Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Wednesday, December 31, 2014

Utility-scale solar costs plummet

Here in Australia, we tend to think of solar as rooftop solar, because our retail electricity costs are so incredibly high (roughly 30 cents per kWh), and so solar is already cheaper than retail electricity, and has been widely adopted.  But in the US, utility-scale, i.e., very large projects have been much more important.


The chart shows the price on the left, time on the x-axis, while the size of the circles shows the size of the contracts.  The average yearly compound decline has been about 16%; the decline between 2013 and 2014 about 18%.  ($50 per MWh = 5 cents per kWh) .

Now these costs are reduced because of an investment tax credit.  That's worth  about 2 cents per kWh.  So when (if) the tax credit expires in 2017, new contracts will be more expensive.  But by then the average cost will have fallen to about 4 cents per kWh, in another 2 years to about 2.5 cents per kWh.  So the expiry of the tax credit will cause at worst a brief pause in the uptake of utility solar before the switch resumes.  But I suspect that the tax credit will be extended, because it has become obvious to everybody who isn't a coal mine shill that global warming is real and continuing and that a switch to renewables is extremely urgent.  This year is likely to be the warmest ever recorded, and since the PDO (Pacific Decadal Oscillation) should have been bringing falling global temperatures over the last decade, while temps have actually risen, even the blindest and most biased of observers must be starting to worry.  More of that in another post soon.

[Read more of the article here]

Tuesday, December 30, 2014

Hypocrisy

The so-called Liberal government of Australia is very hot on cutting benefits to the poor, on eviscerating Australia's free national health system, Medicare, while preserving tax write-offs and benefits for the wealthy.  It recently emerged that George Brandis, our Attorney-General, spent $1100 on a meal in London.  This is Broelman's take on this hypocrisy.


Sunday, December 28, 2014

Solar and Wind Energy Plummeting in Price



From this article from the New York Times:

According to a study by the investment banking firm Lazard, the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kilowatt-hour on the low end and coal at 6.6 cents. Without subsidies, the firm’s analysis shows, solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.

“It is really quite notable, when compared to where we were just five years ago, to see the decline in the cost of these technologies,” said Jonathan Mir, a managing director at Lazard, which has been comparing the economics of power generation technologies since 2008.

Mr. Mir noted there were hidden costs that needed to be taken into account for both renewable energy and fossil fuels. Solar and wind farms, for example, produce power intermittently — when the sun is shining or the wind is blowing — and that requires utilities to have power available on call from other sources that can respond to fluctuations in demand. Alternately, conventional power sources produce pollution, like carbon emissions, which face increasing restrictions and costs.

But in a straight comparison of the costs of generating power, Mr. Mir said that the amount solar and wind developers needed to earn from each kilowatt-hour they sell from new projects was often “essentially competitive with what would otherwise be had from newly constructed conventional generation.”

Experts and executives caution that the low prices do not mean wind and solar farms can replace conventional power plants anytime soon.

“You can’t dispatch it when you want to,” said Khalil Shalabi, vice president for energy market operations and resource planning at Austin Energy, which is why the utility, like others, still sees value in combined-cycle gas plants, even though they may cost more. Nonetheless, he said, executives were surprised to see how far solar prices had fallen. “Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore.”

According to the Solar Energy Industries Association, the main trade group, the price of electricity sold to utilities under long-term contracts from large-scale solar projects has fallen by more than 70 percent since 2008, especially in the Southwest.

The average upfront price to install standard utility-scale projects dropped by more than a third since 2009, with higher levels of production.

The price drop extends to homeowners and small businesses as well; last year, the prices for residential and commercial projects fell by roughly 12 to 15 percent from the year before.

The wind industry largely tells the same story, with prices dropping by more than half in recent years. Emily Williams, manager of industry data and analytics at the American Wind Energy Association, a trade group, said that in 2013 utilities signed “a record number of power purchase agreements and what ended up being historically low prices.”

Especially in the interior region of the country, from North Dakota down to Texas, where wind energy is particularly robust, utilities were able to lock in long contracts at 2.1 cents a kilowatt-hour, on average, she said. That is down from prices closer to 5 cents five years ago.

“We’re finding that in certain regions with certain wind projects that these are competing or coming in below the cost of even existing generation sources,” she said.

Both industries have managed to bring down costs through a combination of new technologies and approaches to financing and operations.


Two key points:


  • Wind and solar are competitive now even without subsidy
  • What remains problematic is the variability of wind and solar generation, but battery costs are halving every 4 years, so this won't be a problem much longer.
I suspect that wind power will not go on cheapening at the rate of the last five years (i.e., halving) but I might be wrong.  On the other hand, PV solar power seems to have its own version of Moore's law, and I expect it to continue getting cheaper at the same rate of the last few years, i.e., more than halving every 5 years.

[See also this article and this one]


Saturday, December 27, 2014

Vast majority

The vast majority of climate scientists believe that climate change is largely caused by humans.  Survey after survey confirms this: the average of the data below is 90%.  And less than  4% of the average of 8 surveys says that there is little or no human effect.  So why do the climate change denialists refute this?  Do they also tell their brain surgeon how to do his job?  Their doctor?  The aviation engineer who designed their plane?  The boffins who created computers?  The engineer who built the bridges they cross every day?  The architect who designed skyscrapers into whose lifts they daily trust their lives?   Of course not!  But, don't you know, yesterday was a bit chilly, so, no there is no such thing as global warming.

Cretinous.

[Chart from here]


Friday, December 26, 2014

Exponential growth of solar

This article contains some remarkable data and insights.  The first chart shows data plotted on a linear scale, and you can see the classic growth curve where the lines get steeper and steeper.  The chart below it shows exactly the same data plotted with a log scale.



The conclusion to the article is worth reproducing here:

For the last 14 years, almost a decade and a half, global solar PV production/installation has grown faster than 41% per year (compound annual growth rate, aka CAGR). This means global solar PV production/installation has been more than doubling every two years. (I’m using predictions for 2014, but we are on track.) Predictions for 2015 already suggest a continued high rate of growth. Most predictions going forward beyond 2015 will continue to be of linear growth, as has been the case in the past. This is because humans have a psychological blind spot with respect to exponential growth. I submit this may not be the case at all. Global solar PV growth will eventually flatten out, but don’t bet on this happening in the near future.
If this high growth rate continues for another 8 years, till 2022, then we will be already well on our way to providing most of the world’s power using solar PV.
The next time you ponder the growth rate of solar PV, consider the plots above…. Consider the continuing drop in cost…. Consider the resulting exponential increase in demand. Think about the multi-gigawatt production plans of some of the big solar PV manufactures. Will it really take 50 years for solar PV to provide most of our power?… Or will those plots above continue, so that it will only take 10 to 20 years? Think about it.
[Read the rest of the article here]

Plotting the actual output of solar panels (remember, capacity is not the same as production because of night time, clouds, etc.)  By 2016, on my estimates solar will be just 1.2% of global electricity production.  It seems like nothing, doesn't it?  Reread the italicised section above.  The percentage of electricity produced by solar  has doubled every 2 years for 30 years, and because the cost (and efficiency ) of solar panels continue to improve (costs halving every 3-4 years, a sort of Moore's law for solar panels) the growth rate is likely if anything to accelerate rather than slow down.  By 2020, total solar will be at least 4.3% of global electricity generation, total wind + solar at least 13.3%.  And the annual increase in renewable electricity production will be greater than the annual increase in global electricity demand.  Which means carbon emissions will be falling.  Coal is finished, as are conventional electricity utility models.



[See also Unlimited Cheap Energy]

Monday, December 22, 2014

Four quotes from Elon Musk



  • “About a third of the output of the Gigafactory is intended as stationary storage, primarily to be paired with renewables, but also to do grid buffering in non-renewable situations, so that you can operate the plants — even if it’s a hydrocarbon energy plant, you can operate it at close to its optimum and avoiding having to sort of peak.”
  • “Here’s a little tidbit: If you take a nuclear plant, and you took its current output, and you compared that to just taking solar panels and putting solar panels on the area used by the nuclear power plant — because these typically have a big keep-out zone, you know of about 5 kilometers or thereabouts, where building houses and dense office or housing space… usually people don’t want to do that near a nuclear power plant. So, there’s quite a big keep-out zone, and when you factor the keep-out zone into account, the solar panels put on that area would typically generate more power than that nuclear power plant.”
  • “You could power the entire United States with about 150 to 200 square kilometers of solar panels, the entire United States. Take a corner of Utah… there’s not much going on there, I’ve been there. There’s not even radio stations.”
  • “If you’re in non-renewables, it’s like you’re stuck in a room where the oxygen is gradually depleting, and then outside, it’s not. So you want to get out of that room. And I think the ones that get out of the room sooner will be better off.”
Read the original article here.

Thursday, December 18, 2014

November 7th hottest

After a run of hottest temperatures ever measured for each month since May, November was only the 7th hottest ever measured.  But the 12 months to November was the hottest 12 months to November ever measured and it seems very likely therefore that the year as a whole will be the hottest year ever.
Note again how 1998 (an El Nino year) is an obvious statistical outlier)


SOURCE: NOAA

Tuesday, December 16, 2014

Why China is serious about de-coaling

This article from the Guardian makes it abundantly clear why China wants to move to renewables.  It's not just that China is now the major source of CO2 emissions, which they know (they have no demented right-wing press to gainsay them, like we have in the West) will cause immense problems for China (drought, flood, rising seas levels: Shanghai is an average of just 4 metres above sea level) but also the air is filthy.  The Chinese authorities mean business.  Of course, the other huge advantage of renewables is that it provides energy security.  Most of the top 10 solar panel and wind  turbine manufacturers are Chinese.

Their plans to switch to renewables are real.  And our excuse to do nothing about CO2 emissions  ("Well, China's not doing anything, and they emit much more than we do") are now hollow.  Coal is finished.

A Chinese man wears an anti-pollution mask near the China Central Television building in Beijing.

Monday, December 8, 2014

Unlimited cheap energy


I agree entirely with this optimistic article: the cost of energy is going to collapse over the next 20 years, and fossil fuels will be entirely replaced by renewables plus batteries.

This chart shows the actual installations of new PV (photo-voltaic) solar panels globally.

Source
In the 1980s, leading consultants were skeptical about cellular phones.  McKinsey & Company noted that the handsets were heavy, batteries didn’t last long, coverage was patchy, and the cost per minute was exorbitant.  It predicted that in 20 years the total market size would be about 900,000 units, and advised AT&T to pull out.  McKinsey was wrong, of course.  There were more than 100 million cellular phones in use in 2000; there are billions now.  Costs have fallen so far that even the poor — all over world — can afford a cellular phone.
The experts are saying the same about solar energy now.  They note that after decades of development, solar power hardly supplies 1 percent of the world’s energy needs.  They say that solar is inefficient, too expensive to install, and unreliable, and will fail without government subsidies.  They too are wrong.  Solar will be as ubiquitous as cellular phones are.

Futurist Ray Kurzweil notes that solar power has been doubling every two years for the past 30 years — as costs have been dropping. He says solar energy is only six doublings — or less than 14 years — away from meeting 100 percent of today’s energy needs. Energy usage will keep increasing, so this is a moving target.  But, by Kurzweil’s estimates, inexpensive renewable sources will provide more energy than the world needs in less than 20 years.  Even then, we will be using only one part in 10,000 of the sunlight that falls on the Earth.
[Read more here]

Thursday, December 4, 2014

AI threatens us!


Brilliant. You can see more Broelmans here.

Solar electricity at 6 cents

This article from CleanTechnica announces that in Dubai, solar electricity is to be produced at just 6 cents per kWh.  Average retail electricity prices vary a lot round the world.  In some countries they're subsidised or the regulator sets low prices for political reasons.  But 6 cents per kWh is still very cheap.  Moreover, unlike conventional power stations, solar power production doesn't have to be centralised.  It can be distributed around the grid.  This reduces the costs of expanding and maintaining the grid.

So between latitudes 30 N and S solar is already cheap.  From latitudes 30 to 50, it's more expensive, but--and this is key--the cost of solar panels is falling by 15-20% per annum, which means that in 5 years' time, solar will cost just 2 cents per kWh in equatorial regions and 4 cents in, say, Germany.

Ah, say the wowsers, but what about the fact that the sun doesn't shine all the time?  Well, yeah, we'll need batteries to stabilise the grid.  But grid-based battery storage is already cheaper than expanding the grid in many places.  And battery costs are falling rapidly: by 15% per year over the last 15 years and even faster recently.  The implications of this shift are immense.  It won't be long before pure economics will drive an inexorable switch from fossil fuels to renewables.  It's already started and it can only accelerate.