OPTO Sessions

Nuclear is Better than Solar: Doomberg Joins OPTO Sessions

Doomberg, one of the most successful financial Substack newsletters, joins OPTO Sessions to discuss the case for and against investing in renewable energies, including solar, hydrogen and nuclear.

It’s easy to get confused about renewable energy investment.

Doomberg, a top financial Substack newsletter run by “a small team of entrepreneurs" from the industrial sector, joined the OPTO Sessions podcast this week to explain why.

The site recently published three hard-hitting articles on the topic of renewables, one of them titled: ‘No, Solar Isn’t Cheap.’

“[We] kind of gave away the secret in the title,” says Doomberg. “When proponents of solar and wind talk about the relative cheapness of those technologies, they are almost always conflating short-term spot market prices for electricity and the long-term average delivered cost of electricity to consumers.

“And inevitably, whenever you introduce intermittent sources of energy, like wind and solar, they are not introduced in a vacuum, they are added to a pre-existing grid.
“A grid must be perfectly balanced between supply and demand, which is actually quite challenging to do.”

On sunny or windy days, other power sources (such as natural gas, coal or nuclear) must be turned down, which bumps up other costs, explains Doomberg.

The upshot? “The more solar you introduce into a grid, the more expensive the electricity becomes.”

A case in point, claims Doomberg, is the famously sunny state of California. “You would think that their electricity bills would be the cheapest in the country. And instead, they're the most expensive.”

“Nuclear is expensive today for a variety of reasons, most of which are political”

There are further technical and economic hurdles for solar. One is the cost of battery storage. “Once you include the amount of batteries you would actually need to properly back up a grid, if you allocate that to the cost of solar…it becomes prohibitively expensive.

“The totality of all of the grid batteries installed in the US today, I believe, could back up the grid for eight minutes. In theory, you would need days and days of backup for cloudy periods and winter doldrums.” Additionally, the return on investment for battery owners can be hard to visualise.

Elsewhere, there’s the thorny question of solar subsidies and how they distort the energy market. Doomberg makes no bones here: “I’m not sure that there is a proper way to subsidise solar. Our general view is it’s not really needed if your sincere intent is to decarbonise the electricity grid, because there’s an obvious way to do that. And that's through nuclear power.

“In almost every instance, solar is sort of a low-entropy parasite onto a grid.”

Is Natural Hydrogen Power the Future?

While not as well-known as solar, natural hydrogen is a carbon-free energy source that deserves attention, as Doomberg argues in one of its recent articles: “The point was to debate with ourselves and with our subscribers as to whether it was something or nothing.”

As a flammable gas, hydrogen combusts with oxygen to make water, releasing energy in the process. However, Doomberg highlights: “Deep underground, there are vast amounts of naturally occurring hydrogen that can, in theory, be drilled for.”

If this store was tapped into, “we could have an abundant supply of carbon-free energy”.

Doomberg does acknowledge concerns about safety (hydrogen is highly explosive) and range, but point out: “We drive around cars with flammable gasoline in them, and we drive around long-haul trucks with compressed natural gas in them. These are unsolved problems. And Toyota [already] has a very nice, regular-looking, hydrogen-powered internal combustion engine.”

The biggest hurdle for harnessing geological hydrogen as a fuel, says Doomberg, is simply that it hasn’t been done before. However, the landscape is already shifting. “A number of companies are actively exploring this”, and there are “miles and miles” of hydrogen pipeline in areas like the Gulf Coast supplying refineries.

Hydrogen can be generated from water or natural gas, but these methods are likely to be more expensive and inefficient. “Why go through those steps if you can just drill for it? And it’s there.”

Doomberg points to rapid recent innovations for extracting shale, suggesting hydrogen could follow a similar path.

“In almost every instance, solar is sort of a low-entropy parasite onto a grid”

“I wouldn't rule out 10 years from now, when we look across the potential for game-changing energy revolutions, that natural hydrogen will look much more realistic and exciting to us than fusion, for example.”

Nuclear Eclipses Solar, Says Doomberg

Last but not least is the subject of nuclear power as a clean energy source, something Doomberg is unabashedly bullish on.

“Nuclear is expensive today for a variety of reasons, most of which are political.”

If companies and governments can change the narrative regarding nuclear, there may be a game-changing opportunity. “The thing about nuclear, though, is, once it’s built, it’s good for 80 years — you’re getting carbon-free, relatively cheap and reliable baseload power.

“All the things that make solar expensive make nuclear cheap, because it’s very easy and predictable to incorporate a nuclear power plant into the grid as long as it’s not being disrupted by intermittent sources like solar.”

In other words, the outlook for nuclear, if Doomberg is correct, may be far sunnier than it is for solar.


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