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.

Tuesday, February 14, 2017

Log scale vs linear scale

These charts of electricity generation (not capacity) from wind are interesting.  I can't remember where this chart is from, so I can't give attribution.  And it's old--the data only go up to 2011.  Since then wind has continued its growth rate unabated.

The top chart shows generation from wind on a linear scale.  The bottom chart shows exactly the same data on a log scale.  On a log scale it's very close to a straight line, which means it has a steady (constant) growth rate.  And that constant growth rate is roughly a doubling every 3 years.  This year (2017) the output from wind will have quadrupled since 2011.  It has gone up by less in Europe, but that has been compensated for by rapid growth in the US and China.  And the slope in the line/growth rate is determined by cost declines.  It fact the growth causes the cost declines and the cost declines lead to growth, which is called a learning curve.

Initially in the switch to renewables, wind was favoured because it was cheaper than solar, especially (obviously) in high latitudes.  These days, solar PV is now cheaper than wind (again, except in high latitudes), and that gap is likely to widen in solar's favour, because solar costs are falling faster than wind costs.  So will wind be ditched in favour of solar?  I don't know.  The wind blows at night, when the sun doesn't shine. I've seen some analysis which suggests than even in daytime, wind is negatively correlated with solar, which is one reason why diversified sources of generation make it easier to stabilise the grid.  Solar is growing even faster than wind, doubling every 2 years, and I'm sure that will continue.

(See also Doublings)


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