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The Value Perspective Podcast episode – with Meredith Angwin

04/05/2022

Juan Torres Rodriguez

Juan Torres Rodriguez

Fund Manager, Equity Value

Andrew Lyddon

Andrew Lyddon

Fund Manager, Equity Value

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Hi, everyone. This week, we are continuing our occasional ESG miniseries and are delighted to welcome Meredith Angwin, a chemist who throughout her career has worked on numerous projects to lower pollution and increase reliability on the electric grid. She has always been a massive advocate for nuclear energy and, more recently, has become an author – and Shorting the Grid: The Hidden Fragility of Our Electric Grid is one of our new favourite books. Andrew Lyddon (AL) and Juan Torres Rodriguez (JTR) sat down with Meredith to discuss the role of nuclear in the modern energy transition discussion and its relationship with solar, wind, hydro and fossil-based energy, including some of the myths that surround each fuel type. Enjoy.

JTR: Meredith Angwin, welcome to The Value Perspective podcast. It is a pleasure to have you here. How are you?

MA: Fine, thank you. And thank you for inviting me.

JTR: Andrew and I are very happy to talk to you today. We both read your book, Shorting the Grid, and it is a fascinating topic with so many things to cover. Before we go into that though, for the benefit of our listeners, could you please introduce yourself and give us a little bit of your background?

MA: My name is Meredith Anglin and I am a chemist – by training and by what I did during my working life. I was a chemist on utility projects and I was one of the first women to be a project manager at the Electric Power Research Institute, which is a research institute sponsored by the electric utilities in the US – mainly to do projects that will benefit all the utilities so that, for example, every utility is not doing its own corrosion control project.

That was actually one of my expertise areas – corrosion control – and I also worked in pollution control. I worked on pollution control for NOx [nitrous oxides] at gas-fired plants; for sulphur oxides at coal plants; for H2S [hydrogen sulphides] for geothermal plants; and then corrosion control in nuclear plants. And, having dashed around between all these different technologies, I became very pro-nuclear.

I spent most of my life around Palo Alto, which is where the Electric Power Research Institute is located, and when I moved out to Vermont in semi-retirement, I began being supportive to our nuclear power plant, Vermont Yankee, and writing a blog about it. In doing so, I had to blog about its interactions with the grid operator and so I began learning about the grid.

This was in 2010 so I have been studying the grid for the past dozen years and I became one of the members of the coordinating committee for our grid operators’ consumer liaison group and so forth. Unfortunately, when I tried to explain things about the grid to people, it was very long-winded because it is very complicated – there are layers and layers of people responsible for this and partially responsible for that. And I ended up writing a book about it because what I learned was the grid was becoming more fragile – it would be taking less and less to lead to rolling blackouts. So I guess that is it. The book is Shorting the Grid: The Hidden Fragility of Our Electric Grid.

JTR: It is a fascinating read but you have also written another book – this time on nuclear?

MA: Yes, Juan – it is called Campaigning for Clean Air: Strategies for Pro-Nuclear Advocacy. When I was defending Vermont Yankee from people who were saying it should be shut down – unfortunately it did get shut down – but when I was doing that, I noticed the anti-nuclear people were all over their activism and their advocacy. They came to meetings in costumes, they wrote lots of letters to the editor, they shouted down other presenters – which is not what I recommend in my book! – but, meanwhile, there were a lot of people who were pro-nuclear and they were kind of shy in comparison.

So I basically wrote the book and the first half of it is how to be a pro-nuclear advocate, if you are shy! How to be a pro-nuclear advocate from behind your computer – writing letters to the editor, getting a group together to write letters to the editor, going to meetings – maybe not, if you are too shy – and other things you can do to support the plant. And also to have fun while doing it. I mean, the nuclear advocates tended to be very serious – let’s make sure we have every fact right – and meanwhile the anti-nuclear advocates are like, we are all going to wear skeleton costumes this time! So I I just wanted to get a little more evenness between the two groups.

JTR: Before we go into the discussion about the different technologies in power generation and the different fuels options out there – and I am sure Andrew is very keen on getting your thoughts there – maybe it would be a good idea to explain exactly what the grid is, how it works and the main energy sources that feed it?

MA: OK. The grid is the connections between the power plants and the end-users – at least that is what I consider it to be. Obviously, it also contains the power plants and the end-users but my emphasis was a lot more on how it is connected up and how, for example, power plants are dispatched. Right now, most grids in the world are maybe 80% or 60%, fossil fuels and there is a lot of talk, if you read the popular press, about how renewables are growing – and they are.

But when you get right down to it, if you put renewables and hydro together – and some people feel you should not add hydro to that – they are less than 20% of most grids, which means there is a fossil grid out there. I am not saying that is a bad thing but when people begin saying, oh, we are just at a breaking point – we are just at the point where it is all going to be clean renewables – I am like, actually, renewables have some problems, just like every other kind of power plant there is, and they are not going to be very good for 100% of the grid because many of them turn on and off when they want to.

So if you have a windfarm and there is more demand on the grid, you cannot have the grid dispatcher calling up the windfarm and say, hey, give me some more – get that wind going. You cannot turn the wind on. So basically, the power plants you can turn on and off, those are the backbone of the grid and the others are not so much.

Now, there are grids that have very low carbon contents and one of them is France, of course, which is 70% nuclear. And then Ontario is a wonderful mix of nuclear and hydro. So when people go around saying we need to decarbonise the grid, there are grids that have done this – but they are not grids that depend on wind and solar. They are grids that depend on nuclear and hydro and that is just a fact.

And all the percentages of how renewables are growing does not change the fact that that is what is happening. When people talk about a grid that is mostly wind, they are actually talking about a subset of a grid – for example, they might say, oh, Iowa has a lot of wind on its grid. Well, yes, but the Iowa grid is not just Iowa. The Iowa grid is the whole Midwest and when the wind in Iowa dies down, there are gas-fired and coal-fired power plants just sitting there waiting to take up the slack.

AL: Hi, Meredith. I just wanted to pick up on one of the comments you make in your book about gas – some of the issues with gas power – because the usual narrative is we get to some renewable low-carbon place one day and gas is basically the backbone of what gets us there. There were some issues you raised in your book with regard to the way gas works with the grid and some of the potential frailties of it I had not been aware of. Would you mind spelling those out because it just seems to be a very consensual view that gas is a big part of the answer?

MA: Well, a consensual view is that gas is a big part of the answer because there are two things gas can do. First, it can ramp up and down quickly so, when a cloud goes over the sun or the wind dies down, it can fill in quickly. The other thing is it is a comparatively clean fossil fuel so everybody is looking at it compared to coal – though, really, coal has been cleaned up a lot, but coal will never be gas.

The problem is that gas involves ‘just in time’ deliveries. If you have a coal plant, you have coal on site; if you have a nuclear plant, you have 18 months of fuel in the reactor. If you have a gas plant, the gas is delivered through pipelines and it shows up when it needs to show up. So you end up with a grid of power plants that are renewables, which go on and off when they want to, backed up by gas, which is delivered ‘just in time’ – and there are several problems with ‘just in time’.

The first is that this is a really important system and you do not want it to fail. And, unfortunately, there are various ways it can fail – for example, people tend to look at high demand on the grid in the summer with the air conditioners but, in the winter, there is a high demand for natural gas from homes heating themselves. The homes get first priority and so the power plants sometimes cannot get natural gas to make electricity. Unfortunately, the power plants have to make a lot of electricity in winter because many homes either use electric heat – for example, people are trying to move most homes to heat pumps, which run on electricity – or they supplement. I mean, here in Vermont, it is very cold in the winter and a lot of our homes are old. We are an old state – we have houses in neighbouring towns that were built in like 1797 or something and a lot of them are leaky. And so a lot of people use supplementary little electric space-heaters to keep comfortable in the winter. So the power plants need to put out more electricity but maybe, if they are all gas, they cannot always get the gas.

So our grid operator has gone through all kinds of shenanigans to try and solve this problem by actually paying the gas-fired plants to keep oil on site for the winter because many of the plants are what is called ‘dual fired’ – they can burn gas or they can burn oil – and they can store oil. One winter, which I documented in my book, the oil on site at power plants was down to less than one day – and, luckily, the cold moderated that day. But the power plant oil on site – even stored by our grid operator in their winter reliability programme – was diminishing.

So it is not a particularly great situation to have only minimal amounts of fuel stored on site, or no fuel stored on site. And it is kind of funny because I wrote this book on the hidden fragility of our electric grid and I used the New England example and other examples and then it was issued in October 2020. And then in February 2021, of course, the Texas grid practically collapsed and I got all these emails saying, wow, I understood what was happening in Texas because I read your book – and it actually was pretty close to what I wrote about.

The first thing was that the wind had been a huge portion of Texas and it died down. And then the gas-fired plants tried to ramp up – and succeeded in ramping up – to cover the shortfall in the wind. Except that, as it got colder, some of their valves froze, more houses began using gas and then, all of a sudden, they could not ramp up any more and they had to begin shedding load – that is to say, just cutting people off from electricity so the whole grid did not collapse. So it was a very bad time in Texas at that point.

JTR: Andrew and I wanted to ask you to highlight some of the myths surrounding the fuels that power the grid and we thought we would take turns in listing some of the key ones. You have already talked a little about gas but I am going to start with renewables. You have argued in the past, notably in your book, that there are three main issues for renewables on the grid so could you explain what those are as well as some of the fallacies and misunderstandings behind the narrative around renewables?

MA:  The first is that they are spiky – they go on and off when they want to. The sun is blocked by clouds and then it isn’t; the wind picks up and the wind dies down – I mean, there is a reason we have a phrase ‘Inconstant as the wind’ – so, basically, you need to have a back-up power for these things. Also, it needs to be a fast-acting back-up power and that is very different from what is called ‘load-following power’ – which is where there is more electricity use, say, at five in the evening than five in the morning and so the electrical load changes during the day. But generally, since there are so many people involved in setting that load – so many people turning their lights on and off and so on – it tends to be very smooth curve because of the law of large numbers. Unfortunately, though, wind can die down very suddenly, for example, so you need fast-acting back-up for renewables.

The second issue is that, you know, the sun does not shine at night and so forth and so on. That is another issue – that we do not have reliable renewable power. People say, oh, battery packs are coming in – and there are – but, at present, none of them lasts for more than four hours. And a third problem is there are issues with electric quality. There are all kinds of solvable issues in this area and I would say one of the solvable issues, which is still worth thinking about, relates to a power plant that decides to get on the grid.

Let’s say a new gas-fired plant is set to be built – when it goes to the various grid operators and licensing agencies and the public utilities commission, they will tell it to build a transmission system because it is the one causing that change so it should upgrade the grid. Unfortunately, with renewables, people can be very reluctant to upgrade the grid. When you begin talking about behind-the-meter solar, for example, people will ask, why should my house pay for a grid upgrade? It is all these other people with their solar that put the grid in a position that it needed to be upgraded. It wasn’t just my house that did it. And so there are a lot of issues even around just paying for the grid to take the renewables.

JTR: Can I circle back to something you mentioned before which caught my attention? Why do some people not consider hydro to be a renewable?

MA: In my opinion – which is not as humble as it used to be! – the whole title ‘renewable’ is a marketing term and it is not really about whether a fuel source is renewable or not. So for example, if you go to our grid operator’s page on what fuel is on the grid right now, it will have a little chart of what renewables are on the grid – and this will be separate from the main chart of what power plants are on the grid. So you might see that there is, say, 90% fossil on the grid and 10% renewables and those renewables are this, this and this.

OK – but what are they? I am going to tell you that most of the time, if the wind is not blowing strongly, most of the renewables on our grid are burning biomass and burning trash. I mean, that is it. And, of course, the trash is burned in very nice power plants that have pollution control – I don’t want you to get the impression there is a trash fire going on! But when you get right down to it, burning garbage has been anointed as ‘renewable’. At the same time, biomass is certainly very controversial because you burn a tree in four minutes but it takes  30 years to grow. So you are adding CO2 that you are not going to recapture for 30 years. So there is a lot of controversy about biomass – and, again, biomass has been anointed as ‘renewable’.

Meanwhile, there is a feeling that the big hydro plants – unlike small hydro plants – are part of the military industrial complex or something and so they should not be considered ‘renewable’. I don’t know why that is – I mean, you can have a small hydro plant and call it ‘renewable’ but a large hydro plant is not. But as I say, in my opinion, it is a marketing term and has nothing to do with how renewable a fuel source is. How renewable is our garbage? Yes, we keep making it but does this mean it is part of the wonderful course of nature? That it is a renewable? I don’t know.

AL: That is interesting because, in the UK, we have one large biomass power generator and, as you say, from their marketing materials they are obviously very keen to extol the virtues of what they do. But on the UK National Grid, they get categorised as ‘other’ rather than ‘renewables’, which I guess tells you perhaps where the grid thinks they lie in terms of being renewable or not.

MA: Well, I think that is lovely. I would love to see these things classified as ‘other’ rather than ‘renewable’!

AL: The consensual response to the points you make on the volatility of generation – and you alluded to it just now – is that, well, at some point, batteries are going to be the answer. And even if they are inadequate today, at some point in the future, that has got to be part of the solution. Now, you have talked about how inadequate they are today so will they ever be a big part of the solution? And if so, what kind of timeframe are we looking at?

MA: I am not able to project whether they will ever be some part of the solution but I would say they are not today. I was just looking up where the biggest batteries are in the world and how much power they can do and, for context, you should understand that our Vermont Yankee powerplant in this area was shut down as being non-economic because it was too small – and it made 600 megawatts of power for 18 months at a time. Now, the biggest battery I know of is 300 megawatts and can make power for four hours.

This battery is a very small part of the grid and you may say, well, there could be better batteries and cheaper batteries and so forth. Actually, the best storage – and indeed the only grid-scale storage – I know of is ‘pumped storage’. And the chances that anybody is going to let a new one be built are pretty slight because it involves digging a big reservoir in a hill near a river or a lake and putting turbines at the lake level and at the reservoir level and that becomes pumped storage. The number of people who would want to see a hill dug out like that is very small nowadays. In the old days, it was also controversial but many of them got built. I don’t think they could be built today.

One more statement about batteries – let’s say you have enough wind turbines running that, when the wind is blowing, they can make 100% of the grid’s power. Okay, isn’t this wonderful? Then you say, we will back the turbines up with batteries – what is going to charge the batteries? The wind turbine power is all going to the grid so, you are going to have to build another wind turbine next to it to charge the batteries so that, when the wind is blowing strong, you have enough for the grid and for the batteries. So now you already have a double investment – that is, you have invested capital for wind turbine number one and wind turbine number two – and then you have to buy a battery too.

So what I am trying to say is, if you look at an ordinary grid – one that has, say, a bunch of nuclear plants, some hydro, a couple of gas plants – the general rule is you look at the maximum amount of demand you expect to have on the grid and then you look to ensure capacity for 120% of that maximum amount because some of the plants may or may not be available when the maximum comes by. But, in our wind turbine example – if it was all wind turbines – you have to have 300% capacity right off the bat, right? The original wind turbine, the other wind turbine for the battery and the battery. I mean, the redundancy requirements become absolutely huge and that is one of the problems people do not address when they go, oh, well, we will have some batteries.

JTR: One thing you mentioned in your book about batteries that really caught my attention was how people have tried to improve the technology around battery storage for decades. Over the last few years, it has become so in vogue to think, well, the technology might not be here now because no one has come up with a solution yet but maybe they will in the future – but you made the point this is a problem that has confounded people for generations.

MA: Absolutely. When I entered the field of energy, I was very much interested and active in geothermal energy because my PhD thesis – which I did not complete – was on mineral chemistry. I was totally into mineral chemistry and ‘rock hounding’ and I thought the best thing I could ever do in the world would be to work in geothermal energy. When I began working on it, which I hate to tell you was in the 1980s – and before you do an estimate on my age, I will tell you, I am in my 70s! – one of the first projects we put together was a huge battery test facility. And they have been doing these kinds of things for 40 or 50 years now and batteries do not improve very much.

I don’t ever say there cannot be a breakthrough. But it is one thing to say, I hope there is a breakthrough, and another thing entirely to say, we are counting on the breakthrough and it is going to happen. That is like asking for miracles. Breakthroughs do happen and steady work can make them more likely to happen but that does not mean they are going to happen.

JTR: You have referred to this whole topic as the folklore of batteries, which I thought was a nice way to put it, and argued that even those who are very pro-environment know batteries are not the solution.

MA: Well, if you talk to people who are actually active in utility stuff – grid operators or people like me who has spent most of their life trying to solve corrosion and pollution problems for various types of technologies – we have a great deal of scepticism about batteries. But if you go to, say a renewables advocate, they will say, oh no batteries are coming right along. It is a belief system, in my opinion.

There is no, oh, this battery is going to do it – they just made a breakthrough. It is a belief system. I am sorry to say that but it is and sometimes it bothers me because the people who have actually worked in the area and who are sceptical are considered to be somehow wrong – you know, don’t you even hope for the future? Yeah, I think it would be great if we had a lot more nuclear plants – I hope for that! But I am not supposed to hope for that, I am supposed to hope for batteries. I don’t know ...

AL: You have hinted – well, more than hinted – that you are pretty pro-nuclear. People are very quick to bring up the obvious drawbacks, or the perceived drawbacks, of nuclear power but are there more subtle or nuanced drawbacks you would draw our attention to on the subject?

MA: I don’t know. I mean, from my point of view, many of the drawbacks people talk about are kind of subtle. Like, for example, every now and again, someone will say to me, how can you be in favour of nuclear? Don’t you understand the nuclear waste or spent nuclear fuel will be radioactive for hundreds of thousands of years? And I say, yes – and how long will the mercury in coal ash be dangerous? Forever? In other words, if people say humans have never had to deal with something that is dangerous for 100,000 years, I will say, yeah – usually they deal with something that is dangerous forever.

But I suspect the anti-nuclear feelings have more to do with nuclear bombs – at least in people my age. My mother was very active in ‘Ban the bomb’ groups – and that was good because they were doing atmospheric testing all over the place, which was not a good thing to do. The trouble is that some of those groups, when atmospheric testing stopped, just moved on over to trying to ban nuclear plants. You know, they ran out of one thing and onto another and they did not really spend any time thinking about the fact that nuclear made very clean, available power. As a matter of fact, at the time my mother was walking around with the ‘Ban the bomb’ groups, [US environmental group] the Sierra Club had a slogan, ‘Atoms, not dams’, because dams disrupted the ecosystems of rivers and areas near rivers and they led to more evaporation from the big ponds that are just open to the sunlight, instead of rivers, which have some shade sometimes.

So they were, like, ‘Atoms, not dams’ – but nowadays, they like, oh wait, we can do little dams on all the streams and that will be good, or we can do wind turbines on all the hills and that will be good. Anyway, I wish I could tell you some disadvantage to nuclear that has not already been trumpeted and exaggerated by the anti-nuclear people. There are disadvantages, but there are so many anti-nuclear people who will exaggerate them that I don’t know what to say.

AL: OK then, to flip that question around – what are the positive aspects of nuclear that you think are underappreciated by the public?

MA: Well, I think one of the things that is underappreciated by the public is how little fuel is needed and how easily you can site a nuclear plant. So, for example, if you want a hydro plant, you have to start with a river. If you want a nuclear plant ... I believe the biggest nuclear plant in this country is Palo Verde, which is in the Arizona desert and uses wastewater from Phoenix as its cooling mechanism. So nuclear plants can be sited in many places.

Another thing is the amount of waste involved. Any process is going to make something you want and something maybe you don’t want. It is a relatively simple analogy but, if I am cooking, I am going to have to clean a pan afterwards – the process made food but it also led to something I would rather it didn’t. Anyway, the amount of fuel needed is very important. We had a coal plant near us – it is still there – Merrimack station in New Hampshire. It was 400 megawatts and, in order to produce at full power, it needed 40 coal cars of 100 tonnes of coal each. That is each day – and they made ash and they made CO2 and they made many things people really didn’t want them to make. Think about those 40 coal cars – each day.

Meanwhile, over at the nuclear plant, two semis pull up every 18 months with fuel for the next 18 months.

Think about the difference in what has to be stored and what has to be dealt with. Because if you think coal ash is fun stuff,  I would like to say it is not – it has to be taken care of carefully. OK, sometimes it is sold as an additive for concrete – I don’t want to say every bit of it is waste product – but there are a lot of coal-ash ponds in the US and they just consist of coal ash in a reservoir that is always kept wet so it won’t fly around.

JTR: Correct me if I’m wrong but I think one thing that has kept people away from nuclear over the last 12 years is the risk of an accident happening at the plant or the plant’s security measures not being good enough to contain an accident. The Fukushima accident in 2011 really changed perspectives on that risk and, more recently, when Russia attacked very close to a nuclear plant in Ukraine, that also made people very scared.

MA: Well, I think Russia attacking nuclear plants could be very scary but, assuming one country actually wants to conquer another country, I think it would like it to be usable when they finish. So the chances of them really trying to make a horrible mess with a nuclear plant seems small. Also, nuclear plants are very hardened – their containment measures mean you could hit them with a plane and they will stay in one piece.

So people say, what if the 9/11 terrorists had gone after the Indian Point nuclear plant? Well, they were never going to because when they hit a skyscraper, they could cause a lot of damage; if they were to hit the Indian Point nuclear plant, their plane would fall apart on the containment dome, which is heavily reinforced and tested against all kinds of attacks. They wanted a sure win – that is why they didn’t do that.

JTR: I have made this point before on another podcast but I read this joke – at least I think it was a joke – but there was some reality in it. So someone was saying, if it wasn’t for all the anti-nuclear protests in the 1970s, and 1980s then, from a climate-change perspective, the world wouldn’t be in the situation it is today. Probably there would be more nuclear around. So how did we get to this place and how can we change the narrative around nuclear?

MA: Well, I think that statement about the 70s and 80s is absolutely true – and it is hard to change the narrative. The people who are changing it, though, are young people. I said before, I am in my 70s and I have white hair – and I just want to say it is the young people who are changing it because they are the ones who have the future ahead of them. They are the ones who, when someone says, oh, we cannot fight climate change with nuclear, they reply, why not? Meanwhile people who grew up with the threat of a nuclear bomb or whatever, they are like, let’s just rid the world of anything nuclear – that would be so great.

Part of this comes down to laws and regulations and part of comes down to the nuclear industry. Nuclear has to be more open. It has to have tours of the power plants. It is very hard to get a tour of the power plants nowadays and I think that leads to terror. If I drive by a federal prison, for example, I think I know what goes on in that prison because I have seen movies set in prisons! And if you are not someone like me, who has visited nuclear plants and tested water at nuclear plants and so on, you have no idea what is going on in that nuclear plant – except that it looks pretty scary. Look at it – look at the barbed wire around it.

So we have to do more ... not so much educating people but letting people educate themselves – having people tour nuclear plants; having days when people who work at nuclear plants go to their kids school and talk about careers in nuclear; having days when people who are in medicine talk about the importance of nuclear medicine and nuclear imaging. I think the narrative is going to change and I think younger people will do it but it has to be at the grassroots level. There are a lot of people my age or a little younger, who are really entrenched in their anti-nuclear stance – I mean, it is part of their vision of themselves. And how are you going to change that?

AL: So let’s say, Meredith, you get put in charge of everything and you get to tell the young people what they should and should not do – which I am sure is a position you would relish! – what would your strategy be in terms of getting from where we are today, with the energy mix we have, to where we might want to be in the future, while navigating those trade-offs between stability of the grid and carbon emissions? What would your plan be?

MA: Well, the first step of my plan would be to keep all existing nuclear plants running – unless they are not capable. At Crystal River in Florida, for example, they attempted to make a change, which actually kind of wrecked the plant. But most nuclear plants that are running – just keep them running. The second step would be to build more nuclear plants at the sites of existing nuclear plants because the substations are in place, whatever water supply is needed is in place – everything is in place there.

Then the third thing would be to have advanced nuclear plants, which can, among other things, use fuel from the existing nuclear plants and generally expand nuclear greatly. Now you may say, OK, you want a 100% nuclear grid? No, I actually don’t. I think it is good for a grid to be varied and so I would like to see a grid that has some natural gas and some solar – maybe even some wind, although wind tends to blow at night, so it is not as useful to the grid. Still if it blows a higher portion of the day, then that could be good too.

So I would tend to say a grid with existing hydro, existing and newly built nuclear, fast-response natural gas, solar. I mean, that would be a really nice grid and it would meet all our different needs for power at night and high power demand at times when it is cold out because you would not be using the gas plants for everything. Right now, more than 50% of the power on the New England Grid and on many other grids is natural gas. So you need a lot of natural gas. But if you have nuclear running at the base load – that is, the amount of power that is used 24 hours a day is filled with nuclear – then you will only have natural gas filling the load-following peaks and you would not need as much of it and you would not have some of the problems with winter reliability.

JTR: In your book, Meredith, you make the point you are pro-environment and, at one point in your career, you took on a job to help get more renewables online. Somehow, over the last couple of years, however, the narrative has evolved and the debate around climate change has become more heated and much more polarised. People are now taking very radical positions, with a lot of white and black rather than the shades of grey that would be more suitable for such a complex topic. In your book, I think you had to make the point you are pro-renewables as well as pro-nuclear – that you are not against renewables, it is just that the way they work from a physics perspective and the way the grid operates makes them suboptimal. Is that correct?

MA: Yes. I am in favour of renewables when they are planned for and you know how much you are going to need and so forth. I mean, you would not decide to have all one kind of plant or another kind of plant on the grid without running scenarios and thinking hard about it – yet people are just like, oh, we are going to have 100% renewables. Well, maybe we should have 30% renewables, 50% nuclear and 20% natural gas. I mean, think it through – think what the grid needs and then put the renewables on.

JTR: Another surprising point you make is that having renewables as part of the system does not mean the environment will get cleaner because you will need another plant – usually powered by a fossil fuel such as gas – in place to support the grid when those renewables are not operating. On top of that, you also make the point that, in some cases, there is even a fallacy about prices going down.

MA: Oh, prices would not go down because you need too much redundancy when you have a renewable grid. You just look at it and you say, a regular grid is 120% installed capacity while a renewable grid has to be what – 200% or 300%? I mean, prices cannot go down if you build in that much.

But, yes – I guess the thing is I don’t like the idea that renewables will automatically clean up the grid. They will clean up the grid, if they are used properly. One of the problems is that ... well, let’s say you have a car and you drive it very conservatively because you are concerned with your gas mileage. But then you give it to your teenage kid who is a ‘lead-foot’ and they dart away from the stop sign. The car that has to accelerate fast is going to use more gas per mile than the conservatively driven car – and the same is true for gas turbines.

If they have to ramp up and down quickly because of the sun or the wind, they will not be as efficient. So if you look at pollution, it may actually be worse because you are using more gas per kilowatt/hour. What I am trying to say is, people make the assumption that, if you just put some renewables on the grid, you are going to have less pollution – but that depends on how many you put up, what pollution you are trying to control and how you are managing your backup gas plants.

AL: In terms of the pathway you laid out, we are often cognisant when we have these discussions that some of the big moving parts here are in emerging or developing markets. Is there anything different you would recommend for those markets because of the situations they are in or because they do not have the legacy of the same kind of grid we do? Is there anything different fundamentally different in the way they should be doing things?

MA: I follow [US journalist] Robert Bryce on this. I don’t know if you know him but he has written some books and made some films, including the documentary Juice: How Electricity Explains The World. And I think, if you are an emerging nation, you should use anything you can. I mean, if that is coal, that is coal. I mean, while I would like to see India swearing off coal from the point of view of air pollution, I don’t think I have a right to tell India – where people have great difficulties just getting through their days – to swear off coal.

On the other hand, if a rich country like the US or Britain, wanted to help build a lot of nuclear plants in India, that could work too. I mean, that would be great! But the thing is that coal is what brought the western countries out of poverty. I am not a fan of it – like I say, I was working on sulphur oxide pollution control as well as nitrogen oxide pollution control anyway and coal makes sulphur oxides, which you have to control.

But first things first. There is a Berthold Brecht line I like, which goes: “For even saintly folk may act like sinners, unless they’ve had their customary dinners.” And I really feel very strongly that that is the case and we should not be telling people who do not get a good ‘customary dinner’ how to behave.

JTR: Meredith Angwin, thank you very much for coming onto The Value Perspective podcast. We could keep you on for hours discussing these issues but it has been a real pleasure.

MA: Thank you very much for inviting me and I really enjoyed the questions.

Author

Juan Torres Rodriguez

Juan Torres Rodriguez

Fund Manager, Equity Value

I joined Schroders in January 2017 as a member of the Global Value Investment team and manage Emerging Market Value. Prior to joining Schroders I worked for the Global Emerging Markets value and income funds at Pictet Asset Management with responsibility over different sectors, among those Consumer, Telecoms and Utilities. Before joining Pictet, I was a member of the Customs Solution Group at HOLT Credit Suisse.  

Andrew Lyddon

Andrew Lyddon

Fund Manager, Equity Value

I joined Schroders as a graduate in 2005 and have spent most of my time in the business as part of the UK equities team. Between 2006 and 2010 I was a research analyst responsible for producing investment research on companies in the UK construction, business services and telecoms sectors. In mid 2010, I joined Kevin Murphy and Nick Kirrage on the UK value team and manage the European Value, European Yield and Global Recovery funds.

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