Inside Energy Episode 4: Securing The Future Energy Supply

19 April 2023

Over recent weeks we’ve been delighted to share episodes from our Inside Energy series with you, which look at specific – and highly pertinent – topics associated with the Energy Transition.

We’re pleased to share the latest in our series, in which our Founding Partner Jerker Johansson and Associate Juan Mahler Llado offer their take on the subject of Securing the Future Energy Supply.

In this fourth episode, they discuss topics ranging from energy efficiency to nuclear and look at how we achieve a balance between decarbonisation and stability in energy supplies over the coming decades.

Read The Full Transcript

Frazer Blyth – Director of Investor Relations & Marketing: Welcome to Bluewater’s fourth episode of inside energy. Today I’m joined by Jerker – one of the founding partners of Bluewater and Juan, who is one of the associates in the investment team. Today, we’re going to talk about energy security, and how that’s come to the forefront of many discussions. Energy security, it seems to be one of these terms that’s suddenly common to everybody’s language and you know everybody’s talking about it. Energy security is that a mix of all energy types? Is that a balancing of that?

Jerker Johansson – Founding Partner: I think that it is a question of having a wide variety of sources of energy. The difference between the different countries is really remarkable and if you look at Scandinavia, we are essentially independent of any hydrocarbon resources other than for transportation. 

Frazer Blyth – Director of Investor Relations & Marketing: So, this energy security is a focus of these different countries and regions, kind of looking inward and saying where’s my energy coming from?

Juan Mahler Llado – Associate: Decades of underinvestment in the overall energy sector not only a specific type of conventional or renewable energy, but on the global energy sector and an infrastructure, which has caused the end consumer to have to pay up much more for energy and hence these price caps that we’re seeing in the UK.

Frazer Blyth – Director of Investor Relations & Marketing: How does energy pricing, what difference is going to happen with the consumer market and with the industrial market, Jerker? 

Jerker Johansson – Founding Partner: Well, I think the consumer will face a higher proportion of their income going to energy in the future. The fact that oil and gas, which is part of the energy supply system and the part that really has seen a huge increase in prices, but the fact is that is also creating an umbrella for the growth of renewables. Because in a way the absolute worst thing that could happen is low oil prices and ample supply, because then you would have very hard competition for the renewables. 

Frazer Blyth – Director of Investor Relations & Marketing: Jerker, can I bring you back to a bit of how different countries are going to deal with this energy security issue? You know, let’s take Africa, booming population, maybe not as well developed as some other countries. How is that going to pan out?

Jerker Johansson – Founding Partner: In a way in Africa, we have the opportunity to build a sustainable energy system. Renewable opportunities in terms of sun, wind and so on. But let’s hope this time we build it with a backbone of steady energy supplies at the same time as relying on an energy supply that goes up and down all the time when the sun goes down and when the wind stops blowing.

Frazer Blyth – Director of Investor Relations & Marketing: I believe gas is now being considered as a green fuel?

Juan Mahler Llado – Associate: Gas was classified as a transition fuel in the U.S last year. As we’ve transitioned in Europe towards the security of supply rhetoric, we have seen gas being classified as a transition fuel in Europe as well.

Frazer Blyth – Director of Investor Relations & Marketing: How much greener is gas than oil? 

Jerker Johansson – Founding Partner: I mean, it’s about 25 percent less CO2.

Frazer Blyth – Director of Investor Relations & Marketing: So, it’s a fair reduction?

Jerker Johansson – Founding Partner: Yeah, it’s a fair reduction.

Frazer Blyth – Director of Investor Relations & Marketing: What other ways can we affect this? You know energy efficiency, what does that actually mean?

Jerker Johansson – Founding Partner: The energy efficiency improvements are the lowest hanging fruit there is in terms of achieving a lower emission. Many studies have proven that this is where you have the lowest cost per unit of reduction of CO2 emission. When we look at studies that have been made, how do we get to the 2050 goals, the largest contributor is energy efficiency.

Frazer Blyth – Director of Investor Relations & Marketing: Recent energy security and nuclear seem to come back to the forefront. You’re talking about timing. How quickly can we turn on more nuclear?

Juan Mahler Llado – Associate: Large scale plans, at least 10 years. 10 to 20 is what we’re seeing. There’s a lot of technological advancements around nuclear and small modular reactor technology, which are quite exciting. Those lead times are much slower, and they can be produced in an industrial process, a more standardized process and roll them out much quicker. But I think that we won’t be seeing those at an industrial scale for six to seven years at least. 

Frazer Blyth – Director of Investor Relations & Marketing: What is the optimum solution between now and 2050 to tackle decarbonization, but also to make sure that we’ve all got the energy we all want to use on a daily basis? 

Jerker Johansson – Founding Partner: When we’re starting today, we’re probably starting with broadly 80 percent hydrocarbon resources (oil, gas, and coal) and 20% renewables. I think that the important question is – what are we investing in now? That would be a totally different mix. So, we see more than a third of it coming from energy efficiency, a little bit less than a third would be renewable sources and then the remaining will be continued investments into oil, gas, and nuclear. And especially gas and nuclear will provide the stability that allows us to grow renewables. 

Frazer Blyth – Director of Investor Relations & Marketing: So, lots of activity tying into where the opportunities are, we have to be aggressive on efficiency, bridge the gap to renewables and that’s just what you’re seeing?

Juan Mahler Llado – Associate: I think that each country will be able to reach this gap in its own way. Because Jerker alluded to, each country has different resources. But we all need to do it in a way in which we make sure that we don’t cause too many fluctuations in the energy pricing. This was evidence here in the UK, when the wind was not blowing during the winter and prices went five times what they were the previous day.

 Frazer Blyth – Director of Investor Relations & Marketing: So, Jerker, Bluewater, is your team positioned well?

Jerker Johansson – Founding Partner: Yes, I think we are. And the reason why I say that is I think that we have the expertise and that is why I look into the future with some confidence. And where I think that we will continue to be able to make good investments, good profitable investments, and things, as I said, which are very necessary for the overall economy.

Frazer Blyth – Director of Investor Relations & Marketing: Gents, listen, thank you very much for your time today! It’s actually been really interesting. Good insights into energy and I’ll let you get back to your day jobs now. Thank you!

Juan Mahler Llado – Associate: Thank you!

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