Green energy’s success requires rethinking power grids

If countries like Sweden want to power the green transition AND be globally competitive, they’ll need a new mindset towards infrastructure and local production.

Few nations have a better reputation for green energy than Sweden. It famously reached its goal for all energy consumed in the country to be 50% CO2-free by 2020, eight years ahead of schedule in 2012. Today, more than 60% of its power is generated from renewable energy sources. And the largest economy in the Nordic region plans to expand its clean energy production in the coming decades to meet demand for electricity that’s projected to triple current levels.

However, according to Polar Energy Solutions CEO Per Langer, there’s a critical component missing from the Swedish approach, one that’s indicative of what many fail to see about green energy. He highlights how current operating and maintenance expenses for power grids — grid costs — are either on par with or higher than the costs to produce electricity and that they’re rising.

“If the trend continues, grid costs will be double or triple the cost of electricity before 2030,” Langer explains. “But the current mindset isn’t to try to minimize grid costs. It’s to optimize the production. The wrong thing is being optimized, and the public needs to wake up to that fact. We need to pay more attention to this to stay competitive.”

“We need to go from centralized systems to decentralized systems”

More than twenty years of experience in the energy sector — including a series of executive roles at the Scandinavian electric utility Fortum and leading a variety of transformative initiatives around the world — has given Langer an unparalleled understanding of the industry as it faces the challenges of the green transition.

Already elevated by digitization, global electrical consumption will grow even more as the world decarbonizes and industries become more sustainable through electrification. For Langer, energy systems like Sweden’s won’t be able to meet the rising demand for green energy without a fundamental change.

“We need to go from centralized systems to decentralized systems regarding the security of supply during peak load — when grids experience maximum demand for electricity,” he says. “And that means adopting new technologies and new ways of thinking on how to optimize electric power systems.”

A solution that isn’t nuclear power 

Green energy technology has reached a tipping point. It’s now cheaper to produce electricity from renewable energy sources, like solar and wind, than from fossil fuels and nuclear power. This has transformed green energy from something optional to a cost-effective necessity.

“Before, we said we needed to use renewable energy because it was better for the environment. Now, we have to because it’s the cheapest way to produce electricity,” Langer explains.

But there’s a tradeoff to using renewable energy. While solar panels and wind farms don’t contribute to climate change, they also don’t produce consistent power outputs. The sun goes down at night, and sometimes there just isn’t enough wind. Sweden and other countries plan to add more nuclear power plants to produce base loads — continuous and reliable power outputs — to close the gap from intermittent renewables.

Langer explains that the real issue lies in the fact that a centralized system addresses capacity problems by designing and defining the infrastructure for transmitting and distributing power according to peak usage. It’s something he equates to “building a road so all the cars can drive on it at the same time.” As for solving renewable energy’s intermittent gaps using nuclear power? “That’s a bit like trying to run a taxi business with a bus.”

Instead, Langer advocates for localization to play a much bigger role in energy infrastructure. Moving more power production to the local level via renewables close to where there’s demand, he argues, can boost base loads for peak usage. For most of the world, this can be done with solar panels. But not for places like Sweden and Northern Europe. Regions dominated by cold weather and long periods of darkness will need to rely on a coherent strategy that mixes renewables like wind turbines with energy storage, demand flexibility, and more. And new technology like CO2-free hydrogen power can be expected to add more layers of sophistication in the years to come.

“If you were a municipal power company or a local utility, you could handle your peak energy usage yourself. But that’s only 5% of the time. The other 95% of the time, you’d give customers access to cheap renewables,” Langer explains. “You switch to a decentralized system, where authorities like Svenska kraftnät give local grids the responsibility of fixing their worst hours of energy usage because the cost to fix them in a centralized system would be too much.”

“When electrification comes, it’s crucial that electricity has a globally competitive price.”

A country like Sweden can meet its green energy goals without switching to a decentralized system with optimized power grids. However, Langer warns the resulting energy costs will prevent it from competing economically with the rest of the world.

“From a GDP point of view, electricity is around 2%. So, it doesn’t seem to be the biggest issue. But it’s very important if Sweden wants to focus on energy-intensive industries. Enabling green electrification for an industry requires a cost-competitive price,” he explains. “When electrification comes, it’s crucial that electricity has a globally competitive price.”

Helping minimize grid costs and optimize the price of electricity for customers are essential aspects of Polar Energy Solutions’ efforts under Langer’s leadership. As the part of Polar Structure centered on the energy sector, it invests in and manages energy solutions for industries, municipalities, and local utilities. But does so in ways that allow communities to be part of the green transition and stay competitive in a global energy market.

“This isn’t one giant step. It’s a million small steps,” says Langer. “And Polar Energy Solutions is about ensuring those steps are in the right direction and then helping our partners take them.

To learn more about how decentralized energy solutions can drive the green transition while optimizing costs and enabling global competitiveness, visit Polar Energy’s website.