The Global Energy Drought May Herald a Future of Excess

The Global Energy Drought May Herald a Future of Excess

Our energy system is built upon a mountain of waste. Believe it or not, that’s a good thing.

Look at the journey that power takes to your plug socket from its original source, and you’ll find excess and overcapacity every step of the way. All electricity grids are designed with a reserve margin — some 10% or so in excess of expected peak demand, that can be called on in exceptional circumstances to prevent blackouts.

Before that, the coal- and gas-fired generators are also oversized, functioning barely half the time at present and only 70% or 80% of capacity when they weren’t competing so hard with renewables. The fuel that powers them also derives from operations that run with a lot of slack, with US oilfields traditionally running at between 90% and 95% of capacity and coal mines at 81% or so.

All that oversupply provides a useful function. When power demand runs ahead of forecasts, the surfeit of capacity can be readily called upon to provide additional electricity at short notice. That’s precisely what we’re seeing right now: The surging costs of Chinese coal, European gas and global crude are the symptoms of an energy system using high prices to incentivize additional