the rooftops of many homes. While many houses will still feature chimneys, which reflects the way in which properties have been heated over the years, it is also quite common to see television aerials and satellite dishes peppering the skyline.
Some homes, however, may not have any technology on their roofs, in which case it is quite likely their entertainment systems are wifi-based. This highlights that the way in which we access our media has transformed completely over the past 15 to 20 years. Instead of relying on traditional television signals to pick up channels, many of us are now livestreaming content at our convenience, using our mobile devices anytime and anywhere.
Yet while this change in habits has been dramatic and fast, the energy transition will take a lot longer and it will not follow a straight line. Moreover, if we want to encourage the development of a wind farm, the price of electricity will probably have to increase.
But costs have to be balanced if we are to reduce our carbon emissions. If living sustainably is too expensive, it will not happen, even if people are conscious of the need to adopt greener lifestyles. An ongoing illustration of this challenge is under way in the US where mortgage rates have reached their highest level in 40 years.
As household budgets are squeezed and homeowners find themselves either unwilling or unable to secure loans from the bank, the demand for solar panels has collapsed. A comparable scenario has unfolded in various parts of Europe, where the evolving economic landscape has stifled the demand for residential solar installations, a sector that had previously been experiencing unprecedented growth.
As the transition to green energy emerges as a key issue in the 2024 US presidential election, we should expect passionate messaging from both sides. But, while the talking and the debates continue, the road towards a more decarbonised world will remain long and bumpy.
Let’s hope we will not be seeing coal-fired power stations springing into life again in New Jersey and wonder when we might see wind turbines appearing off the coast of “old” Jersey.
