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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, Interesting) by helel on Sunday March 21 2021, @11:44AM (5 children)

    by helel (2949) on Sunday March 21 2021, @11:44AM (#1127063)

    Thermal Power Plant Output Down 25% ... Renewables Down 1%

    According to your link...

    Pre-freeze Renewables: 4428MW/57595MW = 7.6%
    Peek Freeze Renewables: 4364MW/44428MW = 9.8%

    So in full fairness they didn't double. I think I had previously seen reporting based on renewable numbers from 2018is and Texas has been putting in allot of wind since then.

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  • (Score: 1) by khallow on Sunday March 21 2021, @03:36PM (4 children)

    by khallow (3766) Subscriber Badge on Sunday March 21 2021, @03:36PM (#1127136) Journal
    Read my post again. 4364/7647 = 57% (which is much more than my earlier estimate of a third). 40037/53150 = 75% (all numbers in MW). If renewable kept on going at that peak, it would have eased the deficit (~69000MW demand - 44000MW supply = 25000MW deficit) by about an eighth. Not enough to save the situation, but it'd make things a little better.
    • (Score: 2) by helel on Sunday March 21 2021, @04:32PM (3 children)

      by helel (2949) on Sunday March 21 2021, @04:32PM (#1127158)

      Yes, but that 7647 MW was during the freezing event. If we want to cherry pick that number then production during the freeze would be 7647(freezing)/4428(normal production). That would give us 172% production. 4300ish MW is the expected output of the renewables on an average day. When you have massive winds you wind up with extra power but you don't install infrastructure off of that once or twice a year peak.

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      Republican Patriotism [youtube.com]
      • (Score: 1) by khallow on Sunday March 21 2021, @05:15PM (2 children)

        by khallow (3766) Subscriber Badge on Sunday March 21 2021, @05:15PM (#1127167) Journal

        Yes, but that 7647 MW was during the freezing event.

        Yes, and the lower number was also during that freezing event.

        • (Score: 2) by helel on Sunday March 21 2021, @05:39PM (1 child)

          by helel (2949) on Sunday March 21 2021, @05:39PM (#1127175)

          Yes, that's why I compared the lower number to the pre-freezing number. Renewables weren't unaffected by the weather, they lost about 1% capacity. They just faired a hell of a lot better than non-renewables which lost 25%.

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          Republican Patriotism [youtube.com]
          • (Score: 1) by khallow on Sunday March 21 2021, @05:58PM

            by khallow (3766) Subscriber Badge on Sunday March 21 2021, @05:58PM (#1127180) Journal

            Renewables weren't unaffected by the weather, they lost about 1% capacity.

            I disagree. I think the difference between the peak and the next day was the better comparison (which incidentally would be a 43% drop), because that was all out production. The grid was underpowered by then.