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.

Thursday, July 20, 2017

How much land?

Monument Valley, Utah (Source)


I've mentioned this before (I think) but it's worth repeating.  How much land would be needed for solar panels to provide all the electricity needed to power the whole of the USA?  Elon Musk:

“If you wanted to power the entire U.S. with solar panels, it would take a fairly small corner of Nevada or Texas or Utah. You only need about 100 miles by 100 miles of solar panels to power the entire United States.” 
 “The batteries you need to store the energy, to make sure you have 24/7 power, is 1 mile by 1 mile. One square mile. That’s it.” 
“People talk about fusion and all that, but the sun is a giant fusion reactor in the sky. It’s really reliable. It comes up every day. If it doesn’t, we’ve got bigger problems” 
Elon said a blend of many power sources would be needed at first. “We’ll need to be a combination of utility-scale solar and rooftop solar, combined with wind, geothermal, hydro, probably some nuclear for a while, in order to transition to a sustainable situation,” Musk explained. 
[Read more here]

Of course, we won't be building a single giant solar farm on these lines.  There will be many large solar farms but there'll also be rooftop solar.  The 10,000 square miles needed would be spread across many places, large and small.  Obviously Musk favours solar as the solution to our renewable energy needs,  but that's not a workable solution for high latitudes, where wind is a much more reliable source of electricity in winter, and even then you will need seasonal storage.  And a mix of wind and solar produces a more stable combined output than either individually.  But his point is well made.  In sunny desert places we need very little space to produce enough electricity, and even less space to make it dispatchable.

Australia Idiocy

The idiot holding a piece of coal is Barnaby Joyce, Oz's deputy Prime Minister, leader of the National Party which is part of the ruling coalition.

Source

Sunday, July 9, 2017

A New Tony Seba speech

Tony Seba calls it "God Parity" when solar plus storage falls below the cost of transmission.


This is the latest Tony Seba speech. It's long but eminently watchable.

He makes the usual point with the two pictures of the same New York street in 1900 (with just one car, the rest horses) and 1913 (all cars except for one horse-drawn carriage); of how AT&T (the inventor of the mobile phone!) hired McKinsey and Co in 1985 to forecast total mobile phone demand by the year 2000, and were 120 tmies out; and how Kodak (the inventor of the digital camera !) went from record profits in 2000 to bankruptcy in 2012 as conventional camera sales collapsed.

He pointed out that technological adoption rates (for successful technologies) are ALWAYS S-curves,  starting slowly then accelerating, and only peaking out when they approach 100% market share. Over the last couple of decades,  the S-curves have become steeper: new technologies are being adopted faster.

Lithium ion batteries fell in cost by 14% per annum from 1995 to 2010.  From 2010 to 2014 the rate of decline accelerated to 16% per annum.  From 2010 to 2016 it accelerated again to 20% per annum [which implies that in the last couple of years it has been higher than 20%, which we know is true]  For Con Ed (a US utility) 1/3rd of generating assets are used for just 6 hours a year.  So even if batteries are too expensive to be used for 3 or 4 or 5 hours of time-shifting power output, they are already cost competitive for these brief periods of peaking power.  By 2020 or so (3 years away!) it will cost the average American consumer just $1 a day to store 24 hours of electricity demand.  But disruptions starts earlier.  The most profitable part of utility sales is the supply in the afternoon-evening peak which is just 6 hours. Already tropical islands are switching to 100% solar+batteries because it is cheaper than diesel.

ICE (internal combustion engine) cars, i.e., petrol/diesel cars convert just 17-21% of the energy stored in the petrol/diesel into motion; electric cars convert 90-95%.  Plus electrons are much cheaper to transmit than atoms.  He gives the example of a Jeep Liberty which would cost $15,000 for 5 years of "gas" (i.e., petrol) vs $1565 if it were electric.  Petrol cars have 2000+ moving parts (transmission, driveshaft, clutch, valves, differential , pistons, gears, carburettors, crankshafts ....) EVs 20.  Reflecting this, Tesla has offered an infinite mile warranty.  Biggest cost of maintenance is tyres. In 2013 he drew the battery cost curve which projected an SUV at $35-$40K in 2017-18, $29K by end 2019, and $22K by end 2022 for cars with over 200 miles range.  People said he was mad.  But we have the Chevy Bolt, the Tesla Model 3 and soon the new Nissan Leaf.

Lidar (needed for autonomous vehicles) cost $70,000 in 2012, $1,000 in 2014, $250 in 2016.  $90 Lidar on the way. World’s first 1 teraflops computer cost $46 million in 2000 and covered 150 square metres.  2016, a 2.3 teraflops computer by Invidia cost $59, and is about the size of a laptop.  Invidia expects a 1000 times improvement by 2025.  All these forces together will lead to transport as a service: autonomous cars which you will only use when you need them (the average car is used for only 4% of the time—the rest of the time, it’s parked) Per mile, costs of transport will drop 10 fold.  The (ICE) used car market will collapse. ICE car companies will have to compete with zero-value used cars and transport as a service which will be 10 times cheaper.  By 2030, the car fleet will be 80% smaller.  Oil demand will peak in 2020, and will be 30% lower by 2030.

A newly-built Danish school gets 50% of its electricity from solarpanels—in its walls.  Copenhagen is 55 degrees N, 3 degrees south of Juneau in Alaska, and 5 degrees north of Vancouver.  If they can do it, 90% of the world can.  Installed solar capacity has doubled every 2 years since 2000 (a 40% per annum growth rate)  Solar provides 1.5% of total world electricity, but it is just 6 doublings—12 years—away from providing 100% of world electricity.  By the end of this year, solar will be at or below grid parity in 80% of the world.   The falling cost of rooftop solar will soon fall below the cost of transmission, never mind generation.  Generation will be distributed, like an internet of energy.


When I watch Tony Seba, I am optimistic about us—mankind—doing enough to stop runaway global warming.  Solar is just getting cheaper every year, and if it continues growing at anything like the rate it is now, we will cut CO2 emissions by 30% over the next 15 years.  Electric cars will dominate the market in 15 or 20 years, and that will lead to a further cut in emissions from transport by 30% plus (remember a big chunk of oil demand is for stuff like tarmac or as feedstocks for plastics).  If we can also cut the emissions of iron and steel, cement production, and air transport we will be able to reduce emissions by 70% over the next 20 years.  This is far better than the IEA (International Energy Agency)’s  projections which assume emissions will keep on rising for decades.  Of course, you then have to deal with dimwits like Australia’s “Liberal” party, which now wishes to subsidise a coal-fired power station, which no utility will build (because it’s so much more expensive than renewables.)  But I hope intelligence will win.

Saturday, July 8, 2017

Telsa to build world's largest battery bank in South Australia

Source


In this post, I talked about Elon Musk's amazing offer to build a battery bank in South Australia which would "solve SA's power woes".  Well, after a competitive tender, Tesla has announced that it will, in co-operation with the French alternative energy company Neoen, build the world's biggest battery bank in South Australia.  It's maximum output will be 100 MW, which is 3 times larger than any other battery bank, and it will store 129 MWh of electricity, which is 1.6 times the Aliso Canyon battery bank in California.

Musk said that a failure to deliver the project on time would cost the group $50 million, which suggests that this is roughly the cost, since Musk is sticking by his promise to build it in 100 days or it would be free.  It would provide 1/15th of South Australia's electricity demand for 80 minutes.  This doesn't sound like a lot, but it's not meant to provide power overnight, say, or for the afternoon peak.  It'll work a bit differently:

The hourly averages of wind power generation can be predicted with almost complete accuracy 24 hours out (and even a week out is a good indication)  - and the more wind you have the more accurate. Solar is even more predictable. What's difficult is the 5 to 15 minute prediction. Will we have 190 MW or 177 MW in exactly 15 minutes time? That is the trick. 
And that's exactly what a big battery allows you to plan for. What you do is smooth the gaps between generation and load. If that gap starts to grow toward 100 MW (the size of your battery) and you don't have anything else ready to go, THEN you start your diesel (gas) generator. And you turn it off as soon as a cheaper source comes [back] online.  [Hat tip to RobertAussie]

The battery bank will be used to prevent the kind of cascading failures that occurred last (southern hemisphere) summer in South Australia.  When a big generator or a power line goes down, it causes voltage and frequency on the grid to "jerk".  This can cause other generators or grid lines to "trip", which cause further failures potentially leading to a system-wide collapse.  Unlike other forms of storage (CSP, pumped hydro) or gas peaker plants, batteries can respond virtually instantaneously to fluctuations in the frequency or the voltage of the grid.  This makes a blackout like those which occurred last summer much less likely.

It's not big enough though to solve the problem of time-shifting.  Demand peaks in the late afternoon, when the sun is already past the meridian, and continues into the night when there is no sun.  And although wind supply is forecastable, it's not fixed.   To reach 100% renewables, SA will likely require 5 hours of storage, plus an additional interconnector via Broken Hill to the east coast NSW grid.  It seems very likely that South Australia will build a CSP plant near Port Augusta in the state's north (lots of sunshine there).  The Federal government has already agreed to to tip in $110 million to help fund it at a low interest rate as part of a deal to get the support of Nick Xenophon in the Senate.  And you may be sure that if this battery bank works as expected, there will be others: after all, at this cost, one hour's storage would be just $750 million.  But it is a beginning.  It emphasises yet again that at some point a 100% renewable electricity supply is feasible, and as the cost of renewables plunges, also inevitable.

Read more here:

Tesla to build world's biggest lithium ion battery in South Australia

Elon Musk's big battery brings reality crashing into a post-truth world



Wednesday, July 5, 2017

World EV sales % reaches new record

EV (and PHEV) car sales as per cent of total global new car sales reached 1.7% in May.  Notice that the slope of the line is increasing--the switch to EVs is accelerating.



US EV/PHEV sales have levelled off.  I expect it's a case of reculer pour mieux sauter, as the market waits for the release of the US$35,000 Tesla 3 and the new extended range Nissan Leaf.




(Source of basic data Insideevs, OICA, and St Louis Fed; my seasonal adjustments and estimates; EV= electric vehicle; PHEV= plug-in hybrid electric vehicle)