Understanding the energy mix

To achieve net-zero emissions, there are many critical elements that need to be addressed. There is no doubt that the green transition, and finding new ways to power the world, is a must – it is something we simply must aim for in the future. However, this green transition as we know it retains some problems that are not yet solved.

As the world undergoes the green transition, it is expected that the demand for electricity will increase significantly as we look to replace fossil fuels as a source of power. Electrification will happen in many sectors: in transportation in the form of electric vehicles, and in the steel, chemical and food industries, for example, by using electricity to produce heat for processes instead of simply burning carbon-rich raw materials. According to an estimate by the International Energy Association (IEA, 2022), global electricity demand will rise by 25-30% by 2030. Accordingly, in the Nordics, it is estimated that the increase in electricity demand will be 40% higher by 2040.


Increase of weather dependent renewable energy supply

While societies are being electrified to help achieve net-zero emissions targets, the power production itself must change to carbon-neutral sources for the electrification to make sense. There are ambitious targets and massive investments ongoing in renewable power production, mainly in wind power in the Nordics (both on- and offshore). It is estimated that by 2050, the share of wind and solar power will exceed 50% of the Nordic power production supply. 

Substantial need for power storage systems

The operational principle of the power system is that the supply and demand of electricity must correspond perfectly in real time – every second and every hour. The inherent characteristics of wind and solar power is that depending on the wind blowing or the sun shining, or vice versa, we will either produce or not produce the necessary power we need.

This increasing share of weather dependent pro­duction means that in the near future we will need several ways to store an enormous amount of energy, for example in Long Duration Energy Storage (LDES), to balance the volatility. Batteries and hydrogen, as well as the demand response, are a part of the solution and the business around this industry is growing dramatically in both scope and ambition.

Far less efficient system

Since wind and solar power are dependent on the weather, the actual annual production is significantly lower than the production of old, conventional power sources of the same rated capacity. In addition, the power storage system itself decreases the efficiency of the system, with the production of hydrogen requiring energy, for example. This means that the existing renewable power technologies, like wind and solar, consequently need massive power buffer support – and at levels more than first thought. To that end, to generate the same amount of energy, we need more installed capacity.

According to calculations by the Geological Survey of Finland (Michaux, P. 2021), the replacement of fossil fuels requires more than double the electrical power capacity to be installed. Based on 2018 figures, the 17,100 TWh fossil fuel capacity that is to be phased out worldwide requires 38,000 TWh electrical capacity to replace the electricity supply, to charge the batteries and to produce the hydrogen.

Minerals are the new oil

So, the new power system will be less efficient and will require a vast new infrastructure to be built in years to come. But is it doable? There is no simple answer. But the reality is that the installation of this new, massive power system, combined with the rapid pace needed, are indeed creating some challenges.

A huge quantity of raw materials, including several critical metals and minerals, will be required to build a power system that is significantly larger than the one we have now. The number of wind turbines, solar panels and power storage batteries needed in the coming years will also need to be considerably increased and each unit will need to be manufactured from metals that also have to be mined.

This raw material value chain includes bottlenecks that are potentially difficult, if not impossible, to solve. It is agreed by the European Commission, World Bank and the IEA that based on present day capabilities, the production of raw materials is not able to respond to the quickly changing and increasing demand. There are plenty of minerals and metals in the bedrock, but the problem is the exploitability and availability. Circular economy actions are important, but for the time being there is not enough material circulating and at least the first generation of material for the new power system must be mined.

Minerals then, are the new oil: a commodity that is rare and the exploiting of it bad for our planet. So, while we are decreasing carbon emissions, are we transferring the problem elsewhere?

The role of fossil fuels

Oil, gas, and coal – the traditional and ‘dirty’ ways to produce energy are treated unambiguously as something we must get rid of as soon as possible. There is no doubt that relying on them in our power supply is not sustainable. However, considering the unsolved challenges in the green transition and its needed pace of change, it is essential to understand that it is crucial to maintain an adequate level of stable power generation resources throughout the energy transition.

Unfortunately, it seems that we won’t totally get rid of carbon dioxide emissions in power production and heavy industries in the coming decades. Therefore, it is important that carbon dioxide can be removed from the flue gas and stored somewhere so that it won’t escape into the atmosphere.

Energy mix

Humankind needs energy to power the world we live in, to meet our basic needs, but also to satisfy our wants and our must-haves. The transition will require many forms of power production in the mix, and only then can we move forward.

It is fair to say that pushing green initiatives is vital but having a realistic approach to where we are today, as well as what are the technological preconditions, is just as important.


IEA, 2022 Outlook for electricity – World Energy Outlook 2022 – Analysis – IEA


Energy Quantified, 2021 Expected consumption growth in the Nordpool areas, 2030 and beyond – Energy Quantified Blog


Wood Mackenzie, 2021 Nordic Power Markets: At The Heart Of Europe’s Energy Transition | Wood Mackenzie

Michaux, P. 2021


Assessment of the Extra Capacity Required of Alternative Energy Electrical Power Systems to Completely Replace Fossil Fuels

Written by

Netta Keski-Keturi, Property Underwriter, Chairperson of Energy Competence Center