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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 oumuamua on Saturday March 20 2021, @11:34PM (5 children)

    by oumuamua (8401) on Saturday March 20 2021, @11:34PM (#1126893)
    • (Score: 1) by khallow on Sunday March 21 2021, @06:41AM (4 children)

      by khallow (3766) Subscriber Badge on Sunday March 21 2021, @06:41AM (#1127002) Journal
      From the article:

      However, by the end of the year, emissions spiked. This week, the IEA, a Paris-based intergovernmental agency, released a new report that shows emissions from the production and use of oil, gas and coal were 2 percent higher in December 2020 than a year earlier.

      Sounds like there might have been some economic rebound to get a spike that sudden.

      • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @07:40AM (1 child)

        by Anonymous Coward on Sunday March 21 2021, @07:40AM (#1127012)

        What is more probable: an invisible economic rebound without cause, or another fake number in a long string of them?

        • (Score: 1) by khallow on Sunday March 21 2021, @08:19AM

          by khallow (3766) Subscriber Badge on Sunday March 21 2021, @08:19AM (#1127017) Journal

          an invisible economic rebound without cause

          This. Because it's a pretty low threshold to be invisible to someone who isn't looking.

      • (Score: 2) by c0lo on Sunday March 21 2021, @01:19PM (1 child)

        by c0lo (156) Subscriber Badge on Sunday March 21 2021, @01:19PM (#1127093) Journal

        Sounds like there might have been some economic rebound to get a spike that sudden.

        How about an unusual heavy winter, you think it'll do that?

        • (Score: 1) by khallow on Sunday March 21 2021, @03:48PM

          by khallow (3766) Subscriber Badge on Sunday March 21 2021, @03:48PM (#1127142) Journal

          How about an unusual heavy winter

          Was it? I'm not seeing any news of that sort. I am seeing news [] that China's economy is steadily recovering.

          China’s economy expanded 2.3% last year, making it the only major economy to report growth, although the growth was its weakest in 44 years.

          Its economy is widely predicted to expand by more than 8% in 2021, led by an expected double-digit rise in the first quarter, but analysts and officials say the recovery remains uneven.

  • (Score: 0) by Anonymous Coward on Sunday March 21 2021, @09:28AM

    by Anonymous Coward on Sunday March 21 2021, @09:28AM (#1127024)

    yeah, you should not build two clothes dryer poles with a string to dry clothes 'cause it sometimes rains and it's dark at night so just buy a electrical clothes dryer tumbler ...
    this is the logic of the nukists.
    the real logic is this:
    fossile fuel generate pollution but also stocks and bonds.
    the "rich" get rich by destroying ... errr ... using resources. it's totally WIN! the resources are limited thus using them makes them more valuable. once you can convince policy makers that these bonds and stocks will rise and they shot up on this limited but endlessly getting more valuable drug, you will see them approve more bitcoin mining (waste electricity) and more policies subtile hindering mass home solar adoption ...
    fossile energy financial tools and state policy makers don't mix if you want a more sustainable future ... now flip ... and the burocracy functionary might think fossile energy stocks and bonds are a good present for his cute grand daughter when they both mature in 18 years ... one at 5%?

  • (Score: 2) by Tokolosh on Sunday March 21 2021, @03:24PM

    by Tokolosh (585) on Sunday March 21 2021, @03:24PM (#1127130)

    "Don’t tell me what you 'think' show me your portfolio."


    Nicholas Nassim Taleb

  • (Score: 0) by Anonymous Coward on Tuesday March 23 2021, @08:49AM

    by Anonymous Coward on Tuesday March 23 2021, @08:49AM (#1127847)

    What's happening here is that uncontrolled feel-good investment into unreliable energy is pushing hard against big coal furnace plants. This is both good and bad.

    Good, because it will get those large CO2 producers shut down sooner rather than later.

    Bad, because grid stabilty is at risk.

    Electrical power is somewhat of an assumed thing: There will be power to operate your appliance, when you want it to work.

    When that promise is broken, suddenly you aren't living in a first-world nation any more. Occasional blackouts are not as scary as they should be: If power goes for a typical large city for half a week, that city becomes a death trap.

    This is known from modelling for the effects of a nuclear strike (of all things). No power soon means no water. No mass transit. No traffic control, then no fuel. No fuel means no deliveries, which soon means no food. When the trucks can't keep delivering, a city has no life support.

    Cities, like rainforests, are able to tolerate huge individual damage without it seeming to make any difference at all... but only so long as the input energy is available.

    Our major civilisation is built on the back of the electrical system making everything able to 'just work'. Once that is no longer true, civilisation soon breaks down. Losing power for a few days length is about the point you should know you are in very severe trouble.

    Pushing the old 'base load' generators into a corner, where they will succum one-by-one doesn't seem to do too much damage - at first. But as they go, so does grid stability. And the odds of a cascade of failure just go up and up.

    Batteries really just don't store anything like enough to help.

    I'm struck by the power ratings that solar and wind are allowed to claim. They rate by the peak output, allowing the perfect moment with perfect weather in the middle of the day. But our day is cyclic. Average over that cycle, and suddenly it's not so impressive (more, if you also include storage losses too).

    What's also cyclic? Internal combustion engines. But those rate by continuous output power too - it's just that their 'day' is the engine cycle. And it's easy to connect multiple engines in different phases together to cover each other so that there is overlap between the times they are able to harvest mechanical power. Interestingly, if you look at a graph of the 'heat release rate' of a single cylinder, which represents the power of the burning fuel - even before the 'power stroke' turns it into mechanical power - it has a form, that when considering the entire 'cycle', starts to look much like the output of a solar panel does, when you likewise consider a 24 hour period.

    So, I propose, for a fair comparison, that engine manufactuers should give their ratings by the same conditions that solar panel manufacturers use: The peak of the HRR. Under that measure, a ~10kW one-cylinder generator can suddenly look equivalent to a solar concentrator array bigger than two tennis fields! (a size, which, I'll point out, won't fit most residential properties... yet, ~10kW is widely considered to be 'about one household' of base load electrical power....).

    The truth is, the best and most practical energy storage is chemical. Fortunately there are chemicals we can make to bottle solar energy, and store a reasonable quantity of it in a reasonable space. Not without some risk, obviously.
    But there is a chemical able to be used this way, to which nearly unmodified internal combustion engines can reasonably be modified.

    For this reason, we all should be buying our own generation capability - most especially so if buying the typical solar+battery setup. Also buy a generator of reasonable and sufficient capacity, and most preferably Diesel. Odds are you'll be able to run it on CO2-less fuel in the future, with little modification apart from installing a new fuel injection system. Fuel which, even as of this time, is getting cheaper than Diesel, and which is projected to get another 10x cheaper again.

    That way, there's a chance civilisation won't collapse, when the grid does.

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