Monday, April 30, 2018

Renewable energy now cheaper than fossil fuels

No, this is not from the lefty tree-hugging latte-sipping pinko.  It's from a German energy asset manager--and it's reported in Forbes:

For the first time in history, the production cost of renewables is lower than that of fossil fuels, an industry asset manager has claimed.

In a recent note to its clients, Hamburg, Germany-based Kaiserwetter Energy Asset Management, wrote that its "internal analysis" – based on data from Bloomberg, The Frankfurt School, Renewable Cost Database of the International Agency for Renewable Energy (IRENA) and UN Environment – puts fossil fuels generated energy costs in the range of $49 and $174 per MWh (Megawatt hours) in G20 energy markets in 2017.

Over a comparable period, renewable energy production came in between $35 and $54 per MWh. Breaking the data down further, Kaiserwetter said the international average cost for hydroelectric projects were more than $50 per MWh, wind power was $51 per MWh, and photovoltaic solar energy was $54 per MWh on average.

To arrive at its conclusion, the asset manager grouped the costs of 15,000 utility projects and calculated the risks that investors will assume across 54 countries between 2020, 2025 and 2030.

And the latest photovoltaic energy auctions in Dubai, Mexico, Chile, Abu Dhabi or Saudi Arabia, and onshore wind energy in Brazil, Canada, India or Morocco in 2017 suggested that the standard cost of energy can be reduced to $30 per MWh from 2018, Kaiserwetter said.

"However, onshore wind energy has already achieved similar costs in projects across Brazil, Canada, Germany, India, Mexico and Morocco, already reaching $30 MWh."

[Read more here]

Wind and solar as % of total electricity production, 2016
Source: Enerdata.  Click to enlarge


In 2016, 5.4% of China's and 4.3% of India's electricity came from wind and solar.  In both countries, there will likely be little net new coal power expansion in the future.  At a 3% growth rate in total demand, this suggests that they will reach about 40% of total electricity production from wind and solar in 15 years. 

Still not fast enough, but as the costs of renewables continue to fall, the chances are that technically viable coal power stations will be shuttered because of their economics, as has happened in the US.  Renewables (including big hydro) delivered 24% of world electricity supply in 2016.  By 2030, my forecast is that it will have reached at least 2/3rds of total production, driven by the falling costs of wind and solar and batteries, and the continued long-term rise in global temperatures.

(By the way, I recommend Enerdata's site.  It's full of useful stats)

Less than 10% battery degradation over 160,000 miles

One of the big worries about electric cars has been that one would have to replace the battery after only a few years, which would be very costly.  This worry was made more real by the performance of the early Leafs.  But we now have more data from older Teslas, and it seems that only about 10% of the battery's capacity is lost by 180,000 miles (290,000 kms)  The average car is driven 12,000 miles (about 19,000 kms) per year, so this means that you'd get a minimum of 15 years from your Tesla battery.  And then you'd be able to sell it for use as a battery for a house or small business.  Try doing that with a 15 year old car engine or drive-train!

Battery life is improved by not charging to 100% or discharging to zero except occasionally or in emergencies.  Musk himself says that charging to a max of 80% and never going below 30% prolongs battery life.  Tesla has software which discourages overcharging and over discharging.

Tesla Model S/X Mileage vs remaining battery capacity
Source: Electrek

[Read more here]

Friday, April 27, 2018

War

I don't know where this cartoon came from or who drew it, but if anyone can let me know I'll put the attribution here.


Oil goes ex-growth

Shares with high earning per share growth tend to be highly valued.  Their dividend yield is low or non-existent.  It doesn't matter to the market because investors are confident that future profits will grow dramatically, so they are prepared to bid up the share price.  A good example of this today is Tesla, while in the past, companies like Microsoft, Apple and Amazon were also high growth low yield companies.  

On the other hand, low-growth companies have high dividend yields.  These high yields are needed to compensate for the lack of growth.  And when a company's profit growth starts to slow, its share price tends to retreat, or at any rate grow more slowly than the the rest of the share market.  Over time, the market demands a higher yield, because prospective earnings growth is falling. In the market, this is called "going ex-growth".  If profits or earnings per share are growing, this rise in yield can be achieved without the share price falling.  But usually, share prices decline, and market capitalisations fall, until the market thinks that the high yield adequately compensates  for low growth.

This is not to say that high yielding shares are necessarily bad investments.  Once the readjustment process is over, a high yield means a high income, without the volatility that can affect high growth stocks.  But during the process of adjustment to the new reality can be painful.  This is what is happening now to oil companies.  There is no reason why oil companies won't go on being profitable--for now.  But the traditional model has been expensive research and development to find new oil fields as replacements for old, emptying, ones.  And that's no longer a viable model, because 15 or 20 years out oil demand will have collapsed.  New oil fields will be worthless.  The money spent finding them and developing them will be wasted.  In short, oil companies which accept the new reality may still be worth investing in; those which do not are likely to be  big losers in this shift.

And it seems the market accepts these conclusions:

For generations of investors, Exxon Mobil Corp. has been a cornerstone of fund managers’ portfolios alongside the biggest names in corporate America. Not so much any more.

From leading the S&P 500 Index a decade ago, the company has dropped to the ninth-largest in a top 10 now dominated by technology giants. Its rivals Royal Dutch Shell Plc and Chevron Corp. aren’t faring much better, with investors demanding unusually high dividend yields to hold the stocks.
Source: Bloomberg
Note: The "energy" sector includes coal and some renewables companies as well as oil and gas.


At fault, a toxic troika that combines gushing supply with fears that long-term demand will flat-line as electric vehicles and renewable energies grow, and climate change policies proliferate. And while cash flow for oil’s majors in 2018 is likely to be the highest in 12 years, investors are largely unmoved.

“Earnings have started to come through but no one believes it’s sustainable,” said Kevin Holt, who helps manage $934 billion at Invesco Ltd. in Houston. “That’s why the stocks haven’t worked even though the commodity has gone up. Everyone’s saying they don’t believe it.”

Years of elevated spending on mega projects worldwide caused costs to soar. That kept drillers from taking full advantage when oil prices were averaging about $95 a barrel in 2011-2014, and it left them exposed when a stubborn two-plus year rout took hold. In February, the weighting of energy stocks in the S&P 500 dropped to 5.5 percent, the lowest in 14 years.

Beyond the S&P, Big Oil’s weighting in global equity indices is now at a 50-year low, Goldman Sachs Group Inc. said in a March report. Of the MSCI World Index’s 100 biggest stocks, only six are oil producers.

The tepid interest in oil “is reflective of a significant paradigm shift in the global energy landscape,” Paul Cheng, an oil equities analyst at Barclays Plc in New York, said in a note to clients. “Investors, particularly generalists, seem to be growing increasingly skeptical of the long-term value of oil and gas assets given the supply and demand risks posed by shale oil and EVs.”



[Read more here]

Thursday, April 26, 2018

India won't save coal. Nor will China.

I've talked before about the collapse in new coal-fired power station construction in India and China.  Construction of new coal power stations stopped dead in 2016.  This is because the cost of renewables has fallen to way below the cost of new coal.  In fact new wind and solar power is cheaper than average wholesales electricity prices.

Two further reports about this, one from IEEFA and the other from CleanTechnica confirm the clear trend away from coal.  

The IEEFA report shows how total coal capacity is expected to rise only 46 GW over the next 10 years, after taking into account planned closures of old power stations.  And that forecast has been cut 11 GW since 2016.  Given how cheap renewables are, it is extremely likely that when the 2019 National Electricity Plan is completed, the 2027 figure for coal will be revised down again. As a result, India's thermal coal imports are forecast to decline by 2/3rds by 2020/2021.  This is likely the beginning of repeated downward revisions to net new coal-fired power station construction and thermal coal imports as renewables keep on getting cheaper and cheaper.



I recommend you read the full article here


CleanTechnica has a nice chart showing that last year India added more solar capacity than any other country except China.  Mind you, China added more than the rest of the world put together, enough to provide about 2.2% of total Chinese electricity demand (see below for the calculation)


Source: CleanTechnica


It's simple.  In two of the world's largest economies, where rapidly growing electricity demand would just 5 years ago have implied rapidly growing coal use and rapidly rising CO2 emissions. the deployment of renewables implies that coal usage has or soon will stop growing and ultimately will start to decline.


➽  Total Chinese electricity demand was 6308 TWh in 2017.  That's 17,282 GWh per day.  The new solar capacity should produce 382 GWh per day at a 30% capacity factor, or 2.2% of total demand.  Since much of this new capacity is rooftop solar, capacity factors may be even lower, more like 20%.  [Numbers corrected after communication with @simonahac ]

Wednesday, April 25, 2018

An EV charging network to rival Tesla's

The factors holding back widespread adoption of electric vehicles (EVs) have up till now been:

  • Cost.  Electric cars have been more expensive than their petrol-driven equivalents (ICEVs) Only in the last year or so have we started to get EVs which cost the same as the average ICEV (the Nissan Leaf, the Chevy Bolt, Tesla's Model 3, though that is still not available in its cheapest configuration)
  • Range.  Because batteries cost so much, most EVs had small battery packs, which meant they had low ranges, with the obvious exception of Tesla. 
  • Charger network (again, with the exception of Tesla.)  These two (small battery packs and poor charging infrastructure) combined to produce range anxiety.  What if I run out of power 20 miles from home, or from the nearest charger?  How will I recharge my car if I'm stuck on the road miles from anywhere?
  • Availability.  In the US there are 43 EVs/PHEVs (plug-in hybrid electric vehicles), of which 14 are pure EVs.  In Australia, there are a handful of either EVs or PHEVs.
  • Knowledge.  In a recent survey in the US, nearly 2/3rds (60%) of Americans aid they were "unaware of electric cars".  Not all are "Tesla tragics" like me.
Of course, these factors all interact.  Because EVs were expensive, sales were low, so charging networks were scanty, which meant range anxiety was and is a big issue  (more than 72% in the survey I linked to above) which meant sales were low, and so on and so on.  On the other hand, this feedback between these factors can also be positive: more EVs on the road mean that there is an incentive to extend the charger network which reduces range anxiety and so on.

Electrify America's planned supercharger network.
The cities highlighted will be home to metro networks.
(Source: Green Car Reports)


In the US, the non-Tesla charge network is being given a kick start.  Ironically, this is because of Dieselgate  As part of its settlement of criminal charges, VW agreed to spend $2 billion building a network of EV/PHEV chargers across the US.  It set up a new subsidiary, Electrify America, to own and run the new chargers.  This report, from Green Car Reports, gives more detail:


Mark 2018 as the year that practical, widespread electric-car charging really started coming to America.

We've had a lot of news about new charging networks coming to the U.S., and it doesn't look like it will be slowing down any time soon.

Following the announcement last week that 100 Walmart stores would get electric car fast chargers, Electrify America has announced that it will install 2,000 additional fast-charging stations at 484 locations across the country.

Electrify America is building a network to rival Tesla Superchargers that will serve electric cars from all the other automakers. It will give them the same ability to drive across the country that Tesla drivers already enjoy.

The chargers are coming now thanks to Volkswagen's settlement with the government over its diesel emissions scandal.

Under a consent decree with the EPA and California, the company agreed to spend $2 billion over 10 years to build a nationwide charging network for electric cars. Electrify America was formed to spend that money and build out the network.

The consent decree stipulates that the chargers have to be compatible with and accessible to electric cars made by any automaker.

This latest announcement, along with the Walmart release last week, constitute the bulk of the first $500 million phase of that rollout.

We spoke with Electrify America's chief operating officer Brendon Jones to get a get more detail on what the new network will look like, and whether to expect the kind of convenience that Superchargers now offer. In short, the news sounds encouraging for those who drive electric cars other than Teslas.

In accordance with the consent decree, the new network will roll out in phases, much like the Supercharger network did in the beginning.

The goal of the first phase is to expand electric car access to major travel corridors and within 17 metro areas across the country. These are mainly, but not entirely, in coastal cities.

At the end of the first $500 million investment phase, Electrify America also expects to have chargers spaced at approximately 80 mile intervals along two major cross country routes. Other cities and other routes will follow until the network is completed nationwide at the end of Phase 4 in 2025. Each construction phase is expected to last about two years, making the rollout a little slower than Tesla's, but just as comprehensive.

[Read more here]

Electrify America will also be installing some very fast chargers:


The Terra High Power charger can charge an electric vehicle (EV) in just eight minutes, thus adding up to 200 km of range, says ABB, which launched the new model at this year’s Hannover Messe.

“By operating at powers of up to 350 kilowatts, the newest model from ABB, Terra High Power charger, adds up to 200 kilometers of range to an electric vehicle in just 8 minutes,” said ABB in a statement released. This is said to add seven times more range in the same time than current models on the market.

ABB added that it has recently been selected for use by Electrify America, which announced last week that it will install electric vehicle chargers at more than 100 Walmart locations across 34 states by June 2019.

[Read more here]

Of course, this is still a decade behind Tesla.  But it's happening, at last.  Range anxiety will soon be a thing of the past. 

An aside:  The logical place for EV chargers would be at service stations.  EV sales is the US will be 5% of total sales by the middle of 2020, or earlier.  They're doubling every 18 months, so by 2023 they will be 20% of total sales.  If you own a chain of service stations, you should be starting to worry about declining petrol sales. Service stations (at least here in Oz) already offer coffee, snacks, and junk food as well as petrol.  Installing fast chargers would complement your existing business.  The European oil majors (BP, Total and Shell) seem to be aware of this risk to their retail businesses, with plans to roll out superchargers to European service stations.  The US oil companies do not.

Wednesday, April 18, 2018

Road widening futility

A cartoon by André-Philippe Côté



Model 3 production shut down. Again.




From Buzzfeed:

Just a few days after Tesla CEO Elon Musk said he’s feeling optimistic about his ability to speed up production on the company’s vehicles, the assembly line for the Model 3 in the company’s Fremont, California, plant has been temporarily shut down — again.

The announcement of the four- to five-day production pause for the Model 3 came without warning, according to Tesla employees who spoke with BuzzFeed News. During the pause, workers are expected to use vacation days or stay home without pay; a small number of workers may be offered paid work elsewhere in the factory.

A Tesla spokesperson said that the assembly line is on pause in order to “improve automation.”


[Read more here]

After the previous shut down, there was a big jump in output from the Model 3 assembly line.   But it is concerning that Tesla's having a second shut down so soon after the previous one.  And it also worries me that this shutdown was obviously planned at very short notice. 

Musk drives his staff to achieve more than they thought possible, and sets goals that appear unachievable, and in fact are often reached late.  That doesn't mean he hasn't achieved extraordinary things.  But .....


Tuesday, April 17, 2018

The Luka -- a cool retro electric car

As a bit of a petrol-head (in Ozzie parlance, somebody who likes exotic, classic and muscle cars) I found this Czech electric car rather intriguing--though whether it'll ever make it to Australia is another question.

Czech electric car startup MW Motors unveiled a new lightweight and retro-looking all-electric vehicle powered by in-wheel hub motors.

[T]he Luka EV’s look is not even the most interesting thing about this new electric vehicle.

MW Motors is using in-wheel hub motors, which is not exactly a new concept, but it hasn’t really been implemented in a significant way by automakers.

They are using 4 motors in the wheels delivering 4 x 12,5 kW for a total output of about 50 kW (66 hp).

The motors are powered by a very small 21.9 kWh battery pack, which MW Motors claims is enough for up to 300 km (186 miles) of range.

It’s hard to believe until you hear how much the whole car weights: 815 kg (~1,800 lbs).

Of course, we are talking about a small two-seater here, but it’s still an impressively low weight and yet, the company claims that you will still find all the features you’d expect to find in a modern car.

MW Motors plans to bring the vehicle to market for a somewhat reasonable 30,000 EUR ($36,900 USD) starting price.

[Read more here; pictures from same source]





Underground transmission could be a game changer

No one likes overhead transmission lines.  Yet, connecting geographically separate wind  or solar regions will be key to increasing the percentage of electricity generated from renewables.  This is because if wind farms are far enough apart, their output is uncorrelated, which means that even if the wind dies down at one farm, it will still be blowing at the other.  In statistical terms, the average of the two farms together has a lower variance than either farm separately.  The lower the correlation the more this is true.  In practical terms, this means that the combined output of several geographically diverse wind farms is more stable than the output from any single farm.  The same principle applies to the correlation between output from wind and solar farms, even in the same region.  Wind is at worst uncorrelated with solar, and at best negatively correlated (the wind blows stronger when the sun isn't shining).  A mixture of wind and solar is less variable than either by itself.

(Source)


Long distance power lines will also be necessary for carrying electricity from places where the wind blows strongly or where the sun shines a lot to where demand for electricity is actually located.   For example in the US, the mid-western "wind corridor" is a fecund source of cheap electricity, but the big consumption centres are thousands of kilometres away in the east.

So if we could build long distance high voltage power lines and put them underground that would reduce community hostility.  If they could be reduced in cost that would be even better.

It’s become clear in recent years that expanded transmission from the windy Great Plains to the east is a prerequisite to developing more of the wind potential in the Midwest. If his project comes to fruition, Ward said, “We will pull some of the cheapest, most robust wind from the upper Midwest and bring it to the East Coast.”
Wind resources in the US (Source)

US solar irradiance (Source)


As a result of recently completed multi-value transmission projects across the region, he said, his project would be able to tap into a wide swath of the windiest land this side of Canada.

However, Ward’s decision to pursue this project now is a function of technology, not policy. Moving high voltages of electricity generally has required copious amounts of space, he said, meaning that transmission developers would hoist their lines high overhead. But over the past five years or so, “The technology of high-voltage cables has changed dramatically. I think everybody understands that solar and wind and batteries have changed a lot, but nobody is thinking about transmission.”

The German manufacturing conglomerate Siemens, looking for a way to unobtrusively move wind power from the North Sea to southern Germany, has been “leading the charge,” Ward said. The company has used a new rubber-based cable that is “very easy to handle in the field, easy to splice,” Ward said.

High voltages of power moved underground now require “a relatively small footprint,” about two-and-half feet across, Ward said. Two transmission cables are installed about three to five feet underground. It seems that the price has a smaller footprint as well.

“Compared to five years ago,” Ward said, “we can transmit much more power at a much lower price.”

[Read more here]

The 100% renewables grid of the future will have a mixture of wind and solar (because of their low correlation), spread across different regions (ditto), connected by underground HVDC lines, with battery storage for grid stability and time shifting.  We might keep legacy gas peaking plants for backup, and might even use power to gas to fuel these gas plants.  But the core of our new 100% renewable grid will be interconnectors and storage, and both are falling in cost.

Tesla semi starts work--for Telsa

The first of Tesla's new semi trucks started work, shipping batteries from the Tesla gigafactory to the Tesla car manufacturing plant in Fremont California.  If we are to slash emissions, all road transport-cars, lorries & vans, must be electrified, and the electricity that powers them has to be generated by renewables.  So Tesla's semi, and the van and ute hinted at when Musk launched the semi 6 months ago are key to the transformation of road transport.  It's encouraging to see the semi being tested.  What is also very encouraging is the steady stream of new orders.  Musk claims that the Tesla semi will be much cheaper to run than a diesel semi because it will manage higher speeds uphill and from a standing start than a diesel does plus the "fuel" will be cheaper--Tesla guarantees that the power used by the semi will cost no more than 7 cents/kWh, presumably because wherever possible, it will be derived from Tesla solar panels and stored in Tesla Powerpack batteries for night charging.

The new Tesla semi at the gigafactory (Source: InsideEVs)

Monday, April 16, 2018

Tesla to be profitable in Q3 and Q4

Tesla has been critical to the growth of electric cars.  The Tesla Roadster surprised petrol-heads with its acceleration, quietness and smoothness.  The Model S showed that electric cars were very much not golf or milk carts.  This is not to dismiss the Nissan Leaf, which was the first and so far the best-selling mainstream electric car released.  But Tesla made electric cars sexy.  Then Tesla built its gigafactory in Nevada which was designed to drive down the cost of batteries, so that Tesla could produce the Model 3 which costs the same as the average American car even without subsidies.  Even though the gigafactory isn't finished, the cost of batteries has halved over the last 3 years.

So far, apart from a couple of quarters, Tesla has made losses every quarter.  People forget that Amazon was massively loss-making at the beginning too, and look at it now.  As a general rule, rapidly expanding businesses tend to be cash flow negative.  Make no mistake, if Elon Musk dumped his goal of transforming the world of energy by introducing cheap storage and sexy, affordable electric cars,  Tesla would be making handsome profits now and would have been for the last couple of years.  The most recent losses and cash outflows have come from the retooling cost of setting up the Model 3 assembly lines in Tesla's Fremont (near San Francisco) factory.  And of course, with limited sales, the cost has to be spread over low output, and, because sales are low, cash flow is negative. 

Musk announced on Twitter (how else?) that in Q3 and Q4 this year, Tesla would be both profitable and cash flow positive.  Now, this is a communication from the CEO of a listed company.   Which means there would be major legal implications if he hasn't done his sums properly and gets it wrong.  The chances are very high that he will be correct.  Though he doesn't say how profitable or how positive cash flow it will be, clearly it's a big improvement on losses and negative cash flow.  And the reason for Musk's confidence is the rapid expansion in Model 3 production, as Bloomberg's Tesla Tracker in the chart below shows.


Aside from all the usual problems of introducing a totally new production line, the Model 3 had three particular issues.  First it was the first Tesla car to be made of steel not aluminium.  That required a learning process.  Second, battery production at the gigafactory was massively behind schedule because of failures by a sub-contractor.  That problem has been resolved by taking that part of the production process in-house.  Musk recently said that the waiting list for the Tesla Powerwall battery is now down to 3 to 6 months.  Third, Musk wanted a completely automated production line, and that didn't work.  He found that skilled and motivated humans were more adaptable and more productive in partnership with a mostly automated production line.  It's instructive how rapidly the failing production system was reworked into a working one--a mark of Tesla's Silicon Valley origins.

Tesla is moving into profitability and positive cash flow.  Tesla bet the house on cheaper batteries and the Model 3.  It's winning its bet.

The EV revolution will continue.

As an aside, my expectation is that when Tesla is profitable, it will again start cutting the cost of its Powerwall batteries, either  by upping the storage capacity while keeping the price unchanged (as it did 18 months ago), or by cutting the price for unchanged capacity.

Saturday, April 14, 2018

Solar: 1 cent/kWh in sight

This chart, from Electrek, shows a remarkable decline in solar costs.  It shows signed contracts (PPAs, or Power Purchase Agreements) in different countries from 2013 to 2017.  (Note that the US data may include the 30% tax credit.  If so the decline is even greater, as there are no subsidies in the other countries in the chart.)  These places are also places with high insolation--desert or semi-desert at low latitudes.  In other places, the cost per kWh would be higher, because output would be lower.  All the same, the costs have fallen from over 8 cents/kWh to 1.8 cents/kWh.  This year it looks as if solar costs have fallen another 20%, taking costs for these favoured regions to 1.4 cents/kWh.  Another 20% decline during 2019 will drive that down to 1.1 cents/kWh.  1 cent/kWh or $10/MWh is within sight.  Which means that even in higher latitudes and less favourable climates, $20/MWh or $30/MWh will be reached.  This is irresistibly cheapLazard estimates new coal costs at $102/MWh, BNEF at about $100.  In the US, where gas is cheap, Lazard estimates gas combined cycle at $60/MWh. 

With wind also declining in price (especially offshore wind, which has high capacity factors), plus plunging battery costs over the next few of years, the decline in coal can only accelerate


(Source)

The road to Damascus

by David Rowe, a cartoonist with the Australian Financial Review.


Friday, April 13, 2018

Paul Ryan's greatest achievement

A cartoon by Jim Morin.


Brazil: Solar auction prices drop 20% in 3 months

Brazil average annual solar  irradiation. (Source)


There have been numerous reports recently of large drops in solar PV contract prices, in Mexico, in Chile, in the UAE, in India.  Brazil is the latest, as PV Magazine reports.

Brazil’s government-run energy agency, Empresa de Pesquisa Energetica (EPE) and the Electric Energy Trading Chamber (CCEE) have allocated around 806.6 MW of PV capacity in the A-4 energy auction, which was held today. 

According to information provided to pv magazine by Rodrigo Sauia,  president of Brazilian solar association, Absolar, the final average price for the selected solar projects was around 118 BRL ($35.2)/MWh.

In the same auction of this kind, which was held in mid-December, the final average price for solar had been 145.78 BRL ($43.9)/MWh, while total allocated solar power had reached 574 MW (AC).

[Read more here]

Prices have fallen 20% in 3 months!  Extraordinary.

Why such a rapid rate of decline?  Well, the cost of the panels is plunging.  And because investors, regulators and utilities are getting to know solar better, the cost of finance is falling.  This reduces the cost per MWh.  (High interest rates favour coal because the present value of the cost of fuel in future years is low.  Since half the cost of coal is the fuel, this makes coal appear cheaper.)  With renewables, most of the cost is up front, because there is no fuel cost.  So falling interest rates, because of lower risk and greater familiarity,  reduce the cost per MWh. 

Finally, when countries like Brazil, Chile, Mexico, South Africa and India introduce reverse auctions to buy power, because they are contracts with the government, the developers can borrow cheaply.  The competitive auctions have led to plunging contract prices.

Will this rate of decline continue?  Probly not.  Although the panels will go on falling rapidly in price, there are other costs.  Land, the cement bases, the stands, permitting, the inverters (transformers), connection to the grid.  These costs aren't falling nearly as fast as the panels.  But for coal it hardly matters.  New solar farms produce power which is overwhelmingly cheaper than from new coal power stations, and in many countries, cheaper than existing power generated from coal power stations.  And that's without a carbon tax.  Even modest price declines in solar from now on will still drive out coal.  And if the price declines continue at previous rates the world will start shuttering coal power stations  in the next 2 or 3 or 4 years simply on economic grounds.  For example, continued  price declines of just 10% a year mean solar will halve in costs over the next 6 years.  What is already an attractive economic case for solar will become even more compelling.

Wednesday, April 11, 2018

100% green grid within 20 years

I've pointed out before that with the costs of renewables continuing to decline, the economic incentive for electricity utilities to switch to wind and solar will increase over the next few years.  Meanwhile, the environmental and political pressure to close down coal power stations will just intensify and the world gets hotter.  So it is a reasonable conclusion that grids will become greener, possibly faster than many expect.

A couple of researchers at the Australian National University in Canberra agree.

Solar photovoltaic and wind power are rapidly getting cheaper and more abundant – so much so that they are on track to entirely supplant fossil fuels worldwide within two decades, with the time frame depending mostly on politics. The protestation from some politicians that we need to build new coal stations sounds rather quaint.

The reality is that the rising tide of solar photovoltaics (PV) and wind energy offers our only realistic chance of avoiding dangerous climate change.

No other greenhouse solution comes close, and it is very hard to envision any timely response to climate change that does not involve PV and wind doing most of the heavy lifting.

About 80% of Australia’s greenhouse gas emissions are due to the use of coal, oil and gas, which is typical for industrialised countries. The land sector accounts for most of the rest.

Wind energy is an important complement to PV because it often produces at different times and places, allowing a smoother combined energy output. In terms of worldwide annual electricity production wind is still ahead of PV but is growing more slowly. The wind energy resource is much smaller than the solar resource, and so PV will likely dominate in the end.

Complete replacement of all fossil fuels requires solar and wind collectors covering much less than 1% of the world’s land surface area. A large proportion of the collectors are installed on rooftops and in remote and arid regions, thus minimising competition with food production and ecosystems.

[Read more here]


They go on to say:

PV and wind are often described as “intermittent” energy sources. But stabilising the grid is relatively straightforward, with the help of storage and high-voltage interconnectors to smooth out local weather effects.

By far the leading storage technologies are pumped hydro and batteries, with a combined market share of 97%.

The cost of PV and wind power has been declining rapidly for many decades and is now in the range A$55-70 per megawatt-hour in Australia. This is cheaper than electricity from new-build coal and gas units. There are many reports of PV electricity being produced from very large-scale plants for A$30-50 per MWh.

Solar PV and wind have been growing exponentially for decades and have now reached economic lift-off. In 2018, PV and wind will comprise 60% of net new electricity generation capacity worldwide. Coal, gas, nuclear, hydro and other renewable capacity comprise the rest. Globally, US$161 billion will be invested in solar generation alone this year, compared with US$103 billion in new coal and gas combined.

PV and wind are growing at such a rate that the overall installed generation capacity of PV and wind has reached half that of coal, and will pass coal in the mid-2020s, judging by their respective trends.
Together, PV and wind currently produce about 7% of the world’s electricity. Worldwide over the past five years, PV capacity has grown by 28% per year, and wind by 13% per year. Remarkably, because of the slow or nonexistent growth rates of coal and gas, current trends put the world on track to reach 100% renewable electricity by 2032.

This is the optimistic perspective.  As the authors say, it depends on politics.  And fossil fuel producers and their bought politicians are doing their best to slow this transition as much as they can.  For example in Australia we have the idiocy of the far right Monash Forum and the L/NP; in the USA we have the Republicans.  But as renewables and electric cars/lorries get inexorably cheaper and global temperatures inexorably higher, the pressure to go green will become irresistible.  I don't know how the Right will explain away their madness in 10 years's time.   We shall see.

Climate change consensus 97%? Think again.

From ZME Science:

Source: ZME Science


The general trend in the media seems to suggest that there’s a 97% agreement between scientists regarding the validity of climate change. However, that might not be accurate. Recent studies indicate an even stronger agreement.

A century ago, people thought smoking was pretty healthy — some even thought it was good for your lungs. But year after year, the evidence started piling up: smoking wasn’t good for you, it was bad. It causes cancer, heart diseases, and a myriad of other conditions. Of course, the tobacco industry was one of the first to learn about this, but they denied it. They hid the truth, they carried aggressive advertising and lobby campaigns against scientific facts, promoting laws and regulations that worked to their advantage, at the detriment of the general population. Even after the scientific evidence came in, it took decades before public opinion followed — and even more before healthy policies were set in place (in many parts of the world, there still aren’t any proper anti-smoking policies).

Something similar is happening today, except instead of smoking, we have man-made climate change.

There are thousands and thousands of studies documenting climate change and its effects and among scientists, there’s essentially a consensus regarding climate change. While the details and the exact specifics of how it is happening are still very much an area of active research, there’s not much denying that it is happening and that we are causing it.

To portray this, the media often uses the phrase “97% consensus” — likely originating from a 2014 study by Cook et al. entitled “Quantifying the consensus on anthropogenic global warming in the scientific literature“. In the study, Cook analyzed 11,944 peer-reviewed papers published between 1991-2011. Out of them, about a third (4,013) expressed a position on man-made climate change, and 3,894 (or 97%) supported the position that humans are causing climate change. The authors also found that more recent papers were increasingly attributing climate change to mankind, indicating an increasing acceptance level.

[Read more here]


Tuesday, April 10, 2018

Trickle-down economics

A cartoon by Clay Bennett


Tesla 3 production nearly 2,500 per week

Half way towards the 5,000 a week target, which Tesla reckons they'll reach at the end of June.  However, even at 5,000 Model 3s a week, it'll still take almost 2 years for the waiting list to be cleared.  I expect the target will be lifted in June to 7,500 a week by September.  Which now looks eminently doable.  This will, combined with the rapid growth in the new Nissan Leaf, push EV sales to 4% of total US car sales in Q4 2018.  It will also make Tesla profitable. 

The graphic comes from Bloomberg



Monday, April 9, 2018

The rampant idiocy of the Right

The "Monash Forum", a ginger group of rabid-right politicians within Oz's ruling "Liberal"/National (L/NP) government is arguing that we need coal for cheap energy, and if the market won't provide new coal power stations then the government must.  Quite how this squares with the traditional values of the Right -- no subsidies, private sector ownership of the means of production, "let the market decide", small government etc.,  is hard to determine.  In response, the broader L/NP government is pressuring AGL (one of the big 3 electricity and gas utilities) to keep open the aging and worn Liddell coal power station in NSW.  This would be very costly for AGL and electricity consumers.  AGL has already come up with plans for a replacement for Liddell--a mixture of renewables, gas, storage and an upgrade to the nearby Bayswater coal power station--which will be much cheaper than refurbishing Liddell.

(Source)


It will also be much cheaper than building a new coal power stations, which is what the "Monash Forum" wants.   Wind contracts are being signed at A$55/MWh or below, large scale solar at A$70/MWh and BNEF estimates new coal power stations would cost A$130/MWh.  (Incidentally these renewables are now as cheap as or cheaper than "baseload" power sold by the big three into the grid.)  Per MWh delivered, Tesla's " big battery" in South Australia costs A$137 (assuming a 10 year life), which works out at about A$6/MWh per hour of storage.  So 12 hours of storage would add A$68/MWh to the cost of wind, taking it to A$123/MWh, which is below the cost of new coal.  And (a) we won't need 12 hours of storage until renewables form 80% or more of generation (two hours would be more than enough now) and (b), in 5 years time, 12 hours of storage will cost under A$20/MWh.

I've been deeply depressed about the rampant idiocy on the Right. What rational, informed person still thinks climate change isn't happening? What informed person still believes that renewables are more expensive than coal when they are in fact half the cost?

The evidence that there are catastrophic consequences of global warming right now (and not in some distant future) is becoming stronger and stronger. Yet still these idiots want to support burning coal. When did irrationality become the defining characteristic of the Right? WTF?

It's not just with energy and climate change that the Right is quite demented.  Neo-liberal economic and fiscal policies in the English-speaking world have made the bottom 10 or 20 percent of the population even poorer, and in desperation, these ppl have voted for populists and populist policies: Trump, Brexit, One Neuron.  To our cost.

Over the last 5 years, Oz real GDP has risen 10% plus. But real wages have been flat. This is echoed by the US (over the last 30 years) and the UK (over the last 10, where real GDP has risen but real wages have actually fallen), all places where neo-liberalism holds sway. The public has stopped believing in the neo-liberal/neo-con trickle-down theory. But the Libbies still embrace that outmoded religion. For example, the L/NP and the Republicans purport to believe that company tax cuts will somehow, miraculously, raise living standards.

Meanwhile, the Right remain utterly impervious to the failure of their signature policies. Because, otherwise they would lose elections, they boost their vote by picking on minorities and demonising the defenceless, the unemployed, the poor, immigrants.

It's as if it's a religion: facts are irrelevant, honesty is unnecessary, intellectual integrity is superfluous.

Sunday, April 8, 2018

Floods and heavy rains up 50%

Berlin Flood (Source:  The Local.De)


From The Guardian:

Global floods and extreme rainfall events have surged by more than 50% this decade, and are now occurring at a rate four times higher than in 1980, according to a new report.

Other extreme climatological events such as storms, droughts and heatwaves have increased by more than a third this decade and are being recorded twice as frequently as in 1980, the paper by the European Academies’ Science Advisory Council (Easac) says.

The paper, based partly on figures compiled by the German insurance company Munich Re, also shows that climate-related loss and damage events have risen by 92% since 2010.

Prof Michael Norton, Easac’s environmental programme director, said that greenhouse gas emissions were “fundamentally responsible for driving these changes”.

“Trends towards extremes are continuing,” he said. “People have experienced extreme weather already - big switches [between] warm and cold winters - but the frequency of these shifts may be changing.”

“Some of the underlying drivers of extreme weather which were speculative four years ago are now looking less speculative and [more like] credible hypotheses. That is the weakening of the Gulf Stream and the meandering behaviour of the jet stream.”


[Read more here]

We should be moving as fast as possible to shut down all CO2 emissions.  We don't have until the 2050s, because the effects of climate change are happening right now. 

Thursday, April 5, 2018

Amazon should pay more taxes

Cartoon by Jimmy Margulies

(By the way, it should be "let him who ..." not "let he who ...."  says this old latinist and aficionado of inflected languages)

Facts don't matter

A cartoon by Joe Dator of The New Yorker.




EV sales soar in the US

Thanks mostly to the exponential growth in Model 3 production, but also with big increases from the new Nissan Leaf and GM's Bolt EV and Volt PHEV, electric car sales in the US are growing very fast.  (As ever, source of basic EV data is InsideEVs; my seasonal adjustment, my chart package)

When Tesla reaches the magic 5000 Model 3 per week production target (July?  August?), total EV sales will just from the Model 3 alone double from current levels.  Add in the rebound in the Nissan Leaf as US production of the updated longer-range cheaper model picks up, plus reasonable increases in the Bolt and Volt and total EV/PHEVsales should more than double.


By end 2018, EV/PHEV sales will make up at least 3.2% of total car sales, and most likely close to 4%.  Just 3 years ago, EV sales were only 0.6% of total car sales.  A clear flexion point in the technology adoption S-curve. 



World EV sales have slowed after a hectic 2017  (though that may be due to seasonal factors as we only have 4 years of data to estimate them--I'm revisiting the NBER's weights to see if I can improve my program) 

I expect this is just a blip. 



Year on year growth is still running at over 60% per annum.


Coal power station construction declines. Finally.

The amount of new coal power capacity around the world has fallen by a record-breaking 41% over the past two years, while a mammoth 500 coal-fired units have been closed in the past three, according to a new report.

Experts can now foresee what seemed unthinkable just a few years ago: the moment when the global coal fleet actually starts to shrink.

But this news comes as the International Energy Agency said last year global CO2 emissions hit a historic high of 32.5 gigatonnes, following a surge in output from Asia after three years of staying flat.

In that same period the growth of the global coal fleet has diminished dramatically, led by China’s response to the twin crises of air pollution and overcapacity. Even so, it has continued to grow nonetheless.

In the latest Boom and Bust report, analysts from Greenpeace, the Sierra Club and CoalSwarm said that  if current trends continue the global coal fleet will start to shrink in 2022. That is when the number of retirements is set to overtake the amount of new coal capacity.

[Read more here]

(Source)

This is an overly optimistic report, at first sight.  If you removed the 2017 data from the chart above, it would be hard to detect a falling trend.  Total construction of new coal power stations up till 2016 has been trending sideways, not down.  It's true that the peak 2015 construction was offset by a high level of power station retirements but even deducting retirements from new construction the trend is only modestly declining.  

However, the news is actually better than it looks.  First, China's new power station construction is declining fast.  And India's investment has virtually stopped, as the chart of quarterly data below shows.

Source: CleanTechnica

In India, investment in coal power stations has collapsed because the costs of solar power have plunged.  In China, the drive towards renewables is driven not just by falling costs but also by horrendous air pollution.  

The other hope of the coal spruikers was Japan.  After Fukushima, Japan planned to build hundreds of coal power stations to replace the output that would be lost when nuclear power stations closed down.  At the time, coal was still cheaper than renewables.  But today new coal is far more expensive than new renewables.  And Japan has had a rethink.

Japan would seek to make renewable sources central to its energy supply, and ensure a stable flow from weather-dependent solar and wind with advances in battery and hydrogen power technology, under a forthcoming strategy through 2050.

The new strategy, based on the 2015 Paris climate agreement, aims to reduce carbon emissions. A draft version seen by Nikkei sets no numerical targets for the electricity mix and leaves the door open for the use of nuclear energy while aiming to lessen reliance on it.

An energy policy roundtable under the Ministry of Economy, Trade and Industry will present a final draft of the strategy as soon as next month. It will be reflected in an energy plan due out this summer covering the years until 2030, but the strategy will provide longer-term guidance.

Renewables' potential to form a mainstay of Japan's energy supply has grown thanks to falling costs for solar and wind power, as well as advances in digital technology, according to the draft.

[Read more here]

We won't be able to definitively say there's a new, sharply declining trend in new coal power station construction until we get 2018 data.  But the collapse in storage, solar, and offshore wind costs, as well as the ongoing more muted decline in onshore wind, suggest that coal power station construction peaked in 2015, is falling fast, and will likely stop completely within a couple of years.  So, even though CO2 emissions rose in 2017, that is likely the peak, especially when you consider the explosive growth in EVs (next post).

Wednesday, April 4, 2018

So what?

A cartoon by Pat Bagley



Tesla 3 production soars

The Tesla skeptics/haters have had a field day with the "slow" ramp up of Model 3 production over the last 9 months.  One short-seller even claimed that Tesla will be bankrupt in 3 months.

I seriously doubt that.  In the last week of March, model 3 production passed the 2000 mark.  As production expands, not only does cash flow rise (because more vehicles are sold) but profit also rises (because unit costs decline). 

"Q1 production totaled 34,494 vehicles, a 40% increase from Q4 and by far the most productive quarter in Tesla history. 24,728 were Model S and Model X, and 9,766 were Model 3. The Model 3 output increased exponentially, representing a fourfold increase over last quarter."

"The Model 3 output increased exponentially, representing a fourfold increase over last quarter. This is the fastest growth of any automotive company in the modern era. If this rate of growth continues, it will exceed even that of Ford and the Model T."

"We were able to double the weekly Model 3 production rate during the quarter by rapidly addressing production and supply chain bottlenecks, including several short factory shutdowns to upgrade equipment."

"In the past seven days, Tesla produced 2,020 Model 3 vehicles. In the next seven days, we expect to produce 2,000 Model S and X vehicles and 2,000 Model 3 vehicles. It is a testament to the ability of the Tesla production team that Model 3 volume now exceeds Model S and Model X combined. What took our team five years for S/X, took only nine months for Model 3. "

Tesla adds that it expects Model 3 production to hit 5,000 units per week “in about three months,” so maybe July then.

“Tesla does not require an equity or debt raise this year, apart from standard credit lines.”

“The quality of Model 3 coming out of production is at the highest level we have seen across all our products. This is reflected in the overwhelming delight experienced by our customers with their Model 3’s. Our initial customer satisfaction score for Model 3 quality is above 93%, which is the highest score in Tesla’s history.”

“Net Model 3 reservations remained stable through Q1. The reasons for order cancellation are almost entirely due to delays in production in general and delays in availability of certain planned options, particularly dual motor AWD and the smaller battery pack.”

[Read more here]

Total EV/PHEV sales in 2017 in the USA were 200,000 units.  When Tesla produces 5000 units of the Model 3 per week, monthly US EV/PHEV sales of all brands will average 40,000.   This will be almost as many as sold for the whole year in 2012.  A ten-fold increase in 6 years.  And you may be sure that Model 3 production won't peak at 5000 a week.  This is the year that EVs will go mainstream in the US.