Renewables, more like Internet than Oil&Gas

Renewable energy behaves more like Telecom/Internet than Oil&Gas, economics-wise, taking into account sourcing and transportation.

Oil&Gas is about exploration, find an oil field and your paramount problem is shipping the oil to the market, provided there is a market. Imagine the Dutch who just discovered an oil field in Sumatra in 1885, with no clear market nearby, how could they feel stranded.

So you fret finding buyers, then booking rail carts to the refinery, sold what is in demand and dump the rest into streams. At early times, you could sell kerosene for light and throw away the exploding part od oil. Over time internal combustion engines are developed and most of oil used. Gas used to be vented, but a market developed there too. Today all oil is used, unless there’s a glut then it stays aboard ships around the world, which is the cheapest stockage, as we learned in 2020.

Wind&Solar, you need not discover them, there are maps and no need to dig a hole in the ground. Rather you have to study government papers to find money buried in there for sustainable projects, but that’s another story.

The story is that the economics of solar and wind is now competitive and so it should be a case of “build it and we will fill it” and the best way to promote renewables in the world would be building power lines from most productive areas to markets, according to forecast consumption.

Sun and wind is there for us, To be clear, if Europe builds direct current power lines going into sahara states, should it expects those pipes to be filled wiht renewable electricity which has found a market ? Smart money would move to north afrcia and build capacity, like in the end some smart money thought it could profit from Sumatra oil and built refineries nearby.

So the global renewable energy build-up should look very much like the global broadband buildup at the turn of the century when most undersea cable would be laid (but demand took time to materailize and the bandwidth glut le to a few telecomm companies, while the slack was picked up by internet players like google etc, dark fiber).

So my question, why are we not building those power lines ? The technolgy is called High Voltage Direct Current Transmmission https://en.wikipedia.org/wiki/High-voltage_direct_current, isn’t it ready from prime time ? Are we waiting to develop a business case for it ? Or we need first figure out how to fit it in our geopolitics ? China has already proposed those links as part of Belt and Roads so now you know. Still, if the econommics of renewable production are right, why don’t we create the market for the would be producer of the world ?

Let’s built it and they will fill it.

Le energie rinnovabili non sono come il settore Oil&Gas, somigliano piuttosto a Telecom/Internet, tutto dipende da dove si trovano.

Il petrolio lo trovi in giacimenti, quando hai il giacimento hai il problema di portarlo al compratore. Nei tempi eroici Rockfeller monopolizzò vagoni ferroviari e oleodotti in USA . Immaginatevi invece gli olandesi che nel 1885 trovano il petrolio a Sumatra e non c’è ancora un mercato in Asia, nemmeno una raffineria nè un compratore.

Invece oggi, negli anni pioneristici delle rinnovabili, tutti vogliono avere più rinnovabili e meno co2 nel proprio kix energetico, non se ne producono abbastanza, nonostante le sovvenzioni. Ma tutti dicono che ormai gli economics di solare ed olico sono giusti, sono i migliori, LCOE più basso e allora perchè non crescono più velocemente. Una modesta proposta, costruiamo una o più linee HVDC verso i paese del Sahara e vediamo se le riempono di elettricità rinnovabile

le linee HDVC sono linee a corrente continua ottimali per il trasporto su lunghe distanze oltre, gli 800 km. Se ne potrebbero stendere tante sul fondo dei mari come all’inizio del secolo, in pieno di boom internet, si stendevano migliaia di km di fibra ottica su cui far passare il traffico internet. Sulle prime, tropa fibra, molti fallimenti e fibra rimasta spenta. Ma col tempo, ce l’avete costruita e noi l’abbiamo riempita, Google et al. hanno comprato dark fiber per anni e non hanno più smesso

Possiamo ripetere l’impresa con le linee elettriche, facendo partire un boom di investimenti in rinnovabili nei paesi più dotati di sole e vento ?

post-scarcity energy scenario

“With our current battery technology of about 100 Wh/kg and $100/kWh, 30 TWh of battery storage for load-shifting would cost US$3 trillion. The global energy market turns over this much every year”

“those batteries would weigh 300 million tonnes and fill 15 million twenty-foot cargo containers. A decade-long installation program at 2020 prices would cost about 1.5 percent of global GDP”

“Generating 100 percent of our energy from solar panels would consume less than 0.5 percent of Earth’s land. Uninhabited deserts take up 33 percent of the Earth’s land. Agriculture uses 11 percent. Roads and roofs in urban areas are 1 percent”

“As of 2020, solar energy was so cheap—even excluding curtailment—that you could synthesize hydrocarbons from captured CO2 for about as much as it costs to drill and refine. Prometheus Fuels,”

“What else might we do with stupendously cheap electricity? Thermodynamically intensive devices such as heat pumps and electrochemical devices such as smelting aluminium or magnesium will recycle everything. By reverse-osmosis, they will desalinate enough water to refill rivers parched by global warming. They will power air conditioning, data center cooling, antimatter synthesis, and zero-impact mining using hard rock tunnel boring machines far beneath the surface”

Also, why is solar in so much steepr trajectory than nuclear ? Product cycles in solar con last as little as 6 months and the rate of learning gets exponential. Nuclear, on the other hand, in 75 years of it history is having trouble to roll-out its 3rd generation reactors

form here, I am happy to read something so optimistic, I have a few things to check by myself https://claireberlinski.substack.com/p/long-live-the-sun

Net Zero EU

2 reports:

EU Commission https://ec.europa.eu/clima/sites/default/files/docs/pages/com_2018_733_analysis_in_support_en_0.pdf

and McKinsey https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Sustainability/Our%20Insights/How%20the%20European%20Union%20could%20achieve%20net%20zero%20emissions%20at%20net%20zero%20cost/Net-zero-Europe-vF.pdf?shouldIndex=false

and Adam Tooze on Social Europe https://www.socialeurope.eu/europes-decarbonisation-challenge-wir-schaffen-das

from Tooze:

between now and 2050, almost half the necessary investment will not meet standard investment criteria

need to mobilise €4.9 trillion in subsidies over 30 years. That is the amount of profit taxpayers would need to offer investors to get them interested in the energy transition—€365 for every man, woman and child in the EU27, every year for 30 years.

Total GDP of the EU27 in 2019 was shy of €14 trillion. Overall investment runs to about 22 per cent of GDP. McKinsey suggests that, to achieve net zero by 2050, the EU needs to invest every year about 5.8 per cent of GDP in the energy transition

a carbon price of €100 per ton 80 per cent of the necessary investment could be justified on commercial grounds.

EU’s regular budget is capped at 1 per cent of GDP

NextGenerationEU programme is a step in the right direction, but the €32 billion per annum it allocates to climate spending over the next seven years is far too small

Both modelling exercises predict that a carbon-neutral economy by 2050 will offer more jobs than the fossil-fuel-addicted status quo

Europe’s neighbours in north Africa are obvious clean-energy partners.

As McKinsey remarks en passant, reaching net-zero may require 18 million workers to be reskilled by 2050 but this is small beer by comparison with the 100 million it expects to need retraining already by 2030, on account of what it euphemistically refers to as ‘automation’.

Cheap inputs and tech epochs

from Carlota Perez “Technological Revolutions and Financial Capital”Screenshot 2020-06-17 at 11.23.56

4th epoch is cheap oil, 5th is cheap bits. 6th?

If it has to be Green then it has to be renewables energies, cheap renewables?

cheap and abundant, the two things are tied in learning curves. Ramez Naam is working the Pareto curves himself.

Solar Future in Insanely Cheap

But a planet on renewables would require a lot of solar and wind, for example this report on reaching 90% renewables in the US calls for doubling new installation every year in the 20s and trebling in the thirtiesScreenshot 2020-06-17 at 11.55.17

Report 2035 di Goldman Sachs and U. Berkeley.

technologists for the environment

Chris Sacca the legendary early investor of Uber, Twitter, Instagram, Stripe, Kickstarter claims he no lo ger investing in tech, he will invest only in envirnment, democracy and justice

Screenshot 2020-03-02 at 15.26.18

Ramez Namm is a former Microsoft whio gained fame as a science fiction writer. He is a staunch bliever that clean technology has legs to run on its own. He tours the world, lecturing fund managers on how they should invest for money not for morals

Screenshot 2020-03-02 at 15.30.57

brick inflation vs. green inflation

Screenshot 2020-02-05 at 14.24.57

Central banks have a problem, they can’t create inflation. ECB is the worst plagued by that.

So the Chief Economist Lane suggests to add real estate costs to CPI and pump up inflation accordingly, real estate markets are in a bull run Philip Lane, the ECB’s chief economist, has been even more specific. “We at the ECB would agree that there should be more weight on housing,” Read more at: https://www.bloombergquint.com/gadfly/why-your-housing-costs-matter-to-christine-lagarde-and-the-ecb Copyright © BloombergQuint

ECB Chief Lagarde does not mention inflation at all but only green. Decarbonization would be a great way to add some inflation to the system

A carbon tax is more or less an oil shock where the surplus stay in the domestic economic rather than flying to Saudi Arabia. Carbon tax would make great financial sense if the target is higher inflation (of course it will shock the economy, reallocate resources among economic sectors, offer various option on how to redistribute the increased taxes imagine a carbon dividend for example) So a green oil shock would serve many purposes and open up many dimensions of public policy

Green QE story https://ftalphaville.ft.com/2019/12/17/1576593138000/Green-QE-is-about-more-than-buying-climate-friendly-bonds/

 

Hydrogen post

Hydrogen elctrolysis can be economic efficient in a scenario of abundant renewables generation and carbon tax. Froma tweetstorm, full of useful charts https://threadreaderapp.com/thread/1176451011600441344.html

Blue Hydrogen is the cheapest option to decarbonise heavy industries. Green hydrogen more stringent on electricity cost and/or hydrolysis learning curve https://energypolicy.columbia.edu/research/report/low-carbon-heat-solutions-heavy-industry-sources-options-and-costs-today

Report IEA “The future of Hydrogen” https://www.snam.it/it/hydrogen_challenge/report_iea/

Report SNAM-McKinsey “THE HYDROGEN CHALLENGE: The potential of hydrogen in Italy” https://www.snam.it/it/hydrogen_challenge/studio_mckinsey/”

Eurelectric Decarbonisation Pathways https://www.eurelectric.org/decarbonisation-pathways/