The Energy Trilemma

Energy Security

The International Energy Agency (IEA) define energy security as “the uninterrupted availability of energy sources at an affordable price”. Energy insecurity occurs when there is a deficit, where the amount of energy consumed is greater than the amount of energy produced. Energy insecurity can be created by geography, lack of wealth, over-dependence on other countries, stretched supply routes and poor management.

Whilst short-term energy security focuses on the ability of the energy system to react promptly to sudden changes in the supply-demand balance, long-term energy security in line with economic developments and environmental needs. As the power sector pivots to decarbonise with the rapid growth in renewable sources and increased digitalisation leading governments, industries, and other stakeholders to improve their frameworks for ensuring electricity security through updated policies, regulations, and market designs.

Electricity's share of final energy consumption is set to grow to replace fossil fuel sources. Its contribution to global energy has increased from 15% to 20% over the past twenty years and will rise to around a quarter by 2040. Electricity underpins the activities of the residential, commercial, and industrial sectors. As electricity drives increased shares of heating, cooling, transport and digital sectors of communication, finance, healthcare etc., there is a need for increased resilience and security of sources.

Electricity security is the system's capability for uninterrupted supply by withstanding and recovery from disturbances arising from equipment failure, fuel supply shortages, operational planning issues, human error or deliberate, malicious attacks.

Affordability

It is a national government's responsibility to ensure that its entire population can access and afford energy. Much of energy policy becomes centred around affordability due to political incentives and is the reason why many energy markets and utilities are forced into competition; to maintain fair prices for the public. However, this position is complex because energy has traditionally been a major source of tax revenue to many national economies, helping to fund national socio-economic infrastructure.

Some energy sources have a cost directly linked to rate of consumption. Others might have high initial capex costs but then their marginal cost of energy produced might be low and almost at no added costs for extra energy created. Zero net energy schemes may be affordable on the grounds that have no net energy demand external to their system. Energy prices have been rising around the world as supplies are tight as industries resume activities after Covid lockdowns resume operations, and as a knock on to events in eastern Europe.

Environmental Sustainability

With the recognition that greenhouse gas emissions drive climate change and are harmful for the planet, there is an urgency to wean ourselves off our high-carbon fossil fuel dependency. Given that oil, gas and coal currently contribute over 80% of the world's energy needs, the task to convert to Clean Energy is huge and will not happen overnight. Whilst the low-carbon energy sources, vectors and wind and solar power, biofuels, blue and green hydrogen, carbon capture, use and storage (CCUS) technologies needed to achieve the decarbonization all exist today, the challenge is to deploy them at scale, an appropriate pace and at a cost that does not impose fuel poverty on communities.

Given there is still a need for oil and gas for decades to come, albeit it at a much-reduced level, it is crucial for the industry to decarbonise through electrification, use of geothermal technologies and reduce the carbon footprint by indigenous production rather than imports. Investigating the role that gas may play as a cleaner transition fuel to replace oil and coal sources is also in-scope to address the energy needs in securing a Just Transition for developing countries whilst reducing their higher carbon footprint.