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.

Saturday, December 3, 2016

0.2 ℃ per decade

There are still people out there who say that there has been a pause in the rise in global temperatures.  "Tamino" (who knows more about statistics than I've forgotten) looks at the data.  His explanation is so clear even I can understand it.  And the rise in temperatures since 1998 hasn't been much different from the rise before, roughly 0.2 ℃ per decade.  In other words, no slowdown.

0.2 deg. C per decade is 1 ℃ every 50 years.  And that's before powerful feedback mechanisms have got underway.  For example, the "compost bomb" .  Or the melting of methane clathrates.  As I keep on pointing out, moving to replace all coal-fired electricity generation by renewables will not raise the price of electricity, it will not cause an economic collapse, it will not cause lower living standards.  But not moving towards a green energy system surely will.

[Source of all charts]




Thursday, December 1, 2016

The world's largest solar farm



The world's largest solar plant has just been opened in India.  It's in Tamil Nadu in the south, where insolation is high, but not as high as in inland Australia. It has a capacity of 648 MW (megawatts), producing the about same amount of power as the Fort Calhoun nuclear power plant in Nebraska used to.  Except that the solar farm took just 8 months to build, while a typical reactor will take 4 to 6 years (or longer!), while leaving behind toxic by-products with a half-life of thousands of years. The project is comprised of 2.5 million individual solar modules, and cost $679m, or about $1 million per MW.  [Read more here]

The Topaz Solar Farm in California produces 1.3 millon MWh of power per year and is a about 1/5th smaller than the Tamil Nadu plant. So a single solar farm the size of the Tamil Nadu one (remember Australia has solar resources better than  India's or California's, so output should in fact be higher) would provide enough power for about 250,000 average Australian homes, as average per household electricity usage in Australia is 5817 kWh per year.  Australia has 5,453,000 households, so 22 such farms, costing a total of about US $15 billion, would provide power for all of them.  In practice, much of the PV capacity would be on rooftops of houses, schools, factories and shopping centres, not in solar farms.   Residential consumption is 25% of total Australian electricity consumption.  So for $60 billion, we could have 100% green electricity.

We will need storage for the evening and the morning peaks.  The new Powerwall battery from Tesla stores 14 kWh per battery, and costs US$5500.  So to provide the storage equivalent of one Powerwall per household, which would store a bit less than  a household's daily demand, US$30 billion would be needed.  However, although the Powerpack industrial-scale battery pricing hasn't been revealed, it will likely be about half the cost of the retail product.  Which means for $30 billion half of our daily demand could be backed up by batteries.

Let's do it over the next 20 years.  That amounts to US$4.5 billion a year, but progressively less in future years as solar and battery costs continue to fall.  That's less that half a percent of GDP.  And we would have to spend some of that money anyway, because our generating fleet of coal power stations is getting old and will need replacement.

I've ignored existing renewables, I haven't included the likely construction of several CSP (concentrated solar power with storage) plants, or the cost of new interconnectors between the eastern seaboard and South Australia with its rich wind resources.  But the picture is clear enough.  In twenty years we could reach 100% renewables for a tiny percentage of GDP.

The current Liberal-National government's policy is the utterly feeble Direct Action, which involves paying polluters not to pollute.  The government spends its time denigrating any move towards renewables and telling lies about how much renewables would cost and how they would damage "energy security".  They ask why we should do anything when India and China are not.  But next year India will become the third biggest solar operator in the world, and despite having 7% a year growth in electricity demand, expects to produce 40% of its power from renewables by 2030.  China is already by far the largest installer of wind and solar in the world, and for the last couple of years the growth in electricity demand has been more than supplied by renewables plus nuclear.

Saturday, November 26, 2016

Cost of transmission grid

(Source)


Yes, so renewables are cheaper than coal, and soon gas.  But what about the need for power lines to connect the places where there is lots of wind or lots of sun with the places where there is demand for electricity?  Many studies have suggested that a well-connected grid reduces the need for storage, because while the air may be still at one place, at another the wind is blowing, and while it may be cloudy at point A it remains sunny at point B.

I have seen few studies showing what such lines add to the cost of renewables.  So let's make a rough and ready estimate using the new Plains and Eastern Clean Line (1) (2), which  will be an HVDC (High Voltage Direct Current) line running east-west from the Oklahoma panhandle across Oklahoma and Arkansas into Tennessee, where it will connect with the Eastern Interconnection.  It will have a capacity of 4000 MW and will cost $2.5 billion and will be 720 miles (1150 kms) long.

So what will it cost per MWh?

Assume current flow varies randomly between half and all of capacity, but averages 75%, then it will have a capital cost of $833,000 per MW (2.5 billion/3000).   Assume an interest charge of 5%, and that the capital cost is amortised over 25 years, and the annual cost is $75,000 per MW. But that's the cost of the capacity.  It will operate for 24 hours a day and  365 days per year.  So that $75,000 million per MW per annum has to be divided by 24 (hours) * 365 (days) to get cost per MWhour.  That's about (on my back of the envelope estimates) $9.3 per MWh per 1000 kms.  Wind costs before tax credits average about $50 per MWh in the US though in the wind corridor running up from Texas through Oklahoma and Kansas to Minnesota and the Dakotas the cost is $30 or less.  The distance from South Dakota to NYC is about 2,400 kms, so the cost per MWh of transmission from the wind corridor to the eastern States would be about $22/MWh.  Or less; because you would still need only two transformers, one at each end.  The point is, even including a power line which reaches halfway across the continent, the cost of far away wind-generated electricity would still be lower than the cost of local coal which at its cheapest is $63/MWh, but averages around $100/MWh.

What about transmission and transformer (inverter) losses?  There is a transmission loss of 3.5% per 1000 km with an HVDC line.  There is also energy loss when AC is converted to HVDC and back again--but the grid is full of these losses.  At any rate, a power line running from South Dakota to New York would lose 7% in transmission and (say) 10-20% in conversion.  That would increase the cost from $22/MWh to $30.  At $30 for the power from the wind turbines, that's still cheaper than coal.

After I wrote this is discovered this source, which estimates median cost of transmission at $15/MWh, suggesting I've (by chance) got the calcs about right!  Interestingly, there seem to be significant economies of scale, with the cost of the larger projects at the lower end.

The cost of a bigger and better integrated grid is not an argument against renewables, even if the source of the energy is 2,400 kms away.  Wind and solar are still cheaper than coal.


Sunday, November 20, 2016

Solar roof tiles cheaper than conventional tiles

A month or so ago, Elon Musk unveiled the new Tesla/SolarCity solar roof tiles, tiles which make up the roof but are also solar panels.  They look really classy, and are much tougher than conventional tiles.  You can see the tiles and what they look like in this shortish video by Elon Musk:




 In the video, Elon said that the goal of Tesla's solar roof tiles was to make them as cheap as a conventional roof plus the cost of the electricity they save.

But a couple of days ago he announced that the roof would cost less than a conventional roof even without considering the cost of electricity saved:

He announced that the cost of a Tesla glass tile solar roof would actually be equal to or slightly less than a conventional roof. And no, that is not after deducting the value of the electricity it generates over the next 20 years or so. That is right now, today, as soon as it is installed.   
How is that possible? Elon explained to the audience that a lot of it has to do with the current supply chain for roofing materials, which he said is incredibly inefficient. It turns out, the glass tiles weigh up to 80% less than conventional roofing materials, especially ceramic tile or concrete tiles. Both of those are very popular in many locations around the world, especially southern California and the Mediterranean countries. Not only do the Tesla glass tiles weigh less, they are less fragile, which means less loss for breakage. 
Much of the cost of conventional roofing materials can be attributed to shipping all that weight over long distances. 

(Read more here)

You can see why Elon was excited.  As he says, why wouldn't you choose solar roof tiles?  They're the same or cheaper than conventional tiles, they're lighter, they're stronger, they look as good or better, and they produce electricity.

Of course, people with existing roofs might not replace them, even if they want solar.  But given how beautiful the tiles are, there is probably a very large market, and certainly, it will make a lot of sense to go with solar roof tiles if you're building a new house.  Along with the new cheap Powerwall and Powerpack batteries and electric cars and lorries, generation and storage will be transformed.