Thursday, September 3, 2026

El Niño 'supersizing' before our eyes

 From The Guardian


The El Niño climate phenomenon is “supersizing before our eyes”, the UN has said. The event is near certain to shatter temperature records, according to the latest forecasts.

The El Niño is likely to be the largest in at least 1,000 years and will pile extra heat into an atmosphere where temperatures are already rising rapidly due to global heating. The combination means 2027 is set to “blow apart” the record and be the hottest year ever recorded.

The rising heat from the El Niño is already having impacts, from worsening wildfires in Indonesia to the weakening of vital monsoon rains in India. The impacts will spread globally, from greater fire risk in Australia to more intense floods in South America. The World Food Programme said in August that the El Niño was likely to push about 50 million people into acute hunger.

The climate crisis, caused by pollution from fossil fuels, is already supercharging extreme weather and killing people, with the most extreme heatwave ever recorded hitting Europe this summer and leading to at least 35,000 deaths. The El Niño will ratchet up the impacts even further, with the scale of the event having been described as “truly mind-blowing” and a “Godzilla-level” event.

El Niño is a natural climate cycle where wind changes over the Pacific lead to rising ocean temperatures and the transfer of huge amounts of heat to the atmosphere. The most recent data, from Monday, shows the temperature of the ocean at the heart of El Niño at 2.6C above the 30-year average. That is already close to the highest anomaly ever recorded in the satellite data era, 3.1C in 2015, with months to go before the peak is expected.


That peak is forecast to reach about 4C in November, according to the average of 14 different models. Data from analysis of corals, tree rings and historical documents suggest no El Niño has reached this level in the last millennium, said Zeke Hausfather, a climate analyst. Any temperature anomaly above 0.5C is classed as an El Niño.

A further concern is that recent research shows global heating is now intensifying El Niño cycles, which then in turn intensify the impacts of the climate crisis.

“El Niño is being supersized before our eyes,” said UN secretary general António Guterres. “The science leaves no room for doubt: the planet is in uncharted waters, and those waters are heating up. The world is in the danger zone of extreme weather. The race now is between rising risks and our commitment to take climate action and protect people. We must win that race.”

The WMO El Niño updates are the world’s most authoritative forecasts and are based on a consensus of models from climate prediction centres around the world. The latest update, published on Thursday, said the El Niño was firmly established and would intensify into a “very strong event” in the coming months, with “big impacts” including floods, drought and extreme heat continuing well into 2027.

In some areas, subsurface ocean temperatures were an extraordinary 8C above average during July and early August.

Chris Jaccarini, of the Energy and Climate Intelligence Unit in the UK, said: “Extreme [weather] around the world has driven up food prices, hitting the poorest hardest. This is not just the food we import, but also what we grow at home.

“After five heatwaves and widespread drought, British arable farmers are now facing the worst harvest on record in 2026. And yet, without action, these could be the good years. Unless we rapidly cut emissions and strengthen resilience, climate change impact will continue to worsen with El Niño turbocharging the trend every few years.”


Yet governments are not 'supersizing' their efforts to slash emissions.

We could, for example, ban the import/production of pure petrol/diesel vehicles, allowing only hybrids and EVs.  After five years we would also ban hybrids, except for EREV*s. 

We could give electricity utilities a renewable energy target (RET), starting at the current average for the industry, for example, 40%, and upping it each year by 10%.  Utilities which don't reach this rising annual target each year would be required to buy surplus credits from those which have reached it, or from the government.  

We could ban new oil and gas heating for buildings, and subsidise heat pumps.  Together, all these steps could cut emissions by ~60%.   

But, paralysed by fossil fuel company funding and lobbyists, governments take none of these steps, even though the vast majority of their citizens are terrified of climate collapse and want something to be done.

Unless we act, we face catastrophe.

World bonds continue to sell off

The rout in bonds continues.  

In my experience, bond investors are realistic and canny and cynical.  Unlike share investors, they're not seduced by "blue sky" arguments.  They see improving growth, stubborn inflation, an endless Iran war, enormous supply of paper from the US, the risk of retaliation by the US's former allies.  All bad for bonds.

Rising government bond yields lead to rising cost of corporate debt, especially in the dodgy private credit market, which is funding the AI bubble.  And that will be complemented by rising discount rates.  Credit will tighten.  None of these things is good for growth.  Or the stock market.


Short-term chart — going to new cycle highs (US cycle high in late 23).




Long-term chart — near or past 20 year highs, decades-long bond bull market kaput, underpinnings of 20-year share-market bull market over.   




Commodity prices point towards higher inflation

A surge in commodity prices usually precedes (and leads to) a surge in consumer price inflation.

You could argue that the rise in overall commodity prices is mostly oil.  But other commodity prices are also going up (see lower chart), although that is partly because methane (natural gas) is used to make fertilisers.


Note logarithmic scale

My "brekkie" index  — an equally weighted index of corn (maize), wheat, oats, cocoa, coffee, sugar and orange juice — has been surging since Trump's Iran War.


N.B.  Log scale

If inflation remains stubbornly high because of higher oil prices and surging general commodity prices, Central Banks will, albeit reluctantly, raise interest rates and tighten credit.  And that will pop the private credit and the AI bubble, driving the economy into deep recession.

Trump's legacy will long outlive him, just not in the way he thinks.




AI hell

By Ben Jennings



 

Monday, August 31, 2026

New tightening cycle beginning?

The chart shows different measures of Central Bank discount rates (= cash rates/bank rates/Fed Funds rate).

The green line is the GDP-weighted average.  It would be biased towards countries with a high percentage of world GDP, such as the US, Europe, Japan, the UK, etc.  It covers countries which make up 83% of world GDP.

The blue line shows the median discount rate for all the countries I monitor.  The median is the midpoint of a range of data points.  So, currently, the median D/R is 4.30%.  Half the countries of the world have a lower rate than 4.3, and half a higher one. 

The red line shows the unweighted average.  Because so many developing countries have high inflation and therefore a high bank rate, this average is skewed towards these countries.  But it does reflect the actual bank rate the different countries of the world face.   

All measures have started rising.  Long-dated bond yields are also rising (see lower chart).

This means that credit is starting to dry up, which is typically not good for the world's share markets.  The initial impact of credit tightening tends to be felt in financial markets.  Later on, it spreads to the real economy.

So far, the tightening has been modest.  But if inflation remains stubbornly higher than CBs want, and the oil market remains tight, then the probability is that economic growth will, after the usual lag (~12 months) start to falter.

Meanwhile, the favourable winds driving the start market higher, are turning to headwinds.  And credit costs for the debt inflating the AI bubble are soaring.  And spending on AI has been driving economic growth in the US, and therefore also the world economy.  If (when!) credit for AI dries up, there will be a credit crunch and economic slump comparable to the 2008/2009 GFC.

There is a lot of risk out there.  Take care.





Saturday, August 29, 2026

The NEM's first solar-battery hybrid

 [NEM = National Electricity Market, and it covers all the eastern states of Australia]

From RenewEconomy

It’s the middle of winter. It’s cold, it’s dark, and in an isolated paddock along Back Trundle Road about 10 kms west of Parkes, famous for its telescope, a solar farm is doing something that no other large scale PV facility has done before: It’s sending its stored PV power into Australia’s main grid, at 10 pm in the evening.

It seems remarkable, but 14 years after the country’s first grid-scale solar project was connected to the grid, the Quorn Park solar hybrid facility, developed and owned by Potentia Energy, has become the first large scale solar-battery hybrid to be built in Australia’s main grid behind a single connection point.

The project is relatively small, and combines just 80 MW of solar and 19.8 MW, 39.6 MWh [2 hours] of battery storage – but it is very much a landmark project for the future of Australia’s main grid.

There are now virtually no large standalone solar projects being built in Australia, but several dozen solar-battery hybrids either already under construction, or sorting through the final details of their contracts and finances. Even wind farms are thinking about installing batteries next to individual turbines.

Most of these new solar-hybrid projects will be exponentially bigger than Quorn Park, including Potentia’s own Tallawang facility, about 200 kms from Quorn Park, which is looking at combining 500 MW of solar and 500 MW of battery capacity, and up to 2,000 MWh [4 hours]of storage.

“We are very proud to be the first,” Gabriele Mallarini, Potentia’s chief operating officer, tells Renew Economy during a site visit at Quorn Park earlier this month.

“The advantage is we need to be flexible because the network requires that level of flexibility. That means being able not only to follow a pattern, which is the one coming from the sun for the generation, but also be able to store and inject electricity when it’s needed on the network.

“And this is exactly what a hybrid that does, and it’s very much similar to what is happening across Australia, where households are installing batteries together with their solar rooftop, because they understand that there is the the best way is to use your own electricity to reduce the bill.

“Sometimes you are not at home, and you want to turn the lights later in the evening, and that’s why you have a battery. And this is very much the same concept.”

To be sure, Quorn Park is not quite the first large scale solar-battery hybrid in Australia – that honour goes to the larger Cunderdin project in the separate Western Australia grid that combines 120 MW of solar and 55 MW, and 220 MWh [4 hours] of battery storage – which was switched on last year.

And there are numerous smaller sub 5-MW projects across the country that have done the same, along with many off-grid installations that combine the two out of necessity.

Several different solar facilities feature big batteries built in a neighbouring paddock – at Darlington, Gannawarra, Limondale, Western Downs and Tailem Bend to name a few – but generally they must export solar to the grid and import it back to charge the battery.

Quorn Park, which was officially opened on Thursday, is the first to be built with a shared connection point. Which means it can store its own output at no cost (and import from the grid if it wanted), and save it for times when it is needed more by customers and can command a higher price.

Quorn Park output. Source: Open Electricity.
Yellow = insolation
Light yellow = charging
Blue = discharging

On a typical day, as other solar facilities are curtailed by low or negative wholesale prices [or by the grid operator], Quorn Park is able to dial down its exports to the grid, and store its solar production in its batteries (the light yellow below the line in the graph above).

Potentia – a joint venture between Italy’s Enel and Japan’s Inpex – will wait for a late afternoon or evening peak when it can then send the power to the grid at higher prices (the blue output).

Mallarini says the Quorn Park battery features AC-couple technology that allows three different operating modes – solar only, battery only, and solar battery hybrid – depending on the circumstances, and customer needs.

And it’s customer needs – as well as the changing dynamics of the grid – that are driving these changes. So, too, are other factors, particularly the falling cost of battery storage.

When Potentia sought grid approvals, the prevailing wisdom was that solar projects should be matched with battery capacity on a 4:1 basis. But now nearly project developer, including Potentia at its other projects, is looking at a 1:1 ratio, and with more storage.

In terms of battery sizing for co-located assets, the rule of thumb, three to four years ago, was four to one to make it profitable because the cost of batteries was quite high and because level[s] of curtailment were not so significant,” Mallarini says.

And now it’s changing because of the strong reduction in Lithium batteries that have become more available to increase the capacity, and then the rest is driven by the big push of solar both rooftop and large scale, which is has expanded the need for longer duration.

And the projects are getting much bigger.

“There are economies of scale to be considered, and we need to remember ourselves that at the moment we are still heavily reliant on coal-fired power stations,” Mallarini says

“Those coal-fired power stations are really aging. They will not be there forever, and there is a void to be filled, and the best way to do is to have a hybrid solar-battery, as well as wind generators, because there is a need for the state, for the nation, to have reliable and stable generation from renewables.”

The Quorn Park facility is also helping change the conversation about wind and solar – often accused by naysers as having lower quality electrons. But the opposite is true, particularly with facilities like Quorn Park.

The combination with battery storage and grid forming inverters means that the facility is actually boosting the strength of the grid in a relatively weak part of the networks, and is also getting paid to provide reactive power which can ensure voltage levels are maintained.

“We are not talking about big dollars, but it is very important because we are really helping the network when it’s needed, and the more assets distributed across the network, the more benefit, which is something that large centralized generators were providing just where they were connected,” Mallarini says.

“The fact that there are many assets spread across the network make the network more reliable, which is something that probably not everyone is across. 

“We have another asset in Western Australia, it’s on a very weak and stringy line south of Perth called Flat Rocks, and it’s a wind farm. And we provide reactive power support to the network, and the quality of the electricity in the area has improved because of us being there.”

SMA has provided both the PV and battery storage inverters, and Samuel Wiggins, the head of large scale service & technology at SMA, describes the project as an important milestone for the integration of solar and battery storage in Australia.

“Quorn Park uses an AC-coupled architecture, allowing the solar and battery systems to be controlled independently while operating as an integrated hybrid power plant under a single Generator Performance Standard and grid connection,” he said.

“This provides greater operational flexibility and enables the plant to respond more effectively to the needs of the electricity system.

“Modern inverter technology can also provide reactive power and voltage support, helping to maintain power quality and strengthen the network.

Quorn Park demonstrates how well-integrated solar and storage can contribute not only renewable electricity, but also valuable capabilities that support a stable and reliable grid.”

The Quorn Park facility also features single axis trackers, which allows the solar modules to follow the sun during the day, and bifacial panels, which pick up reflected light on the rear of the panel to boost output and efficiency.

The mowing will be the responsibility of the sheep that will have the run of the solar farm, and are excellent at keeping the grass and weeds at bay, and enjoying the shade and shelter.

Other solar farms that allow grazing have discovered significant increases in productivity from their flocks. Mallarani says merino are preferred, as they are less likely to scatter wildly when a vehicle or a person approaches.

It's tempting to call solar-battery hybrids baseload operators, but they're actually better than coal power stations, because they can tailor their output to grid demand, as well as providing reactive power and grid support much more quickly than synchronous condensers and gas peakers.  Plus, having far more generators spreads the risk if HVDC lines go down.