W e are at a pivotal moment in the energy transition, balancing increasing global demand with the need for cleaner, more resilient power. Together with its customers, GE provides one-third of the world’s electricity, with an energy portfolio spanning wind, gas, grid, and nuclear, giving it a unique opportunity to help address this challenge.
During an underwriter session at the Atlantic LIVE’s “The Next Scientific Revolution” event, Scott Strazik, CEO of GE Vernova—GE’s portfolio of energy businesses, and Himanshu Saxena, CEO of Starwood Energy Group, one of GE’s customers, spoke about the breakthrough technologies that will play a key role in this new energy era and how companies, governments, and other stakeholders must work together to make it a reality.
Strazik and Saxena emphasized the changing energy landscape, saying decarbonization efforts must be ramped up at the same time as access to and resilience of clean energy. Both Strazik and Saxena agreed that a combination of energy sources and breakthrough technologies is the most effective path forward, necessitating an all-hands-on-deck approach involving everyone from scientists and engineers to governments and investors.
Their conversation, edited for length and clarity, is a reflection on the state of the energy transition today, and a look ahead to innovation and policy changes required in the future.
The demand for electricity is going to grow by 50 percent in the next 20 years. Simultaneously, we need to decarbonize the power sector, which today generates 13 gigatons of manmade carbon. How do we do those two things—electrify the world while simultaneously decarbonizing it, in a world where energy independence is becoming that much more real in light of the complicated dynamics in Russia and Ukraine? A lot of people talk about wind and solar, which is clearly critical to electrifying and decarbonizing. But is it enough?
Any day you open The Wall Street Journal, you see energy security as a primary issue. Just about a year ago, folks would talk about energy in the vein of climate change, but increasingly, it’s not just about that. It’s also about affordability and reliability. We’re going to need to think about producing abundant energy cheaply because a lot of countries need to do whatever they can to meet their basic energy demands. It’s three-dimensional chess now: Energy security on one hand, reliability on another, and climate change on the third one. And that’s only gotten more complicated in the last six months.
At Starwood, we invest in large infrastructure projects. Our portfolio has everything from conventional assets—which includes gas-fired power plants and wind and solar—to battery storage projects and carbon capture assets, renewable natural gas, renewable diesel, transmission, and midstream. My firm belief is that we are going to need all of the above: Wind and solar alone are not going to solve the problem. After 20 years of investment in wind and solar, they are only about 20 percent of the total power generation base in this country. If you adjust for how many electrons they actually produce, that number is less than 10 percent. It’s a long road to go from 10 percent to 100 percent.
Himanshu, you hit on a lot of breakthrough technologies there. What are some of the breakthrough technologies that you are most excited about and most focused on today?
We are thinking about battery storage a lot. Australia has been experimenting with installing very large batteries to balance the grid. The U.S. has been installing a lot of batteries, too. There is a lot of innovation needed in the battery storage space—battery technology has not moved a lot since its inception. If we can store energy cheaply for long periods of time—8 hours, 10 hours—we can run wind farms in the night and deliver power in the morning. If we can do that, we can go a long way towards meeting the goals that we have set up.
Carbon capture is another important breakthrough technology. We have put a lot of CO2 in the air already, and if we want to decarbonize, we’ve got to start taking it out and stop putting it there in the first place, either with direct carbon capture or installing carbon capture systems on the tailpipes of power plants or cement plants.
The third one is hydrogen. We are spending a lot of time decarbonizing the power grid. The harder problem is decarbonizing transportation; decarbonizing chemical industries. These chemical plants are heavy CO2 polluters. We need to start finding different ways of supplying energy, and hydrogen can fill that gap. Hydrogen is related to ammonia: You convert hydrogen into ammonia, ship it around the world in a sustainable fashion, and take carbon emissions out along the way. If we can do that, we help economies and decarbonize the planet at the same time.
I mentioned the 13 gigatons of carbon that the power sector generates today. Ten of those 13 gigatons are from coal power generation. When you talk about replacing coal with wind and solar and having the complementary technologies to support that last mile to decarbonize sectors, carbon capture and hydrogen are critical—and they’re both areas that General Electric is investing in substantially today. At the same time, these are areas that require policy clarity. How are you thinking about policy?
Dr. Alondra Nelson, head of the White House Office of Science and Technology Policy, spoke during the event about the valley of death between having an idea in the lab and bringing it to commercial application. But there is another valley of death: A lot of these technologies are really expensive, and private sector folks like us have to make returns for our investors. That cost gap is the second valley of death.
We saw this when wind and solar projects first came to be 20 years ago—they were so expensive that you couldn’t make the numbers work, and you needed a tax credit to help them along. The investments that have been made in the wind and solar space have been heavily subsidized through tax credits. Now, we are getting to a point where the cost of building wind and solar is very close to parity with more traditional gas and petrol.
With everything else that is mission critical, whether it’s carbon capture or hydrogen, we are in those beginning phases. We spend a lot of time with GE talking about carbon capture, and we are trying to build big carbon capture projects in our portfolio to reduce CO2 emissions from our gas fired power plants.
We need to support these technologies commercially, yes, but all of those policy-related items are going to be critical. The numbers don’t work otherwise. For example, Canada recently announced that the government is going to effectively subsidize 60 percent of the cost of installing carbon capture systems on their grid. We need similar policies in the U.S., and we need them today. The technology is here. It’s just that it’s not commercially viable yet.
It’s an exciting time in the industry: electrification, decarbonization, leveraging the existing technology. Policy clarity will help, and it’s a critical time for talent and leaders to step up.