Why Heathrow's closure won't be the last electricity emergency

Plus, BYD's success adds urgency to Tesla in China; and activists close in on undervalued energy assets

In today’s edition:

— The energy transition is about more than climate change. Ask Heathrow Airport

— BYD topped Tesla in sales last year, adding concern that Elon Musk’s China plan is in peril

— Fossil fuel company claims new facility can remove 500,000 tons of CO₂ a year

— Activist shareholder Elliot Management closes in on another energy giant

— Aramco, Siemens launch first direct air capture plant in Saudi Arabia

— Almost 400 million people at risk from extreme heat in past three months, Climate Central says

A night shot of London, taken by European Space Agency astronaut André Kuipers from the International Space Station. Heathrow can be seen on the left.

Heathrow Airport’s sudden closure for 18 hours on Friday — stranding tens of thousands of passengers and forcing hundreds of flights to turn around in the air — is the most dramatic example yet of the obstacles for a clean energy transition. But it won’t be the last as long as countries rely on centralized grid operations.

The two electric transformers that failed in a nearby power substation are similar to industrial projects around the world that rely on transformers to transfer different types of energy and change the voltage before it is sent out. The world is generating far more energy these days than it can distribute, resulting in bottlenecks in the U.S., Europe and parts of Asia that prevent new clean energy from transitioning through.

“The grid is not enough,” wrote Jonathan Maxwell, founder and CEO of Sustainable Development Capital Ltd., a British financial fund with more than $2 billion in assets that invests in energy infrastructure and efficiency projects. “Decentralized energy systems are no longer optional.”

Bloomberg has an interesting new feature on the bottleneck issues, but power plant managers and grid operators have known for years that aging grids cannot support the amount of new clean energy capacity.

This is not just a climate issue. The need for more power to drive AI data centers and cooling systems as the world heats up will depend on governments breaking away from the system of grids and allowing private networks of electric generators to expand, beyond government control. Energy security is simply another name for green transition, but in these new anti-ESG days, that’s where we are.

As the UK learned last week, and as others will certainly learn, it will take massive investment in new, decentralized power systems to keep the lights on in coming years. Something investors, ESG or not, should not take, uh, lightly.

Don’t forget to contact me directly if you have suggestions or ideas dcallaway@callawayclimateinsights.com.

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Tuesday’s subscriber insights

BYD’s new Qin L EV - similar to the Tesla Model 3 but about half the cost. The Qin L has smart driving tech and a range of more than 300 miles. It costs about $17,000.

BYD’s success adds urgency to Tesla’s China plans