The economics fundmentals of this sector is destine for failure. Simply because the energy bussiness, while borning, slow, and antiquated, is a long man game. The capital nature of the sector requires 10, 20, 30 years of forsight and planning. Supply must equal demand-this is especially true for generating electricity. The inputs for the bussiness require commodities: in ready supply, the instructure to refine & process, distribution network, supply chains, etc. But most importantly the commodities input have to overcome energy entropy. The inefficiencies of morden fossil fuels system still give off enough energy to overcome this entropy.
Sorry I am unfamiliar with the Mendoza line... but they dont work as well as they used to.. thanks for question.. think of all the outdated solar panel that will soon be dysfunctional!!
Straw man argument. I made no such correlation - that’s from your mind.
You are however quite right it is possible to increase generation output, build grid infrastructure as appropriate, but it isn’t happening and there are no plans to fund and schedule it Even if work started now, it could not for practical and logistical reasons be completed before 2050 - and even if we were only talking about coal, gas or nuke mix.
The reason it’s not underway is because it is understood that wind and solar cannot supply base load, or maintain a stable grid frequency. Therefore for every 1GW of wind or solar built, 1GW of gas or coal (nuclear is not suitable to stabilise intermittency) has to be built in support and back-up.
That means two generating systems have to be built in parallel and operated in parallel, but because of intermittency neither will make sufficient revenue to cover costs and for profit contribution. And as you point out, the complex transmission and balancing grid infrastructure needed to connect up all the scattered wind and solar is an additional requirement.
The capital is not there from private investors, Governments are bankrupt so can’t provide it, and in any case we just don’t have the spare resources to do the work necessary in the time frame.
The capitalist free market system can indeed do marvellous things, but only for a profit. No profit, no do.
There is also the question of raw materials. Electricity systems run on copper wire. Copper wire is made from copper produced from copper ore. Therefore copper ore mining activity must increase exponentially to meet demand. But when you check investment in copper ore mining, it has actually eased because the demand for copper has eased. If there were active construction of grid infrastructure we should be seeing an increased demand for copper - why aren’t we?
Over 30 years ago, the telecoms companies in the UK (and most Countries in Europe) made a plan to replace the copper network with fibre. This would include the local loop as well as trunk transmission, and the fibre would go to the wall socket in the home.
That plan soon got under way, but despite 30 years, no Country has completely replaced its copper network with fibre. That is a relatively easy process, but there are practicalities such as capital availability and resource allocation. There is another aspect common to capitalism, return on investment. For small towns and villages, remote dwellings, the cost of extending fibre is too costly and would not give a return on investment.
The same would apply with electricity grid infrastructure.
Britain is a very small Country. The problem will be much more acute for larger territories like Germany, France and the USA.
With wind and solar, the cost to generate the electricity barely exceeds the cost you can hope to sell it for. Hence even the tiniest rise in rock bottom interest rates, or inflation, scuttles most of these projects - the energy return on energy invested is too low and is unsustainable under any sort of economic headwind.
And that won't change - again, the energy return on energy invested is very low. Wind is 4-16 ratio. Solar is a 2-19 ratio. 7 is the cut off - anything below 7 isn't worth doing. Even a slight change pushes a lot of wind and solar projects below the line, because they are just above the line to begin with.
Natural gas is 28, coal is 30, hydro is 30-40. Nuclear is 75.
I note that the CPPIB (Canada Pension Plan Investment Board) just sold their 25% stake in a German offshore wind project. Taking a profit? Or mitigating the loss? Be interested to hear Robert’s take on it.
Thank you for the article Robert. The energy marketplace of ideas is at work. There are significant opportunities for those with conviction and an understanding of how it operates within an inefficient economic and political environment. Stay grounded.
I was unaware of the long-term agreement noted in the article.
"A lingering issue is a 25-year agreement approved by the Delaware General Assembly that allowed electricity from Bloom fuel cells to be fed into the Delmarva Power grid at locations near Newark and New Castle at higher-than-market prices."
Some will accuse us of kicking good (planet saving) men when they’re down, Robert.
To that we would answer:
A) Define “good”?
B) Predicting and/or documenting all this so as to make damn sure voters learn from it is not kicking. It’s a public service the legacy media won’t do.
So, you, Doom, we and others will do it here. On Substack.
The economics fundmentals of this sector is destine for failure. Simply because the energy bussiness, while borning, slow, and antiquated, is a long man game. The capital nature of the sector requires 10, 20, 30 years of forsight and planning. Supply must equal demand-this is especially true for generating electricity. The inputs for the bussiness require commodities: in ready supply, the instructure to refine & process, distribution network, supply chains, etc. But most importantly the commodities input have to overcome energy entropy. The inefficiencies of morden fossil fuels system still give off enough energy to overcome this entropy.
Green new deal pipe dream that fails in its application.
There is no established relationship between human CO2 emissions and the climate.
Sorry I am unfamiliar with the Mendoza line... but they dont work as well as they used to.. thanks for question.. think of all the outdated solar panel that will soon be dysfunctional!!
Check out the recent national assessment on climate change - ludicrous attribution assertions coupled with total ignorance of cost/benefit analysis.
The left is so blighted and ignorant.
Check out the recent national assessment on climate change - ludicrous attribution assertions coupled with total ignorance of cost/benefit analysis.
The left is so blighted and ignorant.
And at the other end of the spectrum in a planned and directed economy considerable enthusiasm …. until a wall is hit.
https://open.substack.com/pub/adamtooze/p/chartbook-carbon-notes-6-chinas-lead?r=2bxjv&utm_medium=ios&utm_campaign=post
Straw man argument. I made no such correlation - that’s from your mind.
You are however quite right it is possible to increase generation output, build grid infrastructure as appropriate, but it isn’t happening and there are no plans to fund and schedule it Even if work started now, it could not for practical and logistical reasons be completed before 2050 - and even if we were only talking about coal, gas or nuke mix.
The reason it’s not underway is because it is understood that wind and solar cannot supply base load, or maintain a stable grid frequency. Therefore for every 1GW of wind or solar built, 1GW of gas or coal (nuclear is not suitable to stabilise intermittency) has to be built in support and back-up.
That means two generating systems have to be built in parallel and operated in parallel, but because of intermittency neither will make sufficient revenue to cover costs and for profit contribution. And as you point out, the complex transmission and balancing grid infrastructure needed to connect up all the scattered wind and solar is an additional requirement.
The capital is not there from private investors, Governments are bankrupt so can’t provide it, and in any case we just don’t have the spare resources to do the work necessary in the time frame.
The capitalist free market system can indeed do marvellous things, but only for a profit. No profit, no do.
There is also the question of raw materials. Electricity systems run on copper wire. Copper wire is made from copper produced from copper ore. Therefore copper ore mining activity must increase exponentially to meet demand. But when you check investment in copper ore mining, it has actually eased because the demand for copper has eased. If there were active construction of grid infrastructure we should be seeing an increased demand for copper - why aren’t we?
Over 30 years ago, the telecoms companies in the UK (and most Countries in Europe) made a plan to replace the copper network with fibre. This would include the local loop as well as trunk transmission, and the fibre would go to the wall socket in the home.
That plan soon got under way, but despite 30 years, no Country has completely replaced its copper network with fibre. That is a relatively easy process, but there are practicalities such as capital availability and resource allocation. There is another aspect common to capitalism, return on investment. For small towns and villages, remote dwellings, the cost of extending fibre is too costly and would not give a return on investment.
The same would apply with electricity grid infrastructure.
Britain is a very small Country. The problem will be much more acute for larger territories like Germany, France and the USA.
Yes and sadly NuScale joined the blood bath
With wind and solar, the cost to generate the electricity barely exceeds the cost you can hope to sell it for. Hence even the tiniest rise in rock bottom interest rates, or inflation, scuttles most of these projects - the energy return on energy invested is too low and is unsustainable under any sort of economic headwind.
And that won't change - again, the energy return on energy invested is very low. Wind is 4-16 ratio. Solar is a 2-19 ratio. 7 is the cut off - anything below 7 isn't worth doing. Even a slight change pushes a lot of wind and solar projects below the line, because they are just above the line to begin with.
Natural gas is 28, coal is 30, hydro is 30-40. Nuclear is 75.
Great article. And then there are the human health costs that NO ONE is talking about, but are becoming critical:
https://www.windconcerns.com/when-the-turbines-went-big-so-did-the-sickness/
I note that the CPPIB (Canada Pension Plan Investment Board) just sold their 25% stake in a German offshore wind project. Taking a profit? Or mitigating the loss? Be interested to hear Robert’s take on it.
Thank you for the article Robert. The energy marketplace of ideas is at work. There are significant opportunities for those with conviction and an understanding of how it operates within an inefficient economic and political environment. Stay grounded.
Aww shucks, the laws of physics win again. Who would've thought? To the oil company charts you can add uranium and the miners...
Bloom energy is right sizing their work force:
https://delawarebusinessnow.com/2023/11/analysis-bloom-energy-thins-the-herd-in-california/
I was unaware of the long-term agreement noted in the article.
"A lingering issue is a 25-year agreement approved by the Delaware General Assembly that allowed electricity from Bloom fuel cells to be fed into the Delmarva Power grid at locations near Newark and New Castle at higher-than-market prices."
Some will accuse us of kicking good (planet saving) men when they’re down, Robert.
To that we would answer:
A) Define “good”?
B) Predicting and/or documenting all this so as to make damn sure voters learn from it is not kicking. It’s a public service the legacy media won’t do.
So, you, Doom, we and others will do it here. On Substack.
Do…not…stop.
- environMENTAL