Eduardo Monteiro, Co-CIO of Victory Hill Capital Partners, outlines the key components to achieving energy security during the transition.
When the UK national grid system was created in 1926, the goal was to create a network to link power stations that were already located near demand centres. In its original form, the grid was composed of 6,400 kilometres of cables – mostly overhead – linking the 122 most efficiently located power stations.
The new system was a marvel. During the blitz when London’s Battersea Power Station could not operate, power plants in South Wales could provide electricity to meet the nation’s demands.
But when the environmental and health impacts of chimney stacks became apparent, efforts to reduce pollution in UK cities and the advent of larger power plants led to the widespread closure of inner-city power stations.
Now, most power production now occurs outside of cities, with the majority of power plants located far from demand centres. Why does this matter? One reason is that transporting electricity over long distances is extraordinarily inefficient. As much as 20% of electricity produced by power plants located away from the point of consumption is lost in resistance on transmission lines.
