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posted by martyb on Saturday March 20 2021, @07:16PM   Printer-friendly

Over-valued fossil fuel assets creating trillion-dollar bubble about to burst:

A major new report has warned that conventional energy assets including coal, gas, nuclear and hydro power plants have been consistently and "severely" over-valued, creating a massive bubble that could exceed $US1 trillion by 2030.

The report is the latest from Rethinx, an independent think-tank that was co-founded by Stanford University futurist Tony Seba, who is regarded as one of few global analysts to correctly forecast the plunging cost of solar over the last decade.

According to the new report, co-authored by Rethinx research fellow Adam Dorr, analysts and the broader market are still getting energy valuation badly wrong, not just on the falling costs of solar, wind and batteries, or "SWB," but on the true value, or levelised cost of energy, of conventional energy assets.

"Since 2010, conventional LCOE[*] analyses have consistently overestimated future cash flows from coal, gas, nuclear, and hydro power assets by ignoring the impacts of SWB disruption and assuming a high and constant capacity factor," the report says.

Where the analysts are going wrong, according to Seba and co, is in their assumptions that conventional energy plants will be able to successfully sell the same quantity of electricity each year from today through to 2040 and beyond.

[...] This assumption, says the report, has been false for at least 10 years. Rather, the productivity of conventional power plants will continue to decrease as competitive pressure from near-zero marginal cost solar PV, onshore wind, and battery storage continue to grow exponentially worldwide.

"Mainstream LCOE analyses thus artificially understate the cost of electricity of prospective coal, gas, nuclear, and hydro power plants based on false assumptions about their potential to continue selling a fixed and high percentage of their electricity output in the decades ahead," the report says.

[...] "In doing so, they have inflated the value of those cash flows and reported far lower LCOE than is actually justified ... and helped create a bubble in conventional energy assets worldwide that could exceed $1 trillion by 2030."

[*] LCOE: Levelized Cost Of Energy.


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  • (Score: 4, Interesting) by Anonymous Coward on Saturday March 20 2021, @08:14PM (29 children)

    by Anonymous Coward on Saturday March 20 2021, @08:14PM (#1126824)

    "In other words, the variation in power from solar and wind (SWB is "solar, wind, and batteries") is disrupting the use of base load power"

    The issue isn't daily variability costs but that SWB is growing faster than demand and undercutting base-load generation. Base-load is therefore overvalued by forecasts that assume that base-load sales will continue to grow with demand despite increasing market pressure from alternative sources. This over-valuation is driving an over-investment in base-load facilities that isn't supported by actual demand trends and if not corrected will inevitably lead to a crash.

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  • (Score: 2) by HiThere on Saturday March 20 2021, @08:23PM

    by HiThere (866) on Saturday March 20 2021, @08:23PM (#1126830) Journal

    I think I use "base load" differently than you do, as I don't consider "peak usage" to be a base load. Rather the base load is the predictable continual use. This is the kind of thing where solar power depends on battery backup, which rather raises the cost. But with battery prices dropping recently, it may be that power from other source will be less necessary. If you can maintain your load through a month of clouds and rain, that will cover most needs, and perhaps it makes sense to buy power from an external vendor when you start approaching your limit.

    Note that I don't think we've reached that level of coverage yet, but it might not make sense to forecast that we won't reach it within a decade.

    --
    Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
  • (Score: 2, Insightful) by khallow on Saturday March 20 2021, @08:29PM (13 children)

    by khallow (3766) Subscriber Badge on Saturday March 20 2021, @08:29PM (#1126833) Journal

    The issue isn't daily variability costs but that SWB is growing faster than demand and undercutting base-load generation.

    Would SWB be growing that fast, if its costs were taken into account?

    • (Score: 3, Touché) by Anonymous Coward on Saturday March 20 2021, @09:33PM (1 child)

      by Anonymous Coward on Saturday March 20 2021, @09:33PM (#1126863)

      That's a bit of a change from your usual free market shtick. "SWB is undercutting the old model, therefore SWB is the problem."
      Got your 401K invested in fossil fuels have you?

      • (Score: 1) by khallow on Sunday March 21 2021, @05:48AM

        by khallow (3766) Subscriber Badge on Sunday March 21 2021, @05:48AM (#1126980) Journal

        That's a bit of a change from your usual free market shtick.

        Not at all. My take is that much higher subsidizes (per electricity generated) for solar and wind are distorting the power production markets even more than usual. After all, if businesses are getting paid a lot of money to do something dumb, then they'll do it.

        And even if it were a free market, faulty accounting still is faulty accounting. The economics of fossil fuels and other forms of power generation have been worked out. I don't buy that this group has figured it out while the rest of the electricity providers have not. If, for example, we see a huge drop in solar and wind subsidies, that will make competing sources look a lot more attractive in comparison.

    • (Score: 2) by legont on Sunday March 21 2021, @01:11AM (2 children)

      by legont (4179) on Sunday March 21 2021, @01:11AM (#1126918)

      I agree with you on this and above points. I've another observation though. I am heavily invested in "energy services" and I am loosing a shitload on them. It appears that the US does not need or wants energy of any kind any more. Is it the case? What am I missing?

      --
      "Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
      • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @04:33AM

        by Anonymous Coward on Sunday March 21 2021, @04:33AM (#1126968)

        The drive to higher efficiency means demand is not increasing in line with population. Combine with 'eco-friendly' virtue signalling, and traditional energy suppliers are not going to make anywhere near their historical profits. Wall St doesn't like that and punishes the stocks, the dinosaurs raise prices and that just pushes more SWB.

        I would get out of the energy services market, it is a cheap, rugged, long-life battery away from a major crash. Off-grid solar/batteries become economic when storage costs are less than some factor of (expected no of cycles) x (price KWh). Lithium is still too high, lead acid too prone to dying and you can't use all the capacity, nickel-iron would work except it requires maintenance and is still ridiculously expensive for some reason. Add in that small backyard windmills in the 0.5 ~ 2 KW range are becoming available and I foresee within a few years most of suburbia and pretty much all rural properties going off grid. There will be a runaway effect at some point - as customers leave maintaining the grid for the remainder becomes more expensive pushing more into the home SWB systems.

        Draw some graphs of 1/ (amortized off-grid power system cost vs Year) and 2/ (Grid-power cost vs Year). 1/ is falling, while 2/ is rising and they are pretty close to crossing over. Really, the whole thing is a good cheap battery away from imploding.

      • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @12:40PM

        by Anonymous Coward on Sunday March 21 2021, @12:40PM (#1127074)

        What am I missing?

        Half a million geezers and more croaked in the last year, they ain't need power no more.
        And their replacement are still sharing the cages at the southern border until sorted out, not much power demand from a shared accommodation.

    • (Score: 2) by sjames on Sunday March 21 2021, @04:47AM (7 children)

      by sjames (2882) on Sunday March 21 2021, @04:47AM (#1126971) Journal

      Costs are being taken into account and wind and solar are coming out on top. Do you REALLY think corporations are building out wind and solar without looking at cost?

      And before you cry subsidies, don't forget to look at fossil fuel subsidies and externalized costs.

      • (Score: 1) by khallow on Sunday March 21 2021, @06:01AM (6 children)

        by khallow (3766) Subscriber Badge on Sunday March 21 2021, @06:01AM (#1126982) Journal

        And before you cry subsidies, don't forget to look at fossil fuel subsidies and externalized costs.

        Subsidies! Going to cry that anyway. Of course, these things don't make sense until you look at subsidy per unit of electrical energy produced, rather than the fatuous acknowledgement that every form of electricity generation is subsidized.Wind and solar just happen to be heavily subsidized by that metric.

        Once again, someone has answered their own question.

        But let's actually compare [soylentnews.org] subsidies rather than just bullshit around.

        Let's look at a study [europa.eu] that did so. On page 262, they break down subsidies by energy source with "RES" being all renewable sources (hydroelectric, solar, wind, geothermal, biomass, etc.). Fossil fuels are the expected 55 billion Euro in 2016 (and near constant through the previous decade through 2008) while RES is 75 billion (grew from 25 billion Euro in 2008).

        That doesn't accurately describe the subsidy issue since fossil fuels are consumed for far more energy than renewables. Here [europa.eu], it is claimed that in 2016 there was fossil fuels consumption of 1093 million tonnes of oil equivalent while renewable sources generated 216.6 million tonnes of oil equivalent - including energy consumption of transportation. So we have roughly 50 Euro subsidies for one unit of fossil fuels consumed and 350 Euro per unit for renewable sources. The subsidy per unit of consumption is seven times higher for renewable sources compared to fossil fuels.

        So seven times higher subsidy per unit of energy generated for renewable sources. So sure, businesses can see the thumb on those scales and which energy source is presently favored. Maybe part of the reason that some businesses are still building other sorts of generation is that they don't buy that these subsidies will continue indefinitely. This may be yet another warning that things won't last, which would be a strong indicator of a bubble in renewable energy (particularly, SWB).

        • (Score: 5, Insightful) by sjames on Sunday March 21 2021, @06:48AM (4 children)

          by sjames (2882) on Sunday March 21 2021, @06:48AM (#1127005) Journal

          You missed the subsidies on the fossil fuel production. You also missed the externalities. All that fly ash doesn't just go away, nor does the CO2.

          • (Score: 1) by khallow on Sunday March 21 2021, @08:10AM (2 children)

            by khallow (3766) Subscriber Badge on Sunday March 21 2021, @08:10AM (#1127014) Journal

            You missed the subsidies on the fossil fuel production.

            Nope.

            You also missed the externalities.

            Let us note that a terrible case has been made for high externalities from fossil fuel use with proper pollution controls.

            All that fly ash doesn't just go away, nor does the CO2.

            Doesn't sound like much of a problem here.

            Notice that we're moving the goalposts now. These weren't important enough to mention when you thought you had a lock on fossil fuel subsidies.

            • (Score: 2) by sjames on Sunday March 21 2021, @09:03AM (1 child)

              by sjames (2882) on Sunday March 21 2021, @09:03AM (#1127020) Journal

              They certainly were important enough. Gee, awfully damned sorry I didn't post 1,000 pages of details. No goalposts moved. Sorry, but "Nope" isn't a counter argument. Nor is "Doesn't sound like much of a problem". For example "But it will kill 3/4 of the Earth's population!" "Doesn't sound like much of a problem!".

              Try again.

              • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @09:39AM

                by Anonymous Coward on Sunday March 21 2021, @09:39AM (#1127028)

                As long as it doesnt disrupt The Bachelor then fine.

          • (Score: 2) by FatPhil on Sunday March 21 2021, @11:04AM

            by FatPhil (863) <{pc-soylent} {at} {asdf.fi}> on Sunday March 21 2021, @11:04AM (#1127053) Homepage
            He also seems to have used the EU to counter a comment which I had presumed was about the US.
            --
            Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
        • (Score: 2) by deimtee on Sunday March 21 2021, @03:07PM

          by deimtee (3272) on Sunday March 21 2021, @03:07PM (#1127124) Journal

          While I am in favour of cleaning up the environment I would just point out that your subsidies argument includes hydroelectric which, when viable, is mostly pre-existing and would have a lot lower subsidy than solar or wind. (I am not disagreeing, this strengthens your point.)

          Putting aside direct subsidies you can argue forever about externalities without getting anywhere. It is a never ending rat-hole of each side attributing a cost to the other, each more vague than the last. Direct subsidies, indirect, environmental damage, disposal costs, military actions, social cost of vastly enriching medieval level governments, earthquakes, flammable tap water, etc, etc, etc.

          --
          No problem is insoluble, but at Ksp = 2.943×10−25 Mercury Sulphide comes close.
  • (Score: 2) by fakefuck39 on Saturday March 20 2021, @10:14PM (13 children)

    by fakefuck39 (6620) on Saturday March 20 2021, @10:14PM (#1126873)

    In other news, you have zero idea of what base load means, and why things like solar and wind turbines are not something that can compete with a power plant capable of generating electricity for a base load. Solar is not undercutting base load generation, unless some misguided hipsters take risks. Risks like power to heat your home or keep your fridge running, not being available at the worst of times.

    Base load requirements grow every year. Because there are more people, and more homes. Until we have rolled out city-scale energy storage that can shift load from peak production times, there is no over-valuation. There is if we pretend short-term extends to long-term. Until some area gets a sustained period of no wind or overcast skies that are not common to the area. And then people freeze to death and learn what base load is.

    There is no need to assume base load sales will continue to grow. There is no increasing market pressure from alternative sources, because those sources cannot provide base load. They only provide extra energy generation at random times that have nothing to do with when people need the energy. You know what works on a cold dark windless winter day? Firing up a gas turbine to meet extra demand. You know what works to provide a consistent 24/7 level of power? A steam turbine powered by some decaying uranium. You know what powers demand from extra cooling requirements on a hot summer day? A solar panel.

    You're saying that solar panel competes against the base load generated by a nuclear power plant, and that nuclear energy should hence decrease in price. You are simply wrong.

    • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @09:46AM (1 child)

      by Anonymous Coward on Sunday March 21 2021, @09:46AM (#1127032)

      In other news, you have zero idea of what base load means, and why things like solar and wind turbines are not something that can compete with a power plant capable of generating electricity for a base load. Solar is not undercutting base load generation, unless some misguided hipsters take risks. Risks like power to heat your home or keep your fridge running, not being available at the worst of times.

      Maybe they are using the freedom market definition pioneered in Texas? Texas power grid stability and base loadiness.

      You know what works on a cold dark windless winter day? Firing up a gas turbine to meet extra demand.

      Texas ....

      • (Score: 1, Flamebait) by fakefuck39 on Sunday March 21 2021, @03:53PM

        by fakefuck39 (6620) on Sunday March 21 2021, @03:53PM (#1127146)

        yes, and a car wrongly built with no engine doesn't get you to work. not winterproofing and being built wrong has zero to do with base load vs green generation. in fact, both green and base energy went offline in texas. so what's your point? ah, you don't have one.

        texas issues were with both base and green energy. yes, if you cut corners and build wrong, all your shit breaks. wow, what insght you have.

    • (Score: 2) by c0lo on Sunday March 21 2021, @01:04PM (10 children)

      by c0lo (156) Subscriber Badge on Sunday March 21 2021, @01:04PM (#1127083) Journal

      Nothing energy storage can't solve.
      At $100/kWh [energy-storage.news] my energy storage for a week will set me back by $8400. Likely, just by timing the market (fill it up at low prices, at night, consume at daytime from buffer), I'll get my investment back in 5-6 years; thus I'll have to use LiFePO chemistry [wikipedia.org], doesn't catch fire and have a larger number of recharge cycles than LiPo.

      --
      https://www.youtube.com/watch?v=aoFiw2jMy-0
      • (Score: 2) by deimtee on Sunday March 21 2021, @03:12PM (5 children)

        by deimtee (3272) on Sunday March 21 2021, @03:12PM (#1127126) Journal

        If you can get them, and don't mind topping them up with distilled water occasionally, nickel-iron is currently the best for stationary systems where you don't care so much about weight or volume. Infinite recharge cycles, and are not damaged by overcharging or running to completely flat.

        --
        No problem is insoluble, but at Ksp = 2.943×10−25 Mercury Sulphide comes close.
        • (Score: 2) by c0lo on Sunday March 21 2021, @03:20PM (4 children)

          by c0lo (156) Subscriber Badge on Sunday March 21 2021, @03:20PM (#1127129) Journal

          Thermal runaway will kill them, but otherwise a pretty solid chemistry.

          --
          https://www.youtube.com/watch?v=aoFiw2jMy-0
          • (Score: 2) by deimtee on Sunday March 21 2021, @04:38PM (3 children)

            by deimtee (3272) on Sunday March 21 2021, @04:38PM (#1127159) Journal

            Easy to avoid with a properly set up system. If you are using a grid charger just go constant current, and if you are charging from solar or domestic windmill, put enough batteries in parallel that they can't supply enough current to damage them. I think you can also resurrect them from thermal runaway unless they get hot enough to actually melt something. Simply losing all the electrolyte as H2 gas won't permanently kill them.

            --
            No problem is insoluble, but at Ksp = 2.943×10−25 Mercury Sulphide comes close.
            • (Score: 2) by c0lo on Sunday March 21 2021, @10:47PM (2 children)

              by c0lo (156) Subscriber Badge on Sunday March 21 2021, @10:47PM (#1127250) Journal

              Easy to avoid with a properly set up system.

              Not when the ambient temperature goes 40C+. It rarely does, but it all it takes is once.
              And no, I'm not giving up habitable space. The problem is of course still solvable, but it's no longer "easy to void".

              --
              https://www.youtube.com/watch?v=aoFiw2jMy-0
              • (Score: 2) by maxwell demon on Monday March 22 2021, @07:22AM (1 child)

                by maxwell demon (1608) on Monday March 22 2021, @07:22AM (#1127387) Journal

                Not when the ambient temperature goes 40C+. It rarely does, but it all it takes is once.

                What if you just put it underground?

                --
                The Tao of math: The numbers you can count are not the real numbers.
                • (Score: 2) by c0lo on Monday March 22 2021, @09:01AM

                  by c0lo (156) Subscriber Badge on Monday March 22 2021, @09:01AM (#1127394) Journal

                  What if you just put it underground?

                  The problem is solvable, just not trivially easy.
                  E.g. underground, waterproof, breathable, still easy to access to fill in extra water from time to time.
                  Size may start to matter too, just a fancy hole is something (scale horizontally for accessibility), a "basement" build on purpose is something else (as also something else is a wine cellar)

                  --
                  https://www.youtube.com/watch?v=aoFiw2jMy-0
      • (Score: 1, Flamebait) by fakefuck39 on Sunday March 21 2021, @03:47PM (3 children)

        by fakefuck39 (6620) on Sunday March 21 2021, @03:47PM (#1127141)

        can't theoretically solve -no. but then again, theoretically we can build a colony for a million people on mars. doesn't solve? it indeed does not.

        your solution is for each of the 3mil households in chicagoland, 1/3 on food stamps, to get at 8k battery? yeah, we'll break even i'm sure, in many years, ignoring that this cash is needed for food, and ignoring that in the real world, that money would have doubled in 6 years by being invested. boy yo so schmart!

        • (Score: 2) by c0lo on Sunday March 21 2021, @10:55PM (2 children)

          by c0lo (156) Subscriber Badge on Sunday March 21 2021, @10:55PM (#1127254) Journal

          Because everybody lives in chigacoland and, besides, if a solution is not perfect it must be garbage, yes.

          --
          https://www.youtube.com/watch?v=aoFiw2jMy-0
          • (Score: 1, Troll) by fakefuck39 on Monday March 22 2021, @12:15AM (1 child)

            by fakefuck39 (6620) on Monday March 22 2021, @12:15AM (#1127287)

            Yes, the solution of every household getting a lithium battery in order to make solar energy base energy is absolute garbage spouted by a complete retard, and should not be considered. No, not every place is Chicagoland. But every place that has high base energy needs is a big metro area, like chicagoland, because that is where most people live, and that's who uses most electricity. Let me guess, you're one of those people that thinks land gets a vote too.

            And by the way, your investment is literally the opposite of an investment. Because you can't do basic logical thinking, or basic math. By the time you recoup your battery cost, that cash put into a safe mutual fund doubles. Then it quadruples in the same time. Then it's up 16x in that same time. Your battery saves you only the base cost and depreciates. You are literally losing tens of thousands of dollars over your lifetime by buying this $8.5k battery. So not only is your solution garbage for shifting peak production to peak load, it is garbage for the personal use case you bought it for.

            Because, again, you are a complete and udder moron.

            A solution doesn't have to be perfect to be good. But when it does literally the opposite of your goal, it is garbage. Like if you buy a grenade to prevent thieves from stealing your expensive TV, which destroys your TV and half your outer wall. It is a garbage solution, that does the opposite of what you want, created by a skull full of rotting garbage. Your skull. You fucking retard.

            • (Score: 2) by c0lo on Monday March 22 2021, @01:14AM

              by c0lo (156) Subscriber Badge on Monday March 22 2021, @01:14AM (#1127303) Journal

              Yes, the solution of every household getting a lithium battery in order to make solar energy base energy

              You forgot your ADHD medication again? Show me where did I imply that every household should.
              With enough buffer capacity in a percentage of households, your big metro areas are covered and the burbs and country side can make their money providing a buffering service.

              By the time you recoup your battery cost, that cash put into a safe mutual fund doubles.

              Hey, forget doing anything productive, everybody invest in safe mutual funds. They double your money by magic, you can retire early in chicagoland area, it's the peak of your American dream.
              (safe mutual funds are also know to provide you with the electric power you need when you need it, don't worry about)
              there may be the small problem in finding the true "safe mutual funds", but let's not get bogged in details.

              Your battery saves you only the base cost and depreciates.

              And participating into the energy market: buy low at offpeak, feed-in high at peak.

              Because, again, you are a complete and udder moron.

              You bumbling idiot, you forgot making fun of autistic persons. Are you sliding deeper into senility or it's just that you acquired a kink for udders?

              But when it does literally the opposite of your goal, it is garbage.

              Besides spewing non-sense and make-believe stories 'bout mythical safe investment funds, do you have any other purpose in life?

              --
              https://www.youtube.com/watch?v=aoFiw2jMy-0