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.

Sunday, February 28, 2016

Yes we can

From this amusing article on flat-footed naysayers


Too often I see and hear idiotic comments asserting that the world can never switch to renewables because, take your pick .... it's too hard  .... renewables are too expensive .... we can't do it ... it's too  big a task ....  renewables are too variable .... what would we do in winter when the sun doesn't shine and the wind don't blow?   And so on and so on.

Many of these nay-sayers then declare that that nuclear is the solution, despite the extraordinary delays and cost overruns  of the Hinkley Point nuclear power station in England.  Even after massive subsidies (worth $120 per MWh!), Hinkley Point  will produce electricity at $150 per MWh (15 cents per kWh), which is more expensive than off-shore wind ($112 per MWh), which is the most expensive wind generation source.  And how do we deal with the toxic by-products of nuclear fission, including plutonium?  The nay-sayers just grumble and mumble and shake their heads.

So what really are their arguments against renewables?  The first is cost. The trouble with that line of argument is that costs of renewables are already cheaper than alternative sources of electricity, and those costs continue to decline inexorably.  The city of Palo Alto  is about to sign a contract for electricity from the Mt Wilsona Solar Project at a price of just $36.76 per MWh, which is just 3.7 cents per kWh.  That includes a 30% tax credit, which means the unsubsidised cost is 5.3 cents a kWh.  Don't forget that fossil fuels are subsidised globally every year to the tune of $450 billion  -- and that's without accounting for deaths and ill health from pollution, the cost of global warming, etc (which are estimated at another $500 billion in the US alone!)

In Chile, a recently signed contract to supply 415 GWh of electricity per annum at just $47.98 per GWh (4.8 cents per kWh) is unsubsidised, so is even cheaper than the Palo Alto contract.   In the link, it is casually mentioned that new contracts have also been signed for wind at 3.7 cents per kWh.  Wind costs have been dropping steadily, just like solar.  5 years ago wind contracts were being signed at 6 cents per kWh.   That's an annual cost decline of 10%.  And even then, that was 2 cents cheaper than coal and about the same as a combined cycle natural gas plant.  And they haven't got any cheaper since then.  So wind and solar are now cheaper than coal and gas and nuclear.  Much cheaper.

When you point this out to the anti-renewables die-hards they immediately counter-attack with the supposed variability of renewables supply, and smugly say "can't provide baseload power", as the ultimate anti-renewables putdown.

I've talked about this before, here and here and here.  It's nonsense, until you reach 70% of generation from renewables.  And no one is there yet, except where they use a lot of hydro (Canada, Uruguay)  Clearly we will need some storage, if only to prevent the lights going out on those rare occasions when the wind isn't blowing and the sun isn't shining and the dams are empty.  One sort of storage is batteries, and their cost too is plummeting, by 15 to 20% a year.  We're not quite there yet: the LCOE* of batteries is still high (21 cents per kWh.)  But there is another sort of storage, the kind used in concentrated solar power (CSP).  In that kind of solar power, mirrors reflect sunlight and also the sun's warmth (infra red -- unlike solar panels which just work off visible light) onto a central tower.  The heat is used to melt salt, which can then be stored (see full report):

Crescent Dunes technology is completely different. Molten salt circulates throughout an integrated energy storage system. The salt “cools” to 500 degrees F (hardly cool: this is twice the boiling point of water) before being circulated back through the receiver again to be solar heated to 1,050°F again. 
Storage in molten salt can stay hot for months, according to Smith. Normally, it isn’t left there, of course, but cycled daily as needed, tapped by night for generating electricity, and replenished by day by the sun. 
Due to its innovative molten salt solar heat storage, SolarReserve’s US-designed technology can generate dispatchable solar electricity 24 hours a day, or on demand when a utility requests it during peak demand periods. 

Note this:  "The molten salt can stay hot for months" and "can generate dispatchable electricity 24 hours a day or on demand".   What was that about "baseload power" again?

So what does CSP cost?  This is brand new technology.  The Crescent Dunes facility mentioned above is producing at $135 per MWh, subsidised.  Costs are falling fast, in a typical learning curve process.  The 100 MW Redstone plant in South Africa will produce power at $120 per MWh, unsubsidised.  In Chile, projections are for costs below $100 per MWh.  This is still above the costs for coal or gas, but with solar, wind and CSP combined, costs are lower.  Let's say we have 1/3 wind, 1/3 solar and 1/3 CSP, the combined cost is 6,2 cents per kWh.  Cheap.  And stable.  And not using fossil fuels.

Exhausted, the nay-sayers then retreat to the final argument.  It's too big a task, they moan, rocking backwards and forwards.  Well, yeah.  It is big,  But how about this:


  • Germany is already at 36% renewables.  The former East Germany is at 50%. (wind and rooftop solar)
  • Denmark is at 40% (wind)
  • South Australia is at 50%. (Wind and solar)
  • It took them just 15 years to get there.
  • We built the existing generators and grid back in the 50s and 60s and 70s and no one said it was too hard when we did it.  We just went out and did it.  Duh.
  • We will in any case have to replace power stations as they age.  In many developed countries, the average age of the generating fleet is 30 years plus (good examples: the US and Oz) with an expected maximum life of 45 to 50 years
  • No one says we have to switch to renewables overnight.  But if they cost less, and global warming is getting scarier by the month, why shouldn't we get a jizz on and do it?
We will have to change some things.  

We will need HVDC lines so CSP power plants in deserts for example  can provide power to cities in less sunny climatic zones.  CSP in say Spain and North Africa,  providing power to northern Europe when the wind stops.  CSP in Turkey and Syria (should peace ever come to that poor country) powering up Eastern Europe.  CSP in the Ozzie outback keeping lights on at night in Sydney and Melbourne.  I've mentioned CSP but it could also be wind farms in the "windy tunnel" in the US, delivering power via HVDC lines to the eastern seaboard.  

We will need a different regulatory environment because a lot of the solar will prolly come from rooftop installations, and at the moment is most likely overpaid in the US and underpaid here in Oz.  And batteries will still play a part in grid stabilisation and the electrification of transport.

But most of all we will need to relinquish old ways of thinking.  It can be done.  And it must be done, if we are to avoid catastrophic global warming.  The nay-sayers are simply wrong.

*LCOE=levelised cost of electricity.




Saturday, February 27, 2016

Monday, February 22, 2016

Start with ruthenium and add air

Source: http://methanolch4o.blogspot.com.au/


I mentioned the Sabatier process in a previous post.  Researchers at the University of Southern California have been testing a different approach:

Methanol (CH3OH) is a common topic of conversation when discussing how to replace fossil fuels with a new form of energy storage. The molecule is versatile: it can be used as liquid fuel in internal combustion engines, it’s an important starter for making chemical feedstock used to make plastics or other materials, and it can be produced through a simple reaction between carbon dioxide (CO2) and hydrogen (H2). All these advantages lead some experts to propose a methanol economy, in which methanol replaces fossil fuels as the primary transportation fuel or energy storage medium.
The problem is that burning methanol would still release greenhouse gases into the atmosphere (less than other current fossil fuels), unless we could create methanol using the carbon dioxide already in the atmosphere! Then all the carbon dioxide released during methanol combustion in an engine or power plant would not create any net gain of greenhouse gases in the atmosphere.
This idea of a human-made carbon cycle, mimicking how plants use carbon dioxide in photosynthesis, isn’t new. Power plants in Reykjavik, Iceland already use geothermal energy to react carbon dioxide with hydrogen to create methanol and water. But in these cases, the carbon dioxide is not taken directly from the air. Instead, the geothermal plant first captures the CO2, which is then funneled into the methanol production process.
To simplify this method, USC researchers have now developed the first technique to directly react CO2in air to create methanol. The secret lies in two major developments. First, researchers chose a new catalyst, the mysterious key to speeding up the rate of converting reactants to products in so many reactions. In this case, they tested several varieties of ruthenium complexes: molecules with a ruthenium atom at their center, surrounded by ligands made of phosphorous, nitrogen, and hydrogen. Second, the researchers used polyamines to capture CO2 so the catalyst could do its work and foment the reaction to create methanol. Amines are derivatives of ammonia and contain high amounts of nitrogen, which are important sites to attract and absorb carbon dioxide.
With these advantages in place, the researchers injected air into a solution of the polyamine and catalyst (known as ‘bubbling air’). After heating the solution up to about 125-165 degrees Celsius, they ended with a 79% yield of methanol. This percent is the amount of actual yield divided by the theoretical yield predicted by the stoichiometry of the reaction. This high yield should be seen as a success for a first attempt at direct CO2conversion to methanol!
Read more here.

Interestingly, they didn't first need to produce hydrogen by electrolysis, which is the basis of the Sabatier process.  It's not clear, but I assume the hydrogen came from the water.

If we wanted to we could move to a 100% renewables energy system with a decade.  Existing cars and lorries would be converted to methanol, and electricity would be produced by wind and solar.

Sunday, February 21, 2016

5 metres sea level rise locked in

According to this article in New Scientist (paywalled), it’s too late to stop the seas rising at least 5 metres and only fast, drastic action will avert a 20-metre rise.

WHATEVER we do now, the seas will rise at least 5 metres. Most of Florida and many other low-lying areas and cities around the world are doomed to go under. If that weren’t bad enough, without drastic cuts in global greenhouse gas emissions – more drastic than any being discussed ahead of the critical climate meeting in Paris later this year – a rise of over 20 metres will soon be unavoidable.
After speaking to the researchers behind a series of recent studies, New Scientist has made the first calculations of what their findings mean for how much sea level rise is already unavoidable, or soon will be.
Much uncertainty still surrounds the pace of future rises, with estimates for a 5-metre rise ranging from a couple of centuries – possibly even less – to a couple of millennia. But there is hardly any doubt that this rise is inevitable.
We already know that we are heading for a rise of at least 1 metre by 2100. The sea will then continue to climb for many centuries as the planet warms. The question is, just how high will it get?


Thursday, February 18, 2016

Hottest January Ever

Hottest January ever recorded.  After the hottest December, hottest November, etc, etc.  The chart shows the average for the 12 months to January for each year.  You can go here to play around with different moving averages.   But you see the same picture whichever smoothing you choose: a sustained rise in global temperatures since the mid-70s.

The last big el niño year was 1998, and this is a favourite year for climate change denialists to pick as the starting point for their charts, because until 2014, you could make a (feeble) case that global warming had ceased for the last decade.  You can see the spike in the chart in 1998, but look how insignificant it is in the context of the history from the 1970s onwards.  Now the denialists are saying that the current temperature spike is due to el niño, and so there's nothing to worry about.  And so it is.  But the el niños are just cycles round a rising trend.  And the point is that this cycle has taken us to new highs--much higher than the last el niño.  But of course, when we get la niña, in other words a cooling cycle, over the next couple of years, the Right will claim that the world is cooling, and that coal is good for us.

Cretins.




Monday, February 15, 2016

Swanson's Law

This is a classic learning curve chart.  Note double log scale.  If cumulative solar shipments go up 20 fold from now (easily achieved), costs will more than halve from here.  Actually the slope of the line since 2008 suggests an even bigger decline than that.





This was the curve for the model T-Ford.



Donald Trump and the American Dream


Sunday, February 14, 2016

Inequality reduces growth

Recently the IMF Managing Director, Christine Lagarde, said:
Our research shows that, if you lift the income share of the poor and middle class by 1 percentage point, then GDP growth increases by as much as 0.38 percentage points in a country over five years. By contrast, if you lift the income share of the rich by 1 percentage point, then GDP growth decreases by 0.08 percentage points.
(Source)

So much for higher inequality incentivising hoi polloi to work harder and thus boost GDP growth


See more David Horsey cartoons here.

Wednesday, February 3, 2016

Monday, February 1, 2016

Signal versus noise

Everybody who is in financial markets knows about this problem.  Is the latest low US GDP data point the beginning of a new slower trend or is it a blip?  Is the stock market still going up--recent trends have been down, so is this a change in longer-term trends or what?  What we normally do to estimate trend in economics or shares is to use a moving average.  And you look at the fluctuations around the moving average.  Is there a pattern of rising highs and lows, or is each new high and each new low below the previous one?

What struck me about the charts in this article was how it's impossible to determine the trend in the unsmoothed data, but how clear the trend is in the smoothed data.  The chart shows the temperature record for central England.  Since 1945 it's been adjusted for the urban heat island effect, i.e., it has been reduced to compensate for the fact that cities are much warmer than the surrounding countryside.

Here's the chart of the unsmoothed data, with the December 2015 anomaly highlighted in the red circles:



Here's a simple 30 year moving average of the data:



Note that the moving average is only available up to 2001, because traditionally you centre the moving average at the midpoint of its span.  So the last observation on the chart above is the average from January 1986 to December 2015.  This is a problem with moving averages--you "lose" data at the beginning and end of your underlying data series.  There are some mathematical techniques you can use to get both smoother and more up to date moving averages.  One of these is the LOWESS moving average. (in these circumstances,  I use a Henderson curve, which is a bit less sophisticated and easier to calculate.)



You can see why those who don't understand statistics will be flummoxed by the big random day-to-day and month-to-month fluctuations. But the thing to focus on is the longer-term trends, and these are clearly shown by the moving averages.