by Judith Curry
A few things that caught my eye this past week.
U.S. energy politics
Obama signs energy efficiency bill into law [link]
In testimony to the Senate Energy Cmte, @TedGayer warns against overly prescriptive mandates for #energy efficiency: [link]
Oklahoma Becomes First US State To Defy EPA On CO2 Rules [link]
The political and legal fights shaping up over EPA’s clean power plan.[link]
Excellent analysis by legal scholar Richard Epstein: Clean Coal Plan in the EPA-dubious law, dubious economics [link]
The Clean Power Plan Is No Climate Fix [link]
Tesla
How Tesla’s energy storage play could take flight – or flop [link]
Why Tesla’s Powerwall is such a big deal: Market Will Grow 12X 2014-19 [link]
Mashable: Analysis of Tesla’s battery plans [link]
Solar/Battery Systems Unlikely to Threaten the Grid Anytime Soon [link]
Elon Musk and the insane demands of success. [link]
New energy technologies
Innovations signal a bright energy future: [link]
Neat/wild idea: use waste CO2 to create a giant underground battery [link] …
Liquid Batteries for Solar and Wind Power [link]
Nuclear
Do nuclear plants take long time to build? Not in China, 8 (!) plants coming online in 2015 & that’s just a start [link]
Renewable energy
Work begins on US’ first offshore wind farm [link]
Here’s why solar photovoltaic power is eventually going to be ubiquitous: [link]
Hawaii’s Advanced #Energy “Postcard From the Future” [link]
#Drought crimps hydroelectric power generation across Western U.S. [link]
Economics
How do electric utilities make money? [link]
JC note: politics and policy issue coming tomorrow. Do you prefer having energy split off as a separate edition (when warranted by news?)
Having energy separate is a great idea. It is a huge field, the yin to climate yang. Policy politics is a third z dimension over both.
well this week there was ALOT in energy, not much in policy/politics. But I think I will go with three, easier to discuss
curryja – excellent to have a separate energy review.
Rud Istvan,
+1
I agree. ~70% of global GHG emissions are from energy. If people want GHG emissions mitigation policies, then GHG emissions policy, climate policy, UNFCCC negotiations for international agreements and targets needs to focus on energy policy.
Agree – separate energy.
I appreciate the extra energy focus (and policy too), especially when there are a lot of links in either area.
Pingback: Week in review – energy edition | Enjeux énergies et environnement
The liquid battery MSM link is naive. True, flow batteries are the only grid scale battery technology on the the horizon. Cause energy is stored in the electrolyte not the electrodes. And the electrolyte tanks can be arbitrarily large while holding electrode costs small. False, since not new. Experiments at various scales have been around for 20 years using various chemistries. All pilots to date have had unacceptible cost and lifetime issues, although serious venture capital has moved into flow batteries in California. Essay California Dreaming.
http://www.vox.com/2015/4/28/8506953/solar-photovoltaic-future
The assertion that PV is sustainable is unsupported. Energy Returned on Energy Invested (ERoEI) says solar PV is not and probably never will be sustainable. Its ERoEI is not sufficient to support modern society and replace itself: http://bravenewclimate.com/2014/08/22/catch-22-of-energy-storage/ . That’s now, it will be even less sustainable as per capita energy consumption continues to grow indefinitely.
Yes. And that is necessary to maintain frequency control.
Solar PV is not sustainable:
ttp://bravenewclimate.files.wordpress.com/2014/08/morganesfig1.jpg
http://bravenewclimate.files.wordpress.com/2014/08/morganesfig2.jpg
http://bravenewclimate.com/2014/08/22/catch-22-of-energy-storage/
Re: “A solar future isn’t just likely — it’s inevitable” http://www.vox.com/2015/4/28/8506953/solar-photovoltaic-future
So what? It’s irrelevant. We need a transmission system to get power from suppliers, whether they are distributed or centralized to the consumers. The big consumers are industry, not residential and commercial. You have to be able to get higher power to concentrated, high power demand, industrial consumers. The grid is the really big cost, and having distributed generators does not reduce the requirement for a reliable grid that can supply peak power demand to consumers.
I’d like to hear what Planning Engineer has to say on this. I don’t believe it is correct.
missing chart intended to be displayed above ‘Society’s Hierarchy of Energy Needs’ in the comment above:
https://bravenewclimate.files.wordpress.com/2014/08/morganesfig1.jpg
The text explains that technologies with an ERoEI less than 7 (or 14) are not sustainable.
This 6 minute video compares an electric Ford Focus and 1909 electric car in New York. The 1909 car was really good.
JAY LENO COMPARES NEW AND 100-YEAR OLD ELECTRIC CARS
Storage would seem to be a great tool for making not only alternatives but all electricity more efficiently distributed.
And like most consumers, all I want from the electricity is availability, reliability, and low cost – if that’s solar – great!
But, I can almost hear the shift from those assailing big oil and energy companies to complaints about big battery.
And I can’t help but ask again ( I may have missed some more definitive discussions ) Does Solar Energy Cause Global Warming?
This Gizmodo story and albedo forcing seen in this image seem to say yes:
http://i.kinja-img.com/gawker-media/image/upload/s–6-oCmtHU–/c_fit,fl_progressive,q_80,w_636/pd6ab7yahnng5lahs2bi.jpg
Well, it requires we burn fossil fuels to make them, so, if you believe burning fossil fuels causes global warming then, yes, solar energy causes global warming.
http://bravenewclimate.files.wordpress.com/2014/08/morganesfig1.jpg?w=440&h=342
http://bravenewclimate.files.wordpress.com/2014/08/morganesfig2.jpg?w=440&h=306
http://bravenewclimate.com/2014/08/22/catch-22-of-energy-storage/
Even better, if you use your solar electricity to perform work, heat is created. It has to go somewhere, I guess. Maybe it goes into the deep ocean where it has no effect, and can’t be measured.
Ain’t no tortoises under them panels.
Here’s a reality check for inventors, investors, enthusiasts and advocates as to how long it takes for technology inventions and ‘breakthroughs’ to reach maturity and become economically viable.
– Solar thermal engine 100 years to get to 0% of total world electricity generation
– PV: 60 years to get to 0% of total world electricity generation
– nuclear: 60 years to get to 18% and now down to 12%
– hydro 130 years to get to 16%
– gas turbines: 220 years
– steam turbines: >120 years
– diesel engines: >120 years
– batteries: 200 years
This is how long it’s taken to develop these technologies to the state of maturity they have reached now.
It takes much longer for large, high cost, long life technologies, such as the major components of the electricity system, to reach maturity than it does for small, cheap, short life technologies like computers, phones, cars etc. The reason is that the units last longer so replacement takes longer so learning by doing is much slower. New models of iPhones are released yearly or more frequently. It’s decades between new generations of nuclear power plants. We are up to Generation III of nuclear power plants after 60 years. We are still using light water reactors which use only 1% of the available energy in the fuel. We hardly started using breeder reactors commercially – they provide the world’s energy needs virtually indefinitely. Then there’s fusion.
Great comment. Gets into installed base, stranded costs, innovation lag, and lots of stuff us business guys have to manage lest we get fired. Becomes a function of market growth. Higher growth means more newer better stuff. In that alone, China has a huge advantage. Every coal plant they have built since 2008 is USC, with efficiencies about 45%. The US has just one such unit. The average US operating coal fleet efficiency is 34%.
Australia gets 75% of its electricity from coal. We have no USC plants and (I think) only one supercritical.
If there is an all-gain policy for all it would be the modernisation of coal power. Trouble is, we’re supposed to pretend that coal power isn’t there, or shouldn’t be there, or won’t be there. Meanwhile, it’s there, should be there and will be there.
Coal power is like the ageing and neglected watchdog who can still bark and nip. But wind and solar, the lapdogs, get the cuddles and the the choice cuts.
Don’t you get it? It was never about the stick?
http://attemptedbloggery.blogspot.com.au/2013/06/the-dogs-birthday.html
How much infrastructure that uses gasoline, diesel, and kerosene needs to be replaced? Jumbo jets, fishing boats, agricultural equipment… these have lifetimes of many decades as does a legion of other power toys that are indispensable to the modern world. Natural gas and coal fired power plants are just one piece of a much larger puzzle.
There are no economically viable alternatives to hydrocarbon fuels. There are uncountable trillions in existing infrastructure built around those fuels. Using electricity for many if not most of the applications is impractical to impossible.
The alternative energy source of the future is indeed the sun. Combined with synthetic biology solar energy and atmospheric CO2 can be cheaply converted to synthetic liquid fuels that are direct replacements for gasoline, diesel, and kerosene. All the distribution and end-use infrastructure remains the same. Only fossil fuel extraction and refining industries go the way of the dodo.
http://en.wikipedia.org/wiki/Synthetic_biology
Synthetic biology approaches to biofuel production
http://www.darpa.mil/our_work/bto/programs/living_foundries.aspx
Agree!. That’s why the future lies in producing hydrocarbon fuels for transport. But not from low energy density sources like solar. The solution is clearly to produce hydrocarbons using high density fuels – nuclear and the inexhaustible source of carbon and hydrogen in seawater. : http://www.nrl.navy.mil/media/news-releases/2012/fueling-the-fleet-navy-looks-to-the-seas
The length of times for “breakthroughs” to mature is a huge point. Batteries have made good progress and we are hearing great things about how they will be a game changer, but look at the Moody’s piece. They say, correctly from my perspective, prices still needs to come down at least tenfold for batteries to impact the grid. I would tend to trust Moody’s more because their vested interest is is in correctly understanding the situation (not hyping new technology or protecting established interests). Why are we so excited about his technology and why so much glowing coverage when it still has so far to go? (Besides the obvious reason that some people stand to make a lot of money off of premature failed technology and that for others it ties to some ideological yearnings.)
The hype allows other people get optimistic and to think/hope you can mandate, and incentivize progress on specified paths. Pushing technology ahead a little is tough, longer paths tougher still. Unfortunately the hype hides how far from the goals we are. As noted by others here, you can project wonderful things but if you ignore the details you set things up for failure.
One other thing to consider: as we seek to travel down these long paths with “favored” technology, other technologies, drivers and a host of other things will change as well. If we do drop battery costs 90%, everything else will not have stood still in the meantime. Who can forecast the winner of the Kentucky Derby 5 years out? And there you at least know it’s going to be a horse race.
Musk is bold, but it is foolish hype. There must be a stock play behind his hype. Most lithium ion cost is in the cells, not the battery packs. Given that various lithium ion chemistry ‘flavors’ in both pouch and can form factors power all portible electronics, economies of scale were long since reached. Having been involved in energy storage for over 20 years, a tenfold reduction in liIon cost is not in the cards. Nor with any other present electrochemistry. That holy grail has been the subject of many billions of research for decades.
+1
An excellent explanation of the real world reality.
It isn’t so much a price thing but resources and pollution.
If the solution to CO2 “pollution” is the extensive use of one of the most resource intensive and dirtiest technologies, you are solving one future problem by creating a complex mix of current and future problems.
http://cleantechnica.com/2015/05/01/tesla-home-battery-price-competition/
To review, I am the volunteer treasurer of a 501(c)(3) ball park with 4 lighted fields. We incur demand charges of about $3000/year. The goal is to have no demands charges.
Our 4 fields, minimum of 72 bulbs X 1500 watts = 108 kilowatt draw
Threshold is 25 kilowatts for 15 minutes for demand charges for the next 12 months
Each Tesla unit gives 10 kilowatts for an hour as far as I can tell
10 units would give us 100 kilowatts for an hour
20 units would give us 2 hours
Cost is $3500 per unit
If any engineers would like to explain to me why I should stick to accounting, I’d appreciate that.
This is too expensive. However, if we could enter the spot market we’d be able to buy for 8 cents and sell and 24 cents, maybe. Which means maybe we can get Xcel to help pay for this for their own benefit of load leveling and short term back up. I read a home uses 1200 watts per hour. We could cover about 80 houses for an hour with 10 units. We may also be able to find some donations or similar things to help pay for this. What if we could flip 100 kilowatts a day? Best case. That would be 16 cents X 100 or $16. $16 X 365 = $5840/year. There’s also the question of this being imperfect in that in Summer we draw at around 8:30 in the evening. On those nights, we will only be leveling our own load, not the grids. I realize most of my assumptions are the most optimistic ones and that I have left some costs out.
Service life of lithium ion batteries is two to four years depending on ambient operating temperature, charge level maintained, minimum required capacity. They don’t go bad all at once the amount of charge they can hold decreases 10% or more per year depending on above factors. I didn’t see any accounting for replacement cycle.
P.S. circa 1993 I was on a small engineering team that brought the first Li-Ion powered device to mass market. The Dell Latitude line of notebooks which is still here today. We beat IBM to market by about 6 months and led the industry in runtime per charge for many years.
Ragnaar
I threw out this very basic analysis on a previous CE article. It is based on a single 10 KWH unit, lots of assumptions and sparse facts, but you may be able to adjust the component parts to suit your situation and ongoing factual updates. If you want to optimise time-shifting, then you may need additional components to manage that process.
Assume the battery is $3,500 and the inverter and install are $1,500 for a total of $5,000. Assume the 10 KWH battery can be discharged 50% and recharged every day for 10 years before it dies: 3,600 cycles at 360/year, and assume the inverter will last forever.
Each year you can time shift 1,800 KWH (360 x 5). If your $5,000 investment cost you 4% interest, then you are out $200 plus $350 battery depreciation each year, for a total of $550. If you save 10 cents per KWH shifted, then you only saved $180 against the annual $550. Your break even point is about 30 cents per each KWH shifted, but I pay less than 15 cents for a prime-time KWH. Not promising for me as a time-shift device.
And BTW, each KWH you take in will be transformed and rectified to low voltage DC, then stored in the battery, then recovered from the battery, then inverted back into high voltage AC. I would be shocked if that process was over 80% efficient. So in my example the cost per KWH purchased x 1.25 – cost per KWH sold needs to be about 30 cents in order to break even.
Plus you have to manage installation, monitoring, and time-shifting. Plus you assume the risk of unscheduled failures, and you may have to increase your insurance if the battery packs prove to be theft-worthy.
I understand. Other costs and inefficiencies keep adding up. The goal of eliminating the demand charges is a difficult one, made worse by the fact that they are not larger that would justify a greater investment and greater support costs. If we ran 250 days a year, our demand charges might be 5 times higher or $15000/year. There are days where I tell myself, just let the $3000/year go.
ragnaar, Athletic field LEDs are just starting to become reasonable. They would amount to about a 75% reduction in energy use.
Yes, I’ve looked at LEDs. They are looking too expensive for us yet, we could do one field as a middle of the road approach. We have ponds as most developments do around Lake Minnetonka, as run off is bad. We water the fields drawing from one of them. The ponds have some height difference and are already there, but pumped hydro storage while fun, has me seeing bankruptcy. If only battery storage prices were less, we could start being part of the answer to load leveling in a distributed and resilient way.
In South Dakota we had one light: the sun.
More proof that a little knowledge is a dangerous thing:
http://www.metalhalidewholesale.com/inc/sdetail/1534/1537
In the upper right you select the 378 watt one I am guessing. We’d need at least 18 of these to do one field, 24 with some reserve. It’s expensive to get the cherry picker to stop by. I talked to Musco lighting last year and they didn’t mention LEDs. It’s been 15 years since we changed a bulb it seems which is a testament to old technology. However I suspect there’s something I am overlooking.
Running some new numbers, 84 LEDs at 378 watts is 32 Kilowatts. Goal is to stay below 25 Kilowatts. Enter the Tesla Powerwall. Enough of them or electric forklift batteries could avoid the demand changes. It’s a niche situation based upon a somewhat arbitrary pricing structure. With that I mean, What is the correct number, 20 or 30 Kilowatts? The 25K is a compromise number decided by Xcel.
The main reason for lithium batteries is their light weight. Extremely important in automotive or airborne applications. Why use them for stationary applications? Are they any better than lead-acid batteries? (For Elon Musk, the answer is yes, he will make money on them.)
Flow batteries and once again, I am chasing rainbows. $300 per kWh is too high if I am understanding what that means. While the situation is not encouraging, I am optimistic about the future. The lines are in place to receive over 100 kilowatts and to deliver it back to the grid. The land is in a transition area between the suburbs and rural Minnesota, meaning it’s likely that slow housing development will increase local demand. I think the fact we are a 501(c)(3) non-profit has its advantages, and to clarify, no officers are compensated. Our mission is the operation of a park, which means it’s not necessarily to turn a profit. It’s satisfying to stop by the park and see all four fields being used by youth on a Sunday afternoon. Not too profitable, but when it’s not I ask, are we accomplishing our mission and will we be doing that 10 years from now? I think the answer is yes. Perhaps a small change of adding in some small amount of load leveling for the grid which I think might need it some day. Chasing rainbows again.
Let’s pick a deep cycle battery.
An AGM deep cycle battery is about $200 for 100 AH.
12×100 = 1200.KW-H. Perhaps 90% of that might be usable (after going through the inverter). So about 1080 KWH usable.
So the $300 is a little high. But you have to ask what your battery life is.
For $200/100AH in 3-4 years you chuck them and get new batteries.
A 17 CU refrigerator uses about 1KWH per day. So my AGM Interstate 31M battery will drive the frig for about 1 day.
This ball field lighting discussion, and thank you for your comments, has me realizing what it is the our park does. Seems the standard bulb is 1.5 kilowatts and the minimum number of them for a 280 to the fence ballfield is 18 bulbs. So with four field that’s 72 X 1.5 kilowatts = 108 kilowatts. If a typical house uses 1.5 kilowatts per hour that’s 72 household equivalents we add to the grid for say 2 to 3 hours right around peak demand time, as the sun sets. We then turn off the lights and that demand disappears until the next night games are played. Xcel is after a steady predictable demand and our demand profile is about the opposite of that. We add 72 household equivalents to peak demand, but then go dormant for most of the time and about half the year. If Xcel were to look at us objectively and was given a choice of selling to us or not, I’d think they’d say no, that’s Okay. We don’t want to add the capacity that is only used about 200 hours of the year. The revenues we’d collect on that don’t come close to the costs incurred. One the reasons I bring this up is it’s not just our park. It’s every night time sports field that operates during peak demand times. I suspect along with us, even after demand charges are paid, they are getting a subsidy, that is not paying for the marginal cost of the increase to peak demand they cause. I started looking at the problem as the demand charges we pay. I think a better way to look at it is peak demand reduction maybe by switching to LEDs. With that we get less capacity and infrastructure needs, and less fuel used.
What price does sustainable fuel need to sell for?
$50/bbl? $75/bbl?
See: Peak Oil Price.
Volte-Face Investments writes at Seeking Alpha:
About the same price as real fuel.
Don’t know about peak oil. Robot extraction (think nano-goo) could potentially cheaply extract additional oil from existing wells. Robot burrowers could provide enhanced survey and discovery.
I still like the idea of using nuclear warheads to create underground reservoirs and fracture rock, nuclear weapons are really good at fracturing rock.
Given that most new sources seem to need $50 oil to be justified we probably are headed for $70 oil.
Potential to Double Solar Conversion
A new metamaterial rectenna promises to double conversion from 47% to greater than 95% when it is scaled down to light wavelengths!
Metamaterial electromagnetic energy harvester with near unity efficiency
Thamer S. Almoneef1,a) and Omar M. Ramahi1,b)
Appl. Phys. Lett. 106, 153902 (2015); http://dx.doi.org/10.1063/1.4916232
DH, I served on the Board of a private VC solar startup out of Argonne for three years. Was a very clever idea to increase thin film efficiency to above thick film crystalline silicon. We spent a few $million making some. Did not work. The devil is in the details. I would be very sceptical of this.
Especially since the Shockley-Quiessner quantum limit for a single band gap PV is only 33%. Claims of designs exceeding that theoretical physics limit are a bit suspect.
Now, maybe they meant thermal aborption. In which case I have a simpler, non-metamaterial invention. Paint whatever dull black. Works great.
ristvan Good pragmatic reminder of the importance of details. NREL reports multi junction PV efficiency has risen to 46% with industry projecting future > 50%.
With rectenna (rectifying antenna), efficiency is based on wide band reception efficiency, not bandgap. A fractal rectenna with 57% efficiency has been demonstrated.
So that is why the metamaterial method is so intriguing with its promise of higher efficiency. It “only” has to be scaled by some three orders of magnitude! However the next generation extreme ultra violet IC line widths are now targeting 13.5 nm (or < 3% of wavelength of 450 nm blue light). Sunlight rectennae are now being developed for > 70% efficiency. Thus the metamaterial white light conversion now appears technically testable and promises efficiency > PV.
DH, the NREL multilayers are triple band gaps built by Boeing. Two GaAs over crystalline Si. Super expensive. ‘Commercial’ ones are on deep space probes either in conjunction with or in lieu of radioactive sourced solid state thermoelectric (also GaAs). Because as you recede from the sun, efficiency falls. Just a function of photon flux. So a few percent is invaluable compared to rhemsize and weight penalties of themalternative, supersized conventional panels. Will never see widespead adoption from first principles.
A more serious objection is it is dubious the additional efficiency will justify the additional cost.
The killer app for solar is spray on or stick on organic solar cells that might be only 6% efficient but you can put anywhere.
Yes, Please split off energy articles into a separate segment. Thx
DH,
I read the paper, and may have interpreted it somewhat differently to you. The experimental result of 93% power absorption efficiency is not as good as the 98.5% achievable in a well designed transformer at full load, however the 93% can occur with some separation of emitter and absorber. Handy.
I agree with ristvan that the devil is in the detail, and also that PV conversion is quite different from wireless power transmission and absorption. Obviously, a metamaterial with perfect absorption of radar frequencies would be handy for a stealth aircraft, not so much for generating electricity.
Thanks Mike
See my post above in translating down to light wavelengths (up to THz frequencies) (I meant to say up to 70% efficiency).
The year-out contango for WTI is now less than $5 from around $10 in recent months. This indicates the market is expecting a firmer price for oil than before. The Saudi’s are exceeding their quota. Storage currently is not in danger of exceeding capacity. The build in inventory was greater than expected last week. The rig count in the US continues to decline.
Production has begun to decline:
http://peakoilbarrel.com/wp-content/uploads/2015/04/DPR-by-Basin.jpg
Some are still expecting another drop in WTI prices, but few are calling for $20-30s now. However, professional analysts are still all over the map on this.
This is the Friday close of the front-month WTI future from when I began tracking, the low, and now.
11/27/14
OIL________68.92
BRENT______72.49
NAT GAS_____4.22
RBOB GAS____1.91
3/13/15
OIL______44.84
BRENT____54.60
NAT GAS___2.727
RBOB GAS__1.7623
5/1/15
OIL_______59.26
BRENT_____66.46
NAT GAS____2.769
RBOB GAS___2.0414
Robert Rapier’s 2015 predictions included oil not falling below $40/bbl. (All 5 of his 2014 predictions came true.) That is holding up. He explains why in detail in his posts.
DOE’s Energy Information Administration (EIA) released its
Annual Energy Outlook 2015
EIA projects ~ $56/bbl in 2015 rising to ~$141/bbl by 2040.
Thanks David L. Hagen,
They didn’t mention the most important causes:
– government intervention in markets
– regulatory ratcheting
– government’s trying to pick and mandate technology winners – e.g. wind and solar – while disadvantaging others e.g. nuclear.
@Peter Lang 10:16
Slow energy demand growth is a major contributor to cost in the US.
In a moderate demand growth the sane policy for utilities is to build new,efficient baseload and relegate older, less efficient plants to peaking.
Noting the nonsense with windmills and solar panels…in the US we seriously overbuilt baseload in the 1980’s..as a result…the vast majority of what we built now is peakers.
It was a very close call in the US Southeast where energy growth has been highest over the last few years as to whether to just add more peakers or build new nuclear baseload.
In California..where windmill and solar panel insanity is full blown the biggest driver of costs is the size of the swing between seasonal peak load, normal load and off peak loads. Today’s off peak will be about 20GW, peak will be about 30 GW…summer peak is about 60 GW. Half of their capacity is used only for a few hours a day for a few weeks a year.
harrywr2,
Thank you. Good points.
In Australia’s National Electricity Market (NEM) which is eastern Australia and bout 90% of Australia’s electricity, baseload is about 18 GW and peak about 33 GW (down for 36 GW in 2008-09 https://www.aer.gov.au/node/9766 .
I have bet on $80 by yearend, and $100 by mid 2016. Three simple reasons. 1. Decline curves in US shale, and drop in rig count. 2. Brazil. Between the Perrobras corruption writeoff and current price, Brazil will not be able to continue developing its subsalt. 3. Russia’s new remote Yamal discoveries would not pay to develop until prices are higher (Arctic pipeline infrastructure similar to Alaska pipeline). 2 and 3 require at least $90, more probabaly $100. Saudis probably knew all this when they decided on the disciplinary price action. Swift and brutal. Plus, even if Iran sanctions are lifted, They themselves say will take $15 billion and 3-5 years to lift production back to 2010 levels (3.7mbpd); it is now 2.7 thanks to existing field declines.
I’ll stick my neck out, even though I won’t remember this next year.
2015: Not greater than $75.
2016: $60-$80.
2017: $75-90.
With some difficulties, oil companies eventually will up Mexico’s production. The shale producers have cut costs, so they can be profitable at lower prices. The Saudis will continue to flood the market with oil. The world economy will continue to suck.
This is so alarming.
Looking at a portfolio right now. P&As are big.
Analysts are still all over the map on the future for WTI. Here’s one:
…
U.S. oil prices are heading into a sweet spot that could spur the fracking industry to crank up some of the drilling it shut down when crude prices collapsed.
West Texas Intermediate oil futures for June rose above $60 per barrel Tuesday for the first time since December. That sparked expectations the price could go even higher, if U.S. oil inventory data Wednesday show an expected draw down in oil stored at the Nymex physical hub in Cushing, Oklahoma.
“If oil prices stabilize above $60, I believe we are going to resume production growth in the second half of the year. More companies will drill more wells,” said Fadel Gheit, senior energy analyst at Oppenheimer.
…
http://www.cnbc.com/id/102649648
The cool thing about what the Saudis are doing is that they are hurting themselves as much as anyone else. From the article:
…
Saudi Arabia may issue sovereign debt for the first time since 2007 this year after oil’s decline sent its cash reserves plunging, according to Ashmore Group Plc.
Assets of the biggest Arab economy’s central bank tumbled by 76 billion riyals ($20 billion) in February, the largest monthly drop since at least 2000. The country has a debt-to-GDP ratio of about 2.6 percent, according to International Monetary Fund estimates, among the lowest in the world, and may now take advantage of record low interest rates and ample bank liquidity, said John Sfakianakis, a Riyadh-based director at Ashmore and former chief economic adviser to Saudi’s Ministry of Finance.
“If oil prices remain at $55 to $60 a barrel, I would expect them to issue some debt in the second half,” Sfakianakis said by phone March 31. “They will tap the local debt market through medium-term paper, which would be a balanced fiscal approach, to partly use reserves and partly the debt markets.”
…
http://www.bloomberg.com/news/articles/2015-04-01/first-saudi-sovereign-debt-since-07-seen-this-year-as-oil-bites
jim2 besides harming Iran, they are banking on the very long lead time for oil projects. They are banking on earning much higher prices as global conventional oil flattens and declines faster than if they had not acted.
And then there’s this:
…
NEW YORK, May 1 (Reuters) – U.S. oil producers are rushing to take advantage of the rebound in oil markets by locking in prices for next year and beyond, safeguarding future supplies and possibly paving the way for a rebound in production.
The flurry of hedging activity in the past month will help sustain producers’ revenues even if oil markets tumble again, which is bad news for OPEC nations, such as Saudi Arabia, that are counting on low prices to stunt the rapid rise of U.S. shale and other competitors.
Oil drillers are racing to buy protection for 2016 and 2017 in the form of three-way collars and other options, according to four market sources familiar with the money flows. In some cases, that means guaranteeing a price of no less than $45 a barrel while capping potential revenues at $70.
…
http://www.cnbc.com/id/102639178
From the article:
…
3. UPDATE: 10 Years of 7kwh Cycles. Cheap Enough. I’m adding this after some twitter conversations with Robert Fransman. Let’s assume for a moment that the Tesla Battery actually can be used for full 7kwh charging and discharging every day during its 10 year warranty. That would make the cost around 12 cents / kwh.
[I had initially assumed that daily 7kwh cycling was impossible, despite the specs Tesla provided. No Li-ion battery today can handle 3650 discharges to 100% depth. But Robert Fransman has done the math on the weight of the battery vs. Tesla car batteries. He suggests that the 7kwh battery is actually a 12kwh battery under the hood. Discharging a battery to 60% 3650 times is still a stretch, but much closer to plausible. Tesla may here be just assuming they’ll have to replace some on warranty before 10 years, but given that the price of batteries is plunging, future replacement is far less expensive. Smart.]
All three of these prices are the price to installers. It’s not counting the installer’s profit margin or their cost of labor or any equipment needed to connect it to the house. So realistically the costs will be higher. If we add 25% of so, the bottom price, the one backed by the warranty, is around 15 cents per kwh.
Tentative Conclusion: The battery is right on the verge of being cost effective to buy across most of the US for day/night arbitrage. And it’s even more valuable if outages come at a high economic cost.
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http://rameznaam.com/2015/04/30/tesla-powerwall-battery-economics-almost-there/
!!!!!!!!!!!!!!!!!!!!! One thing that most are missing is that the more people try to take advantage of a cost delta through arbitrage – the smaller that delta will become. You can’t transform a market and expect the old cost drivers to remain.
Well actually much of the renewables movement is being driven by expectations that important existing cost drivers will remain the same after major market transformations. Unfortunately the expectations will not be met and they are likely to have adverse consequences.
But Elon Musk will get richer, even though his car company doesn’t even turn a profit!
http://www.bloomberg.com/news/articles/2015-03-04/as-tesla-gears-up-for-suv-investors-ask-where-the-profits-are
Rud Istavan – I would think you would be a good candidate to write something on this (if you haven’t already). I haven’t seen anyone touching this subject, It seems to be a major flaw with the renewables push in that they are not forseeing that the proposed changes in the market will change the market drivers.
We now have a reasonable estimate of wind turbines’ effectiveness at reducing CO2 emissions in the Australian National Electricity Market (NEM), i.e. 78% effective in 2014. Wind turbines generated 4.5% of the NEM’s electricity and avoided 3.5% of the emissions from electricity.
See Wheatley’s analysis of CO2 savings from wind turbines in the NEM, Submission No. 348 to the ‘Senate Select Committee on wind turbines’: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Wind_Turbines/Wind_Turbines/Submissions
As wind’s proportion increases to about 15% by 2020 to comply with the RET, effectiveness is likely to decrease to around 60% (all else equal). If that is the case, the CO2 abatement costs estimates in the recent RET Review are probably gross underestimates – e.g. the CO2 abatement cost estimates with wind energy would need to be increased by ~67%.
From the article:
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Hedge fund manager David Einhorn thinks oil producers are screwed no matter what happens to crude; Jana Partners’ Barry Rosenstein is bullish on shareholder activism; Keith Meister, founder of Corvex Management, thinks Pizza Hut parent Yum! Brands YUM -0.97% looks delicious; and Omega Advisors CEO Leon Cooperman is feeling good about stocks including Actavis ACT 0.02% , Citigroup C 0.76% and General Motors GM -0.06% .
…
Einhorn, founder and president of Greenlight Capital, kicked off the event by arguing that a handful of leading American oil companies that rely heavily on fracking were “poised for a fall”—even if the price of crude rebounds from its current depressed prices. “We object to oil fracking because the investment can contaminate portfolio returns,” Einhorn said during his presentation.
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https://fortune.com/2015/05/04/2015-sohn-conference-einhorn-shorting-mother-fracker-oil-companies/
Take a peed at WTI inventory:
http://static.cdn-seekingalpha.com/uploads/2015/5/5/1006811-14308438674712348-Paulo-Santos.png
http://seekingalpha.com/article/3142416-crude-one-good-sign-two-bad-ones
Ouch! That should be PEEK!
Comment sent via email:
There may have been a missed alternative under Renewable Energy or Nuclear.
That alternative is the nuclear breeder reactor. The concept has been
successfully tested. In a breeder reactor, more fuel is produced than
is consumed. I would consider that to be “renewable”.
http://en.wikipedia.org/wiki/Breeder_reactor
Safety was raised as an issue after EBR-1 (E stands for
‘experimental’). Safety and reliability have much improved since the
1950. I referenced a list of U.S. accidents up-blog. Here they are again:
Wikipedia contributors. “List of Nuclear Power Accidents by Country.”
Wikipedia, the Free Encyclopedia, January 31, 2015.
http://en.wikipedia.org/w/index.php?title=List_of_nuclear_power_accidents_by_country&oldid=644767173.
Wikipedia contributors. “Nuclear Reactor Accidents in the United
States.” Wikipedia, the Free Encyclopedia, February 21, 2015.
http://en.wikipedia.org/w/index.php?title=Nuclear_reactor_accidents_in_the_United_States&oldid=648161768
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