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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: 2) by c0lo on Sunday March 21 2021, @07:19AM (11 children)

    by c0lo (156) Subscriber Badge on Sunday March 21 2021, @07:19AM (#1127008) Journal

    Do you have a reason to think I'm wrong, incorrect, etc here?

    I have that hunch that you underestimate how fast renewables displace fossil.

    Solar panels switched off by energy authorities to stabilise South Australian electricity grid [abc.net.au] - too much energy generated, not enough demand.

    5 years after a blackout [abc.net.au] with a govt built buffer of 100MW/129MWh [abc.net.au], the private sector starts to make big plans (250MW with 1GWh capacity [energy-storage.news].

    As for being right or wrong in regards with "accounting"? I can't care less. But the word of mouth is that storage provide quite a good ROI, while still delivering saving to the consumer [reneweconomy.com.au].

    --
    https://www.youtube.com/watch?v=aoFiw2jMy-0
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  • (Score: 1) by khallow on Sunday March 21 2021, @08:12AM (10 children)

    by khallow (3766) Subscriber Badge on Sunday March 21 2021, @08:12AM (#1127015) Journal
    I'm fine being wrong here.

    I find it interesting though how hard the narrative of obsolete fossil fuels is being pushed. That tells me that it may not be all that close after all. You don't need to push water downhill, for example.
    • (Score: 2) by c0lo on Sunday March 21 2021, @09:20AM (9 children)

      by c0lo (156) Subscriber Badge on Sunday March 21 2021, @09:20AM (#1127023) Journal

      I find it interesting though how hard the narrative of obsolete fossil fuels is being pushed.

      If that's a narrative, you should be more than fine betting on the stock market against them.

      --
      https://www.youtube.com/watch?v=aoFiw2jMy-0
      • (Score: 1) by khallow on Sunday March 21 2021, @03:25PM (8 children)

        by khallow (3766) Subscriber Badge on Sunday March 21 2021, @03:25PM (#1127131) Journal

        If that's a narrative, you should be more than fine betting on the stock market against them.

        Because? We still have the political activity that led to huge solar and wind subsidies. I'm not going to bet against a well-funded mistake. Not yet anyway.

        • (Score: 2) by c0lo on Sunday March 21 2021, @03:39PM (7 children)

          by c0lo (156) Subscriber Badge on Sunday March 21 2021, @03:39PM (#1127138) Journal

          We still have the political activity that led to huge solar and wind subsidies.

          Good choice of verb tense, they are rolling them back. At least in Australia.

          --
          https://www.youtube.com/watch?v=aoFiw2jMy-0
          • (Score: 1) by khallow on Sunday March 21 2021, @03:50PM (6 children)

            by khallow (3766) Subscriber Badge on Sunday March 21 2021, @03:50PM (#1127144) Journal
            Might be worth looking at some Australia investment then.
            • (Score: 2) by deimtee on Sunday March 21 2021, @04:45PM (5 children)

              by deimtee (3272) on Sunday March 21 2021, @04:45PM (#1127163) Journal

              They are rolling back the solar subsidies because it was being installed faster than they could adapt the grid to. Power prices here (~ $0.25 / KWh) are high enough and the weather sunny enough that solar is economical without a subsidy in most of the country.

              --
              No problem is insoluble, but at Ksp = 2.943×10−25 Mercury Sulphide comes close.
              • (Score: 1) by khallow on Sunday March 21 2021, @05:59PM (4 children)

                by khallow (3766) Subscriber Badge on Sunday March 21 2021, @05:59PM (#1127181) Journal
                We'll see if solar is still being install fast when the subsidies are removed.
                • (Score: 2) by deimtee on Sunday March 21 2021, @10:40PM

                  by deimtee (3272) on Sunday March 21 2021, @10:40PM (#1127242) Journal

                  They are pretty much removed now, and it is still being installed. But they have a roadmap of how fast they want it, and if it slows down too much the subsidies will come back.

                  --
                  No problem is insoluble, but at Ksp = 2.943×10−25 Mercury Sulphide comes close.
                • (Score: 2) by c0lo on Sunday March 21 2021, @10:53PM (2 children)

                  by c0lo (156) Subscriber Badge on Sunday March 21 2021, @10:53PM (#1127252) Journal

                  I get YT ads from a company that want to sucker suckers in their program: get paid to install PV on your roof. I suspect a scheme of "we are the PV owners, will sell you power made on your roof".

                  Otherwise, I'm charged 27c/kWh consumed and paid 6.5c/kWh fed into the grid - no longer subsidized.

                  --
                  https://www.youtube.com/watch?v=aoFiw2jMy-0
                  • (Score: 0) by Anonymous Coward on Monday March 22 2021, @01:01AM (1 child)

                    by Anonymous Coward on Monday March 22 2021, @01:01AM (#1127297)

                    > I'm charged 27c/kWh consumed and paid 6.5c/kWh fed into the grid

                    Do you have more installed solar than your "base load"? By base load, I mean minimum load during the day when solar is making power--all the clocks, computers, etc that are always on.

                    Given the poor sell/buy ratio, it would seem like a disincentive to have much more solar than your base load?

                    • (Score: 2) by c0lo on Monday March 22 2021, @01:21AM

                      by c0lo (156) Subscriber Badge on Monday March 22 2021, @01:21AM (#1127307) Journal

                      Given the poor sell/buy ratio, it would seem like a disincentive to have much more solar than your base load?

                      True. 'xcept the storage prices come down fast lately and then one can move in storing all that's needed and feed-in nothing. Totally achievable with the rooftop area available.
                      We're early on in the process; once it picks up speed it will accelerate the downfall into the death spiral for power utilities - the more money you try to squeeze, the less participants to squeeze will choose to stay with you.

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