The nuclear power generation industry is rarely front and center in the global energy transition discussion. Most of the focus has been placed on the need to develop alternative energy sources such as wind and solar, with the objectives to reduce oil and gas consumption and achieve net zero carbon emissions. This is certainly a worthy goal for many reasons but achieving this goal is being made much more difficult by the phasing out of nuclear power generation. This phenomenon is occurring not only in Europe but also here at home in the US, creating a detrimental impact on energy prices and, in fact, a greater reliance on much dirtier sources of energy such as coal.
Since 2017, there have been six nuclear plants shuttered across the country with another three scheduled to be closed by 2025. The loss of so much power generation simply cannot be replaced by renewable energy sources. This is resulting in surging energy costs as well as drawdowns in traditional energy inventories, most notably natural gas. The recent closure of a key nuclear energy plant in New York is a prime example. Not only will power generation need to come from additional petroleum resources but there will also be a need to fill the gap created with increased coal power. So, not only is the closure of a very clean nuclear plant resulting in an increase in carbon intensive power sources but it is driving costs up considerably. For the New York residents in the service area of this recently closed plant, they are seeing increases in their monthly power bill upwards of 13.5%.
It’s unfortunate that the move away from carbon intensive energy is being pushed more aggressively than the renewable markets can support. This is now being compounded by the shuttering of nuclear energy plants which, ironically, is resulting in the need for more carbon energy sources. However, this bodes well for the oil and gas industry in the mid-term. The need to fill the energy supply gaps will result in higher demand for oil and gas which is also good for our offshore vessels. Certainly the rise in oil prices and the resulting increase in offshore activity is going to continue for at least a handful of years as renewable energy sources are further developed and become more efficient.
While the dynamics of today’s energy market are good for oil and gas activity, JOO remains committed to being an active participant in the energy transition. Not only in vessel improvements, efficiencies in battery power, and even the potential of hydrogen powered solutions, but also looking to the burgeoning offshore wind industry as more opportunities are presented.