Energy Security [Archive] - Page 3

Ulenspiegel

10-03-2012, 08:07 AM

This doesn't seem to fit.
You seem to forget to include opportunity costs into how much they lose.

1 barrel of oil contains around 1600 kWh energy, of which -let's be a little bit optimistic- 50% can be converted into electricity (= 800 kWh).

One kw(p) of PV gives you 1800 kWh per year electicity in SA, it costs 1500 USD, its life span is at least 20 years, with 10% annual costs (credit repayment and interest, insurance, replacements of inverters) you pay 150 USD per year for 1800 kWh or around 8.5 USDcent per kWh, hence, the production of 800 kWh electricity with PV in SA cost you 66 USD.

So burning one barrel oil costs in SA at least 34 USD more than selling the oil for 100 USD per barrel and buying PV.

Burning oil means you have to buy and maintain a thermal engine + generator (additional costs), each price increase of crude makes the situation worse and after 20 years you have written off PV that gives you almost free energy for additional 10 years at least.

Therefore, PV perfectly makes sense in countries with high percentage of electricity from oil (Arabia, India, Pakistan) and a high electricity demand during daytime for running ACs.

Rick M

10-03-2012, 11:14 AM

Russia's Economy Minister predicts flat production and increasing internal consumption:
http://www.reuters.com/article/2012/10/02/russia-oil-belousov-idUSL6E8L25MX20121002

Firn

10-03-2012, 07:09 PM

1 barrel of oil contains around 1600 kWh energy, of which -let's be a little bit optimistic- 50% can be converted into electricity (= 800 kWh).

One kw(p) of PV gives you 1800 kWh per year electicity in SA, it costs 1500 USD, its life span is at least 20 years, with 10% annual costs (credit repayment and interest, insurance, replacements of inverters) you pay 150 USD per year for 1800 kWh or around 8.5 USDcent per kWh, hence, the production of 800 kWh electricity with PV in SA cost you 66 USD.

So burning one barrel oil costs in SA at least 34 USD more than selling the oil for 100 USD per barrel and buying PV.

Burning oil means you have to buy and maintain a thermal engine + generator (additional costs), each price increase of crude makes the situation worse and after 20 years you have written off PV that gives you almost free energy for additional 10 years at least.

Therefore, PV perfectly makes sense in countries with high percentage of electricity from oil (Arabia, India, Pakistan) and a high electricity demand during daytime for running ACs.

An interesting calculation and there is no doubt in my mind that PV can be a key element among many to increase the energy security of the world. Still in this particular case there are opportunity costs for the potential Saudi investor, in the sense that he might get a better return on his capital elsewhere.

Personally I do however agree that it could be a sensible investment, especially in this part of the world with an almost ideal endowment in terms of solar power and energy usuage enviroment. In short great potential energy yield seems even to match the peak of energy usage.

Ulenspiegel

10-04-2012, 05:46 AM

An interesting calculation and there is no doubt in my mind that PV can be a key element among many to increase the energy security of the world. Still in this particular case there are opportunity costs for the potential Saudi investor, in the sense that he might get a better return on his capital elsewhere.

Personally I do however agree that it could be a sensible investment, especially in this part of the world with an almost ideal endowment in terms of solar power and energy usuage enviroment. In short great potential energy yield seems even to match the peak of energy usage.

Sorry, here I do not see your point :-) For 66 USD investment you get for twenty years p.a. (!) 34 USD, what is a better alternative? Keep in mind energy in form of electricity is a very sexy product. :-)

This solution works now very well because the PV has become quite cheap in the last three years and at the same time crude price increased.

BTW: If you check the plans published last year in respect to future electricity production in SA, you will find that they plan to install many GW PV and nuclear. Here my bet is they will shift more to PV in future. :-)

Firn

10-04-2012, 01:28 PM

Sorry, here I do not see your point :-) For 66 USD investment you get for twenty years p.a. (!) 34 USD, what is a better alternative? Keep in mind energy in form of electricity is a very sexy product. :-)

This solution works now very well because the PV has become quite cheap in the last three years and at the same time crude price increased.

BTW: If you check the plans published last year in respect to future electricity production in SA, you will find that they plan to install many GW PV and nuclear. Here my bet is they will shift more to PV in future. :-)

Sorry if I did not make my point clear enough. From a micro perspective, a potenial Saudi investor has a different set of opportunity costs. In this case, if the sources I found are to believed a gallon cost less then 1$ at the local gas station. This means that a barrel of it can cost at most roughly 33$ compared to a world market price of 100$.

This should also explain why PV, despite the glaring advantages and almost perfect match for the Saudi energy problem are not yet widespread. So in a sense your argument makes sense from a macro perspective but not on a micro one, at least if there are no massive subventions for PV.

All in all it shows us once again the power of a (distorted) market, in this case setting from multiple points of view terrible incentives. I serioulsy doubt the ability of the Saudis to create sensible longterm growth Nauru (http://en.wikipedia.org/wiki/Economy_of_Nauru) is a stark reminder of an extreme dependency on fossil ressources.

Ulenspiegel

10-04-2012, 06:13 PM

Sorry if I did not make my point clear enough. From a micro perspective, a potenial Saudi investor has a different set of opportunity costs. In this case, if the sources I found are to believed a gallon cost less then 1$ at the local gas station. This means that a barrel of it can cost at most roughly 33$ compared to a world market price of 100$.

This should also explain why PV, despite the glaring advantages and almost perfect match for the Saudi energy problem are not yet widespread. So in a sense your argument makes sense from a macro perspective but not on a micro one, at least if there are no massive subventions for PV.

All in all it shows us once again the power of a (distorted) market, in this case setting from multiple points of view terrible incentives. I serioulsy doubt the ability of the Saudis to create sensible longterm growth Nauru (http://en.wikipedia.org/wiki/Economy_of_Nauru) is a stark reminder of an extreme dependency on fossil ressources.

Sorry, you lost me. SA has to provide electricity for her citizens, at the moment oil is burnt, that could be sold on the world market for 100 USD, in order to provide electricity that can be produced in SA for 66 USD with PV.

That the oil costs only 33 USD /barrel in SA only means for me that the citizens of SA do not pay the world market price. Or to make my point, the rulers ARE ABLE to distort the market by implementing from the marco POV stupid construct, which is only politically useful. Hence, it should be easy for them to implement a PV program, too. They have money and they control the oil, for the citizens it does not make any difference how the electricity is produced.

Firn

10-04-2012, 07:15 PM

Sorry, you lost me. SA has to provide electricity for her citizens, at the moment oil is burnt, that could be sold on the world market for 100 USD, in order to provide electricity that can be produced in SA for 66 USD with PV.

That the oil costs only 33 USD /barrel in SA only means for me that the citizens of SA do not pay the world market price. Or to make my point, the rulers ARE ABLE to distort the market by implementing from the marco POV stupid construct, which is only politically useful. Hence, it should be easy for them to implement a PV program, too. They have money and they control the oil, for the citizens it does not make any difference how the electricity is produced.

Indeed, this is from the state or macro view true and should result in a different set of policies in Saudi Arabia.

My point is that a potential Saudi homeowner has the following choices.

a) If the government delivers him cheap electricity thanks to burning oil at those low, 33$ a barrel, prices he will take that glady. (And consume a great deal with great inefficiency).

b) If the government delivers him expensive electricity by pricing the oil at a current world price of 100$ he has an incentive to produce his own energy. He has two options:

- A generator powered by oil. If he gets oil that cheap on the local market he can save a great deal, let us say 50$ per year after his expenses.

- A PV. He can save around 30$. Not as much as with generator.

Yes, changes in the Energy policy and the world price have a big influence on the calculation.

What interests me in this regard is the failure of the Saudi government to set up the proper framework for market which sets up the correct incentives for the common good of the state. In fact the massive subsidies to keep the oil price so much below the level of the world market cause massive distortions and are almost textbook like examples of how you create incentives which will likely bite the Saudis into the butt.

Fuchs

10-04-2012, 09:46 PM

The Iranians do the same, as do actually many major oil exporters.

The reasons are multiple, I blame two the most:
* incompetence; people even in government don't understand opportunity costs properly
* Bread and circuses; subsidizing goods of everyday consumption is a simple and popular (albeit usually economically inefficient) way of maintaining loyalty

The Saudis have a state that already achieves the latter through their version of trickle down economics (= including institutionalised corruption at higher levels and lots of official subsidies at lower levels), so to subsidize energy is an unnecessary duplicity.
Many people in such countries cannot stand the idea that oil ought to be as expensive in a oil-rich exporting country as everywhere else.
That's not unique; remember how "drill drill drill" is propagandised as if it leads to lower gas prices in the U.S.?

Ulenspiegel

10-05-2012, 06:10 AM

Indeed, this is from the state or macro view true and should result in a different set of policies in Saudi Arabia.

My point is that a potential Saudi homeowner has the following choices.

a) If the government delivers him cheap electricity thanks to burning oil at those low, 33$ a barrel, prices he will take that glady. (And consume a great deal with great inefficiency).

b) If the government delivers him expensive electricity by pricing the oil at a current world price of 100$ he has an incentive to produce his own energy. He has two options:

- A generator powered by oil. If he gets oil that cheap on the local market he can save a great deal, let us say 50$ per year after his expenses.

- A PV. He can save around 30$. Not as much as with generator.

Yes, changes in the Energy policy and the world price have a big influence on the calculation.

What interests me in this regard is the failure of the Saudi government to set up the proper framework for market which sets up the correct incentives for the common good of the state. In fact the massive subsidies to keep the oil price so much below the level of the world market cause massive distortions and are almost textbook like examples of how you create incentives which will likely bite the Saudis into the butt.

I see our "problem": I suggest that PV in SA is mainly installed by state owned utilities - the same companies which run most of the larger generators. At the same time an increase of fuel prices is essential to motivate a more efficient use of energy and to decrease the useage of small generator in homes. Here a promotion of PV for the homeowner could also work, if I pay subsidies anyway why not for PV? If energy becomes the modern bread in panem et circenses then please in a sustainable form, i.e. from fuel that does not deplete.

Rick M

10-08-2012, 10:45 PM

Two weeks ago DECC released its Statistical Press Release for the second quarter of 2012.
It states (pg. 6):
• Total indigenous UK production of crude oil and NGLs in the second quarter of 2012 fell by 12.2 per cent when compared with the second quarter of 2011. Oil production over the last eighteen months has been impacted by maintenance and other production issues over and above the general decline in North Sea production.
• The UK was a net importer of oil and petroleum products in the second quarter of 2012 by 5.5 million tonnes. In the same period of 2011 the UK was a net importer by 3.4 million tonnes.

UK gas production fell even further.
http://www.decc.gov.uk/assets/decc/11/stats/publications/energy-trends/6480-pn-12109-energy-stats.pdf

This historical graph (1965 to date) is rather sobering:
http://mazamascience.com/OilExport/output_en/Exports_BP_2012_oil_bbl_GB_MZM_NONE_auto_M.pdf

A decade ago, UK supplied Canada with a full one-third of its imported oil, with Norway supplying another third.

davidbfpo

11-25-2012, 11:05 PM

This article's sub-title promises much:
Politicians and environmentalists alike are obsessed with a narrow set of old technologies. It’s time for 21st-century ideas

Link:http://www.spectator.co.uk/features/8749181/new-paths-to-power/

davidbfpo

12-31-2012, 01:43 PM

A nice play on words, but in fact fracking is one component of this blog article on UK energy and security:http://www.thinkdefence.co.uk/2012/12/a-fracking-great-shift-of-power-2/

Back to fracking for a moment:
There are two issues to consider with shale gas, what happens if the UK can develop its own shale gas resources and what will happen if and when everyone else does.......(Later)...Whether UK shale gas can compete with cheap US LNG, Russian, Norwegian or Qatari LNG is yet to be seen but I think we should be pushing hard to find out.

Lots of links to follow, but I enjoyed the PPT on the Qatar supplied LNG terminal in Wales and the maps of pipelines.

Ulenspiegel

12-31-2012, 04:12 PM

This article's sub-title promises much:

Link:http://www.spectator.co.uk/features/8749181/new-paths-to-power/

Sorry, the author of the spectator paper is an idiot :-)

If you want to make a useful contribution you should at least get the simple facts right:

1) Germany does not build more coal power plants, some of the old ones are replaced,however, there is no net gain in coal power. More energy output comes from higher efficiency of the new plants.

2) His understanding of renewables is not up to date: Wether a wind turbine has only 5 MW is not relevant, we have enough space to install them and onshore turbines are already competitive in most European countries -only lignite is more competitive. Gas is for most European countries not the solution, wind is. As economist he should be able to check prices.

3) The last shale gas projects in Poland were a disaster, too much nitrogen, too much SH2 and an large error when calculating the reserves. To extrapolate from US to Europe is stupid.

4) The author should at least admit that there are plenty of scientific studies that contradict him, very likely he has not read them. To ignore good stuff from Fraunhofer et al. is not the way to go.

Rick M

01-19-2013, 10:41 PM

On Thursday a report was issued by a team of reputable UK actuaries, along with a 3-hour public presentation:
http://www.actuaries.org.uk/events/one-day/effects-limits-growth-financial-markets-and-consequential-impacts-actuarial-advice

Yesterday the Guardian posted this article which explains their concerns:
http://www.guardian.co.uk/sustainable-business/climate-change-resource-scarcity-pension-industry-actuaries?intcmp=122

I've examined the report, which is concise (26 pgs) & very readable.

Rick M

02-09-2013, 07:57 PM

Almost six years ago, Danny Davis (then a Major in the US Army) wrote a concise, well-researched paper on Peak Oil ("On the Precipice," 37 pgs). Davis was one of the first military officers (anywhere) to publicly address PO.

Yesterday HuffPo ran Davis' call for prudence/realism when considering our future oil supply:
http://www.huffingtonpost.com/daniel-davis/indepence-from-rational-a_b_2618953.html?show_comment_id=228713126#comment _228713126

Rick M

02-17-2013, 06:27 PM

bourbon

02-18-2013, 05:20 AM

Arctic ice shrinks to its annual minimum in (early) September and usually maxes out in April.
This graph uses one colour for each month, then graphs the monthly averages by year (based on PIOMAS data). The resulting image makes it look as if we're painting ourselves into a corner/bulls-eye.
FSB Border Guard is looking to stand up 20 posts in the arctic. All I know is that they will be the most degenerate outposts in Russia – which is saying something.

Upgrades to the Northern Fleet seem to be mechanism to (further) enrich Vladimir Vladimirovich's Peterersburg cronies more than anything else.

Rosneft signed another arctic agreement with Exxon this week.

Firn

02-18-2013, 07:42 AM

Personally I think that sometimes the reports of the big corporations are quite interesting and well done. RWE had a good summary of the financial impact of the German EEF. Of course they and others tend to paint the picture the way they want...

Rick M

03-05-2013, 12:50 AM

Ulenspiegel

03-05-2013, 08:53 AM

The latest item from US military researchers is a devastating critique of biofuels.
The biofuels industry has had over a month to respond/conduct damage control, but so far appears to have done nothing to refute Capt. Kiefer's data or his conclusions.

A review of this study was posted this morning:
http://www.resilience.org/stories/2013-03-04/i-twenty-first-century-snake-oil-why-the-united-states-should-reject-biofuels-as-part-of-a-rational-national-energy-security-program-i-review

The basic problem of biofuels, low energy yield, was known for many years, see for example Pro. Tad Patzeks blog "life itself".

PV produces two order of magnitude more energy per square metre than plants and does not require land that could be used for food production.

The combination of biofules with combustion engines is stupid as stupid can be, no discussion here.

Rick M

03-05-2013, 12:05 PM

I agree, Ulen

Kiefer credits Patzek and many others:
"The author gratefully acknowledges Randall Rush, Charles Hall, Paul Waggoner, James Bartis, Jesse Ausubel, Tim Garrett, Thomas Homer-Dixon, Freeman Dyson, Andrew Marshall, David Pimentel, Tad Patzek, Jason Hill, Wayne Henson, Peter Brabeck-Letmathe, and Tom Elam for their contributions to his understanding of the issues discussed herein. Any errors are the author’s alone." - Acknowledgements (Kiefer, p. vii)

Kiefer's footnotes include references to other Peak Oil/ASPO/TOD analysts:
Murphy, Hagens, Rapier, etc.

The first peak oil book was written almost 30 years ago. "Beyond Oil: The Threat to Food and Fuel in the Coming Decades" (1986) states:
"A more frequent recommendation is that agriculture become a producer of energy, through the production of alcohol from crops and crop residues.
This approach has some appeal, but it's hardly a panacea. For one thing, alcohol's energy profit ratio is only slightly above 1. For another, current studies point to as much as a ninefold increase in erosion when all crop residues are removed for alcohol production." - Gever et al, p. 245

Firn

03-05-2013, 05:37 PM

This editorial (http://onlinelibrary.wiley.com/doi/10.1002/anie.201200218/pdf) in the famous sientific-journal Angewandte Chemie by Michel Hartmut (http://www.biophys.mpg.de/?id=106&L=1/public/memprotstruct.html), who won his nobel prize for key work in the field of photosynthesis, is an excellent summary on the issue.

Taken together, the production of biofuels constitutes an extremely inefficient land use. This statement is true also for the production of bioethanol from sugar cane in Brazil.

...

Recommendations

Because of the low photosynthetic efficiency and the competition of energy plants with food plants for agricultural land, we should not grow plants for biofuel production. The growth of such energy plants will undoubtedly lead to an increase in food prices, which will predominantly hit poorer people. The best use of the biomass lies in its conversion into valuable building blocks for chemical syntheses. Usage of the available biomass for heating purposes or for generating electricity in power stations, thus replacing fossil fuels, is preferable over biofuel production. The saved fuels can be used for transportation purposes.

Clearing rainforests in the tropics and converting them into oil palm plantations is highly dangerous because the underlying layers of peat are oxidized and much more CO2 is released by the oxidation of organic soil material than can be fixed by the oil palms. The rainforests possess an important role for the climate and constitute a valuable resource for novel compounds for drug discovery. With respectto the carbon footprint, it would be even much better to reforest the land used to grow energy plants, because at a 1% photosynthetic efficiency, growing trees would fix around 2.7 kg of CO2 per square meter, whereas biofuels produced with a net efficiency of 0.1% would only replace fossil fuels which would release about 0.31 kg CO2 per m² upon combustion!

...

The [Green] Alternative

Commercially available photovoltaic cells already possess a conversion efficiency for sunlight of more than 15%, the electric energy produced can be stored in electric batteries without major losses. This is about 150 times better than the storage of the energy from sunlight in biofuels . In addition, 80% of the energy stored in the battery is used for the propulsion of a car by an electric engine, whereas a combustion engine uses only around 20% of the energy of the gasoline for driving the wheels. Both facts together lead to the conclusion that the combination photovoltaic cells/electric battery/electric engine uses the available land 600 times better than the combination biomass/biofuels/combustion engine.

The future of our individual transport has to be electric!

To come back to our old Saudi discussion their pricing policy gets even more criminal. We in snowy parts of the world suffer from a lower solar energy input, especially in the winter. Our batteries suffer from the cold and we need to heat our cars. This makes the economics of the combination less attractive*. The Saudis have far more energy input by the sun per m², hardly any opp. costs for that land use and in general suffer far less battery drain due to cold and do not need a similar of heating.

A car gets heated by the thermal energy which is 'lost' to it's propulsion. This reduces it's efficiency gap compared to an electric car.

Ulenspiegel

03-05-2013, 06:55 PM

Firn

03-05-2013, 07:36 PM

@Firn

It is a little bit embarrassing for me, but the very good source you gave, Prof. Hartmut Michel, head of the Max Planck Institut fuer Biophysik, Frankfurt/M., should have come from me, I did part of my PhD in a program that was supervised by him. :)

http://onlinelibrary.wiley.com/doi/10.1002/anie.201200218/pdf

:D

There are worse PhD progams. However your words guided me to the right google search terms. ;)

I just liked the way he layed out the basics and came to the logical solution. While I know very little in the field I just can not imagine that we will see that gap in efficiency or ROEnergy closing enough to have a competitive bio fuel combination.

A highly interesting aspect of the photosynthesis is the way the energy efficiency maps against the sunlight. I will have to think about that. There are many aspects like shaded areas in forests and meadows, the other scarce resources which put an upper limit on needed solar power the specific history of evoultion.

P.S: Berkshire (http://www.berkshirehathaway.com/2012ar/2012ar.pdf) invested and invests heavily into renewable energy through MidAmerican.

MidAmerican’s electric utilities serve regulated retail customers in ten states. Only one utility holding company serves more states. In addition, we are the leader in renewables: first, from a standing start nine years ago, we now account for 6% of the country’s wind generation capacity. Second, when we complete three projects now under construction, we will own about 14% of U.S. solar-generation capacity.

Firn

03-06-2013, 08:44 PM

BTW I did have a good chat with my uncle, which according to a local paper 'makes' the power of a relative small utility company ;)

He his a hydro man and very hands-on. While he is the manager of several powerplants he still can not resitst to fish out trash and footballs in front of the bars of a certain river plant. :D

In any case he would like to see a stable regulatory environment, hopefully on a more European scale to enable more secure investments. Quite understandable in a very capital-intensive business. The Alps are already quite exploited in terms of hydropower but he certainly sees a lot of potential in pumped-storage hydroelectricity. Right now some of 'his' hydroplants do indeed work as a buffer for conventional/thermal plant as you can switch them quickly on and off without losing efficiency.

So far the energy mix does in theory profit from a greater amount of renewable energy sources like PV as the demand is higher during day. From a grid view it all those decentralized mini-plants are a bit of nightmare to manage and even worse, lessen the profit achieved by delivering power at the right time. :(

Ulenspiegel

03-07-2013, 01:46 PM

Firn

03-08-2013, 01:11 PM

IIRC the Alpes have a storage potential of 30 TWh in Austria and Switzerland. Many reservoirs or more exactly the attached generators/ pumps have often a quite low capacitor factor, I found for Austria values between 10 and 45%. Therefore, connecting theses reservoirs with German or Italian wind and PV capacity would be IMHO a relatively cheap approach to long term storage of reneables, we only need more transmission capacity.

In Norway and Sweden we have larger reservoir with 80 TWh and 34 TWh, respectively, and the same low capacity factors for generators and pumps.

Germany has a demand in winter (fog, no wind) of around 20 days worth of energy (~35 TWh), have not found any good numbers for Italy.

So far the storage potential of water was in general just used to cover the ups of demand and not the ups of supply. It seems quite logical that if we have a more variable amount of supply an investment to 'arbitrage' in both ways could make a lot of sense.

The grid we have today is of course the result of the developments in the last decades. A more capable, better interconnected European grid could indeed smooth out the variable and diverse inputs by the large network effects and greatly ease the storage and management of energy...

From an economic standpoint of the big utilities a more fragmentated grid can of course more profitable. It limits the 'free market' supply and allows one to return more on the (old) investments made in conventional power plants. I say this as a very recent stockholder of RWE, E.ON, GDF Suez and ENEL, which all have lost massively in value in the last years.

Ulenspiegel

03-08-2013, 08:51 PM

So far the storage potential of water was in general just used to cover the ups of demand and not the ups of supply. It seems quite logical that if we have a more variable amount of supply an investment to 'arbitrage' in both ways could make a lot of sense.

The grid we have today is of course the result of the developments in the last decades. A more capable, better interconnected European grid could indeed smooth out the variable and diverse inputs by the large network effects and greatly ease the storage and management of energy...

From an economic standpoint of the big utilities a more fragmentated grid can of course more profitable. It limits the 'free market' supply and allows one to return more on the (old) investments made in conventional power plants. I say this as a very recent stockholder of RWE, E.ON, GDF Suez and ENEL, which all have lost massively in value in the last years.

The interesting question for me is, are the big utilities in Germany really in a good strategic position? They are severely indebted and are loosing at least 2% market share per year. The killer for them is onshore wind power that is owned by German farmers, who will replace 15000 old turbines with new ones within the next ten years providing at least additional 90 TWh per year of electricity (+15% of gross demand). :-)

Firn

03-09-2013, 11:22 AM

The interesting question for me is, are the big utilities in Germany really in a good strategic position? They are severely indebted and are loosing at least 2% market share per year. The killer for them is onshore wind power that is owned by German farmers, who will replace 15000 old turbines with new ones within the next ten years providing at least additional 90 TWh per year of electricity (+15% of gross demand). :-)

To answer that one would need a long post. I'm quite sure that I got enough value for the price and that over the remaining life of their assets the discounted cash flow will be worth it.

For now the lack of important power highways and the decreasing financial costs gives them more time to manage their problems. For example RWE pays overall currently 5%, but the latest long-term bond (http://www.rwe.com/web/cms/de/1805824/rwe/investor-relations/anleihen/finanzierungsinstrumente/rwe-standardanleihen/2013-2020-1875-eur/) yields under 2%. 10% of the 6% long-term liabilities should be replaced by similar low yielding ones or partly financed out of the operating income with lower capex. Long-term bonds issued by RWE are priced very high. The low yields for pension fonds hit the earnings the other way around very high.

Now I know it is easy to comment from home but RWE certainly managed to get a lot of bad bond deals for their balance sheets, doing a lot of capex when financing them was expensive and cutting now back when financing is cheap. Not quite at the level of Hewlett-Packards stupidity of buying massive amounts of shares back when the prices were 4 times higher and buying nothing back at the current depressed prices, not to forget that they blew 8 billions out of 12 IIRC on a single software acquisition...

Firn

03-11-2013, 08:36 PM

A Norwegian (http://www.youtube.com/watch?v=3eV43A1GrDU) talks about hydro power and the potential big battery called Norge.

Green energy yes (http://www.youtube.com/watch?v=ckux7edN6Tg) but not in my backyard...

davidbfpo

03-14-2013, 11:00 AM

Hat tip to 'The Interpreter' from Australia's Lowy Institute for this BBC report:
Japan says it has successfully extracted natural gas from frozen methane hydrate off its central coast, in a world first. Methane hydrates, or clathrates, are a type of frozen "cage" of molecules of methane and water.

Link:http://www.bbc.co.uk/news/business-21752441

It does seem a little early to expect this is a saviour for Japan.

Rick M

03-22-2013, 11:47 PM

Here is the latest from Lt. Col. Davis re. optimism over US tight oil surge:
http://www.huffingtonpost.com/daniel-davis/domestic-oil_b_2898256.html

As Davis points out, the eventual "confluence" (late this decade) of KSA exporting 3 mbpd less as China needs 6 mbpd more could be a troublesome combo.

Firn

03-23-2013, 10:36 AM

Interesting:

In the February 21 issue of Nature Magazine, Mr. Hughes reported that "much of the oil and gas produced [in shale formations] comes from relatively small sweet spots within the fields. Overall well quality will decline as sweet spots become saturated with wells, requiring and ever-increasing number of wells to sustain production." More ominously, he notes, "high-productivity shale plays are not ubiquitous, as some would have us believe. Six out of 30 plays account for 88% of shale-gas production, and two out of 21 plays account for 81% of tight-oil production." Even the typically optimistic EIA echoed the concerns about sweet spots and the likelihood high levels of production cannot be sustained.

It is obvious that you pick first the low-hanging fruits. I think it is now incredibly difficult to get the predictions right, but is save to say that:

a) It looks like a boom.

b) It will end.

In late February, the EIA reported that "Saudi Aramco's CEO Khalid al-Falih warned that rising domestic energy consumption could result in the loss of 3 million barrels per day (bbl/d) of crude oil exports by the end of the decade if no changes were made to current trends." The New York Times reported that Chinese consumption by 2020 could be almost two-thirds greater than it was in 2011, resulting in a 6 million barrels per day (mbd) increase. Thus, viewed in context evidence indicates that U.S. domestic oil production could max out as early as 2017 and then begin a slow decline -- just as Saudi Arabia could be exporting 3 mbd less and China could be needing 6 mbd more. The consequences to the U.S. economy of such a confluence could be drastic.

This fits into the discussion we had earlier. Oil is a finite ressource with remarkable properties and as chemical energy store we have no equal substitute.

Saudi Arabia, like Venezuela and other oil states does follow a perverse economic policy which makes no economic but all the more political sense. It offers it's rare and precious ressources at laughable prices thus drastically increasing local demand and lowering energy efficiency.

Even a short look at the Wiki (http://en.wikipedia.org/wiki/Energy_in_Saudi_Arabia) reveals that fossil fuels deliver pretty much every Joule consumed in SA. The economic oil boom has been followed by a demographic boom with vast and inefficient hunger for cheap oil which now soaks up an ever bigger part of the revenue stream.

And to think that Solar, which has become cheaper and cheaper would be a perfect economic match to a great deal of the Saudi energy needs. :rolleyes:

PS: Oh wait there is even a nice recent paper (http://www.chathamhouse.org/sites/default/files/public/Research/Energy,%20Environment%20and%20Development/1211pr_lahn_stevens.pdf) about it. An 8 year old should be able to do the math. Much more people x vastly increased consumption per capita = big problem if the ressources are finite, the output limited and the external revenue the lifeline as roughly the overall output = internal consumption + external consumption. Instead of earning good money and storing it for a dry day the are throwing away more and more per year.

PPS: This means for the US and Western Europe that they should try hard to become more efficient and move their energy mix away from those fuels. Fracking could have been a vastly bigger gift twenty years down the road.

PPPS: The battery Norge looks more attractive and it might be a very smart choice to limit the oil output just like they limit the money stream going into their economy.

Rick M

03-23-2013, 12:20 PM

Hi, Firn

Yes, it's obvious about the best, low-hanging fruit being consumed first, etc.

But the purpose of Dave Hughes' comprehensive paper re. unconventional fuels (Feb. 13, 178 pgs) was not to state the obvious. Rather, it was to refute the recent hype from Maugeri, Morse, IEA, etc that "peak oil is dead"... USA will be self-sufficient in oil supply once again, Bakken boom can be replicated world-wide, etc.
From the perspective of the 'average' North American reader, the recent hype is probably what's obvious, and many citizens probably wonder why Hughes, you or I would waste our time worrying about future oil supply when the evidence is so obvious that PO was a false alarm.

Hughes' focus is global, rather than US-centric, and it is clear from his data that a relatively brief surge in American tight oil will not solve long-term supply concerns over global liquid fuels.

KSA is central to the global oil market, and the entire world will feel it when Saudi export capabilities eventually diminish.
Paul Stevens at CH continues to do excellent work re. Saudi export decline. The 2011 paper that you suggest is excellent. So is an earlier 2008 paper which also predicts that KSA will be done as an exporter of significance around 2040.
(A discussion of the 08 paper was posted up-thread on p. 2, #28.)

davidbfpo

03-23-2013, 01:01 PM

Yesterday for a short time the security of UK gas supplies came to the fore; after the loss of one pipeline connection, due to a faulty pump, a cold snap, a sudden increase in prices and outsiders being told very little was in reserves.

Links:http://www.bbc.co.uk/news/business-21897715 and with more detail:http://www.independent.co.uk/news/uk/home-news/britain-faces-the-prospect-of-gas-rationing-for-the-first-time-8544975.html

Not to overlook the bizarre:
To make matters worse heavy snow and high winds in Cumbria forced the Sellafield nuclear power plant to close...

Thankfully Sellafield is not a major generator. More significant, even if planned for was the switching off yesterday of Didcot 'A', a 2,000 megawatt (MW) coal-fired plant:http://www.bbc.co.uk/news/uk-england-oxfordshire-21698037

Rick M

03-23-2013, 08:54 PM

Thanks for the UK info, David.
I see that this week's forecast is still cool, but the weather (at least in the south of England) looks like it's going to moderate. I wonder how many Brits have a back-up source of heat (old coal burners?), or even proper insulation.

As an update to Davis' article yesterday, there is some discussion in today's Drumbeat:
http://www.theoildrum.com/node/9909#more

davidbfpo

03-23-2013, 11:47 PM

Rick asked:
I wonder how many Brits have a back-up source of heat (old coal burners?), or even proper insulation.

Very few modern homes have a back-up source, let alone a working chimney and 'clean air' regulations restrict smoke emissions in virtually all urban areas.

Insulation is another matter, although the government has repeatedly had campaigns to get home insulation improved - the last was free for all, rather than those on public benefits. Most modern homes are reasonably insulated, notably double glazing and doors. Cavity wall insulation is not standard and attic / roof insulation is haphazard.

flagg

03-24-2013, 08:09 AM

Hat tip to 'The Interpreter' from Australia's Lowy Institute for this BBC report:

Link:http://www.bbc.co.uk/news/business-21752441

It does seem a little early to expect this is a saviour for Japan.

I strongly suspect(and would bet heavily against it/short it for profit if it were possible) that this is little different that a moon made of gold and oil.

Massive amount of tangible value and energy, but the cost/energy invested in recovering it would be far greater than the value/energy gained.

davidbfpo

03-24-2013, 10:35 AM

Firn

03-24-2013, 06:37 PM

I read AM today that two LNG deliveries from Qatar are due to arrive in the UK, within two days and so restore reserves. How the UK which still has its own gas under the North Sea, in the midst of winter, has 1.5 days in reserve eludes me.

For a contrarian viewpoint Christopher Booker adds:http://www.telegraph.co.uk/earth/energy/windpower/9949571/Its-payback-time-for-our-insane-energy-policy.html

To be honest I'm quite surprised to read the low amount of reserves. Reserves mean of course costs. Is it the task of the government or a private company, and if the latter is the case, gets it financial support for a strategic reserve?

I stayed little time in the UK but I can not remember heavily insulated housing units. Of course the weather tends to be milder then here in Alps so the ROI should be quite lower. I will take a quick look.;)

@Rick M: I enjoyed the article and I think the author did a fine job to get his important points across. With the obvious I just wanted the tell myself 'stupid' as I didn't think about that and the consequences first... :wry:

Rick M

03-24-2013, 10:20 PM

This project is supposed to add 30% to UK gas storage capacity:
http://www.gatewaystorage.co.uk/

Meanwhile, this article points to the root of the problem. If the UK hadn't been in such a hurry to sell off its new-found O&G during the Thatcher years, etc, they'd probably still have secure supplies from their own gas-fields.
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8187240

It has been argued that the UK economy was in such a shambles that they had little choice, but one would think that a more sustainable, long-term approach might have been developed.

Bad enough to sell off a finite resource within a few decades. To realize that one's nation has done so at rock-bottom prices (at least through the 80s and 90s) must be downright painful (literally painful to those who can't afford heat, of which the UK seems to have a great number).

davidbfpo

03-24-2013, 11:09 PM

Rick,

You raise a number of points about the UK's decisions on economic policy, way beyond energy security:
If the UK hadn't been in such a hurry to sell off its new-found O&G during the Thatcher years, etc, they'd probably still have secure supplies from their own gas-fields.

I suspect there was an assumption that additional O&G would be found that could be exploited, to date - from my little knowledge - that has not happened. There remains a political reluctance to publicly acknowledge the North Sea "bonanza" is over. Today Alec Salmond, Scotland's First Minister and aspiring to independence, when interviewed referred to massive private investments still being made in the North Sea, not a word about declining production.

In fact the North Sea oil was what was being sold, including at one point to Canada IIRC!:wry: The natural gas all came ashore here.

It has been argued that the UK economy was in such a shambles that they had little choice, but one would think that a more sustainable, long-term approach might have been developed.

Yes, alas those who made the decisions did not think long-term. A few have asked what happened to the "bonanza". Even today our energy policy depends on our national ability to earn enough to import supplies. Security of supply is on the agenda, but is out of sight from nearly all.

The UK economy outside the City of London and the wider south east is not far off being a shambles.

Try this taster from The Guardian:
...the finding from Manchester University's Centre for Research on Socio-Cultural Change that in the Midlands, the north, Wales and Scotland between 1998 and 2007 the private sector created almost no net new jobs. North of the Watford Gap, it was left to the state to provide employment, and effectively cover up for the inertia of businesses.

Link:http://www.guardian.co.uk/commentisfree/2013/jan/28/britains-shrinking-economy-debate-farcical?CMP=twt_gu

The cited report:http://www.cresc.ac.uk/sites/default/files/wp%2075.pdf

What did the UK spend the "bonanza" on? Personal consumption yes and the public or state sector, which absorbed more and more often without giving the outcomes.:(

Dayuhan

03-24-2013, 11:11 PM

I think it is now incredibly difficult to get the predictions right, but is save to say that:

a) It looks like a boom.

b) It will end.

Also safe enough to say that the scenario that eventually plays out will be neither as dire as the prophets of doom would suggest nor as lavish as the prophets of boom would suggest. It's always wise, when assessing such assessments, to apply the Olympic Diving method and discard the lowest and highest scores from the start.

The boom will surely end, though that does not mean production will cease. It will simply cease to be seen as a "boom" and become the norm, at whatever level it ultimately finds.

Green energy yes (http://www.youtube.com/watch?v=ckux7edN6Tg) but not in my backyard...

Oddly, somebody now wants to build a 15MW wind farm in my backyard. Perhaps predictably, neither I nor the community are entirely enchanted with the idea...

Rick M

03-25-2013, 12:17 AM

"that does not mean production will cease"

You are correct, Steve.
UK is still top-15 (maybe still top-10) in global O&G production.
But that's the scary part: if we have top-10 producers which are clearly post-peak and struggling, where do we think that the next decade's (the 2020s') supply is going to come from?
We can't all be importers....

As for importers, David is correct: Canada used to receive one-third of its oil imports from UK and another third from Norway. Now the two struggle to provide us with one-third of our imports between them, and our #1 supplier has been Algeria (hardly a bastion of stability and itself possibly post-peak since 09).

Dayuhan

03-25-2013, 09:54 AM

"that does not mean production will cease"

You are correct, Steve.
UK is still top-15 (maybe still top-10) in global O&G production.

The "boom" referred to was the US "tight oil/tight gas" boom"

But that's the scary part: if we have top-10 producers which are clearly post-peak and struggling, where do we think that the next decade's (the 2020s') supply is going to come from?
We can't all be importers....

As I've said before, in most cases the "peak" issue is less a problem of geological constraint than one of political constraints on investment and exploration.

As far as where it will come from, IEA says the US can produce 11.2 mbpd by 2020, and this article:

http://www.cbc.ca/news/business/story/2012/06/05/capp-oil-production-forecast.html

says Canada could push 6.2 mbpd by 2020. What's going on in the US and Canada is an example of how investment can respond to high prices if it's not arbitrarily constrained. The same could happen in a fair number of other places if investment and exploration were as open, but of course they are not.

As for importers, David is correct: Canada used to receive one-third of its oil imports from UK and another third from Norway. Now the two struggle to provide us with one-third of our imports between them, and our #1 supplier has been Algeria (hardly a bastion of stability and itself possibly post-peak since 09).

If things get really strange you may have to buy from... Canada! :eek:

Firn

04-18-2013, 07:16 PM

Ulenspiegel

04-18-2013, 07:36 PM

An interesting USB paper (http://qualenergia.it/sites/default/files/articolo-doc/UBS.pdf), maybe somebody with more expertise could step in. ;)

I have recently bought ENEL* and I own E.ON stock (see the EUCOM economy thread) which actually is doing fine in the last weeks being just slightly in the red so something like that always gets my attention... :D

*The last annual report and outlook are rather interesting, the amount of energy produced by coal relative to it's installed capacity and other sources was quite remarkable...

A nice chunk of the coal capacity was replaced with cheaper NG capacity after 2000 in Germany. For data see AG Energiebilanzen: http://www.ag-energiebilanzen.de/viewpage.php?idpage=1 (Frontpage, Tabelle zur Stromerzeugung nach Energietrgern 1990-2012).

Because NG prices soared coal capacity replaces NG capacity in Germany and Netherlands. The pendulum is simply swinging back. This happends despite a high penetration with reneables.
The sum of coal+NG is quite constant for more than one decade, see the table of AG EB.

In Germany renewables will mainly replace nuclear power until 2022, then coal will be replaced. With this background, I would not buy shares of the large German utilities, because they have only nuclear and coal as main cash cows, cows that are dying. Their market share of renewables is small due to strategic mistakes in the past.

For me the Austrian Verbund is much more interesting, they produce more than 80% of their electricity by running water power plants, which are of course written of for many years and were profitable at much lower electricity prices. :-)

Austria can sell without any problems electricity to her larger neighbours Italy and Germany (no transmission bottle neck) and has a lot of storage capacity, i.e. it is future proof in a green energy landscape.

Firn

04-18-2013, 07:55 PM

I had you certainly in mind when I wrote that.. :D

There is that ENEL plan (http://www.enel.com/en-GB/investors/annual_presentations/presentazione.aspx?id=2013_01). While ENEL can not rival the Austrian Verbund, hydropower is at least quarter of it's group production mix. See page 44 and a couple of the following ones.

A good deal of that might form part of a future 'Alpine battery' which is not quite as potent as the Norvegian one, but is located in the heart of Europes industrial heartland...

In any case ENEL seemed greatly undervalued, even if the interest rate on it's (large) debt is shockingly high compared to German utilities in general. I might look at the Verbund, it is always nice to have a couple of good investments lined up.

Ulenspiegel

04-19-2013, 08:05 AM

Firn,

a few weeks ago I attended a lecture of Prof. Max Otte, who is an successful investor and fan of Warren Buffett. He talked about investment strategies with clear focus on German and Austria, because in this countries there are a lot of undervalued companies.

He came to the same result for Verbund, however, he still invested/hold investments in RWE, he gave no explanation for this decision. So maybe, I miss something.

Other interesting candidate for him is the airport Vienna, price of all shares around 900 million EUR, real estaste value 1,4 billion.

Another field for me would be solid industrial bonds, here some small Austrian utilities from Burgenland and Niederösasterreich with clear focus on wind power look attractive, they pay 4-5% per year.

Firn

04-19-2013, 11:42 AM

Ulenspiegel,

Maybe he bought RWE high and doesn't want to realize his loss. ;) Who knows?. I got RWE at around ~30 € and right now it is pretty much there. Keep in mind that the big dividend day is approaching and the current yield is pretty high indeed so the stock will tend to rise quite a bit.

Yesterday late evening I took a very quick look at the Verbund, and I like the way how the presented their power plants on the map. ENEL, RWE and EON could learn from that. I was a bit surprised by the relative low number of big hydro plants in the Alps, most of the hydro plants are small and along the rivers...

So not so much battery potential.

I tend to agree that over the last decade German and Austrian companies have been rather undervalued compared to other companies around the globe. I'm pretty sure nobody knows why but that is not the most important question an investor should ask. If and how much sound better.

A bit later I also found a paper called Wind in power: European statistics 2012 (http://www.ewea.org/fileadmin/files/library/publications/statistics/Wind_in_power_annual_statistics_2012.pdf) which I found highly interesting. The percentage by renewables of the newly installed European capacity has been very high over the last years and the trend is strong.

Good and clear graphics, well done to the authors.

Ulenspiegel

04-20-2013, 07:13 AM

Firn

04-22-2013, 06:44 PM

Firn,

the Verbund has almost only runninng water power plants, so no surprise that they have no storage, Tirol is where to look. :-)

Austrian power plants are well documented in wikipedia:

http://de.wikipedia.org/wiki/Liste_%C3%B6sterreichischer_Kraftwerke

Here you get owner and homepages. Interesting for me as German is the high capacity factor of the Austrain wind farms, they started late but did a very good job, we Germans can learn a lot from them.

Maybe the Austrians 'just' started later and are able to used the knowledge gained from their pioneering neighbour and profit from putting new technology on the best spots. Think about the law of diminishing returns, with place being a key factor of wind energy output. With new technology and bigger/higher wind farms the Austrian curve should naturally be above the German one ;).

Good call about Verbund, I took also a quick look at Tirol. Seems like some recent pump storage projects were canceled due to understandable 'not in my backyard' opposition.

Ulenspiegel

04-23-2013, 09:11 AM

Firn,

yes the high capacity factor of the Austrian wind farms is a direct result of starting later, no discussion.

On the other hand they make money under conditions under which some Germans bitch, so the different owner structure leads to more efficient constructs in Austria. Maybe, small utilities can manage the connection of the wind generators with the net much better than the farmer in Frisia. :-)

Firn

04-23-2013, 12:24 PM

The last point is quite interesting. Austria is not exactly the biggest country and has a couple of small utilities. In Germanys case a lot of of the windpower is strongly localized, just like in Austria. However thereit seems to fit rather well into the (Austrian) population density clusters. So one of the biggest problems for our Frisian Farmers, the lack of north-south connections should not bother those Austrian utlities, which are also located pretty centrally in Europe.

http://www.regioenergy.at/sites/regioenergy.at/files/uploads/results_maps/KL_erg_windkraft_2020_maxi.jpg

http://www.kozenn.at/fileadmin/images/kozenn/Vorschaubilder/kk062_v.jpg

The West of the country has obviously a lot of hydro power and is well suited for pump storage.

davidbfpo

04-28-2013, 01:34 PM

The actual headline in the Daily Telegraph is 'Fridges could be switched off without owner's consent to reduce strain on power stations', a strange report on a proposal by EU power generators to the EU Commission:http://www.telegraph.co.uk/earth/energy/10023508/Fridges-could-be-switched-off-without-owners-consent-to-reduce-strain-on-power-stations.html

Needless to say the power companies don't include paying compensation if private household or others appliances are remotely switched off.

Firn

04-29-2013, 11:51 AM

Obvioulsy and understandably the article is rather polemic, it is in the end the Telegraph writing about an EU paper. The fridge is possibly the worst example and thus it ends up in it's headline. :D

Viktor Sundberg, energy strategy manager at Electrolux, warned: “This is Big Brother technology on a grand scale. The device inside the fridge or freezer will automatically change the way the appliance operates in response to the output of the grid.

“This method of shutting down household appliances could to be carried out almost instantly, saving the energy companies millions because they won't have to start up the turbines or pay huge industrial companies to cut production.

“Consumers are not benefiting at all and will be left paying more when they buy the appliances, as well as having their private goods controlled by outside forces.”

Things like hot water storage seem the most usuable appliances. You could store supply spikes and can switch it off on demand peaks. Overall the topic is highly interesting and is a part of the evolution of the internet of things. If the markets work under the set of new circumstances energy prices should come actually down relative terms. I would love to see an button/option to allow the dishwater to start at will within some timeframe, provided the bill gets cheaper. We sometimes let the machine wash at night so that we can hang things up in the morning and switch the dishwasher on in the evening. Even simple programming helps a lot. The marginal returns get of course in general slimmer the more technology you employ.

Needless to say that I won't tolerate any tampering when I'm let us say cooking. That would be evil.

BTW: I just read the Wiki article to get the English terminology concerning the subject of water heating and found that bit interesting.

Densely-populated urban areas of some countries provide district heating of hot water. This is especially the case in Scandinavia and Finland. District heating systems supply energy for water heating and space heating from waste heat from industries, power plants, incinerators, geothermal heating, and central solar heating. Actual heating of tap water is performed in heat exchangers at the consumers' premises. Generally the consumer has no in-building backup system, due to the expected high availability of district heating systems.

In those quasi soviet states high up in the cold north the costumers rely even for warm water on their suppliers and that without in-building backup system. Obviously it seems like to be a very efficient solution which should also be reflected on the (low) price they have to pay. Markets and technological evolution at work in mostly quite decently working societies.

Fuchs

04-29-2013, 05:35 PM

The West of the country has obviously a lot of hydro power and is well suited for pump storage.

Spoken like a hydroengineer.

Too bad the Austrians would gain nothing by building lots of dams. Their tourism sector would suffer terribly. They're already losing their glaciers and will fight to keep horrible dams away from the picturesque sights of the Alps.

Firn

04-29-2013, 07:19 PM

One of the many uncles is actually one, it seems to have some effect on me :D

I think we need to take a hard look for political and economic reasons at the existing plants for new pump storage. Hydropower output has remaind pretty flat over the last fifty years in Italy. Obviously the factor 'location' is the limiting one, as there are just so many good & usable spots.

http://upload.wikimedia.org/wikipedia/it/thumb/2/26/Produzione_energia_italia_1950.png/800px-Produzione_energia_italia_1950.png

The monthly energy mix, idro = hydro. Eolica = windpower.

http://upload.wikimedia.org/wikipedia/it/3/3d/Componenti_mensili_dell%27energia_elettrica_italia na.png

I think the future of that sector will be rather interesting. In the South we have a lot of potential for solar. The water is of course in shorter supply then in the North but ENEL could certainly have more then one big pump storage plant (http://en.wikipedia.org/wiki/Presenzano_Hydroelectric_Plant) there.

Ulenspiegel

04-29-2013, 08:05 PM

Spoken like a hydroengineer.

Too bad the Austrians would gain nothing by building lots of dams. Their tourism sector would suffer terribly. They're already losing their glaciers and will fight to keep horrible dams away from the picturesque sights of the Alps.

Austria + Switzerland (30 TWh), Sweden (35 TWh) and Norway (80 Twh) have a lot of big natural reservoirs without or with underused pump capacity, they can simply increase the capacity factor of the pumps as first step and upgrade them as second step.

OTOH Austria is actually building one pump storage with 1 GW power, this is per capita much more more than Germany has or will have in the next decade.

With at least 6 GW corsss border transmission capacity to Germany Austria has a good chance to cover up to 30% of the German long term storage demand and also deliver peak power.

Firn

04-29-2013, 08:19 PM

I just wanted to point out how 'ragged' the overall energy mix percentages have become even compared to 2008 over a single year. Hydro always tended towards this but now we also have other renewables, especially solar. Quite a challenge.

Firn

05-01-2013, 05:41 PM

After a good bike tour I googled a bit around as the topic is highly interesting and geographically rather close as there quite a bit of hydro plants around.

Projekt Obervermuntwerk II (http://www.youtube.com/watch?v=yvxx8eGR4L4) gives you a nice overview of another pump storage project in the Alps. In this case it is located in Vorarlberg (http://en.wikipedia.org/wiki/Vorarlberg), in the westernmost part of Austria, in some sense a rather Swiss place. ;)

The video is of course in German. I already posted the video link about the impressive Kopswerk II (http://www.youtube.com/watch?v=uk2Cn-v3JEA) pump storage project.

The direct impact on the alpine landscape seems to be very low indeed and it is exactly the project I had in mind when I wrote about increasing the efficiency of already existing infrastructure. Two quite big lakes 300m of altitude get linked together giving the utility 21% more installed 'turbine' capacity and even 36% more 'pump' capacity. (Kopswerk II was another big pump storage project)

I think there should be an considerably bigger growth in net generated & storaged energy as more and more renewables get connected to the grid. From a business point of view such companies seem to have a wide competitive moat around them as such places and plants are scare and in high demand with a limited supply. Maybe I will take a look at their numbers, we will see.

ENEL (http://energyviews.enel.it/?p=1457), which stock price has done decently well since I bought it* only a month or two ago has short blog entry about the pump-storage plants in Italy, but seems to have forgot to add some...

P.S: Wiki to the rescue: 'Die Vorarlberger Illwerke AG ist ein sterreichisches Energieunternehmen mit Sitz in Bregenz. Mehrheitseigentmer ist mit einem Aktienanteil von 95,5 % das Land Vorarlberg.' So practically no real way to invest into it.

I got them at 2.75 now they are around 3. Mind you they could fall a lot. Nobody knows. But compared to their value, especially the asset part they seem still priced very low. But to repeat it again, nobody knows for sure.

Rick M

06-06-2013, 01:28 AM

This may be of interest (with link to original MoD report):
http://www.guardian.co.uk/environment/earth-insight/2013/jun/04/rising-energy-prices-western-life-mod

davidbfpo

06-07-2013, 09:49 AM

Thanks Rick for that post, I only occasionally check The Guardian. A "lurker" responded:
An American academic thinks it is all exaggerated deliberately to ‘securitize’ the world’s issues and justify military actions and expenditures. He studies global energy and finds a disconnect with the material produced by militaries or think tanks.

Firn

06-07-2013, 10:16 AM

Funny how things develop sometimes..

A couple of private investors (not including myself :D) did present yesterday their small pump-storage project to the public of my home village. Basically they want to use the very steep 700m drop between the valley floor and our plateau to get a highly efficient storage. The upper basin is planned to be underground! It should be placed in a relative isolated pine forest with little humus on the edge of said plateau.

Sadly I could visit it due to a meeting, in any case I will get more detail soon and talked to our major* beforehand about it, mostly about the revenue side. As far as I know it looks good from the credit side for the investors.

All in all I hope it will be a win-win-win situation for all involved. But I need to take a closer look. Another potential, very small step for energy security.

*His big farm has a very considerable number of solar modules on the roof, and it is pretty much the perfect spot being on a sunny ridge at roughly 1400m with the proper roof angles.

davidbfpo

06-27-2013, 08:42 PM

It's Thursday, so it must energy stories day for the Daily Telegraph.

Risk of UK power blackouts has tripled in a year, Ofgem warns or:
the margin of electricity supply capacity over demand could narrow to between 2pc and 5pc by 2015 and 2016.

Link:http://www.telegraph.co.uk/finance/newsbysector/energy/10145803/Risk-of-UK-blackouts-has-tripled-in-a-year-Ofgem-warns.html

Shale gas in northern England could meet Britain's gas needs for 40 years:http://www.telegraph.co.uk/finance/newsbysector/energy/10145414/Shale-gas-in-northern-England-could-meet-Britains-gas-needs-for-40-years.html

Wind farms get generous subsidies for another six years:http://www.telegraph.co.uk/earth/energy/10146403/Wind-farms-get-generous-subsidies-for-another-six-years.html

Dayuhan

07-28-2013, 12:01 PM

http://www.constructionweekonline.com/article-21431-iraq-to-spend-173bn-on-energy-infrastructure/#.UfXO66zYjAE

Iraq plans to invest $173bn in its energy infrastructure over the next five years in order to dramatically ramp up crude output, Oil Minister Abdelkarim al-Luaybi has said.

The investment in upstream activities, refineries and to increase natural gas production will boost oil production to nine million barrels of oil per day and bring in revenues of $600bn

Will be very interesting to see if they can get to 9mbpd, or even close.

davidbfpo

07-28-2013, 12:31 PM

IIRC Iran exports crude oil for refining across the Gulf and then imports the products, presumably at a premium. It will be interesting to see if new refineries are added.

Rick M

08-20-2013, 11:38 PM

Chatham House has come out with another excellent examination of energy consumption within Persian Gulf countries.

"The six GCC countries - Saudi Arabia, Qatar, Kuwait, Oman, the UAE and Bahrain - now consume more primary energy than the whole of Africa. Yet they have just one twentieth of that continent’s population. Energy intensity in the region is high and rising....

Almost 100% of energy in the region is produced from oil and gas without carbon dioxide abatement, and water security is increasingly dependent on energy-driven desalination. If the region’s fuel demand were to continue rising as it has over the last decade, it would double by 2024. This is a deeply undesirable prospect for both the national security of each state and the global environment."

http://www.chathamhouse.org/publications/papers/view/193884

Rick M

08-28-2013, 03:58 PM

In February USDA released a major analysis, "Climate Change and Agriculture in the United States: Effects and Adaptation" (193 pgs) but I only discovered it now.
http://www.usda.gov/oce/climate_change/effects_2012/effects_agriculture.htm

Here in southeastern Ontario the weather has been relatively normal so far this year (unlike last year with its super-warm March which caused premature budding of fruit trees, then a summer drought followed by Sandy's spin-off).

It sounds like the Arctic has seen a return to more normal ice retreat as well:
http://nsidc.org/arcticseaicenews/

Rick M

09-21-2013, 12:47 PM

Chatham House released a rather detailed (85 pgs) examination of oil theft in Nigeria, which has now reached industrial proportions (at least 100,000 bpd):
http://www.chathamhouse.org/publications/papers/view/194254

The short video (3 min) is worth watching: the analyst (Christina Katsouris?) provides a thoughtful summary.

Rick M

11-23-2013, 11:16 PM

Bill Moore

11-24-2013, 01:51 AM

Ron Patterson started his own website prior to the closing of The Oil Drum, where Ron was one of the mainstay contributors. His postings were detailed and always sourced from EIA, BP, IEA, etc.

Dave Hughes is a veteran geoscientist, now retired from the Geological Survey of Canada where he was a leading analyst re. coal and unconventional gas. He is also a meticulous researcher who is careful in his assertions.

In yesterday's posting, Ron uses Dave's forecast re. US light tight oil (LTO) to conclude that the global peak in oil production will occur "no later than 2015." Ron is not prone to making predictions (he usually simply posts the data and offers his analysis) so I'm not sure what prompted him to do so this time.

In any event, Ron's prediction is quite in line with what the Joint Operating Environment said in 2008 (and again in 2010).

http://peakoilbarrel.com/world-oil-production-peak/

Rick,

The JOE's source for their information was the IEA report, this is what IEA is saying now.

http://www.iea.org/aboutus/faqs/oil/

What is peak oil?

Peak oil can mean different things to different people. Some see it as the potential result of economies maturing and deploying more energy-efficient and diverse fuel technologies, meaning that year-on-year growth in world oil demand may level off. Others see it as the maximum possible annual rate of extraction of conventional crude oil, due either to physical resource constraints or above-ground political, economic or logistical factors. While others insist that since the definition of what constitutes conventional oil is constantly changing, total producible liquid fuels is what should be looked at.

Where does the IEA stand in the peak oil argument?

Our analysis suggests there are ample physical oil and liquid fuel resources for the foreseeable future. However, the rate at which new supplies can be developed and the break-even prices for those new supplies are changing. Global oil production levels are also dependent on the production policy of OPEC, which holds between one and six million barrels per day of spare capacity in reserve. Declining oil production in any given year can occur for one of several reasons unrelated to peak production, including OPEC production decisions, unplanned field stoppages and the impact of earlier investment decisions by the oil industry. A combination of sustained high prices and energy policies aimed at greater end-use efficiency and diversification in energy supplies might actually mean that peak oil demand occurs in the future before the resource base is anything like exhausted.

Bold highlights are mine

To me it seems the analysis is constantly adjusted based on new technologies and new oil field discoveries. None the less energy security will remain a principle security concern for most, if not all countries.

Rick M

11-24-2013, 11:48 PM

Thanks for your reply, Bill.

What the IEA says is sometimes inconsistent, even contradictory. Some of the strongest warning about PO and future oil supply have been oral statement by Fatih Birol, but usually they are not repeated/supported in formal IEA memos or documents.

In any even, a few lines of this year's WEO are quite striking and certainly warrant further analysis:
[The IEA sees] "oil output (excluding NGLs) dropping from 74 mb/d in 2012 to less than 13 mb/d in 2035, half of which would be from large onshore fields in the Middle East where decline rate are lowest."

Conventional, pump-able petroleum has been the mainstay of mankind's liquid fuel supply for over 150 years. To learn that even the IEA (which is traditionally overly optimistic in its prognoses) sees conventional oil supply shrinking to a mere 13 mbpd in 22 years' time ought to have alarm bells ringing.....

davidbfpo

11-25-2013, 12:02 AM

In recent weeks energy security has been an issue in the public arena in the UK, the catalyst being steep rises in the cost of electricity and for some the underlying, increasing costs of 'green energy and taxation.

For a couple of days the reduction in UK electricity generation capacity, under EU 'green' policies and being beyond planned operating limits was discussed. This was partly due to the announcement of the first new nuclear power station construction, for over twenty years, by a Sino-French consortium and with an agreed price double today's. See:http://www.bbc.co.uk/news/business-24604218

Rick M

12-23-2013, 02:47 PM

The British Society has recently published a special edition on The Future of Oil.
Most of the articles are behind a paywall but a few are free, including the excellent introductory paper by Steve Sorrell (UKERC) and Richard Miller.

This morning's Guardian includes this article (which provides links to the British Society journal and other links:
http://www.theguardian.com/environment/earth-insight/2013/dec/23/british-petroleum-geologist-peak-oil-break-economy-recession

davidbfpo

01-08-2014, 10:47 AM

Yesterday I listened to a BBC radio report on pollution in Beijing with mild interest which changed when a local academic commented (not exact words):
Yes atmospheric pollution is an issue here, especially when using international standard measurements. There is now public pressure for change and as much of the pollution comes from coal-powered electricity generation we are changing to gas-fired generation.

I am not aware of China's domestic gas production or extent of imports, but it struck me that this public pressure could have a significant impact. Beijing's pollution is shared by other cities, such as Shanghai.

Anyone able to comment?

Fuchs

01-08-2014, 04:54 PM

A better investment would probably be to use non-coal electricity for output growth and upgrade the existing coal-firing power plants with (better) emissions filters (or simply maintain existing ones properly).

Their many cars and motorcycles as well as the lack of green inner city areas, distance of Beijing from the sea, weather and geography all play their roles as well.
The rise of electrical scooters and more public buses may help the Chinese megacities' air quality a lot.

I'm sure in the event of a blockade or war the Chinese government could simply switch off power supply to residential areas or impose other forms of rationing.

Firn

01-08-2014, 06:19 PM

Public transport (http://www.thetransportpolitic.com/2012/09/11/profitable-or-not-china-doubles-down-on-investments-in-new-metro-systems/) is certainly a key element towards Energy security for China and to curb further rises in pollution. The Chinese push towards nuclear powerplants to cover the rising energy consumpition is another one and fits with the support for rail.

It is of course impossible for us to get a good idea about the quality of the investment and it's long term return on investment for the country. The Keynesian multiplier can be rather large and I think that the policy of urban rail is sound for the bigger denser cities with the opportunity costs looking not too bad. In smaller cities the calculation will be of course different. The financing ist obviously putting additional pressure on the state banks.

Does the fact that new Chinese metro systems require operational subsidies pose a problem? It depends on your perspective. From a fiscal point of view, long-term operational aid will impose heavy burdens on local taxpayers, just as is true in U.S. and European cities. This is especially a problem because Chinese cities have intentionally set fares at very low levels (just 2 yuan a ride in Beijing), making it impossible to cover costs. Should China, with relatively low labor costs,* be in this situation?

Another take on it (http://www.economist.com/news/china/21576719-dozens-cities-are-building-metro-system-some-do-not-need-it-going-underground) from the Economist with some critical views:

Zhao Jian of Beijing Jiaotong University reckons that metros in fewer than 20 of the 38 designated cities make sense. He says that perhaps ten of those could be replaced with cheaper light rail, which runs above ground. The minimum core urban population that can qualify a city for an underground system is 3m people, but even a place that big may find the operating costs crippling. Mr Zhao says the systems in Harbin and Kunming are unnecessary.

Shi Nan of the Academy of Urban Planning and Design in Beijing says it is obvious that “we cannot count on private cars” to get around the big cities. But the metro projects mostly rely on government subsidies, and operating them will be a “bottomless pit”, says Mr Zhao. He says city officials tend to pursue grand projects that may not even make money because they will not be around to bear the burden. The performance of local officials is evaluated on how much they increase local GDP, not on whether projects they build are needed. Today’s leaders get credit for spending money. Tomorrow’s must foot the bill.

I'm well aware of the bad state incentives, the already huge investment drive and the troubles with financing, but I think it is wise to take note of some of the opinions in the comments. What I know for sure is that the Chinese urbanisation level is still very low compared to Japan in the 80ies and will very likely rise considerably. The picture on the operating costs may well look more positive in years to come and in any case it is hard to imagine an alternative for Chinas larger cities urban transport problem.

P.S: At least Line 13 in Bejing (http://www.youtube.com/watch?v=xG-meaGqg-M) is not that empty. Longer trains should help.

Fuchs

01-08-2014, 09:13 PM

It's not possible to determine the externalities in a metro/no metro comparison. The results of such comparisons are either subjective or based on an incomplete comparison.

A well-designed metro system can make sense in a European 0.5M city, especially if the train only goes underground in the most densely built-up centre of the city.

Brazilian bus lanes are a successful alternative, but you can only build them if you have enough space for another lane. The same applies to surface rail (I know rail lines running on streets, and they're both death traps for motorcyclists and just generally dangerous).

Rick M

01-13-2014, 09:44 PM

A few days ago information was posted about the Transatlantic Energy Security Dialogue which was held last month.

This video-linked event was organized by Jeremy Leggett in London and by Lt. Col. Danny Davis (US Army) in Washington and involved several analysts with military/security backgrounds. There were 21 participants in London and 28 in Washington.

The agenda was in two main parts:
1. Data of Concern (with important info from Mark Lewis and David Hughes):
- Lewis focused on decline rates, soaring upstream capital costs and stalling/falling oil exports.
- Hughes focused on shale (shale gas and tight oil).
2. Implications of Concern (including a presentation on "Implications for Militaries" by Paul Sullivan at NDU).

Notes (20 pgs) are available for Part One and are worth reading carefully.
I'll let you know as soon as notes for Part 2 are available.

Here is Leggett's synopsis with links re. Part 1:
http://www.resilience.org/stories/2014-01-10/fears-of-global-oil-crisis-aired-at-transatlantic-energy-security-dialogue

Firn

01-21-2014, 06:56 PM

Some of the graphs from the Energy Security Dialogue were quite interesting, even if in some cases like the subsidies I would have like additional data like the development over time. Some thoughts:

1) The effect of the demographic boom of the OPEC countries, the overall lifesytle and some (stupid) policies have been discussed before. While you can understand how the idiotic energy policies of many a Gulf state developed you still have to shake your head about their gross stupidity which will have dire consequences for the long term wealth of the country.

Instead of selling the finite ressource at the high world prices you burn it at home as much as possible by pushing its price down low. You even use it to generate power for which you stimulate demand by reducing its price. :D

2) The fracking boom in the USA has certainly attracted a considerable amount of foreign captial, be it into the industry itself or sectors which profit greatly from low energy prices like European chemicals. I know too little to know about the business itself to comment on it, but if the fossil fuels in question are so important for the national security why do we not keep them in the ground when the need is far greater?

Personally I would advise most European countries to explore the issue but to leave the reserves where they are. Maybe I have read too much economic literature about WWII but from that angle and the environmental perspective it makes sense. If there is a supply shock it is quite likely that it could prove to be an highly valuable buffer.

Rick M

01-22-2014, 01:42 AM

Ulenspiegel

01-22-2014, 07:23 AM

"if the fossil fuels in question are so important for the national security why do we not keep them in the ground when the need is far greater?"

I agree, Firn.

For over 40 years the US has wished for/aimed at a reduction in oil imports. In numerous War College theses, etc we see military analysts arguing for energy independence, freedom from dependence on MIddle East oil, etc.

But surely it would make better sense in the long term to maintain a reasonably viable domestic oil (& gas) industry while relying on oil imports as well. USA and Canada need a domestic industry which is available, competent and ready to expand should something interfere with our regular supply of affordable imports.
But the degree to which we can deplete someone else's finite supply while preserving our own oil & gas reserves should be to our long-term benefit, one would think.
But we rarely hear this view expressed, even among military analysts.

The more pressing question for me is: If most pure shale gas companies in the USA do not make money with the production of methane, why should we copy this??

Hint: We have only shale gas in Europe, not meaningful volumes of shale oil or oil sands, the latter are highly profitable.

If shale gas operation requires subsidies then we can spend the same money with higher startegic impact on real REs.

Firn

01-22-2014, 08:52 PM

Indeed, Rick, depleting the others reserves at a rather cheap rate and keep the own reserves for times of great need and high prices would seem wiser. This of course also a case in which capitalism does not work as the externalities are not taken into account by private agents. The state which did a fine job supporting the research should have been far stricter in regulating the market.

Ulenspiegel, I don't know on which guesstimates the business plan of many of those companies was founded and investement was comitted but I would be surprised to see the current prices of natural gas among the vast majority. A boom contains of course always the danger of overinvestment and the misallocation of capital. This might be half-bad if there is a good deal of sensible infrastructure as after the Railway Mania (http://en.wikipedia.org/wiki/Railway_Mania) in the UK but it does not look as pretty for the current one...

It will be highly interesting to watch how the story goes on. In the meantime investments in other areas seem to be more promising in the long term.

I recently watched NASA | Regenerative Fuel Cells, Energy Storage Systems for Space Applications [HD] (http://www.youtube.com/watch?v=2_Fn96LRW3g).

Great stuff, of course mostly about the things it says in the title.

Ulenspiegel

01-23-2014, 10:00 AM

Ulenspiegel, I don't know on which guesstimates the business plan of many of those companies was founded and investement was comitted but I would be surprised to see the current prices of natural gas among the vast majority. A boom contains of course always the danger of overinvestment and the misallocation of capital. This might be half-bad if there is a good deal of sensible infrastructure as after the Railway Mania (http://en.wikipedia.org/wiki/Railway_Mania) in the UK but it does not look as pretty for the current one...

It will be highly interesting to watch how the story goes on. In the meantime investments in other areas seem to be more promising in the long term.

I recently watched NASA | Regenerative Fuel Cells, Energy Storage Systems for Space Applications [HD] (http://www.youtube.com/watch?v=2_Fn96LRW3g).

Great stuff, of course mostly about the things it says in the title.

The business plan of most companies was very likely quite solid on paper, however, reality sucks. :-)

Pure shale gas companies need 4-6 USD/mcf to be profitable, the lack of infrastructure prevented and still prevents the selling of shale gas on the global market: the price dropped to 2 USD, now we are at 3-4 USD again, a price at which BTW utilities in the USA switch back to hard coal again.

As a typical shale gas well depletes very fast - usually in less than 7 years- it is very unlikely that pure shale gas companies made money with the production of methane in the USA. The whole affair is not sustainable in the current state and, therefore, a bad reference.

I do not dispute that in Europe the NG prices are (much) higher and shale companies may make profit under US conditions. However, with different ownership/production rights, less sophisticated technology, much smaller reserves and a much higher population density the overall picture is not clear and it does not help the proponents of shale gas to refer to the non sustainable US situation.

I support evaluation of shale gas production, but do not seee any need to support it in large scale. It is not a game changer, not in the USA, even less in Europe.

Firn

01-23-2014, 12:04 PM

Changing the Game? : Emissions and Market Implications of New Natural Gas Supplies (http://www.youtube.com/watch?v=7kqHvp6hgQk) is a lecture by Hillard Huntington from the Energy Modeling Forum.

Hillard Huntington discusses a study that evaluates the channels through which shale formations and new natural gas supplies can change energy, economic and environmental opportunities within North America. He concludes that continued shale gas development within North America is likely to have more sweeping impacts on future energy prices than on the economy or the environment*.

Perhaps the most important graphic was one showing the minuscle percentage of jobs added as a result of the big boom and its minor impact on the GDP. This should of course come to no surprise to people informed about the general makeup of developed economy but it was still impressive to see. Compare that with the response in the media and the 'feeling' of a student who asked about it.

The regional price level of natural gas and the costs of transport were also nice.

*He focused on climate change and the respective emissions. The local impact was not discussed.

Rick M

03-05-2014, 11:13 PM

Ron Patterson picks up on Steve Kopits' presentation and questions whether OPEC is capable of responding when called upon to produce more oil:

http://peakoilbarrel.com/can-depend-call-opec-opec-peaked/

Firn

06-10-2014, 06:22 PM

I spent some time recently to inform me a bit more about electrified vehicles and was actually quite surprised by the recent numbers (http://evobsession.com/world-electrified-vehicle-sales-2013/) of sales. The 2013 outlook (http://www.iea.org/publications/globalevoutlook_2013.pdf) feels actually a bit dated as it is a (electric) field in flux...

http://cdn.ecomento.com/wp-content/uploads/2014/04/ev-sales-growth.png

Still market shares are mostly tiny...

http://www.theicct.org/sites/default/files/fig1_EVmarketshare_2012-2013.png

Looking at the personal financial picture a buy looks far more attractive then I imagined, in this case as a second car for the family. I planned my next compact car purchase in 2016, we will see.

It is not that far-fetched anymore that in the long run electric cars will boost European utilities. Some oil imports might be substituted by an energy mix including other carbon. Used car batteries might indeed increasingly used for renewables. Still small numbers, still early days but it looks actually surprisingly good from my point of view...

Firn

07-01-2014, 08:35 PM

Electric cars have been somewhat of a mirage but in the last years it is slowly, very slowly materializing.

However a vehicle with far more impact has been the eBike in various shapes and forms. The giant market driver is of course China (http://www.bike-eu.com/Sales-Trends/Market-trends/2014/6/E-Bike-Markets-Maturing-in-China-and-US-1545952W/), with 37 millions sold in 2013 pushing the fleet up to official 181 units. The EU sales are of course dwarfed, with only over a million hitting the streets.

The market growth has been very impressive indeed with China going in fifteen years from 60000 to those 37 million.

eBikes have become much more mature and are highly efficient means of transport for not that short distances. I tested recently a bit more expensive 29' hardtail pedalec with a central Bosch engine and was surprised by the 400W battery endurance and additional power. It worked great on a moderate gravel road but impressed me most up on really steep ramps in the forest. I would have prefered a bit wider tyres (2,5') and a little less pressure for more grip and a smoother ride.

But of course the vast majority in China uses still pretty cheap 'E-Scooters' with lead batteries for commuting, although lithium ones are growing over 40% compared to the 6% overall market growth there. They are having a huge impact on the way the Chinese move and are perhaps the brightest note in that terrible environmental mess.

Dayuhan

07-29-2014, 11:58 AM

My worry is that the NATO allies might not uphold their obligation if Putin turns their gas off.

Putin can't cut the gas off. He needs the money. At this point Putin is just as concerned with overdependence on Europe as a buyer as Europe is with overdependence on Russia as a seller.

Russia is dependent on pipelines for exports. That makes them vulnerable: a pipeline is not a tanker; it can't be diverted to another destination. It only goes to one place, which means Putin sells to Europe or to nobody. He can't sell to nobody, because his government depends almost entirely on energy revenue. Europe would hurt if the energy trade with Russia stops, but Russia will hurt more.

The Russians are pursuing new pipelines that will allow them to send more gas and oil to Asia, but it will be years before they are ready. Europe will probably be able to diversify supply faster than Russia can develop new outlets, but for now, Russia and Europe are stuck with each other.

Maeda Toshiie

07-29-2014, 04:22 PM

Putin can't cut the gas off. He needs the money. At this point Putin is just as concerned with overdependence on Europe as a buyer as Europe is with overdependence on Russia as a seller.

Russia is dependent on pipelines for exports. That makes them vulnerable: a pipeline is not a tanker; it can't be diverted to another destination. It only goes to one place, which means Putin sells to Europe or to nobody. He can't sell to nobody, because his government depends almost entirely on energy revenue. Europe would hurt if the energy trade with Russia stops, but Russia will hurt more.

The Russians are pursuing new pipelines that will allow them to send more gas and oil to Asia, but it will be years before they are ready. Europe will probably be able to diversify supply faster than Russia can develop new outlets, but for now, Russia and Europe are stuck with each other.

I don't really want to derail this thread into one on energy, but there are claims that the US can replace Russia with gas from fracking to supply Europe. Do calculations actually bear out? (If this has been discussed before, link(s) to relevant thread(s) is/are appreciated)

davidbfpo

07-29-2014, 04:48 PM

Maeda asked:
I don't really want to derail this thread into one on energy, but there are claims that the US can replace Russia with gas from fracking to supply Europe. Do calculations actually bear out? (If this has been discussed before, link(s) to relevant thread(s) is/are appreciated)

I thought Firn (our resident economics guru) had posted on this, but a search found fracking has been mentioned - though not an answer to your question.

What I have read elsewhere suggests that there is no capacity in the USA to export such amounts as Europe would require, nor the capacity to bring it ashore either.

There are threads on Energy Security and the economic aspects of the Ukrainian crisis, which have various posts on European reliance on Russian gas supplies.

Dayuhan

07-30-2014, 12:12 AM

I don't really want to derail this thread into one on energy, but there are claims that the US can replace Russia with gas from fracking to supply Europe. Do calculations actually bear out? (If this has been discussed before, link(s) to relevant thread(s) is/are appreciated)

Simple answer: no. There is a surplus, but it's not that large, and the US has no gas export facilities. There are several under construction but their output is already committed to Asian buyers (prices in Asia are much higher).

The real impact of US gas independence on Europe is in displacement: as the US becomes self sufficient, the considerable amount of gas that the US used to import becomes available for others, like Europe, to buy. Again, though, this is tanker-transported LNG, and Europe would need to build more regasification terminals in order to exploit it. Just as Russia needs to invest time and money in infrastructure in order to redirect its current European exports to Asia, Europe needs time and money to build the infrastructure to replace pipeline-delivered Russian gas and oil with tanker-delivered imports from other sources.

Not meaning to turn it into an energy thread, but the energy relationship is an integral part of EU-Russian relations and it's always going to be part of the discussion.

Rick M

08-02-2014, 02:03 AM

"the considerable amount of gas that the US used to import becomes available for others"

Not really, for the same reasons that you gave re. inability of US to export its gas surplus overseas.
USA gas imports come almost exclusively from Canada via pipeline. These volumes have decreased during the past 8 years as US shale gas has swamped their market.

Continentally, there is a surplus, but Canada is no better equipped than USA to export large volumes of gas or oil overseas.

Returning to the issue of Russian leverage re. oil & gas 'weapon' I believe that Russia is better positioned to bear the pain of reduced exports than Ukraine, etc are able to cope with constricted supplies, esp. re. gas during the 4 winter months (Dec. 1 -March 31st). My guess is that Ukrainians are very worried about their ability to stay warm this winter.

Firn

08-07-2014, 06:01 PM

Ulenspiegel and I discussed the issue of coal vs NG before. To some extent the European LNG terminals are already there as simple container ports which handle goal.

http://g.foolcdn.com/editorial/images/7231/usexportsbyregionline_large.png

http://si.wsj.net/public/resources/images/P1-BQ031_EUCOAL_NS_20140505190603.jpg

Some companies want already to reduce the competivness of coal. (http://www.bloomberg.com/news/2014-06-27/eu-seen-curbing-coal-use-by-quadrupling-carbon-price.html) :wry:

A shale boom in the U.S. led to a collapse in gas prices that’s helped consumers and stimulated industries, forcing cheaper, more-polluting coal to be shipped to Europe for use in power stations. The U.S. doesn’t have environmental obligations placed on companies, unlike in Europe, where staying competitive is a concern.

http://www.datawatch.ze.com/assets/may-2014/eex-to-relaunch-its-coal-market.jpg

Firn

08-07-2014, 10:08 PM

....those container ports handle of course coal, not goals. :p

I have followed intermittentdly the market for electric vehicles of all sort. As written before in quantitative terms of electric bike demand, pedal-assisted or not, China is absolutely dominating the world market The growth there has been spectacular, aided in part by laws aimed at curbing the massive emission problem in Chinese cities.

In Vietnam eBikes have greatly increased their market share, by the looks (http://www.wordhanoi.com/features/the-perspectives/the-e-bike) and the facts (http://news.xinhuanet.com/english/world/2014-07/23/c_133505091.htm).

You’d have to be living under a rock not to notice the rising number of electric bicycles now zipping their way around Vietnam’s bustling streets, particularly in Hanoi. With the post-Tet buying stampede now in full flow, bike dealers are lining the pavements with the latest imports from around Asia. What follows is the inside word on the e-bike craze.

Everybody who has been recently in the region knows that bikes with ICE keep a large part of it's economy moving. Gas is relatively expensive which can be observed by the special type of tank used there. Quite a few people take it home so that nobody gets any strange ideas :D

On average, one electric bike rider who commute urban distance is estimated to pay only 50,000 Vietnamese dong (nearly 2.4 U.S. dollars) more in their monthly electricity bill.

Meanwhile, a scooter will cost around 500,000 Vietnamese dong ( 24 U.S. dollars).

...

In a recent interview with online newspaper VTC News, Nguyen Trong Thai, chief of the National Traffic Safety Committee, said that the number of electric bikes in Vietnam increased sharply in 2013 and 2014.

With IIRC around 80% of the world's production of motorbikes going to Asia trends there will have a huge impact on the global market.

Firn

08-12-2014, 05:05 PM

As one can see to some degree from my recent posts I became interested into electric mobility both from a technological point and in relations to the topic of 'energy security'. I also had a blast on ebike tours, so in that case the theoretical research was matched by practical experience.

e-mobility is increasingly making inroads into fields formerly occupied by ICE*, think bikes or drones, transforming them considerably in some cases. So while an electric scooter substitutes almost perfectly an ICE one a modern pedelec is a new, far lighter hybrid form. Arguably the biggest hurdle for many applications of e-mobility, for example larger vehicles are the weight and cost of the battery. Nobody knows how quickly the technology will progress
but it is good to take the past trends into account:

http://pubs.rsc.org/services/images/RSCpubs.ePlatform.Service.FreeContent.ImageService .svc/ImageService/Articleimage/2011/EE/c0ee00777c/c0ee00777c-f2.gif

http://www.kk.org/thetechnium/Battery%20Energy%20Density.jpg

Still a very long way to go to achieve density parity, even if in other areas of the powertrain electric vehicles weight considerably less.

http://www.toyota-global.com/innovation/environmental_technology/plugin_hybrid/images/magazine_vol01_img02.gif

The Price per Watt has also gone down considerably. I'm not that sure about the break-even point of the total ownership costs but it gives a good perspective.

http://rameznaam.com/wp-content/uploads/2013/09/Lithium-ion-battery-experience-curve1.jpg

Once again the past development is no (sure) guide for the future but it offers a perspective on the present. Today the research into battery technology is a massive topic because there is just so much of importance which gets powered by them. The economies of scales in some industries are truly gigantic with knock-off effects into smaller fields. For example small drone technology was driven to a large extent by the increasingly more capable cheaper and smaller sensors employed by smartphones. In the case of batteries the tech spread was so far quicker and wider.

*internal combustion engine

Firn

08-12-2014, 05:41 PM

A side show of energy security are direct military applications. It is important to point out that the energy cosumption of military forces is overall tiny compared to one of the civil world. While 'green' initiatives by the military can have merit they should arguably closely linked to military capability and not global sustainability. For a country facing a big war effort saving in civilian consumption has just so much more scope and arguably efficiency then doing so in the military itself. This doesn't of course mean that the armed forces shouldn't try to identify the lower-hanging fruits and sensible targets and picking those.

Military e-mobility is of course a diverse topic and it's application depends, like in the civilian world, on the specific circumstances. An electric MBT for example would be right now a lot of steps backwards in key areas like march speed, range and 'refueling'. On the other side of of the spectrum are micro drones which give the soldiers an eye up in the sky. In that case electric power has no competitor.

Staff like the Velocopter (https://www.youtube.com/watch?v=tO03-_z56jo) are highly interesting, but there much will depend on the development of battery price and density in the next decades. More on it's homepage (http://www.e-volo.com/).

davidbfpo

08-12-2014, 08:34 PM

https://pbs.twimg.com/media/Bu2lId9IgAAa3Ey.png

Firn

08-12-2014, 09:06 PM

How Much Energy Does the U.S. Military Consume? – An Update (http://www.dailyenergyreport.com/how-much-energy-does-the-u-s-military-consume-an-update/)

The DoD accounted for around 1 percent of the US energy consumption and 80 percent of the federal government energy consumption.

http://www.dailyenergyreport.com/wp-content/uploads/2013/08/The-DoD-Energy-Consumption-2012.jpg

It's share in oil consumption is thus of course closer to 2 percent due the fact that USA as a whole have this energy consumption mix:

http://www.motherjones.com/files/images/blog_eia_2012_energy_consumption.jpg

Dayuhan

08-13-2014, 12:17 AM

Ulenspiegel and I discussed the issue of coal vs NG before. To some extent the European LNG terminals are already there as simple container ports which handle coal.

Container ports don't handle coal, they handle containers. Coal would move through a bulk cargo terminal, which uses very different equipment. Coal ports are typically specialized and associated with specific power plants.

The days when a port was a port are long gone... the basic need to bring ship into proximity with shore remains, but the infrastructure for handling different cargo is very different. A good example is the US and its gas terminals. The US has a number of regasifacation terminals, which are designed to receive LNG, convert it back to gas, and feed it into a distribution grid. As the US no longer imports gas, these facilities are largely useless. The US cannot export gas at this time because despite a surplus of gas, none of the terminals are equipped with the infrastructure needed to liquify gas and load it onto ships. They can take it off, but they can't put it on. The industrial plant required for liquification is completely different from that used for regasification.

Gas import or export facilities are single-purpose dedicated installations that require large investments of time and money to build. They cannot be flipped from one purpose to another, something which is occasionally overlooked in discussions.

Firn

08-13-2014, 06:03 AM

Container ports don't handle coal, they handle containers. Coal would move through a bulk cargo terminal, which uses very different equipment. Coal ports are typically specialized and associated with specific power plants.

....

Gas import or export facilities are single-purpose dedicated installations that require large investments of time and money to build. They cannot be flipped from one purpose to another, something which is occasionally overlooked in discussions.

Thanks for catching that error, what was I thinking? As I stated before coal imports can substitute natural gas imports and indeed they do to some degree. Obviously in the short-term is limited by the existing infrastructure along along chain, but it is very important to state the obvious, as I often do. Things get more elastic with time of course...

Demand:

http://lsigroup.org/wp-content/uploads/2011/08/coal2.png

Supply:

http://www.pnoytrader.com/wp-content/uploads/2012/10/TopExporters-Coal.png

http://www.eia.gov/todayinenergy/images/2011.11.25/AustraliaCAB_CoalExports.png

Of course part of those coal imports are, especially in the eastern European countries, from the same sources as the NG and oil....

http://www.eea.europa.eu/data-and-maps/figures/eu-27-imports-of-natural-gas-crude-oil-hard-coal-and-the-sum-of-these-by-country-of-origin-as-a-of-primary-energy-consumption/figure-2-2-energy-and-environment.eps/image_original

Rick M

08-14-2014, 10:49 PM

Today Ron Patterson posted some highlights from the latest energy outlook which is conducted annually by a team of Russian analysts.

In one scenario they forecast a peak in coal production prior to 2040. In all scenarios they see abundant oil supply. Many of these projections seem quite unrealistic (Canada at over 7 mbpd in 20 years time?).

Ron has warned for some time that Russian oil production is peaking. He feels that this new outlook confirms that view, which is the real story here:
http://peakoilbarrel.com/russias-take/#more-4111

Dayuhan

08-15-2014, 12:43 AM

Ron has warned for some time that Russian oil production is peaking.

What does he mean by "peaking"? It is certainly true that without substantial investment Russian production is likely to start dropping soon, but there's no reason to see that as a "peak" imposed by geologic constraints ("running out of oil"). It's a constraint imposed by policy, and reversible by policy.

Rick M

08-15-2014, 02:39 AM

I'm reluctant to speak for Ron, but I have followed his research for many years and am confident that I am accurately representing his views.

Both Ron and I see little reason to quibble over the cause of a peak in production. The cause could be geological, geopolitical, lack of investment, price uncertainties, etc or any combination thereof.

Both of us see little value in attempting to predict the timing of the global peak. Also, we both see this peak as being fairly imminent and having a severe impact, mostly because we are so unprepared for it.

When Russian experts confirm what was previously hinted at (ie. that Russian oil production is close to reaching its maximum), this is important info because Russia is a leading oil exporter.

Neither of us views the projections for Russian oil as being constrained by policy nor reversible by policy.

Dayuhan

08-15-2014, 04:16 AM

Both of us see little value in attempting to predict the timing of the global peak. Also, we both see this peak as being fairly imminent and having a severe impact, mostly because we are so unprepared for it.

When Russian experts confirm what was previously hinted at (ie. that Russian oil production is close to reaching its maximum), this is important info because Russia is a leading oil exporter.

I dislike the term "peak" because it's associated with all manner of emotional baggage. The impact of a decline in Russian production will depend on the extent and duration of the decline. "Maximum" is also a loaded word: does it mean "the maximum possible production from Russia" or "the maximum that Russia can produce with currently existing infrastructure"?

Rick M

08-15-2014, 03:08 PM

I agree that the term, "Peak Oil" has acquired various associations and so has the word "peak" which has become fashionable to apply to all sort of things (peak democracy, peak coffee, etc).
The PO concept is also widely misunderstood, usually by people who equate it with "running out" when it fact it refers to maximum production, not minimum.

In my opinion the most comprehensive, credible analyses of PO are those of UKERC (over 200 pgs) and Bundeswehr (100 pgs), both of which are thoroughly sourced.

Here is Ron's previous post re. Russian oil (last month):
http://peakoilbarrel.com/opec-update-also-russia-peaked/

Given the central importance of Russian oil and Saudi oil to the global export market, any constraint on their ability to produce and export (regardless of cause) could have serious implications.

Dayuhan

08-16-2014, 12:53 AM

As I stated before coal imports can substitute natural gas imports and indeed they do to some degree. Obviously in the short-term is limited by the existing infrastructure along along chain, but it is very important to state the obvious, as I often do. Things get more elastic with time of course...

The impact of infrastructure and transition cost on elasticity and substitution is often underrated, as when we hear facile solutions like "Europe can replace Russian gas with US gas" proposed. There are also common misunderstandings on the US gas glut... even if gas is very cheap in the US, consumption will rise slowly because transitioning from oil to gas doesn't happen overnight. LNG and CNG are perfectly viable vehicle fuels, but nobody wants to buy the vehicles unless the fueling infrastructure is in place and nobody wants to install the fueling infrastructure until the vehicles are out there. A utility with oil fired power plants is not going to just shut them down and build gas plants. The transition will happen if the gas price stays low, but as you say, it will take time, likely decades

Given the central importance of Russian oil and Saudi oil to the global export market, any constraint on their ability to produce and export (regardless of cause) could have serious implications.

True, but understanding the nature of the constraint is critical to formulating policy. Even the term "maximum" raises questions: absolute maximum or maximum possible with existing levels of infrastructure and investment?

Rick M

08-16-2014, 01:39 PM

All good points, Steve.

We have at least two major problems. First, we will never know what the ultimate recoverable reserve (URR) is or 'ought to be' because there are so many complex factors & interactions including geology, technology, investment, infra, market forces, royalties and other gov't policies, etc. Consequently, we have a very good understanding of past production but present production is dynamic and future production is a bit of a crap-shoot.

Second, energy (and oil supply in particular) is so fundamental to modern life that a significant constraint in supply (regardless of cause) would probably cause such turmoil that effective policy responses would be next to impossible. This was the point stressed by both Hirsch and by Bundeswehr, though in different ways. Hirsch argued that we need to plan and implement mitigation strategies at least one decade before peak (ie. our best guess as to when peak may occur, but that's very difficult to predict as we are seeing).

Bundeswehr warned that economies function within a narrow band of relative stability: although economies can sustain their principal functions despite cyclical fluctuations and the occasional shock, there is the potential for an economic tipping point to be breached. Over-stressed economic systems could suddenly find themselves beyond that band of stability, at which point the entire system could react chaotically. Given the multitude of interconnections within our modern economy, one can readily imagine chain reactions which could destabilize the entire global economic system.

James Hamilton has done excellent analyses of the interactions between high oil prices (which are now required to maintain fracked LTO and bitumen production) and recessions. I think we've underestimated the role of high oil prices in both creating the 2008 financial mess and in perpetuating the ongoing recession. I also think we are wasting precious time between the peak in conventional oil production (which virtually everyone agrees has occurred) and the impending peak and decline of US LTO.

As for policy responses to oil shocks, it's worth noting that both Canada and USA seem to have backed away from formal planning for fuel emergencies. The planned government response now seems to be one of non-response: the term that's used is "full price pass-through." This strategy strikes me as doomed to fail (primarily because of its effects on vital food supply chains) and therefore irresponsible. But I also appreciate the near-impossibility of attempting to ration/allocate, pick & choose, subsidize, etc.

I will let Bundeswehr have the final word:
We are unable to think about the consequences of Peak Oil via our everyday experiences, and can only draw partial historical parallels. It is accordingly difficult to imagine what kind of impact a gradual withdrawal of one of the most important sources of energy would have on our civilization. Psychological barriers account for the suppression of irrefutable facts and lead to an almost instinctive rejection of in-depth discussion of this difficult issue.
The occurrence of Peak Oil is, however, unavoidable.

Firn

08-16-2014, 09:55 PM

Elon Musk - The Future of Energy and Transport (https://www.youtube.com/watch?v=pKHyZxSCseE) is a long, quite interesting interview and Q&A with one of the most acclaimed innovators of the last years. Personally I'm always quite sceptical when somebody gets showered with so much praise, however so far the achievments are indeed great and he certainly has a very sharp intellect. His approach to the question about biofuel shows a part of his approach to things, which is of course surprisingly basic and almost painfully obvious. Other scientists came to the same conclusion (http://council.smallwarsjournal.com/showpost.php?p=145136&postcount=522) and have been quoted. That basic insight gets of course supported by an amazing effort in many areas.

The oil crisis has certainly shown the world how painful an energy supply shock can be for the global economy. In normal times our global markets are doing a mostly great job at solving the market problems. Given how much damage a lack of supply can do the importance of energy security rightly demands answers on how to avoid such big or even bigger shocks in the future.

Personally I think that in the long run the key is both a moderation and shift in consumption as well as far higher share of renewable energy production on home and friendly soil. The importance of fossil fuels in the Western energy mix should decrease considerably while ideally getting supplied by larger numbers of entities. It's energy competitors must get increasingly cheaper and more efficient in production, transport and storage. Thankfully technological progress makes the renewable approach ever more attractive and in some cases it is already the cheaper option.

Arguably deposits like those now getting depleted in the USA should ideally be regarded more as national treasure and reserves for difficult times rather then cheap but weak short-term boosts for the economy.

Dayuhan

08-17-2014, 05:50 AM

The oil crisis has certainly shown the world how painful an energy supply shock can be for the global economy. In normal times our global markets are doing a mostly great job at solving the market problems. Given how much damage a lack of supply can do the importance of energy security rightly demands answers on how to avoid such big or even bigger shocks in the future.

Personally I think that in the long run the key is both a moderation and shift in consumption as well as far higher share of renewable energy production on home and friendly soil. The importance of fossil fuels in the Western energy mix should decrease considerably while ideally getting supplied by larger numbers of entities. It's energy competitors must get increasingly cheaper and more efficient in production, transport and storage. Thankfully technological progress makes the renewable approach ever more attractive and in some cases it is already the cheaper option.

Oil shocks to date have, for the west at least, been less a matter of lack of supply than of very high prices: the oil has always been there, it's just been expensive. If supply does get really tight, the largest impact will be in oil-importing developing countries, who will find themselves priced out of the consumption picture, likely with serious unrest as a consequence.

To me the key to making a transition away from fossil fuels happen is maintaining a high price for fossil fuels. It sounds self-destructive and it would certainly be unpopular, but as a question of energy policy I think the US should be committed to keeping oil prices in the $100/bbl range. Of course that also means subsidizing a number of unpleasant regimes, but those regimes are less dangerous than the potential consequences of cheap oil.

Rick M

08-17-2014, 01:12 PM

Thanks for the Musk video, Firn. I was not aware of it. Also for your observations, Steve.

I note that early in his presentation Musk said, "Sustainable energy... I mean the ability to produce and consume energy in a sustainable manner is the probably biggest challenge of the 21st century" (or words to that effect).
Personally, I would have voted for population/population control but energy is certainly top-three.

Musk comes across as a sensible, strategic guy... attentive to details, a visionary who remains realistic. His observations on energy production (35th min) make perfect sense (emphasis on solar). He is confident in his existing lithium-ion batteries and expects further improvements re. both energy density and price.

The implications for Peak Oil are obvious: such improvements could really take the sting out of future constraints of oil supply, which are bound to come eventually.

He certainly has a cautionary note re. deep shale hydrocarbons (52nd min) re. climate change and not much good to say about land-based biofuels (1:17), for very good reasons.

I agree that we need a 'floor price' for oil. So does Robert Hirsch. I'll bet that Musk would argue the same: a sudden return to cheap oil could undo much that he and others have achieved. The current price of roughly $100 is a bit of a sweet spot: low enough to not cripple the economy (though it certainly limits recovery/growth) but high enough to stabilize production of bitumen and LTO and support investment in alt-energy. Yes, there is a self-destructive aspect to it but there will be much more pain further down the line if we fail to make necessary changes.

Personally, I think a somewhat higher price ($115 - $120?) would be beneficial. As long as we regularly see people idling their vehicles in mall parking lots just to run the a/c, we know that oil is still too cheap and that many people can indeed absorb an even higher price (despite their ongoing complaints about "pain at the pump").

But it's a delicate balance, as the Bundeswehr team warns. If energy prices are unaffordable and the ripple effects cause unemployment, a collapse in suburban property values, mortgage default & unpaid taxes, unaffordable food prices, etc then things could destabilize fairly quickly.

Firn

08-18-2014, 01:29 PM

Oil shocks to date have, for the west at least, been less a matter of lack of supply than of very high prices: the oil has always been there, it's just been expensive. If supply does get really tight, the largest impact will be in oil-importing developing countries, who will find themselves priced out of the consumption picture, likely with serious unrest as a consequence.

My point as well.

To me the key to making a transition away from fossil fuels happen is maintaining a high price for fossil fuels. It sounds self-destructive and it would certainly be unpopular, but as a question of energy policy I think the US should be committed to keeping oil prices in the $100/bbl range. Of course that also means subsidizing a number of unpleasant regimes, but those regimes are less dangerous than the potential consequences of cheap oil.

Well ideally from an energy security point the world market prices should be lower with the state slapping a higher tax on it. In that case you give your citziens the right incentives and collect quite a bit of revenue for your budget to be used for energy alternatives. Of course we know that increasing those taxes is highly unpopular. Low international prices would of course inflict further harm on the globe by pushing climate change.

Rick M

08-18-2014, 02:10 PM

"world market prices should be lower with the state slapping a higher tax on it."

I agree with your second point but lowering market prices seems to be an impossibility apart from the usual vacillations.
Global production of conventional oil has been on a plateau for almost a decade. Indeed, some analysts believe that the decline may have begun. In any case, global supply has been buoyed by increased LTO and bitumen production, both of which are already expensive and about to get worse.

Here in Canada the Globe & Mail has had several recent articles about the high costs of bitumen production.
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/china-faces-oil-patch-buyers-remorse/article20090355/#dashboard/follows/?

This recent article gives an interesting perspective on Bakken production and provides an update on global supply:
http://peakoilbarrel.com/bakken-production-data-june/

Firn

08-18-2014, 06:22 PM

I was going to agree with you earlier, but run out of time. Obviously the policies of countries even as important as the USA and China can influence the oil price to a limited degree. The global supply depends of course partly on that it and price expectation of the market (which are obviously tied). Both are known to flactuate to a very considerable degree which result in those boom and bust cycles in investments into the respective sectors.

From a global point of view there is no doubt fossil fuels will face increasingly high production costs. It takes increasingly more investment to bring a given energy unit to market. Renewable energy has on the other hand overall been trending downwards, sometimes very rapidly. Now in some cases like on-shore wind the quality of the locations tends to drop but overall there is still much scope left. Storage technology like batteries benefited from the rise in energy density somewhere around 7-10% in the last decade while the costs per watt decreased even more. Nobody knows how quickly progress will be but there will be some.

http://handlemanpost.files.wordpress.com/2014/04/2012-cumulative-pv.jpg

The biggest challenge for the political leaders is to support an efficient transition, limiting misallocation and short-term disruption. The macroeconomic benefits for diverting those investment euros and dollars from fossil fuel exporters into the local economy might get overstated in some cases but they do exist. Without arguing about details, just one example:

Better Racking Drives Down Solar’s Soft Costs (http://www.greentechmedia.com/articles/read/Better-Racking-Drives-Down-Solars-Soft-Costs)

“The current generation and the next generation of integrated racking are now being standardized,” Cinnamon said. “Zep did that so well that SolarCity* bought them.”

“Racking and mounting, at $0.16 per watt, is one of the single largest cost categories for benchmarked rooftop residential installations in the U.S.,” the study reports, and “can have at least a $0.12 per watt impact on the total installed cost.”

Zep competitors that do versions of integrated racking are emerging, like Lumos, Solon, SunPower, Andalay Solar, VeriSol and Cinnamon’s Spice Solar startup. And competing strategies like prefabricated and plug-and-play products are being put in place by companies like PanelClaw, SunLink, and Renusol.

I'm pretty sure there is still much scope in the installation side of that vastly increased business.

*Musk is it's CEO.

Firn

08-18-2014, 06:48 PM

Batteries for Electric Cars (http://www.bcg.com/documents/file36615.pdf) is a short overview by the BCG.

Current Costs and Forecasting Methodology.

Most sources estimate the current cost of an automotive lithium-ion battery pack, as sold to OEMs, at between $1,000 and $1,200 per kWh. Citing the current cost of consumer batteries (about $250 to $400 per kWh), they further predict that this price tag will decline to between $250 and $500 per kWh at scaled production. However, consumer batteries are simpler than automotive batteries and must meet significantly less demanding requirements, especially regarding safety and life span. Nonetheless, $250 per kWh persists as the cost goal for an automotive battery pack. Given current technology options, we see substantial challenges to achieving this goal by 2020.

I think after this it becomes clearer why Elon Musk is pushing hard for the 'gigafactory'. I have no idea if it will work, but it is clear that he sees considerable scope for economies of scale in the production of batteries specifically designed for EV. Needless to add that the underlining trends are in my humble opinion strongly in the electric vehciles favour.

Firn

08-18-2014, 07:02 PM

I think we have an excellent recent example of tradeoffs between short and high energy prices: Ukraine.

We discussed it earlier (http://council.smallwarsjournal.com/showpost.php?p=153322&postcount=277), and it shows how low energy prices for many consumers due to (very) high subventions and some external discounts can make a country highly vulnerable once much higher prices get charged. It is of course a special case with the energy prices rising by at least a factor 2 for some.

davidbfpo

09-02-2014, 05:27 PM

Being a typical English summer day, with a host of very news worthy items in the foreground, it is a good time to announce this:
National Grid announced on Tuesday that it would begin recruiting idle or mothballed power plants, which would be paid to ensure they could fire up if needed as a "last resort".

The Grid had said in June that the emergency plan to boost power supplies would not be needed this year. However, it has resorted to using it because five of the power plants it had expected to be running this winter are now shut down or are in doubt.

Link:http://www.telegraph.co.uk/finance/newsbysector/energy/11070173/Emergency-measures-to-prevent-blackouts-this-winter-as-power-crunch-worsens.html

This is nothing to do with any Russian dependency, rather mishaps with a number of generating plants in the UK.

Firn

09-02-2014, 06:04 PM

Both demand and supply emergency measures were already due to be used in winter 2015-16 when Britain's spare capacity margin was already expected to fall to as low as 2pc.

The measures will be funded by consumers and are estimated to add £1 a year to household energy bills.

The additional margin of safety doesn't seem likely to destroy the British economy. Said that it seems that:

i) It was a great deal of bad luck that so many plants have at the same times problems

Two nuclear power plants have been temporarily shut down amid safety fears, two coal-fired power plant units have been partially shut after fires, and one gas-fired power plant unit is being shut because it is unprofitable.

ii) A decreasing pool of flexible plants like that gas-fired one which has been priced out of the market makes the energy security more susceptible to such streaks of bad luck.

The energy sector is overall in a transistion phase which pace depends on a number of factors differing between regions and countries. Careful management with enough ressources is certainly needed.

Rick M

09-11-2014, 10:30 PM

The most recent forecast from the EIA in consistent with previous reports in expecting light tight oil (LTO) to peak prior to 2020.
The International Energy Outlook (IEO) was released a couple of days ago and although EIA formerly predicted LTO to peak in 2019, then in the 2017 - 2020 time frame, this time EIA predicts 2017, followed by a brief plateau, with decline beginning in 2020.

Here is the link:
http://www.eia.gov/forecasts/ieo/more_overview.cfm

The box on the right of EIA's page contains six Data Tables. There is a slight discrepancy between Table 4 (all liquids) which shows peak in 2017 @ 14.3 while Table 5 (C&C) shows peak in 2018 @ 9.9.

Both Tables show US decline starting in 2020 which is probably the most relevant issue here.

Firn

10-17-2014, 02:14 PM

After the oil rout in the last months it might be useful to return to this topic. The oil market has of course known far more dramatic movement and swings, and I have no idea what the oil price will be in a couple of months or years. Sounds obvious, but it is good to remind others and oneself of it. :wry:

Extraction costs (http://www.businessinsider.com/crude-oil-cost-of-production-2014-5) from the Business insider are handy to put the current prices into perspective. Handle as always with care...

http://static1.businessinsider.com/image/53712e4f69bedde31684d4c3-854-673/screen%20shot%202014-05-12%20at%203.56.27%20pm.png

Another table (http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=6) by the (American) EIA.

http://cdn.static-economist.com/sites/default/files/imagecache/original-size/images/2014/10/blogs/graphic-detail/20141018_gdc875.png

The higher oil prices of this year mean that for most countries the budgets should be fine on that side. Things will be of course different if it prices stay so low for a longer period. There are of course the well-know feedback loops with investment which kick in but with so many variables it is impossible to say what impact it will have when.

What is Fiscal Breakeven for Oil States? (http://alfinnextlevel.wordpress.com/2014/04/19/what-is-fiscal-breakeven-for-oil-states/) is a blog entry which contains many links looking into the problem. I have actually posted quite a few of the same graphics over the months...

As stated before, ideally not-so-badly performing countries like the USA would use this opportunity to somewhat increase taxes on fossil energy consumption to curb global warming and increase it's longer term energy security. Some semi-flexible indexing might work. Won't happen of course...

Rick M

10-19-2014, 03:59 PM

Thanks for your post, Firn.

We've seen posts all week heralding a return to cheaper oil, mocking peak oil concerns, etc. But many people seem unaware of the fact that conventional oil has peaked and that the increased production that we've enjoyed for the last 8 years has come almost entirely from two North American sources: US tight oil and Canadian bitumen.
Both sources are very expensive, as your graph illustrates, and will be scaled back if they face sustained unprofitable prices.

Yesterday Ron Patterson posted an examination of ND oil production by county. The degree to which ND's production depends on the sweet spots in two counties is quite remarkable: McKenzie and Mountrail produce about 60% (around 666,000 bpd) of ND's oil:
http://peakoilbarrel.com/bakken-oil-production-county/

Meanwhile, EIA continues to forecast a peak in US tight oil (and therefore US overall production) within the next few years.

This thread has been running for over 5 years, during which time we've seen several ups and downs re. oil & gas. Five years from now I expect that the prevailing view will be that concerns over long-term global oil supply (and climate change, the flip side of the energy coin) were well-founded.

Firn

10-20-2014, 06:33 PM

I broadly agree with you and history shows indeed that oil prices swing indeed a great deal. The low prices of today have often been an important factor in the high prices in the next future.

I think it is always important to keep the basics firmly in mind. Among them is the simple fact that never before was so much oil consumed:

https://s3-eu-west-1.amazonaws.com/rbi-blogs/wp-content/blogs.dir/383/files/2014/07/BP-energy-Jul14.png

From the Climate Insider (http://insideclimatenews.org/news/20140714/americas-oil-consumption-rising-not-falling-outpacing-chinas).

http://www.energytrendsinsider.com/wp-content/uploads/2014/07/Change-in-Oil-Consumption-MMBPD.png?00cfb7

Puts the economic rise of Asia in an energy perspective. The European decline, yes to a (small) degree through increased efficiency, is almost as stunning. The last graphs are from Energy Trend Insider (http://www.energytrendsinsider.com/2014/07/10/world-sets-new-oil-production-and-consumption-records/)

http://www.energytrendsinsider.com/wp-content/uploads/2014/07/Change-in-Oil-Consumption.png?00cfb7

Seemingly ever increasing demand for finite ressources will make sure that at some stage we will run out even if technology and capital allocated due to high-enough prices will push the bounderies of 'finite'.

Firn

10-21-2014, 04:25 PM

As I don't think that technology can keep the costs of crude at the current levels in the long run, putting also in the long run something similar to a floor under it's price, it will continue to get substituted. Arguably the pace should increase with far stronger competition from alternatives, some of which seem able to continue to benefit from technological progress. Of course how it plays out depends on a lot of variables and the specific dynamics of the demand and supply. Those soft restraints and competition should play a bigger role in the near future than the hard limits, at least in my humble opinion.

http://epp.eurostat.ec.europa.eu/statistics_explained/images/thumb/d/d1/Gross_inland_consumption%2C_EU-28%2C_1990%E2%80%932012_%28%25_of_total_consumptio n%29_YB14.png/800px-Gross_inland_consumption%2C_EU-28%2C_1990%E2%80%932012_%28%25_of_total_consumptio n%29_YB14.png

The upwards trend of coal is quite interesting after it's consistent fall over more then a decade. Crude is also down, but far less so in percentage terms. NG has been clearly replacing the two other fossil fuels to a good degree. The rise of renewables is indeed very large.

Rick M

10-27-2014, 09:40 AM

David Hughes is a veteran geoscientist, now retired from the Geological Survey of Canada. He is also a meticulous researcher who carefully sources the data upon which his conclusions are made.

This morning his latest analysis of US shale/tight oil and shale gas supply was released. "Drlling Deeper" is a massive document (315 pgs, 25 MB). Here is the Abstract (my emphasis in italics):

Drilling Deeper reviews the twelve shale plays that account for 82% of the tight oil production and 88% of the shale gas production in the U.S. Department of Energy’s Energy Information Administration (EIA) reference case forecasts through 2040. It utilizes all available production data for the plays analyzed, and assesses historical production, well- and field-decline rates, available drilling locations, and well-quality trends for each play, as well as counties within plays. Projections of future production rates are then made based on forecast drilling rates (and, by implication, capital expenditures). Tight oil (shale oil) and shale gas production is found to be unsustainable in the medium- and longer-term at the rates forecast by the EIA, which are extremely optimistic.

This report finds that tight oil production from major plays will peak before 2020. Barring major new discoveries on the scale of the Bakken or Eagle Ford, production will be far below the EIA’s forecast by 2040. Tight oil production from the two top plays, the Bakken and Eagle Ford, will underperform the EIA’s reference case oil recovery by 28% from 2013 to 2040, and more of this production will be front-loaded than the EIA estimates. By 2040, production rates from the Bakken and Eagle Ford will be less than a tenth of that projected by the EIA. Tight oil production forecast by the EIA from plays other than the Bakken and Eagle Ford is in most cases highly optimistic and unlikely to be realized at the medium- and long-term rates projected.

Shale gas production from the top seven plays will also likely peak before 2020. Barring major new discoveries on the scale of the Marcellus, production will be far below the EIA’s forecast by 2040. Shale gas production from the top seven plays will underperform the EIA’s reference case forecast by 39% from 2014 to 2040, and more of this production will be front-loaded than the EIA estimates. By 2040, production rates from these plays will be about one-third that of the EIA forecast. Production from shale gas plays other than the top seven will need to be four times that estimated by the EIA in order to meet its reference case forecast.

Over the short term, U.S. production of both shale gas and tight oil is projected to be robust—but a thorough review of production data from the major plays indicates that this will not be sustainable in the long term.
These findings have clear implications for medium and long term supply, and hence current domestic and foreign policy discussions, which generally assume decades of U.S. oil and gas abundance.

AdamG

12-19-2014, 08:08 PM

North Korea dispatched covert commando teams to the United States in the 1990s to attack nuclear power plants and major cities in a conflict, according to a declassified Defense Intelligence Agency report.

The DIA report, dated Sept. 13, 2004, reveals that five units of covert commandos were trained for the attacks inside the country.

According to the report, the “Reconnaissance Bureau, North Korea, had agents in place to attack American nuclear power plants.”

http://freebeacon.com/national-security/dia-north-korea-planned-attacks-on-us-nuclear-plants/

Firn

02-12-2015, 06:42 PM

Seven Reasons Cheap Oil Can't Stop Renewables Now (http://www.bloomberg.com/news/articles/2015-01-30/seven-reasons-cheap-oil-can-t-stop-renewables-now)

I like graphs so I had to go with that one:

http://media.gotraffic.net/images/iQYuKSosjb3U/v16/-1x-1.jpg

As we discussed before the often large tax burden does of course reduce the upside for the consumer. As Italian it is especially easy to note that. :wry:

http://media.gotraffic.net/images/ih3xuhKPTuV4/v17/-1x-1.png

On a worldwide scale the following might be surprise some:

Fossil-fuel subsidies outpace renewable-energy subsidies by a factor of 6 to 1. Reducing the subsidy gap is one of the cheapest ways to increase fuel efficiency and speed up the switch to cleaner energy. Expect similar moves as the rising toll of climate change pushes governments to take action.

However it is important to keep in mind the difference in energetic output, with the renewables still being a small slice of the worldwide consumption. Still subsidies for oil are a terribly bad idea for many developing countries or producers. Perhaps the best example of the worst policy (among many others) in that regard is Venezuela.

Ulenspiegel

02-12-2015, 06:59 PM

Firn

03-26-2015, 07:07 PM

The good news are that PV is a generator for which global installation doubles in less than four years, from 1% to 32% takes only 5 doubling steps, i.e. 20 years. And there are no real bottlenecks for required materials.

Installation and O&M are more or less low tech for PV, so no real problem for a wider distribution.

Wind power is more tricky as installation and O&M is sometimes more on the high tech side, however, with huge potential in developed countries and some of the developing countries I see a real impact in PV and wind power.

I fully agree with you and the basic logic is hard to deny. PV is booming for very good reasons, having become ever more cost-efficient per watt surprisingly quickly.

http://media.gotraffic.net/images/iLS6QqWkr3QQ/v1/1200x-1.png

From Bloomberg's article: California Just Had a Stunning Increase in Solar (http://www.bloomberg.com/news/articles/2015-03-26/california-just-had-a-stunning-increase-in-solar) and good chunk comes from mighty Berkshire (http://www.berkshirehathawayenergyco.com/energy/solar). In addition to the utility numbers 'In small-scale solar, capacity for another 2.3 gigawatts has been installed'. Not bad at all...

http://media.gotraffic.net/images/ijZQbGdXd_h8/v1/-1x-1.png

Firn

03-26-2015, 08:18 PM

An interesting article (http://www.bloomberg.com/news/articles/2015-03-24/there-s-pure-profit-sitting-at-the-top-of-u-s-crude-oil-tanks) about oil storage in the US gets filled up at a rapid pace.

Traders’ attempts to use every cubic inch of storage underscores how desperate the market has become to stow oil. Supplies at Cushing reached a record 56.3 million barrels as of March 20, Energy Information Administration data show. Nationwide, stockpiles at 466.7 million are the highest since 1930

Who saw that coming even one year ago?

Firn

04-01-2015, 09:45 PM

X-rays Reveal Secret Life of Batteries (https://www.youtube.com/watch?v=V8lSTLRkKEk) offers amazing pictures and graphs on some processes inside experimental batteries. It is a public lecture and thus explained in a simplistic but cohesive and clear manner.

Firn

04-01-2015, 09:50 PM

China’s Fuel Demand to Peak Sooner Than Oil Giants Expect (http://www.bloomberg.com/news/articles/2015-04-01/china-s-fuel-demand-to-peak-sooner-than-oil-giants-expect) makes for interesting reading. China dominated demand growth across pretty much all the commodities so a different path will be felt around the world.

Sinopec has offered a view of the country that should serve as a reality check to any oil bull. For diesel, the fuel that most closely tracks economic growth, the peak in China’s demand is just two years away, in 2017, according to Sinopec Chairman Fu Chengyu, who gave his outlook on a little reported March 23 conference call. The high point in gasoline sales is likely to come in about a decade, he said, and the company is already preparing for the day when selling fuel is what he called a “non-core” activity.

It seems a little to bullish (or bearish depending on your perspective) but it is well worth to think about it.

Bill Moore

04-01-2015, 10:46 PM

Firn

04-02-2015, 05:53 PM

Good questions which are usually not in short supply regarding China...

Sinopec has offered a view of the country that should serve as a reality check to any oil bull. For diesel, the fuel that most closely tracks economic growth, the peak in China’s demand is just two years away, in 2017, according to Sinopec Chairman Fu Chengyu, who gave his outlook on a little reported March 23 conference call. The high point in gasoline sales is likely to come in about a decade, he said, and the company is already preparing for the day when selling fuel is what he called a “non-core” activity.

Peak diesel demand just two years ago is a very bold prediction. A quick look at the commercial vehicle sales (http://www.statista.com/statistics/265928/commercial-vehicle-sales-in-china/) have roughly doubled within 10 years on a 3Y basis. I don't know about the longevity of Chinese trucks and the typical turnover but the overall fleet size should be still increasing greatly even if annual sales are down. Alternatives to diesel play only a minor role so, all things equal, we would have to see a large drop in miles per vehicle (or/and a lot of vehicle exports to Africa ) if demand should peak in 2017

http://www.eia.gov/countries/analysisbriefs/China/images/oil_production_consumption.png

The current trend of diesel and ex-diesel oil consumption...

The China Commercial Vehicle Outlook (http://www.actresearch.net/wp-content/uploads/2013/04/chinaoutlookQ112.pdf) is dated but gives plenty of details on the market (among them the officially proposed vehicle duration)A recent global overview (https://www.powersys.com/sites/powersys.com/files/article/files/commercial_vehicles_webinar_18-11-2014.pdf) provides some background. There might have been some overinvestment due to a too bullish projection of the economy, some impact by Euro IV, more efficient fleet management. lots of other factors and so forth but personally it seems unlikey that we will see no increase in consumption over 2017 unless there is a might Chinese crash.

China invests massively in renewables but China is massive and the energy sector has typically a huge momentum. I will have to take a closer look at the non-diesel part later, starting most likey here (http://www.eia.gov/countries/cab.cfm?fips=ch).

http://www.eia.gov/countries/analysisbriefs/China/images/electrcity_net_generation_fuel.png

Yes I love graphs!

AdamG

04-03-2015, 06:01 PM

A massive power failure that crippled life in Turkey for almost 10 hours on Tuesday highlights the threats facing electricity grids worldwide.

Turkey’s most extensive power failure in 15 years, which left people stranded in elevators and traffic snarled, wasn’t the result of a lack of electricity. The prime minister said all possible causes -- including a cyber-attack -- were being investigated.

While the source of the problem is still unknown, recent revelations that a 2008 oil pipeline explosion in Turkey was orchestrated via computer and the high-profile hacking last year on Sony Pictures Entertainment demonstrate the increasing ability to penetrate systems. For power grids, technology being added to make them more reliable and productive is also giving attackers an entry point into vital infrastructure.

“Every country, including the U.S., will be looking at it to see what the vulnerabilities were and learn some lessons about protection,” said Kit Konolige, a New York-based utility analyst for Bloomberg. “An electric grid is a complex system and it’s hard to ensure that it’s defended everywhere.”

Several foreign governments have hacked into U.S. energy, water and fuel distribution systems and might damage essential services, the National Security Agency said in November. A report by California-based cybersecurity company SentinelOne predicts that such attacks will disrupt U.S. electricity in 2015.
http://www.bloomberg.com/news/articles/2015-04-01/turkish-blackout-shows-world-power-grids-under-threat

Firn

04-12-2015, 09:38 AM

The move towards a 'smarter grid (http://en.wikipedia.org/wiki/Smart_grid) with much complex physical and digital interactions should indeed naturally greatly increase the ability to input cyber attacks.

Water consumption outstripping water supply in the last decades has in California both impacts the energy security both directly (http://www.eia.gov/todayinenergy/detail.cfm?id=20732) and indirectly (http://www.nytimes.com/2015/04/12/science/drinking-seawater-looks-ever-more-palatable-to-californians.html).

California's drought caused a state of emergency to be declared in January 2014. Since then, the drought has worsened, and, as of April 7, 2015, 44% of the state is now classified as experiencing exceptional drought, the most intense drought category. The drought has limited the state's ability to generate electricity from its hydropower plants. For instance, the California Department of Water Resources reports that 2013-14 precipitation in the Northern Sierra, where some of California's largest hydropower plants are located, was 37% below the historical average. Precipitation in 2015 continues to be exceptionally low.

http://www.eia.gov/todayinenergy/images/2015.04.09/chart3.png

Desalination has become an important source of water in some dry countries and areas of the world, for example Israel*, but it requires large amounts of capital to built as well as energy to operate. The latter obviously increases energy consumption per capita, making 'energy security' harder to achieve.

A huge amount of energy is required to create enough pressure to shove the water through the membranes. But clever engineering has cut energy use of the plants in half in 20 years, as well as improving their reliability.

Future desalination plants also have the potential to blend well with the rising percentage of renewable power on the electric grids in California and Texas. Since treated water can be stored, the plants could be dialed up at times when electricity from wind or solar power is plentiful, and later dialed down.

All in all so far almost everything I gathered seems to support this view:

“Our position is that seawater desalination should be the option of last resort,” said Sean Bothwell, an attorney with the California Coastkeeper Alliance, an environmental coalition that has battled California’s turn toward the technology. “We need to fully use all the sustainable supplies that we have available to us first.”

A sensible legal framework and much better markets are among other efforts key to price water properly, especially for farming, which consumes 80% with a high ratio of especially water-thirsty crops while creating only a (very) small poportion of California's economic output.

*Israel is arguably one of the country for which such plants make most political and economic sense for obvious reasons despite far more conservation efforts then we see in Californian agriculture. It is no surprise that a considerable amount of technological progress seems to have come from there.

Firn

07-04-2015, 05:18 PM

A nice Bloomberg piece (http://www.bloomberg.com/news/articles/2015-06-10/the-three-seismic-shifts-that-are-shaking-up-the-world-of-energy) about some of the trends I have been writing about in this thread.

http://assets.bwbx.io/images/iFvRgH5HKEZk/v1/-1x-1.jpg

Long term the rapid rise of renewables is of course the far bigger story.

Firn

08-08-2015, 09:14 PM

U.A.E. Removes Fuel Subsidy (http://www.bloomberg.com/news/articles/2015-07-22/u-a-e-to-link-gasoline-price-to-global-markets-effect-aug-1) a long, long overdue move as we discussed many pages ago with terrible knock-on effects.

Gasoline is now subsidized in the U.A.E., the second-biggest Arab economy and home to about 6 percent of the world’s oil reserves. Unleaded gasoline 98 octane in the U.A.E. sells for 1.83 dirhams (50 cents) a liter, according to prices on the ministry’s website. The U.S. price of premium unleaded gasoline is $3.18 a gallon, or 84 cents a liter, according to AAA, the biggest U.S. auto group. That compares with 16 cents in Saudi Arabia, the largest OPEC producer.

It will be wise the review it in a couple of months..

A The Context of Fossil-Fuel Subsidies in the GCC Region and Their Impact on Renewable Energy Development (http://www.iisd.org/gsi/sites/default/files/ffs_gcc_context.pdf) offers a great deal of, well, context to the economic folly.

By now it has been recognized that the low pricing of fossil fuels has led to a number of adverse impacts. While GCC countries have among the highest GDPs per capita in the world, the opportunity cost of selling fuels domestically at prices below international market rates and the volatility in world oil prices have started putting fiscal pressure on GCC governments. Low fuel pricing has resulted in domestic over-consumption of hydrocarbons and the absence of incentives to achieve energy efficiency in the economy. At the same time, renewable energy uptake has been impeded by a lack of competitiveness.

Firn

08-25-2015, 05:07 PM

i) A neat graphic about the Electric Car market:

http://i1.wp.com/gas2.org/wp-content/uploads/2015/08/electric-cars-infographic.jpg?zoom=1.5&w=900

ii) Germany's wholesale electricity prices keep falling (http://www.bloomberg.com/news/articles/2015-08-25/why-do-germany-s-electricity-prices-keep-falling-). Maybe something for Ulenspiegel :):

http://assets.bwbx.io/images/iNYmzy9ZYbhk/v2/-1x-1.png

iii) Nominal oil prices agains real ones:

http://d37lpsgnac8i9z.cloudfront.net/static/stories/full/6bd4e19b618b86c0a03f0b4b38f5cf961e53dfb1.jpg

Ulenspiegel

10-02-2015, 07:16 AM

Firn

10-09-2015, 05:13 PM

@Firn

as far I understand the situation, the wholesale price of electricity is quite irrelevant for the consumers: a lower wholesale price leads to higher RE tax. Electricity will very likely cost almost the same in the next 15 years, maybe slightly more around 2023 due to more (expensive) offshore wind until 2020. Around 2030 we as consumers can expect a sharp drop of the RE payments as a lot of expensive PV falls out of the FIT.

For energy intensive industry the situation is quite good as these guys do not pay any RE tax, i.e. the Germany energy intensive industry will improve its relative competitiveness on the global market in the years to come.

This matches my perhaps more limited understanding of the current German situation. In short the German citziens pay more, stimulating overall energy supply, so that the energy intensive industries can pay less... :wry:

For utilities this means that NO new conventional power plant is able to make money in a energy only market. You have to privide other services or switch to REs.

It must be quite depressing to be in the convential part of the business and you feel for those guys if you read the reports of RWE or E.ON. With so little return, if any, it is no surprise that capital flows into other areas even with investments overall being curtailed. Some Services will be quite competitive as they seem to be on of the few places to make money which will make making money more difficult.

As German and Austrian utilities have excess capacity only until 2019, I expect a higher wholesale price then. Or from a different POV: The Austrian Verbund assumes that their mothballed NG power plants are able to make money in 2019 again.

Interestingly the Verbund did mouthballed it's coal plant Duernroh, see the intermin report, despite the lower costs thanks to the Co2 certificate issues and the supply glut of it's fuel. Only in 2009 a teleheating pipeline to the Laender capital, more capital down the drain...

Generation from thermal power plants increased by 54.4%. The main reason for the rise was the increased use of coal in order to reduce inventories at the Duernrohr power plant prior to its closure and greater use of bottleneck management during the first quarter.

On the other hand, the German Net Agency and some other people expect an increasing NET export of German electricity even after 2019, therefore, I may miss something. (I would expect lower net exports as more electricty is then generated from expensive NG, which not longer has the advantages coal has today.)

I think it is impossible to predict what we will see in 2019, although you make good points. So much depends on fossil fuel prices, renewable energy growth and their cost structure, grid investment and politics. Some
prices spikes are rather likely to happen and it won't be easy for the utilities to chose what to do with their plants.

The German trends will have obviously on a big impact on the Austrian market. My personal guess is that increasing net export growth is quite likey due to current incentive structure in the German market. In that case it's citiziens will also help others industries to pay less.

BTW there is justly much talk about the relative unpredicitable nature of renewable power generation however little, maybe because it is seen as given, on the unpredictable nature of power generation costs of conventional fossil fuel plants. I think the last years, especially in regard to NG, are a good reminder of that.

Ulenspiegel

10-09-2015, 06:09 PM

Firn,

found today this on the Agora Energiewende site:

http://www.agora-energiewende.de/fileadmin/Projekte/2015/Understanding_the_EW/Agora_Understanding_the_Energiewende.pdf

It explains nicely the issues with wholesale price and RE tax and their projections until 2035. I was quite correct with my assumptions.

Common electricity market comprising Germany and Austria may end (for a few years) in 2019, if the "war games" of the German Net Agency come true.

IMHO it is only a shot across the bow of the Austrians, who admitted that they are greatly benefitting from the market without costs. The Austrians understood this, too, and suggest constructive alternatives.

http://diepresse.com/home/wirtschaft/economist/4827846/Stromgrenze-konnte-Osterreich-300-Millionen-Euro-kosten-?from=suche.intern.portal

Firn

12-06-2015, 07:00 PM

I completely missed your response, thanks for the links. I may come back later to the first one but I will comment on the second.

1) A great influx of cheap wind energy does pose a challenge to the grid as it can, as pointed out, currently not matched to demand due to a lack of grid integration and storage. Cheap German energy exports means of course overall cheaper electric prices for the Polish market however less profit and more challengers for the Polish utilities and it's providers.

Poland gets powered (https://euobserver.com/regions/130319) by coal (http://wysokienapiecie.pl/energy-poland/704-is-polish-coal-doomed-to-extinction-poland-kompania-weglowa) which is also mined (https://www.unece.org/fileadmin/DAM/ie/se/pdfs/Poland_CoalRestructuring.pdf) by a fairly large amount of people.

Coal plants tend to compete with wind as base load so suffer often especially if cheap wind pushes the (upper) rest of the supply/cost curve towards the right. So there is certainly a lot of specific political interest to keep cheap energy out.

2) The Verbund will also suffer from the wind competition with it's plants along the Danube for example, however I guess that they hope for more business for their investment into the grid and their pump storage plants. They also divested fossil fuel lately as it was mostly not competitive under current condidtions.

Of course the Austrian consumer should be happy - just like the Polish one - about German electricity lowering his bill.

AdamG

12-21-2015, 01:51 PM

SAN JOSE, Calif. — Security researcher Brian Wallace was on the trail of hackers who had snatched a California university’s housing files when he stumbled onto a larger nightmare: Cyberattackers had opened a pathway into networks running the United States power grid.

Digital clues pointed to Iranian hackers. And Wallace found that they had already taken passwords, as well as engineering drawings of dozens of power plants, at least one with the title ‘‘Mission Critical.’’

The drawings were so detailed that experts say skilled attackers could have used them, along with other tools and malicious code, to knock out electricity flowing to millions of homes. The breach involved Calpine Corp., a power producer with 82 plants operating in 18 states and Canada.

http://www.bostonglobe.com/news/nation/2015/12/21/power-grid-vulnerable-foreign-hackers/4ZSwtjvmi0HgsY7sBt5ENI/story.html?p1=Article_Recommended_ArticleText

Firn

12-22-2015, 05:19 PM

Ulenspiegel

12-23-2015, 09:44 AM

....
Poland gets powered (https://euobserver.com/regions/130319) by coal (http://wysokienapiecie.pl/energy-poland/704-is-polish-coal-doomed-to-extinction-poland-kompania-weglowa) which is also mined (https://www.unece.org/fileadmin/DAM/ie/se/pdfs/Poland_CoalRestructuring.pdf) by a fairly large amount of people.

Coal plants tend to compete with wind as base load so suffer often especially if cheap wind pushes the (upper) rest of the supply/cost curve towards the right. So there is certainly a lot of specific political interest to keep cheap energy out.

2) The Verbund will also suffer from the wind competition with it's plants along the Danube for example, however I guess that they hope for more business for their investment into the grid and their pump storage plants. They also divested fossil fuel lately as it was mostly not competitive under current condidtions.

Of course the Austrian consumer should be happy - just like the Polish one - about German electricity lowering his bill.

I think the issue is that German utilities have often spare coal capacity at peak demand times due to the REs, hence, they can export when there is demand in neighbour countries and kill NG and (older) coal capacity there. France and Poland do not have these cheap excess peak capacities, i.e. they buy more expensive than they export.

Yes, the Austrian Verbund will suffer a little bit, however, some of their problems are unsound investments in fossil energy (Italy) in the past. IMHO they are in a much better position than their German counterparts due to the high RE share, which is to a large extend written off, their German competitors have nothing.

IIRC the Verbund hopes to bring on-line their (open turbine) NG power plants, these are peakers, when the excess fossil capacity is reduced in Germany, this will be around 2018/19.

Ulenspiegel

12-23-2015, 10:01 AM

Power generation is already slowly becoming more and more decentralized. If, and a big if at that, battery prices continue come down storage should also become increasing so. Such a structure is obviously far harder to physically knock out.

Smart grid, large scale grid integration in general and long range UHV (https://en.wikipedia.org/wiki/Ultra-high-voltage_electricity_transmission_in_China) ultra high voltage transmission could make the grid on the other hand more vulnerable to physical and cyberattacks.

I'm curious how this plays out in the long run, although with adequate investments even the direct energy security the ups outhweigh the downs in my humble guess.

From a purly economic and physical POV better transmission grid integration is the most useful solution. Wind power is, when we talk in European scale, not correlated, this means you can get a base-load like situation on most days simply by more transmission capacity, therefore, no huge amount of short term storage is needed.

Long-term storage needs could be covered by Norway/Sweden, again, more transmission is needed. A wind heavy scenario in northern Europe plus PV in the south would my path to go.

The basics are nicly described in the dissertation of Gregor Czisch.

AdamG

12-23-2015, 05:01 PM

An Iranian hactivist group has claimed responsibility for a cyberattack that gave it access to the control system for a dam in the suburbs of New York — and intrusion that one official said may be "just the tip of the iceberg."

The group, SOBH Cyber Jihad, sent a message through another Iran-linked hacker outfit, Parastoo, promising that it would release the technical information that proves it was behind the 2013 breach, according to Flashpoint Intelligence.

The hackers claimed they kept quiet about the attack for two years because of a "state-level" warning not to go public with it "for the greater good."

http://www.nbcnews.com/news/us-news/iranian-hackers-claim-cyber-attack-new-york-dam-n484611

davidbfpo

02-06-2016, 07:26 PM

After a short delay in Morocco:
The Noor I power plant is located near the town of Ouarzazate, on the edge of the Sahara. It's capable of generating up to 160 megawatts of power and covers thousands of acres of desert, making the first stage alone one of the world's biggest solar thermal power plants.
Link:http://www.npr.org/sections/thetwo-way/2016/02/04/465568055/morocco-unveils-a-massive-solar-power-plant-in-the-sahara? (http://www.npr.org/sections/thetwo-way/2016/02/04/465568055/morocco-unveils-a-massive-solar-power-plant-in-the-sahara?utm_campaign=storyshare&utm_source=facebook.com&utm_medium=social)

Interesting that this is funded by the World Bank, to reduce Morocco's dependence on external sources of power.

davidbfpo

12-11-2017, 06:07 PM

A recent IISS event on these issues 'Threat multipliers: the changing energy landscape, climate change, and water stress' with a recording (63 mins); the introduction:
Over the last decade an advisory group of retired admirals and generals has come together to examine the intersection of national security, the changing energy landscape and climate change. In this panel discussion members of the CNA Military Advisory Board addressed changing energy and water security as potential threat multipliers for fragile regions of the world.Link:http://www.iiss.org/en/events/arundel-s-house-s-events/threat-multipliers-climate-change-af78

There are other threads on climate change and water supply.