Interesting Twitter thread on the impending European power grid “catastrophe”. Tangentially on topic as BHE constitutes a large part of the US power grid.
"So now, we have a dilemma that needs urgent addressing by policy makers. The perception of the people (at least in Europe) is to get rid of hydrocarbons while the reality is that those same people do not reduce hydrocarbon consumption. Meanwhile, the hydrocarbon industry is an extractive industry that needs US$ 300 billion of re-investment every year just to keep production flat. However, we will consume more, not less hydrocarbons in the future, and if only because the world population is set to grow to as much as 12 billion people. Yet, the industry invests not even half the necessary amounts while OPEC cannot compensate global under-investments for long. The implications for oil and gas prices will become ever more dramatic. In fact, higher oil prices will likely shorten global economic cycles from so far 6-9 years to more like 3 years because overshooting prices will cause recessions. We like to call this part “Fossilflation”
Here is the big difference to the 1970ies. Europe is also in an electricity crisis. Take German baseload wholesale prices for November. They currently stand at €700/MWh and should be €50. Of course, European politicians love to blame Putin for this. That is only half of the truth. Yes, because of the war gas-fired electricity generation has the highest cost in the so called “merit order system” of the European electricity market that prices all atoms according to the price of the highest cost generation. However, it is also true that by shutting down dispatchable baseload-critical nuclear and coal power facilities and replacing them with intermittent renewable energy sources such as wind and solar, Germany left itself - and by extension the entire European Union - vulnerable to electricity shortages and higher prices.