Slash Boxes

SoylentNews is people

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.

Original Submission

This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (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.