Risk managers needed in the transformation of energy markets
The big question is what role natural gas will play in the changes in the global energy market, says the CEO of MET International. György Vargha explains why it is so important to manage risks in an integrated way.
With the transformation of energy markets, the role of energy sources is also undergoing a significant change. In power generation, for example, the proportion of renewables is increasing rapidly. “However, the world will surely need natural gas as a transition fuel, as a relatively cleaner way to have flexibility in power markets,” remarks Mr. Vargha.
From an environmental perspective, eliminating lignite production is a far more pressing concern than eliminating gas consumption or gas-based power production. Lignite and gas are both providers of power flexibility, and renewables are users of power flexibility.
“As long as batteries remain uneconomical on a large scale, natural gas is the go-to transition power flexibility provider to the world,” says the CEO of MET International. Gas emits significantly less than lignite or coal. In the case of any abrupt exit of lignite-based power production, more gas-based power production will be needed. As currently there is not even enough CCGT infrastructure to enable the exit of lignite, coal-based capacities will need to be restored to support additional volatility linked to renewables.
Power grids are struggling with the surge of renewable production because it is too volatile – the weather is unpredictable and day production is very different to that produced at night. Europe will need to solve power grid stability problems even before decommissioning lignite power plants.
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