Welcome to our members quarterly that looks at the trends that are shaping the future of energy companies today. Our approach remains to be an open source, impartial platform that aggregates content for our membership. This Quarterly Review, like the ones before it, reflect the views of our members and followers all around the world. There is a plethora of platforms that offer you on the spot news to whichever device you require. However, the purpose of all of our content is to dig beyond the IR and PR statements. We look to talk to, and about, the people at the ‘coalface’ of the industry.

This statement got me thinking about coal a little, as we host two important gatherings in Canada and South Africa this month. These are two countries where coal still looms large over the power sector.

Today we have the luxury of choosing between several direct and indirect viable energy sources. Renewables and gas are two of these, and of course historically coal has been the dominant force. The decisive question we always face is “what is the optimal energy mix”? But what influences our choices for the mix? Is it energy security? Is it cost? Zero omissions? Or is it all of the above?

We have seen throughout the Energy Council network that transformational changes are taking place in the energy system – so far, I have said nothing new to you I am sure. The transition underway goes way beyond the energy mix itself of course.

Innovation is coming more and more into the equation. We also see optimisation through digital and smart grids. Energy storage capability is advancing every day. Yet we still keep coming back to what I believe is an archaic question – renewable vs hydrocarbons.

Let’s look at the facts. To get to net zero emissions as per the Paris Accord we will need a greater share of the global energy system to be electrified. From less than 20% today to at least 50%. If we also take in to account the increased demands for energy, the power sector alone needs to quadruple in size over the next 50 years. The final piece of the jigsaw is the 80% of the energy ecosystem that renewables are currently unsuited for. Though they may argue over a percentage here or there, everyone I meet with openly agrees with the sentiment behind these numbers. They also admit that renewables can’t do all the leg work.

I therefore suggest that we reframe the question to “Gas / Renewables vs Coal”? The single biggest energy opportunity we have as a planet is the largescale replacement of fully loaded coal generation with gas and renewables. In the latter partnership it is irrelevant who the senior partner is, rather how in unison they can accelerate the journey to decarbonisation.

Renewables will indeed grow but gas flexibility and cost dynamics are compelling beyond today. Take battery storage per MWh for instance vs. the cost of storing natural gas in an underground depleted reservoir. The latter is projected to be 1% of the cost in Technology forecasts are wildly inaccurate, but that is still a lot of innovation we are blindly hoping for, to keep the lights on.

What is in the way?

In developed markets the cost of renewables has come down so quickly that it is actually the speed of change that is getting in the way. With renewables comes volatility and that requires stability. Trying to manage changes in the energy mix requires more, not less gas generation, for stabilisation. Portfolio management of more gas and new technologies such as storage and business models, are adding new layers of complexity to decision making. All of this is in many ways is preventing a new stable status quo from emerging.

We must remember that energy is regional. Disparities clearly play a role and are at the forefront of decisions made in emerging markets. Each region has an optimal ratio of gas and renewables that will act as a sweet spot for the cleanest system at the most affordable cost. Adding at low capital cost, just the right amount of supplementary gas power capacity where and when it is needed, is a route to a low carbon future. However, for places such as South Africa and India finding the best system outcome at an optimised cost is still far from clear. This core topic is a central theme at the annual Gas to Power World Congress in Cape Town.