Is the energy crisis going to get worse?

Wednesday 9th Mar 2022, 12.30pm

Over the past year, we’ve seen our energy bills reach unimaginable heights. The war in Ukraine is having devastating effects for Ukrainians and creating ripples for international fuel costs. We’re now in the midst of a ‘perfect storm’ when it comes to energy supply – but where are we in the story? Is the energy crisis going to get worse, and what are the potential solutions to bringing those prices down? We chat to Phil Grünewald who considers the current situation a wake-up call to improve our housing stock, diversify how we heat our homes and to use new and sustainable fuels that could change the geopolitics of energy for good.

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Emily Elias: There is an uneasy feeling when your energy bill comes through your letterbox. There’s that moment as you break through the envelope and question: “How bad is it?” You unfold the paper and realise, “Oh, yes, it’s bad.” On this episode of the Oxford Sparks ‘Big Questions’ Podcast, we’re asking: is the energy crisis going to get worse?

Hello, I’m Emily Elias, and this is the show where we seek out the brightest minds at the University of Oxford and we ask them the big questions. For this one, we’ve reached our energy research extraordinaire.

Phil Grünewald: Hi, Emily. I’m Phil Grünewald. I’m an energy researcher at the University of Oxford, with a particular interest in energy demand.

Emily: Last time we talked to you, we were actually talking about how our energy consumption was changing during lockdown. What can you tell us about the last couple years? What has it looked like for consumers using energy at home?

Phil: Yes, it has been fascinating, hasn’t it? We’ve been able to see how energy-use patterns have changed during lockdown in particular, and we’ve seen how disruptive it has been for electricity demand in particular. We’ve seen real changes there, where people used more evenly throughout the day and then less in those critical evening peaks.

That was the story for electricity. For gas use, which we principally use for heating, the story has been slightly different. We’ve actually seen less change there. One hypothesis is that people are less readily playing with their heating controls. Even though they’re working more from home, they don’t really dare to touch the settings and make fundamental changes.

Emily: What stage would you say that we’re at in the energy crisis?

Phil: If what we had was a perfect storm, then we’ve got a perfect storm plus. In the last year, we’ve seen energy prices reach levels that we never thought possible. On top of all that, we now have the Ukraine crisis, which has driven them even further.

Emily: So, pretty bleak, then?

Phil: It might be a wake-up call that we long needed. We’ve been dependent on gas supplies for some time, and we’ve always meant to wean ourselves off gas. So, if ever there was a wake-up call, this probably is it.

Emily: Is energy now an economic issue, or has it become more a political issue in the last few weeks?

Phil: Yes, energy is both economic and political. The economics, obviously, we see every day, with rising energy prices. That puts pressure on all sorts of other aspects of the economy, but ultimately it is so political. Our energy independence is something that will keep ministers awake at night.

When the chips are down, it is political decisions that make sure that we don’t run out of supply. The lights going out is the ultimate fear. Luckily, at the moment, that doesn’t seem to be a problem for the UK. The supply, because we’ve got quite a diverse set of vectors that come to the UK with liquefied natural gas, for example, we don’t need to necessarily worry about running out of fuel, but the price is something that we’re very much exposed to.

That also becomes political because it is voters who are now increasingly getting pretty spicy bills for their energy use into their homes. There are some important questions to be asked.

Emily: What has been going on with these prices? I mean have government interventions done anything to change the on-going crisis?

Phil: Yes, the prices are worrying. The prices have gone up last year. We haven’t actually seen most of that yet, because the price caps are only just about to be lifted. That price cap was quite controversial at the time, and now we suddenly find it’s a lifesaver for a lot of people to not be immediately exposed to high prices, but that will change. The price cap is being reviewed regularly. This April we expect it to go up, so with that will come even higher bills.

The expectation is that energy prices are not going to come down anytime soon, so the government’s response to this energy crisis has been to offer people a £350 rebate: basically, money off their energy bill. The trouble is that that’s only borrowed, so we’ll have to pay that back in over future energy bills.

Even though the hope is that energy bills in future will be lower so we can afford to pay it back, there’s a very good chance at the moment that energy bills will stay high for some time. So, it’ll just add even more to future bills. Really, what we need is a fundamental change of our energy dependency and help people to get to sustainably lower bills.

Emily: What does that look like? How do we do that?

Phil: I think there are three things we need to do. Number one – and this is an absolute no-brainer – is we need to insulate our housing stock better. The second thing we need to do is diversify how we heat our homes. At the moment, it’s predominantly gas. We need to find alternatives to that. Then, ultimately, we need to get away from gas altogether and find sustainable sources of energy, be that electricity or other vectors.

Emily: When you say, “Diversify,” what kind of power sources are we talking about here?

Phil: The big debate at the moment is whether we want to go electric or hydrogen. There are strong views on both sides that one is the solution or the other. Quite frankly, I think we probably need a range of solutions so that we’re less vulnerable to disruptions in supply.

Hydrogen could be a very neat way to heat homes. You could use them in boilers, not unlike we do at the moment. We’ve already got a gas infrastructure that some people would love to keep in good use for those solutions, but then the same question arises: where do you get the hydrogen from?

That’s where there might be a slightly bigger solution. If we go back to the energy crisis and the origins, is that we are somewhat exposed to gas price and gas supply. The UK is actually not so exposed to supply issues, because, unlike Germany and much of Europe, we’re not fed by pipelines. We get our gas through liquefied natural gas, LNG, that can be shipped from anywhere to the UK. So, we don’t so much need to worry about getting our supply.

The trouble is we’d have to pay for it. When the prices go up globally, then we will also face that global price, but the principle of shipping energy around the world, that’s really powerful because you can tap into the global market. You’re not, like with a pipeline, locked into a bilateral trade, which we’re currently seeing some countries are getting a bit nervous about.

One way to maintain that very nice property of gas as being something that we can ship around the world could be done with hydrogen, except that hydrogen is quite difficult to liquefy, and difficult to store and transport on ships. But what you can do is you can convert your hydrogen into ammonia, using something called the ‘Haber-Bosch’ process.

Then that ammonia can be shipped readily around the world to when and where it is needed, and then you convert it back to hydrogen or combust it directly. Then you’ve got a very neat alternative and a future fuel.

Emily: Where would we get all this ammonia from?

Phil: Yes, that’s a beautiful thing. Once you’ve got something that you can ship around the world, you can choose where you want to manufacture or generate the energy. The obvious place to go, for example, with solar photovoltaics, which have come down in cost so fantastically over the recent years, is to go where you have the most sun and the cheapest available land.

That suddenly shifts the geopolitics fundamentally because you can go to places like Sub-Saharan Africa, where previously you couldn’t really have benefited from the renewable resource that they have, but with ammonia you could just put your renewable solar generation to make ammonia wherever it’s cheap and land is available.

As I said before, the beautiful thing is you’re not locked into a trade. So, these countries, for the first time, could somewhat more freely choose who they want to sell their energy in the form of ammonia to, because a ship with ammonia can choose to go anywhere. You typically go where the price is right, so you have slightly more market power.

There’s some real potential that this could change the geopolitics of energy and empower some of those countries that could very well do with a bit of a boost in benefiting from their renewable resources.

Emily: When could we start seeing ammonia being shipped around the world as a source of energy?

Phil: Yes, the timing is interesting because, so far, we’ve always thought of this as a slightly long-term solution. Hydrogen is expected to become a major player from, say, 2030. Those grander visions for ammonia as a global fuel, they tend to talk about 2040, 2050, but I think the dynamics might have changed just in the last few weeks. The political motivation to do something, to have an alternative fuel that is consistent with our climate goals, might have just gotten quite a major boost. With a political will, I think these things can happen much, much faster.

Emily: In the short term, then, what can we do, with everything being so messed up?

Phil: The usual response is, “Shop around for the cheapest supplier,” but, quite frankly, that changes nothing, does it, because we’re still using the same energy, ultimately, because they all come from the same sources of gas and grid electricity?

What we can do ourselves, I suppose, is try to have a look at our energy needs. Heating is one of the really big ones, so have a look if there’s anything you can do to improve the energy efficiency of your home. We still have a lot of draughty homes. We’ve got a lot of poorly insulated homes, so that’d be something that is worth having a look at. See if you can get advice for your home.

I’m hoping that some of the work that we’re doing here at Oxford is to learn from smart-meter data, to see if that can inform us what the most immediate actions are that people can take to reduce their energy use, because, remarkably for the 21st century, but we’ve got very little visibility of what we’re using energy for. So, ‘better feedback’ is my mantra here. Hopefully, smart-meter data will help us with that.

Emily: This podcast was brought to you by Oxford Sparks, from the University of Oxford, with music by John Lyons and a very special thanks to Phil Grünewald. Tell us what you think about this podcast. You can find us on Twitter. We’re ‘@OxfordSparks’. We’re on Facebook, Instagram, wherever the cool kids hang out. We also have a website: ‘’. I’m Emily Elias. Bye for now.


Transcribed by UK Transcription.

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