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CEO Of Europe’s Top Utility: Power Generation From Gas Is “Stupid”

It is “stupid” to use natural gas for heating homes or generating electricity when there are better alternatives, the CEO of Europe’s largest utility told CNBC on Tuesday, noting that gas should be used for industrial processes where it is still irreplaceable.  

Europe uses “too much gas” to produce electricity, Francesco Starace, chief executive at Italian power giant Enel, told CNBC on the sidelines of the World Economic Forum in Switzerland.

Gas is used “in a stupid way, because burning gas to produce electricity is, today, stupid,” he added.

“You can produce electricity better, cheaper, without using gas ... Gas is a precious molecule and you should leave it for … applications where that is needed,” Starace told CNBC’s Steve Sedgwick.

The CEO of Enel—which has pledged to invest tens of billions of dollars in renewables over the next decades—said that gas use should be spared for industry, and reduced in electricity production and in-home heating when there are better alternatives.

“Overall, I think there will be a reduction of gas consumption in Europe across the board coming mostly from those, like I said, ‘stupid’ uses,” Starace told CNBC.

The European Union is looking to reduce its dependence on Russian gas and proposes accelerated energy efficiency and renewable power targets as part of its plan to do so.

Enel, for its part, said in late 2020 that it would invest as much as $171 billion (160 billion euro) by 2030 in boosting renewable power generation, decarbonization, and grid infrastructure as part of a new plan to become a “Super Major” in renewables. At the end of 2021, Enel brought forward by 10 years the goal for decarbonization, and pledged to sell only electricity produced from renewables by 2040. Enel looks to phase out coal-fired generation by 2027, and gas power generation by 2040.  

By Tsvetana Paraskova for Oilprice.com

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  • Jeff Smith on May 24 2022 said:
    Francisco Starace is correct about it being stupid to use natural gas to generate electricity, but wrong about it being stupid to use natgas for space heating.

    All forms of energy should be used for their "highest and best" purposes, according to their respective characteristics of cost, transportability, ease-of-storage, ease-of-transfer, and energy density (or "mass-viability").

    Natural gas and coal are relatively cheap.

    Liquid petroleum is more conveniently and inexpensively transported than compressed gasses, such as natural gas or hydrogen.

    Coal and liquid petroleum are more easily stored than compressed gas or electricity.

    Liquid petroleum is more easily transferred than compressed gas and is transferred far more rapidly than electricity.

    Petroleums, both liquid and gas, have significantly greater energy density than hydrogen has.

    The highest and best use of liquid petroleum is transportation and construction equipment.

    The highest and best use of natural gas is space heating and, secondarily, transportation.

    Natural gas is uniquely ideal for heating space.  It has an enormous energy density, providing large amounts of heat relative to its mass and volume.  It is also inexpensive, compared to the cost of using electricity for space heating.  This cost and affordability aspect cannot be overlooked and should never be undervalued.  People cannot afford to pay $500 to $800 a month to heat their homes with electricity, no matter how fervently the climate change ideologues want to end all use of natural gas.  Until the retail price of electricity comes down by 50%, heating homes with electricity will continue to be an economic non-starter.  Natural gas is currently the natural choice for space heating.

    Using natural gas to generate electricity is both a national crime and national sin, when we could be generating electricity with nuclear and coal, which would allow us to dedicate natgas to its highest and best use, which is space heating.  In addition, if we weren't using natgas to generate somewhere around 38% of our electricity here in America, the price of natgas would not have quadrupled in the last three years.

    If we use petroleum resources according to their highest and best uses, that requires that we generate electricity using a different source energy.  That would be either coal or nuclear power.  If we're going to submit to the edicts of the climate change religion and never use coal, that leaves nuclear power.

    The cost problem of nuclear power could be fixed by building new nuclear plants in accordance with a specific strategy for building plants affordably.  To wit, using a single, standardized reference design built in modularized fashion, by companies that build this single reference design repeatedly.  The repetition of construction will result in greater and greater build speed and other efficiencies, reducing costs.  This is extremely doable, and the reference design already exists and is already approved by regulatory agencies.

    Shutting down coal and nuclear for generating electricity has increased the demand for and use of natgas to generate electricity, running up the price of gas by a factor of four in just a few years and therefore the cost of using gas for space heating considerably.  It has also caused some utities to resort to using oil to generate electricity, thus placing an inappropriate demand on oil that should be used for transportation instead and placing upward pressure on the price of oil.

    Until the human race gets over its ignorant superstitions about nuclear power and moderates its religious zeal for climate change ideology, we will continue to misuse energy resources and thus create virtually incalculable unnecessary living costs and, in the process, cause ourselves indescribable inconvenience and heartache.
  • Mamdouh Salameh on May 24 2022 said:
    Mr Francesco Starace the CEO at Italian power giant Enel marred his one day of fame at the Economic Forum in Switzerland when he made a stupid remark by claiming that it is “stupid” to use natural gas for heating homes or generating electricity when there are better alternatives, noting that gas should be used for industrial processes where it is still irreplaceable.

    His solution is boosting renewable power generation. But he must be living on another planet if he didn’t realize that renewables can’t on their own satisfy electricity demand because of their intermittent nature. What does he think the cause of the serious energy crisis that has been enveloping the EU since January 2021? It was triggered by hasty EU policies to accelerate energy transition at the expense of fossil fuels.

    Even a partial energy transition wouldn’t succeed without major contributions from natural gas and to some extent nuclear energy and coal.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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