Google joins Big Tech's move into nuclear power, and other top energy stories

https://www.weforum.org/agenda/2024/10/google-joins-big-tech-move-i...

This round-up brings you the key stories from the energy sector over recent weeks.
Top energy news: Google invests in nuclear power; IEA says new 'age of electricity' is coming; China leading clean energy roll-out.
For more on the World Economic Forum’s work in the energy space, visit the Centre for Energy and Materials.
1. Google joins Big Tech's move into nuclear power
Google has signed an agreement to buy power from small modular nuclear reactors, in a move the company has described as a "world first".

The deal with the start-up Kairos Power will help Google meet the increasing demand for electricity created by artificial intelligence.

It will bring up to 500MW of carbon-free power to US electricity grids, the company says, with the first reactor planned to come online by 2030, followed by additional deployments through 2035.

Small modular reactors are advanced reactors with a capacity of up to 300MW per unit – about a third of the power produced by traditional nuclear reactors. With a smaller footprint, these plants can deliver power to areas unsuitable for larger nuclear facilities, are more cost-effective to construct, and can be deployed incrementally to meet rising energy demand.

Big tech firms have signed several agreements with nuclear power companies in recent weeks, with Microsoft agreeing on a deal that will see the reopening of a plant in Pennsylvania, and Amazon buying a nuclear-powered data centre, Reuters reports.

Nuclear power accounts for about 10% of global electricity generation today, and has "significant potential" to contribute to decarbonization in some countries, including those in the G7 and China, the International Energy Agency (IEA) says.

But it will require overcoming hurdles, from mistrust to underinvestment, writes Rafael Mariano Grossi, Director General at the International Atomic Energy Agency (IAEA).

2. IEA: 'Age of electricity' will follow fossil fuel peak
Fossil fuel demand will peak by the end of the decade, followed by a new age of electricity, the IEA has said in a release accompanying the latest edition of its annual World Energy Outlook report.

In the second half of this decade, ample or surplus supplies of oil and natural gas would likely lead to lower prices and could enable countries to dedicate more resources to clean energy, moving the world into an "age of electricity", according to IEA Executive Director, Fatih Birol.

However, for clean energy to meet accelerating demand, greater investment in new energy systems – especially in grids and energy storage – is needed, the agency said, adding: "Today, for every dollar spent on renewable power, 60 cents are spent on grids and storage, highlighting how essential supporting infrastructure is not keeping pace with clean energy transitions."

The World Energy Outlook 2024 examines three "overarching and inter-related themes", which it describes as follows:

"Energy security, corresponding to the longstanding core of the IEA’s mandate as well as the imperatives of the present given escalating risks in the Middle East.
The prospects for clean energy transitions, which have accelerated rapidly in recent years, but which need to move much faster to meet climate goals.
Uncertainty, an ever-present factor in any forward-looking analysis but particularly visible this year.”

Pakistan to reform power distribution after IMF meetings, minister says
Owais Rawda explores what the most recent request for IMF climate funding means for power sector reform.

https://www.power-technology.com/comment/pakistan-to-reform-power-d...

At last week’s International Monetary Fund (IMF) Annual Meetings, Pakistan’s finance minister Muhammad Aurangzeb requested $1bn in funding from the IMF’s Resilience and Sustainability Trust (RST) to help mitigate the country’s climate risks and accelerate its energy transition. Established in 2022, the RST offers vulnerable low- and middle-income countries long-term concessional cash for climate-related spending.

Pakistan’s power sector circular debt, driven by inefficiencies in the power distribution network, crossed Rs2.66tn ($9.5bn) in May, according to a debt report released by the government’s power division. Meanwhile, citizens have suffered significant and frequent power outages in recent years, leaving millions without electricity.

The government’s faulty capacity payment contracts with independent power producers (IPPs) have come to light as the primary source of these challenges. Interest rates borne from private IPPs have not only worsened the debt crisis but spiked consumer tariffs, making electricity unaffordable.

In light of Aurangzeb’s request, coupled with multiple IPPs terminating their contracts with the government, the South Asian nation is now likely to announce significant reforms.

“These IPP payments had a detrimental effect on the overall quality of life for our citizens,” Awais Laghari, Pakistan’s minister for energy’s power division, tells Power Technology. “It is imperative that necessary steps are taken to resolve the issue.”

Without specifying the plans, he claims that the power division is currently evaluating options “through which the fiscal burden shared by the consumer, whether through taxes or debt repayments, can be optimised through various interventions that improves household economics and consumption at the same time”.

Laghari says that there are also plans to “unbundle electricity” and create a competitive market for energy, citing the recent introduction of an independent system and market operator (ISMO) as a step in this direction.

“This will ensure that a B2B [business-to-business] market for electricity can develop, which can eventually evolve into a B2B2C [business-to-business-to-consumer] market thereby providing greater options for consumers and lower prices through a competitive process,” he says.

The minister adds that the role of renewables in reforming the country’s power market will be imperative, “given their price advantage”. He believes that their ability to generate cheap electricity will “always put them ahead in any competitive market regime, making them critical to the success of the market.”

Following the IMF meetings, Laghari says that the government plans to “move forward actively” with the privatisation of electricity distribution companies and that “necessary improvements in governance are already underway”.

He believes that privatisation can enhance the efficiency of these companies, allowing them to remain a key player in the power market, which in turn will result in more affordable prices for consumers.

“Similarly, we continue to focus on investment in transmission to remove constraints so that lower cost electricity generated in the South can be moved across the country and overall consumer tariff can be reduced.”

About the author: Owais Rawda is a regulatory policy researcher that has written about the energy and technology industries.

Pakistan’s solar boom challenges global energy assumptions - The Daily Climate

https://www.dailyclimate.org/pakistan-solar-boom-2670305662.html

Pakistan’s rapid adoption of solar energy reveals flaws in global energy demand forecasts and emphasizes the need for more adaptable energy models.
Noah Gordon and Daevan Mangalmurti report for Vox.

In short:

Pakistan has become the world’s sixth-largest solar market, with over 25 gigawatts of solar panels imported from China in three years, increasing its power supply by 50%.
High electricity costs and unreliable power grids are driving households and businesses to adopt solar, with systems often paying for themselves within two years.
Energy demand models consistently underestimate how quickly energy consumption rises as countries develop, leading to insufficient planning for cleaner energy infrastructure.
Key quote:

“Allah has given us this gift to get out of this mess.”

— Factory owner in Sialkot

Why this matters:

Underestimating energy needs in developing nations limits preparation for clean energy transitions, risking reliance on polluting sources. A realistic view of global energy demands is essential to equitably allocate resources and prevent further climate impacts.