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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: 3, Insightful) by fustakrakich on Saturday March 20 2021, @09:04PM (11 children)

    by fustakrakich (6150) on Saturday March 20 2021, @09:04PM (#1126845) Journal

    Wall Street is overvalued by over 20 trillion, and the fed is still pumping in more

    --
    Ok, we paid the ransom. Do I get my dog back? REDЯUM
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  • (Score: 1, Insightful) by Anonymous Coward on Saturday March 20 2021, @09:28PM (5 children)

    by Anonymous Coward on Saturday March 20 2021, @09:28PM (#1126860)

    The old adage still holds: The market (and now governments) can remain insane longer than you can stay solvent.

    No matter how big the bubbles get, you never know when they are going to pop. Leave too soon, lose most of the upside. Leave too late, lose your shirt. Best one can do is allocate to sensible holdings, and even those are going down when the bubble bursts.

    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.

    Though this article sounds like an engineered piece to sell something. Weasel words, appeal to authority. And who of us technology people doesn't know that the price of technology always plunges? Not going to go to some strange URL on squarespace to see what he's selling.

    Probably shouldn't have been a front page article.

    • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @07:15AM (1 child)

      by Anonymous Coward on Sunday March 21 2021, @07:15AM (#1127007)

      No matter how big the bubbles get, you never know when they are going to pop. Leave too soon, lose most of the upside. Leave too late, lose your shirt. Best one can do is allocate to sensible holdings, and even those are going down when the bubble bursts.

      When there's a gold rush, try to make money from selling shovels etc to the miners.

      • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @09:48AM

        by Anonymous Coward on Sunday March 21 2021, @09:48AM (#1127037)

        Then sell them a time-share in Costa Rica. Ha ha suckers trying to work for a living!

    • (Score: 2) by driverless on Sunday March 21 2021, @09:36AM (1 child)

      by driverless (4770) on Sunday March 21 2021, @09:36AM (#1127027)

      We don't even know whether this is an actual bubble. Remember, this is one economist, of many, many, making an educated guess at what will happen. The fact that he guessed right once in the past doesn't make him a market predictor, it just makes him a lucky guesser. Take anything you want and there'll be some economist somewhere predicting it will or won't happen.

      • (Score: 1) by khallow on Sunday March 21 2021, @05:19PM

        by khallow (3766) Subscriber Badge on Sunday March 21 2021, @05:19PM (#1127169) Journal

        The fact that he guessed right once in the past

        Which doesn't mean much. As a futurist, I've guessed right [soylentnews.org] in the past too. You don't see people fawning over my accuracy.

    • (Score: 2) by c0lo on Sunday March 21 2021, @01:09PM

      by c0lo (156) Subscriber Badge on Sunday March 21 2021, @01:09PM (#1127087) Journal

      No matter how big the bubbles get, you never know when they are going to pop

      Until WSBets calls your shorts (grin)

      --
      https://www.youtube.com/watch?v=aoFiw2jMy-0
  • (Score: 3, Insightful) by FatPhil on Saturday March 20 2021, @10:19PM (3 children)

    by FatPhil (863) <{pc-soylent} {at} {asdf.fi}> on Saturday March 20 2021, @10:19PM (#1126876) Homepage
    I almost agree with your thrust, but you appear to have overlooked the fact that the thing that is being described as "over-valued" is a thing that took many tens of millions of years to build up, and barely a century to deplete. If you start scaling the value inversely by the (potential future) availability, you'll see that right now they are unbelievably cheap.

    And to trigger c0lo: "infinite".
    --
    Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
    • (Score: 1) by fustakrakich on Sunday March 21 2021, @12:21AM (2 children)

      by fustakrakich (6150) on Sunday March 21 2021, @12:21AM (#1126901) Journal

      the thing that is being described as "over-valued" is a thing that took many tens of millions of years to build up...

      13 billion, more or less...

      and barely a century to deplete

      About 28 years, more or less :-)

      --
      Ok, we paid the ransom. Do I get my dog back? REDЯUM
      • (Score: 2) by hendrikboom on Sunday March 21 2021, @02:27AM (1 child)

        by hendrikboom (1125) Subscriber Badge on Sunday March 21 2021, @02:27AM (#1126948) Homepage Journal

        More like a few hundred million:

        The Carboniferous (/ˌkɑːr.bəˈnɪf.ər.əs/ KAHR-bə-NIF-ər-əs)[6] is a geologic period and system that spans 60 million years from the end of the Devonian Period 358.9 million years ago (Mya), to the beginning of the Permian Period, 298.9 Mya.

  • (Score: 2) by crafoo on Sunday March 21 2021, @05:39PM

    by crafoo (6639) on Sunday March 21 2021, @05:39PM (#1127176)

    ... and they are still keeping interest rates low, until 2022-2023 timeframe, which will just cause much more wild swings both up and down in investment assets.

    Also, stay mad analysts at my ridiculous profits on energy ETFs 2019-2021. Keep telling us we are wrong. By my estimates we are still in the boom market phase. It's somewhat harder to tell because the fed has said they won't raise interest rates during this boom phase. Fed retardation aside, 2 std-dev over-valued stock market aside, I don't see the bust phase starting yet.