Unpicking the Energy Trilemma
The next generation of clean energy will be the only route to a system that delivers affordable, secure energy to consumers
Modern society relies on access to plentiful energy that is secure and affordable, and the addressing of climate change requires that this energy also be clean. To succeed, the energy transition must deliver an energy system that is clean, affordable and secure.
For many years, the challenge of meeting these goals has been described as a trilemma. Energy could be clean, affordable or secure; pick any two, but not all three. While this may seem like a useful shorthand, indeed one that I have used in the past, the problem with this way of thinking is that it actually understates the problems of the energy system prior to the energy transition. As I experienced very personally as Energy Security Advisor to the NATO Commander, ever since the 1973 oil embargo battered consumers, the world had been struggling to deliver an energy system that was affordable and secure, before concerns about climate change and sustainability became mainstream. Rather than seeing the energy transition as yet another competing demand being placed upon the energy system, the technology that is now being developed to enable the energy transition could also provide the solution for a system that is secure and affordable.
The application of the trilemma framing to societal problems is often dated to Mundell’s and Fleming’s work on monetary policy in the 1960s and was given new relevance in the post-Cold War period in Dani Rodrick’s application of trilemmas to understanding globalisation. Trilemmas themselves date back to ancient Greek philosophy and Epicurus’s struggle, as popularised by Hume, to reconcile god’s omnipotence, god’s omnibenevolence and the existence of evil. In a proper trilemma, there are three possible outcomes, and any two are consistent, but not all three. Rodrik uses the example of a dry cleaner in which services can be fast and good, but not cheap; fast and cheap, but not good; or good and cheap, but not fast.
Trilemma thinking came into the energy world most notably with Shell’s 2005 global scenarios, which framed the future of the world as a trilemma among markets, community and the state. This thinking was then applied to the energy transition by the World Energy Council in the form of the now iconic Energy Trilemma, forcing a choice of any two among energy being secure, affordable and sustainable.
Unfortunately, just as in reality dry cleaning is often expensive, slow and bad, energy systems struggle to achieve any one of the trilemma objectives, let alone two of them. Prior to the energy transition, very few countries were self-sufficient in energy, and even those countries were still exposed to global oil prices. Regardless of their relative reliance on imports, all countries faced a trade-off between minimising cost and investing in maintaining stockpiles or spare capacity for use in the event of disruption. Global markets have made this trade-off more complex, lowering prices and increasing flexibility, but also allowing those without stockpiles or spare capacity to freeride on additional supply from countries that have chosen to make these investments. We have seen this with both consumers, where many countries have relied implicitly on the US Strategic Petroleum Reserve, and producers, where other members of OPEC freeride on Saudi Arabia’s willingness to maintain spare production capacity and shut-in production.
The trade-off between security and affordability extends to domestic infrastructure, and even impacts countries that are self-sufficient in primary commodities. The need to maintain the AC signal in the electricity grid at 50hz or 60hz requires supply and demand for electricity to be balanced within +/- 1% at all times. Failures of generation or grid equipment can rapidly unbalance the system. During Winter Storm Uri, Texas shed 10.5GW of demand in a matter of minutes to keep frequency in balance - but adding redundancy is both expensive and complex. In the UK, IRA plans to attack distribution transformers could have disrupted the electricity system for months while replacements were fabricated and installed.
Just as it is not possible with current technology to achieve an energy system that is secure and affordable, it does not appear possible to achieve one that is sustainable and also meets either of these goals. While individual countries have achieved high levels of renewable generation, they have done so either by being part of a wider system, the European grid, that is stabilised by fossil fuel generation in other parts of the system, or by exploiting unique local resources, like geothermal energy in Iceland. Nuclear power has promised affordable and sustainable power, but the need for dispatchable generation to balance the system, as well as cost overruns and maintenance outages, mean that nuclear has failed to resolve problems of either affordability or security. On a standalone basis, rising levels of generation from either renewables or nuclear drive a rising requirement for system balancing. Renewable generation is unpredictable and intermittent, creating the need for higher-cost fossil fuel generators to balance the grid when the wind does not blow, or the sun does not shine. Nuclear energy creates balancing problems in the other direction, as it generates a near-constant amount of electricity and output cannot be quickly increased or decreased as load changes. Meeting this requirement entails added cost and carbon emissions, and system stability is endangered if the need for balancing is inadequately addressed.
In short, current Energy Trilemma discourse can be misleading because current technology does not enable an energy system that achieves any two of the three poles of the trilemma. Instead, we are forced to recognise the true complexity of the energy system. With current technology, the best that we can hope to achieve is an imperfect and unsatisfying balance among these goals.
The so-called Energy Trilemma is not a framework for making choices. Rather, it is a problem statement for innovation: How can we develop an energy system that achieves these three mutually incompatible, yet fundamentally important, goals for the energy system?
The solution requires systems thinking and new technology. First, what fundamental characteristics would the system need to have to resolve the trilemma? Second, what technology would be needed to enable such a system?
It is widely recognised that the energy transition requires deep electrification of the economy, replacing oil and natural gas with electricity. Unfortunately, with current electricity grid technology, the electricity system is far more rigid than the oil, or even the gas, system. Hydrocarbons can be traded globally and stored until they are needed. There is no global market in electricity, however, and every grid needs to be kept in balance in real time. By shifting energy consumption from hydrocarbons to electricity, the energy transition risks exacerbating energy security challenges.
This cuts to the heart of how systems design can deliver a solution to the trilemma. If we can deliver an electricity system that is much more flexible, it will be able to accommodate much higher levels of renewables, while reducing balancing costs. This will enable consumer energy costs to fall in line with the falling levelised cost of renewable electricity. This requires taking an entirely new approach to electricity system security. Historically, redundancy and protection has been seen as the solution to electricity system security: spare generating capacity to meet demand peaks and replace losses, stocks of critical network equipment to rapidly deploy, added physical protection to shield critical infrastructure from attack or weather-related failures, and interconnections among grids to share power. These measures help to secure the rigid system, but they do not fundamentally change its nature. Moreover, all of them add additional cost, and sometimes complexity, to the operation of the system.
What would this more flexible system look like? It would need to be inherently agnostic to the nature, location and timing of supply and demand. In such a system, the network itself would be a source of system balancing and stability, rather than stability being a product of manual adjustment of supply and demand. Such an approach seems to be the most plausible route to achieve an energy system that delivers affordable, secure and decarbonised energy to everyone.
