An epic Chinese EV price war

 A video from The Electric Viking.   

• China's reached 50% market share for EVs and plug-in hybrids (PHEVs).  Already.  And the rate of growth suggests 70% market share next year and 95% the year after.
• Battery pack prices have halved.  
• There is huge oversupply of EVs in China because of how weak the Chinese economy is.
• Chinese buyers don't trust legacy carmakers to get EVs right, and so won't buy from them.
• EV prices are being slashed in China.
• Chinese profits buoy up Western legacy carmakers profits.  If China is unprofitable, then they're in trouble.

Conclusion:  Western legacy carmakers are in serious strife.  And, logically: Chinese EV manufacturers will turn to exports to survive.  Which suggests legacy carmakers aren't safe even in their home markets.  

Oh, and EVs/PHEVs continue to head inexorably towards market dominance.

 

GB fossil fuel share drops to record low

(To be precise, the share of fossil fuels in electricity generation has dropped to a record low)


From The Guardian

The share of Great Britain’s electricity generated by burning fossil fuels plummeted to unprecedented lows this month, ahead of plans to begin running a “zero-carbon grid” for short periods from next year.

Electricity generated by burning gas and coal fell to a record low of just 2.4% for an hour at lunchtime on Monday 15 April, according to an analysis of data from National Grid’s electricity system operator (ESO).

The same data has revealed that earlier this month the share of fossil fuels in the generation mix taken over an entire day fell to a record low of 6.4%, on 5 April.

The findings lend support to the aims of the ESO to begin the “groundbreaking and world-leading” step of running a zero-carbon electricity grid for Great Britain for short periods from next year.

The new records mark a dramatic shift from 15 years ago, when gas and coal power plants made up 75% of the electricity mix, while renewables accounted for only 2%. Last year only a third of Great Britain’s electricity came from fossil fuels, compared with 40% from renewables.

The research, undertaken by Carbon Brief, found a dramatic increase in the frequency of short periods when fossil fuels made up less than 5% of Great Britain’s electricity generation in recent months.

There have been 75 half-hour periods in the year to date when fossil fuels have accounted for less than 5% of the country’s electricity needs, more than four times the number recorded last year. Just five ultra-low carbon half hours were recorded in 2022, the analysis said.

The new record low took place amid a glut of renewable energy, according to the ESO. At the time, wind power made up about half of electricity generation while solar power accounted for just over 30%. Britain’s nuclear reactors generated more than 13%.

In the US, they think we're communists

In the Red Mars--Green Mars--Blue Mars trilogy, the author Kim Stanley Robinson posits a society dominated by co-operatives, driven not just by the need to survive on Mars (which requires a collective approach) but also a hostility to capitalism and its inherent inequality and greed. The capitalists, billionaires and multi-national corps are emphatically the bad guys.  In these novels, the new members of a co-operative also have to buy their way into the co-op, and should you leave, the co-op would buy back your share. It seems a very attractive alternative to raw capitalism and doctrinaire socialism to me.  I think he must have had the Mondragón co-operative in mind.



From The Guardian

The Basque Country’s Mondragón Corporation is the globe’s largest industrial co-operative, with workers paying for the right to share in its profits – and its losses. In return for giving more to their employer, they expect more back.

When Marisa Fernández lost her husband to cancer a few years ago, her employers at the Eroski hypermarket went, she says, “above and beyond to help me through the dark days afterwards, rejigging my timetable and giving me time off when I couldn’t face coming in.”

She had a chance to return the favour recently when the store, in Arrasate-Mondragón in Spain’s Basque Country, was undergoing renovations. Fernández, 58, who started on the cashier desk 34 years ago, and now manages the store’s non-food section, volunteered to work extra shifts over the weekend along with her colleagues to ensure everything was ready for Monday morning. “It’s not just me. Everyone is ready to go the extra mile,” she says.

Such harmonious employer-worker relations are the stuff of corporate dreams, and they are no accident here: the Eroski retail chain is part of Mondragón Corporation, the largest industrial co-op in the world. As a fully signed-up member, Fernández co-owns part of the supermarket chain that also employs her. “It feels like mine,” she says. “We work hard, but it’s a totally different feeling from working for someone else.”

That sentiment is echoed by Mondragón’s 70,000 other workers. Made up of 81 autonomous co-operatives, the corporation has grown since its creation in 1956 to become a leading force in the Basque economy. Eroski is one of its most conspicuous manifestations, with 1,645 outlets across Spain. In addition to food, the chain has profitable sidelines in white goods, electronics, insurance and holiday bookings.

More than its economic success, though, Mondragón has become a beacon for the co-operative model, as a more humane and egalitarian way of doing business that puts “people over capital”. Every worker has a stake in the company’s fortunes and a say in how it is run, and receives a share of the profits. But the goal is more about creating “rich societies, not rich people”. That means looking after workers during not only the good times but the tough times, too.

The lowest point for Maite Aguirrebeitia, for example, came back in 2013, when, after 20 years’ service, the Mondragón co-operative that she and her husband were affiliated to, Fagor Electrodomésticos, filed for bankruptcy. Demand for its ovens and household appliances had plummeted after the 2008 financial crisis and despite help from a Mondragón “solidarity fund”, it never recovered.

“I felt this overwhelming sense of pain and grief at the time, as if someone close to me had died,” the 56-year-old communications specialist recalls. “Plus we had two kids and bills to pay and so on. The mental stress of it all was huge.”

Rather than thank the redundant workers for their service and wish them on their way, Mondragón committed to find alternative employment for as many of Fagor’s 1,900 or so workers as it could. After temporary stints in five Mondragón co-operatives in 2022, Aguirrebeitia found a permanent placement with Mondragon Assembly, a manufacturer of equipment for process automation.

Although it has meant a shift in career – she now works part-time in human resources, and part-time as a receptionist – the security of having a fixed job is a “huge relief”, she says. “I always felt confident that somehow I’d be looked after. I talked to other people who were out of work at the time and they had none of that. They were out on the street, totally alone. If I’d had to compete in the open job market against all the youngsters coming out of university, I’m not sure I’d have ever found another job.”

Mondragón’s human-centric approach originated far from any business management school. Its roots lie in a socially engaged form of Catholicism that gained ground in the 1940s, during the early years of the Francoist regime. Its initial champion was a Basque-born cleric named José María Arizmendiarrieta, who, in 1941, arrived in the small town of Arrasate-Mondragón, about 30 miles (50km) south-east of Bilbao.

Taking it as his pastoral mission to revitalise the local economy, the diocesan priest set up a technical school for young men. A few years later, he arranged for some of them to take distance-learning degrees in industrial engineering. “After graduating, they all found jobs in conventional companies in the town, but they felt stifled … they wanted more of a say over their destiny, but their employers thought otherwise,” explains Ander Etxeberria, head of Mondragón’s outreach programme.

With Arizmendiarrieta’s encouragement, five of these first 11 graduates decided in 1955 to set up the now defunct Fagor Electrodomésticos. Seeking a model that reflected their Christian socialist philosophy, they turned to the Rochdale Pioneers, a group of tradespeople from the Lancashire town who, more than a century before, had established the world’s first co-operative. That venture grew to become today’s Co-operative Group, home to the UK’s fifth biggest food retailer and its largest provider of funeral services.

Mondragón’s founders adopted wholesale many of the Pioneers’ core tenets. In their modern-day headquarters, located in a renovated 14th-century tower with a spectacular mountain backdrop, Etxeberria counts off the group’s 10 “basic principles”. The list ranges from the sovereignty of labour and democratic organisation (one member, one vote), to wage solidarity and “social transformation” – which includes reinvesting surpluses to create new jobs, supporting local charities and community development projects, and strengthening the Basque Country’s Euskara language. Top of the list is voluntary and open membership – namely, the opportunity for everyone to have a personal stake in the enterprise where they work. As an early version of the principles reads: “The first form of elemental justice that we need to practise is to consider each other as free human beings.”

These values hold true into the present, Etxeberria explains. The salary differential between the highest and lowest paid workers in Mondragón, for example, remains about six to one; for the largest 500 listed companies in the US, the gap is closer to 272 to one. At the year end, members of Mondragón’s co-operatives also decide collectively on whether they should pay themselves bonuses and, if so, how much. This profit-sharing comes in addition to a base pay rate that, on average, is 40% above Spain’s minimum wage.

Despite its social responsibility credentials, Mondragón remains a competitive business. When Etxeberria presses “play” on an introductory video, the screen shows not pictures of happy workers doing yoga but gleaming industrial facilities and straight-faced technicians in lab coats. Overlaying these images are facts and figures that would have mainstream financiers salivating: €10.6bn (£9.1bn) in annual revenues; a dozen research and development facilities; a global roster of blue-chip clients; and a diversified sector spread – industry, retail, finance and education.

The same no-nonsense, professional vibe is on show at Fagor Arrasate, a Mondragón affiliate located on one of the many industrial estates that ring Arrasate-Mondragón, a vibrant town of cafe-strewn streets and busy bars. A specialist in metal presses and stamping systems, Fagor Arrasate boasts several hangar-sized workshops full of robotic machinery and giant components ready for export. “Some of the installations we make for customers can be three to four storeys high, so these are massive, multimillion-euro investments,” enthuses Edorta Mendieta, the venture’s marketing manager.

Pinned to a cork noticeboard beside a busy production line are photos of a recent charity run, a printout of donations to local causes (including €60,000 for a nearby organic food association), and a poster about a forthcoming “women in science” event. In the centre of the board, an A4 sheet of closely printed text gives notice of the co-operative’s general assembly, where next year’s strategy plan will be put to an all-member vote.

Mondragón’s collective spirit also offers an edge with innovation. In a process that the movement refers to as “inter-cooperation”, co-operatives within the group frequently swap ideas between themselves and engage in joint research.

Over the years, many of the best innovations have come from alliances with Mondragón’s homegrown university. Located on a leafy campus in Arrasate-Mondragón, the university was set up with a strong practical bent to both its teaching and its research. So much so, in fact, that the European Commission recently selected it to co-lead a major “dual training” programme aimed at blending academia with business to tackle global challenges such as the climate crisis.

Mondragón’s approach has proved itself profitable and resilient, so could it become a realistic alternative to the modern corporation?

It’s a moot point. Despite their worker-first philosophy, the movement’s leaders are reluctant to denounce the wealth-maximising nature of modern market capitalism. The reason is as simple as it is awkward: Mondragón must actively participate in that same capitalist system for its survival.

This tactic of being “in, but not of” the world of mainstream business has seen the Basque-based movement face charges of double standards. In particular, critics highlight its outsourcing of some of its production to low-wage countries with weaker labour standards, such as China and Mexico. Mondragón argues that it has checks and balances in place to ensure that its foreign business partners uphold workers’ rights, and that keeping costs low is part and parcel of staying competitive. “For us, workers will always come before capital. But capital is still important because without it we cannot fulfil our mission of social transformation,” says Javier Marcos, Mondragón’s director of communications.

Radical as that mission is, its focus is and always has been primarily on el territorio (the local Basque region); less about rewriting the global economic order and more about improving co-op members’ lives. That said, if others want to copy the Mondragón model, then its doors are always open, insists Etxeberria. In the past month alone, he has hosted large groups of policymakers and business students from the Philippines, Brazil and the US. “They come to see if our approach works in practice,” he says. “They all go back pleasantly surprised, I think.”

Young people, in particular, are attracted to the notion of business and entrepreneurship going beyond just the pursuit of profit, but they “don’t know the co-operative possibility exists,” says Ana Aguirre, a graduate of Mondragón University. The 33-year-old now co-runs Tazebaez, a worker-owned consultancy and education provider that she and eight fellow students created during their bachelor’s degree. For the few who have heard of co-operativism, she adds, most relegate it in the folksy, do-gooder box. “The problem is that it’s portrayed as something to do with charity or [philanthropic] foundations, rather than as a credible business model.”

Pursuing a co-operative model is far from plain sailing, however. Numerous hurdles exist. For one, membership does not come cheap. To join a co-operative, workers typically put up a one-off payment of about €17,000 each. Plus, just as they are entitled to a share of any profits, so, too, are they liable for any losses.

Commercial pressures can also prove acute, as Fagor Electrodomésticos’s troubled history shows. The fact that all major investment decisions have to be put to the vote can also make Mondragón’s co-operatives less agile than their conventional competitors. And finding financing can be problematic as the private capital markets are effectively closed to them, admits Fagor Arrasate’s Mendieta: “We can’t incorporate external capital into the co-operative’s share capital because we are governed by the principle of ‘one person, one vote’, which no capitalist investor would accept.”

In some parts of the world, Mondragón’s approach just looks downright weird. No one bats an eyelid at the co-operative model in countries such as Germany, “but with these ideas in Texas or Kansas, you’re basically a communist,” says Mendieta, only half jokingly.

Across Europe, at least, the co-operative model is widespread. In Norway, for instance, co-ops have a strong heritage in the social housing sector. Italy’s Emilia-Romagna region boasts a long tradition of industrial co-operatives similar to that of the Basque Country. And, as well as the Co-operative Group, the UK’s almost 7,000 co-operatives include the mighty John Lewis Partnership, which has a turnover of nearly £10bn. In total, the EU hosts about 250,000 co-operatives, providing 5.4m jobs.

Increasingly, the movement’s footprint is also being seen in company law. Germany has long required corporate boards to have worker representatives, for instance. Similarly, Spanish law allows unemployed people to lump together their unemployment benefit to set up small businesses – known as Sociedades Laborales – as long as they are majority owned by their employees. The rise in mainstream corporations now talking the language of employee autonomy, horizontal management, dignified wages and similar themes suggests co-operativism is leaving its mark on business company practices if not – yet – on capitalist ownership

Back in Mondragón’s fort-like headquarters, Etxeberria is quietly confident about the movement’s prospects. Co-operativism, he says, is a little like zirimiri – the Eusakara word for “drizzle”. “It’s the same ideas that keep falling; they’ll settle eventually.”

Some trenchant and insightful quotes from the Mars Trilogy:

“What we need is equality without conformity.”

“Beauty is power and elegance, right action, form fitting function, intelligence, and reasonability. And very often expressed in curves.”

“Economics was like psychology, a pseudoscience trying to hide that fact with intense theoretical hyperelaboration. And gross domestic product was one of those unfortunate measurement concepts, like inches or the British thermal unit, that ought to have been retired long before.”

“You can't get any movement larger than five people without including at least one fucking idiot.”

“That's libertarians for you — anarchists who want police protection from their slaves.”

“We were outside the world, we didn't even own things -- some clothes. . . . This arrangement resembles the prehistoric way to live, and it therefore feels right to us, because our brains recognize it from 3 millions of years practicing it. In essence our brains grew to their current configuration in response to the realities of that life. So as a result people grow powerfully attached to that kind of life, when they get the chance to live it. It allows you to concentrate your attention on the real work, which means everything that is done to stay alive, to make things, or satisfy one's curiosity, or play. That is utopia.”

“And because we are alive, the universe must be said to be alive. We are its consciousness as well as our own. We rise out of the cosmos and we see its mesh of patterns, and it strikes us as beautiful. And that feeling is the most important thing in all the universe—its culmination, like the color of the flower at first bloom on a wet morning.”

“Very few people ever bother to find out what other people really think. They are willing to accept whatever they are told about anyone sufficiently distant.”

“History was like some vast thing that was always over the tight horizon, invisible except in its effects. It was what happened when you weren't looking -- an unknowable infinity of events, which although out of control, controlled everything.”

“That is what capitalism is—a version of feudalism in which capital replaces land, and business leaders replace kings. But the hierarchy remains. And so we still hand over our lives’ labor, under duress, to feed rulers who do no real work.”

“That's a large part of what economics is - people arbitrarily, or as a matter of taste, assigning numerical values to non-numerical things. And then pretending that they haven't just made the numbers up, which they have. Economics is like astrology in that sense, except that economics serves to justify the current power structure, and so it has a lot of fervent believers among the powerful.”

[Quotes from Goodreads]

Is renewable energy cheaper than fossil fuels?

Answer:  Mostly, yes, but there are complications

From The Climate Brink.

Is renewable energy (RE) cheaper than fossil fuels?

To begin to answer this, we need to define what cost we’re talking about. Let’s first talk about the cost of RE energy vs. fossil-fuel energy on a grid that’s dominated by dispatchable power, such as fossil fuels. This is what most electrical grids are like today.

 

For a grid dominated by dispatchable power (i.e., power sources that can be turned on or off at will), the intermittency of wind and solar imposes no costs. Thus, the relevant cost comparison is between the so-called Levelized Cost of Energy (LCOE) of the various energy sources:

Virtually all credible analyses agree that RE has the lowest LCOE. Therefore, it is the cheapest energy source for grids that contain a lot of dispatchable power.

 

This explains why, for example, 95% of the power scheduled to be hooked up to the ERCOT (Texas) grid is RE (solar, wind, or batteries). Natural gas is 5%.

 

For a grid that’s mainly fossil fuels, every kW of renewable power (RE) you add displaces a kW of expensive and dirty fossil fuel power. But, as the grid gets more and more RE, that changes. At high levels of RE deployment, the intermittency of the wind and solar means that you need to add several kW of wind and solar to displace a single kW of fossil fuels. This drives up the marginal cost of RE energy.

 

In addition, high RE levels mean that RE is competing with the most efficient and cheap fossil-fuel generation, some of which have not yet been paid off. Additionally, the more RE you add, remaining RE sites are higher cost and lower quality.

The net result is that, beyond some point, the price of energy on the grid starts increasing as you add RE. Qualitatively, the price of electricity vs. RE deployment looks like this:

Right now, around 20% of our electricity comes from wind and solar and this is already saving consumers billions of dollars a year. As we increase RE deployment, the price of electricity will continue to decline and consumers save money.

 

Then we reach the minimum price point. One study from NREL concluded that this occurs when RE penetration reaches 57% (in 2050). At this point, electricity produced on this grid is cheaper than a fossil-fuel heavy grid and, as a bonus, we’re also emitting a lot less CO₂.

 

As we move beyond 57%, the declining value of wind and solar to the grid means the price of energy increases. However, it remains below what we’re paying today for a fossil fuel grid until we get to around 90% RE.

 

Let me repeat for those in the backrow: we can get to a 90% RE grid and pay about the same as we’d pay with a fossil-fuel heavy grid. And this doesn’t account for the external costs of fossil fuels (see below).

A significant amount of the discourse about RE focuses on the cost of achieving net zero by 2050, which requires completely eliminating fossil fuels. No one knows how much this will cost, but some studies have produced eye-popping numbers: 

Many analyses have looked at this goal and they agree that a lot of the costs of reaching net zero are driven by the cost of phasing out the last few percent of fossil fuels. The reason is that the last few percent of emissions are the hardest to abate and the ones for which technology to replace fossil fuels is expensive or undeveloped. For example, decarbonizing long-distance airline flights is one of the last things we’ll decarbonize because it would probably require biofuels, which could have very high costs.

 

This is quantified in this plot, which shows the incremental abatement cost (orange line) as a function of how much RE is on the grid. For a 95%-RE grid, the abatement cost is $200/tonne, increasing to $930/tonne for 100% RE.

Figure 1 of Cole et al.

Thus, it’s easy to look at the price tag for getting to net zero and conclude, “Wow, this is too expensive.” But that misses the fact that the cost of getting to a slightly lower value, e.g., a 90% clean-energy grid, is actually quite modest.

 

These net-zero estimates also hinge heavily on future innovation — a variable notoriously difficult to predict. History has shown us, particularly in the last decade, that technological advancements can drastically outpace predictions, as seen with the enormous drop in the cost of solar panels, which no one predicted.

 

External costs

All of these discussions focus on the market price of energy. Such a discussion neglects the extensive subsidies that distort the energy market. While RE sources receive financial support, the subsidies for fossil fuels are substantially larger and more ingrained within global economies.

 

Moreover, the price of fossil fuels seldom reflects their full societal costs — what economists call externalities. Recent estimates of the cost of climate impacts puts it around $185/ton of CO₂ emitted. These costs are not included in the cost of fossil fuels.

 

Air pollution from fossil fuels kills millions of people every year. Like the climate impacts, the costs of this are not included in the price. Fossil fuels have also been linked to significant political and social instability. For instance, the U.S. invaded the Middle East twice in the last 35 years in order to stabilize the oil supply. The Russian invasion of Ukraine is intimately tied to fossil fuels. These costs are also not included in the costs of fossil fuels.

 

If we added these externalized costs to the cost of fossil fuels, the argument increasingly tilts in favor of RE.

 

Summary

In any complex discussion, you need to carefully define the question you’re asking. Much of the discussion around renewable energy focuses on net zero, because that’s what we ultimately need to aim for. We really don’t know how much achieving net zero by 2050 will cost because it will depend to a large extent on future innovation.

 

But a large chunk of the cost of net zero is driven by the last few percent of decarbonization. If you talk about, say, a 90% clean grid, the cost of achieving that using today’s technology is approximately zero. And this cost comparison excludes the external costs of fossil fuels: climate impacts, air pollution, geopolitical instability. Taking all factors of those into account, there’s no question that we can largely decarbonize today and end up with a better economy and cleaner environment.

 

I found this article extremely enlightening.  It put into words something which I had only intuitively understood.  But it highlights how the cheapest RE now might not be the cheapest RE in 2040 (ignoring of course technological advances).  For example, CSP (concentrated solar power) is more expensive than solar panels.  However, it can produce dispatchable electricity, which means it will be very valuable for that last 10% of electricity supply.  Another example:  SMRs (small modular reactors) are prolly 3 or 4 times as expensive as solar, now.  But to convert solar into dispatchable power would require at least 12 hours of storage.  That's still very expensive, though no doubt battery costs will continue to decline.  But so might the costs of SMRs.  Again, for that last 10%, SMRs might be the answer.    Yet another example: power-to-gas.  Using green methane (produced using green electricity to make hydrogen by electrolysis, which is then converted into methane by the Sabatier process) to run peaking gas plants will be expensive, but again, makes sense for the last 10%.

We may have an answer sooner than we thought.   The state of South Australia has been steadily increasing the percentage of renewables in its grid for 17 years.  So far this year, it has averaged 75%.  It could reach 100% within 5 years.  Now, this isn't a perfect test for how high renewables can go, because SA (unlike, say, ERCOT) has high-voltage links with other grids, so it can buy or sell power to the other states.  Nevertheless, we will get a clear idea of the issues quite soon.