{"id":9634,"date":"2025-07-03T14:36:42","date_gmt":"2025-07-03T18:36:42","guid":{"rendered":"https:\/\/www.fundamentalanalytics.com\/?p=9634"},"modified":"2025-07-03T14:36:42","modified_gmt":"2025-07-03T18:36:42","slug":"energy-transition-and-electrification-part-i","status":"publish","type":"post","link":"https:\/\/www.fundamentalanalytics.com\/ar\/energy-transition-and-electrification-part-i\/","title":{"rendered":"Energy Transition and Electrification, Part I"},"content":{"rendered":"\n\n\n
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Dr. Ken Rietz<\/p>\n

This is the first of a 2-part commentary, due to the extensive material to be covered. The second part will be distributed during the week of July 14. This commentary will cover energy transition and the importance of electrification. The second part will deal with the impact of this transition on crude oil.<\/p>\n

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Electrification is the process of transferring every other energy to electricity. An obvious example is to move from gasoline-powered automobiles to EVs. There are a number of advantages to doing this. There are also disadvantages, and I will cover both. My intention is to be even-handed with the topic. But before I get started, here is the graph of the front-month futures of NYMEX natural gas, which is the acknowledged competitor to electricity.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Figure 1: Front month futures prices of NYMEX natural gas<\/p>\n

We begin with energy transition, which here and most places means changing electricity generation from fossil fuels to renewable sources. There are automatically several advantages of this. First of all, fossil fuels are environmentally hazardous, generating carbon dioxide. Beyond that, fossil fuels are inherently limited; we will eventually run out of crude oil, for example. You don\u2019t want to base your source of energy on something that will disappear. The alternative is growing: renewable energy. There are a lot of options: solar, wind, hydroelectric, and geothermal are the main ones. Diversifying your sources of energy generation is prudent. Let\u2019s take a closer look at hydropower, the most common renewable energy source globally. China, India, and the US are the three most productive users, in that order. Chinese\u00a0hydropower accounted for 1.44 terawatts<\/a>\u00a0of global hydropower generated in 2024, which provided a considerable stabilization in turbulent energy times. It is the only renewable power that has some power storage capability: using excess power to pump water into a high reservoir and then drawing that water to run turbines to generate electricity during higher demand times.<\/p>\n

Everyone who has investigated green energy transition by 2050 (which means zero net carbon by then) says it will be horribly expensive,\u00a0from $4 trillion to $4.5 trillion<\/a>\u00a0according to Wood Mackenzie. This is obviously a gigantic amount of money. But environmentalists point out that the alternative is extinction. Extinction is an event that is sufficiently far in the future that it can easily be minimized, but that is hardly a rational thing to do. Instead, what are the shorter- term advantages of electrification? There are many, such as immediate transfer between places over high-tension lines, universal usage, security using multiple generators, reduce reliance on fossil fuels. and increased efficiency in some situations. These are indeed admirable qualities.<\/p>\n

But there are also drawbacks, usually not mentioned by environmentalists. You must use electricity as it is generated; storage of electricity is difficult and not scalable; the grid is a single point of failure (e.g., EMPs); and electricity is generally less efficient and more expensive than natural gas. While solar power, for example, does not produce greenhouse gases while in use, both the production and disposal of solar cells are highly polluting. Similar things can be said about wind power and hydroelectric power.<\/p>\n

Let\u2019s look at electricity storage in more detail. Sufficiently large-scale battery systems are still not in use, though several cities have that as their goals. But the cost, the large area needed, and monitoring (lithium-ion batteries have well-known safety problems) can be overwhelming. One reason for the popularity of hydropower is that the electricity production can be delayed by pumping water uphill, described earlier. But that can require huge amounts of water storage high above the generators. Many areas of the world can\u2019t do that, either for lack of access to that much water or uncooperative terrain or weather.<\/p>\n

Ignoring the drawbacks is as problematic as ignoring the problem, and solving any of them is<\/p>\n

difficult. But again, when faced with extinction, the drawbacks would likely be a lesser problem. The drawbacks are only presented because these are the challenges that alternative energies need to address.<\/p>\n

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How can you trade renewable energy? The commodities are free: light, water, wind, geothermal heat. There is no market for these. MIT\u2019s Technology Review describes the electric future as being almost unstoppable, so investing in these fields should be profitable. But watch the market carefully; it tends to be a volatile one. Another approach is to invest in a company attempting to solve one or more of the drawbacks listed earlier.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>","protected":false},"excerpt":{"rendered":"

Dr. Ken Rietz This is the first of a 2-part commentary, due to the extensive material to be covered. The second part will be distributed during the week of July 14. This commentary will cover energy transition and the importance of electrification. The second part will deal with the impact of this transition on crude […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9634","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9634","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/comments?post=9634"}],"version-history":[{"count":1,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9634\/revisions"}],"predecessor-version":[{"id":9635,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9634\/revisions\/9635"}],"wp:attachment":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/media?parent=9634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/categories?post=9634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/tags?post=9634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}