Energy Demand is the new Supply

There is an issue that doesn't get enough attention. The world keeps talking about how we need to rapidly increase the rollout of green energy. This is important - one of the best ways to decarbonize is by replacing fossil fuel sources with solar and wind. But only focusing on supply ignores the quickest and cheapest solution to a big problem.

Issues with Russia

Russia is weaponizing its energy supply to Europe. As much as we'd like to, it's not so simple as just turning off the tap. Certain industries cannot survive not having access to a supply of gas. In Germany, for example, there are glass furnaces that require a constant supply to be able to function. These cannot simply be switched off, or the molten glass will get stuck. Europe must avoid significant weakening of the economy, it's not politically feasible.

Recently, German Energy and Economics minister: Robert Habeck called on Germans to "Cut Energy use", Specifically, asking German households to "Make a difference".

With that in mind, an interesting fact is that the average indoor temperature in the UK in 1970 was about 12C, according to the BBC.

Imagine if by wintertime, and Russia hasn't yet capitulated, Europeans collectively agreed to wear a sweater indoors to help the situation. 65% of household energy use in the EU is used for indoor heating. A little bit of temporary discomfort could go a long way. Better yet, a massive push towards heat pumps and improving insulation. The Americans have in June invoked something called, "The defense production act" to boost the production of heat pumps and insulation - it's as if they too are at war.

The biggest issue with looking towards renewable to fix the situation is the variable nature of those resources. It's a simple fact that the more wind and solar installed, the more variable the supply of energy becomes. We're entering a very interesting time for renewables, for the first time, with increasing energy prices and decreasing costs, battery storage is economically feasible. The importance of this fact cannot be understated. The main issue with massively deploying batteries is a supply chain issue, not an economic one. However, there is a cheaper and easier way to solve demand without needing to store energy.

Enter DSR

The nerdier and less sexy sibling of batteries is demand-side response. Rather than storing energy, creating a system that can interrupt the demand for electricity by responding to decreases in supply. The problem is not trivial, take for example a factory with large electricity-consuming devices, interrupting the supply of electricity means that production will stop for a time. When timed correctly with maintenance intervals, or being able to shift workers' tasks, the solution can work. In other industries such as cold storage - it is easier to set parameters to temporarily limit power while maintaining the right temperature.

Perhaps it's time for a massive call-to-arms push toward Europe-wide demand-side response as a means of fighting both climate change and energy insecurity.