Tag Archives: renewable energy

EIA Annual Energy Outlook for 2017: Summary and Thoughts – 1/31/17

The EIA has released its annual energy outlook for 2017 so here is the short version with some additional analysis.

For starters, the EIA sees no growth for nuclear power industry. Nuclear generation is expected to decline slowly from now through 2040 as units are retired and relatively little new nuclear capacity comes online.

In contrast, EIA’s assessment of the renewable sector shows strong growth. From 612 billion kwh in 2016, renewable generation is expected to climb to 1,212 billion kwh by 2040.

The third major finding in EIA’s analysis has coal generation moving little from its initial 1,232 billion kwh, reaching 1,400 billion kwh in the late 2020s before falling back to 1,390 billion kwh in 2040. Overall, coal’s share of the electric generation market would decline from 30.3% to an estimated 27.8% of annual generation.

Keep in mind that the EIA projections do not reflect the possibility of future regulations such as the now assumed defunct Clean Power Plan. Should another administration or even a number of state governments implement emission reduction targets then coal share would drop relative to other power sources. The federal government has never set a comprehensive national energy policy anyways whereas many states have their own policies planned or in place making this a real possibility.

The EIA previously released data on the LCOE for new generation resources projected for 2020 which helps to explain some of its conclusions in the 2017 Outlook.

(click image to enlarge)

For context:

Fracking and horizontal-drilling capabilities have vastly lowered the cost of natural gas as reflected in the table above.

Prices for solar power modules have fallen 70% in the past six years.

Wind power costs have dropped 58% in the past five years.

Battery prices, which are seen as complementary to intermittent power sources like wind and solar, have also fallen approximately 14% annually since 2007.

Green Businesses – 1/25/17

The markets decide risk and return, not the federal government. That’s good news for businesses still interested in going green.

More than 530 companies and 100 investors signed the Low Carbon USA letter to support policies to curb climate change, invest in the low carbon economy, and continue U.S. participation in the Paris Agreement.

“All parts of society have a role to play in tackling climate change, but policy and business leadership is crucial,” said Lars Petersson, president of IKEA U.S. “The Paris Agreement was a bold step towards a cleaner, brighter future, and must be protected.”

The list of signatories to the Low Carbon USA letter has doubled since November, and includes DuPont USA, General Mills, HP Enterprises, Pacific Gas & Electric, Salesforce.com, Unilever, and more.

In recent decades, global economic development has increasingly been impacted by sustainability considerations. Be it legislation or consumer demand, companies are acting more and more with the environment in mind.

  • Investors controlling more than $5 trillion in assets have committed to dropping fossil fuel stocks from their portfolios, according to a new report on the trend.
  • Climate change criteria shape the investment of $1.42 trillion in assets under management, a more than fivefold increase since 2014.
  • Microsoft-founder Bill Gates and over two dozen other business leaders launched a $1-billion fund to finance energy innovations.
  • Google has pledged to operate on 100% renewable energy in 2017.
  • Microsoft announced a massive wind power purchase agreement in a deal to buy 237MW of capacity from projects in Wyoming and Kansas.
  • Smithfield Farms, the largest pork producer in the world, promised to reduce greenhouse gas emissions 25% by 2025.
  • Walmart has committed to removing a gigaton of emissions from its global supply chain by 2030.
  • Over 2.5 million Americans now work in the clean energy industry, making above average wages.

Prices are dropping, making green power sources like solar and wind competitive even without subsidiesSolar energy is already the lowest-cost option in some parts of the world and expected to offer a better global average return on investment than coal by 2025.

Risks associated with stranded assets and weak future performance are also steering investors away from fossil fuels, especially coal, and towards green investments.

Funding coal mining operations in the U.S. is only becoming harder as credit ratings for coal companies deteriorate. Credit downgrades have outnumbered upgrades among coal mining companies this year by about eight to one, Bloomberg data show.

Renewable Additions, Distributed Solar, Etc. From the EIA – 1/13/17

The EIA expects that 24 GW of generating capacity was added to the power grid during 2016 and that, for the third consecutive year, more than half of these additions come mostly from renewable energy, especially wind and solar.

Of the 2016 renewable additions, nearly 60% were scheduled to come online during the fourth quarter when additions are usually high because of timing qualifications for federal, state, or local tax incentives.

Monthly U.S. renewable electricity generation peaked in March with high hydroelectric and wind generation.

Most renewable generation comes from the Western U.S., which accounted for the majority of the hydroelectric (63%) and solar (77%) generation in 2016. Wind generation was more evenly spread across the country with 37% occurring in the Midwest, 35% in the South, 24% in the West, and the remaining 4% in the Northeast.


At the end of 2015, EIA also began publishing monthly estimates for distributed small-scale solar photovoltaic (PV) capacity and generation. As of October 2016, the United States had a total of 12.6 GW of small-scale solar PV installed. Of this capacity, 56% was in the residential sector, 36% in the commercial sector, and 8% in the industrial sector.

Because wind and solar facilities generate power only to the extent their respective resources are available, their capacity factors (ratio of its actual output over a period of time to its potential output if operated at full capacity continuously over the same period) are typically lower than those of other resources.


Other renewable electricity highlights in 2016:

The production tax credit (PTC) for wind and the solar investment tax credit (ITC) were extended at the end of 2015 with bipartisan support. The tax credits include an eventual decline in value for both technologies with the PTC for wind expiring in 2020 and the ITC for large-scale solar declining from 30% to a permanent 10% and expiring for residential projects in 2022.

New York, Oregon, and the District of Columbia extended and expanded their mandates for renewable electric generation to reach 50% of each state’s total electricity generation by 2030, 2032, and 2040, respectively.

Hydroelectric generation increased as drought conditions that affected hydroelectric generation on the West Coast in 2014 and 2015 diminished.

IEA: The Cost and Value of Variable Renewables – 1/3/17

Renewable power generation has spiked in recent years thanks to sharply falling costs of variable renewables like solar and wind. According to the IEA, between 2008 and 2015, the average cost of land-based wind decreased by 35% while the cost of solar PV dropped by almost 80%.

This growth has raised a new challenge for power-system operators and regulators: power systems, including both policies and infrastructure, are not always ready to handle increased variable supplies.

A new IEA publication, Next Generation Wind and Solar: From Cost to Value, describes this challenge and possible solutions.

The challenge depends largely on two things: the amount of variable renewables on the power sector and the flexibility of the power system as a whole.

Integrating the small amounts of variable renewables into generation poses few problems but, beyond these levels, power systems must be adapted and upgraded handle power generation with a variable nature.

The IEA sees the measurement of system value as particularly important issue. The traditional focus on the levelized cost of electricity (LCOE) – a measure of cost for a particular generating technology at the level of a power plant – in particular comes up as something to be updated to better convey the benefits of adding more wind and solar power generation to the grid. The IEA recommends that system value include factors such as reduced fuel costs, reduced carbon dioxide emissions and other pollutant costs, or higher costs of additional grid infrastructure.

China: Fossil Fuels and Renewables – 12/13/16

China uses more energy than any other country. The scale of Chinese consumption of electricity and oil dwarfs any other nation’s besides the U.S. giving trends in China far reaching implications for global energy markets.

Oil

In oil markets, the expected slowdown of Chinese economic growth has contributed to oil prices to half their 2014 levels. Even now, China’s demand for imported oil is seen as major factor in if and how prices recover.

So far, oil output from China has slid this year as the country’s producers shut fields too expensive to operate at current prices. According to Bloomberg News, even China’s largest oil companies have struggled under low prices: PetroChina Co., the country’s biggest oil and gas producer, barely broke even in the the first half of 2016 and Cnooc Ltd., its biggest offshore explorer, posted a first half loss as low crude prices forced it to write down assets. Overall, China’s crude production from January to October fell 6.7% from a year ago, according to data from the National Bureau of Statistics.

Electricity

China currently uses about 47% of the world supply of coal, but health and environmental concerns have lead the Chinese government to consider supporting alternative fuels.

Seeking to boost the share of natural gas in its energy mix to 10% by 2020, the Chinese government has pushed favorable policies for the fuel including an adjustment of pipeline fees next year to stimulate use. China National Petroleum Corp., the country’s biggest oil producer, also plans to separate its pipeline and natural gas sales units, as reported by the state-owned China Daily.

In clean energy, China has encouraged a boom in wind turbine production, though it is now struggling to upgrade power grids needed to carry it to users. As a result of construction outpacing infrastructure, roughly one-fifth of wind power currently goes undistributed and the country’s energy authority in November was forced to slashed wind and solar targets through 2020 in response.

In its newly issued five-year plan for power, China’s government targets total installed solar capacity of 110 GW by 2020, down from earlier guidance by officials of 150. On wind, the government now aims for 210 GW of installed capacity, down from 250.

Meanwhile, a slowing economy is reducing the amount of electricity that people will ultimately need. The growth in electricity demand has already dropped from double-digits in recent years to less than 3% in the first half of 2016.

Emissions Will Probably Still Fall – 12/6/16

The president-elect’s climate policy won’t be anything like the Obama administrations, but emissions could still drop to historic lows.

In a report published by the Breakthrough Institute, pointed out that real progress on reducing carbon in the atmosphere has been driven so far by specific domestic energy, industrial and innovation policies, “not emissions targets and timetables or international agreements intended to legally constrain national emissions.”

International and even national action on climate has rarely been the driver of emission declines. The Kyoto accords which committed advanced nations to reduce emissions between 1990 and 2010 did little to reduce dependency on. And even the Obama administration’s strictest bill on emissions, which was blocked in the Senate in 2009, proposed emissions limits that were higher than what emissions have turned out to be due to the recession and the power sector’s move from coal to natural gas.

Should promoting natural gas and energy security take precedence over bringing back coal jobs, the drop in carbon emissions could come sooner than expected. Burning natural gas produces functionally half the emissions of coal per unit energy produced.

If the Clean Power Plan is dropped and the U.S. drops its commitment to the Paris accord, the nation will still be on track to reduce emissions so long as the nation’s nuclear power plants stay online, tax incentives for wind and solar energy are left alone, and the shale energy revolution continues, according the report’s authors, Ms. Lovering and Mr. Nordhaus. Meeting those conditions, they write, “the U.S. might outperform the commitments that the Obama administration made in Paris.”

So the loss of the Clean Power Plan might not even make that much of a difference since the shift from coal to gas will likely happen regardless of what action the federal government takes. A study commissioned last December by the Environmental Defense Fund concluded that most states could comply “by relying exclusively on existing generation, investments already planned within each state and implementation of respective existing state policies.” In other words, state level initiatives were already on track to make the CPP irrelevant.

As far as support for sources of clean energy, production tax credits for renewables have already been extended by a Republican-controlled Congress until 2021 and the new administration is already indicating it favors nuclear energy.

Even the federal energy program known for its part in the Solyndra debacle is likely to survive. Given that it would take new legislation from Congress to kill the program, that the program’s loan portfolio generated about $1.65 billion in interest payments to date, and that the program is loans to clean-energy projects, as well as those including coal and natural gas, it will probably survive. Still, every new loan must be approved by the Energy Secretary so whoever takes over the Energy Department could effectively suffocate the program by not signing off on new applications.

Commercial self-interest will also keep interest in clean energy high as the costs of clean energy tumble. Solar power is closing in on gas and coal as an attractively cheap source of power, according to Bloomberg New Energy Finance.

And solar costs are expected to fall about 60% over the next eight years.

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The falling cost of solar power and the 80% drop in the cost of batteries for electric vehicles and home energy storage since 2008 are expected to curb demand for coal and oil in the coming years. Opportunities those cost declines offer will be tapped so long market forces are allowed to run their course.

On the matter of energy independence, according to the 2016 edition of the International Energy Agency’s World Energy Outlook, the United States could become energy independent as soon as 2040 on current policies thanks to rising shale oil and gas production, as well as increasing fuel efficiency. The Trump administration only has to maintain existing CAFE standards and U.S. dependence on oil from the Middle East would drop like a rock.

Possible Evolution of the Oil Industry – 12/2/16

Companies in the oil industry are weighing their options as pessimism about traditional business models grows.

In the short-term, the collapse of crude oil prices has led to massive cuts in exploration budgets needed to find new fields. Some believe prices could rise one more time because investment in finding new supplies is so weak, but many firms like Goldman Sachs and Wood Mackenzie expect prices to stay between $50 and $60 a barrel — a level where few fields are profitable — in the short-term.

The U.S. Energy Information Administration (EIA) projects that a recovery in non-OPEC production, primarily from U.S. shale drillers in mid- to late-2017, will offset OPEC actions and limit price increases throughout the year.

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At low prices producers invest in the lowest cost per barrel sources like the Middle East, America’s Permian basin, Brazil’s pre-salt fields, and not much else. But even a boom for those areas could be short-lived if demand continues to decline in the long-term due to stricter fuel efficiency standards or widespread adoption of electric cars.

Concerns about reaching peak oil demand in the near future are rising as well. The IEA has projected that European consumption will fall from 11.7 million b/d to 10.8 million b/d between 2015 and 2020. Most, if not all, major oil players are prepping for the shift in demand. Shell finance chief Simon Henry has said the company sees oil demand peaking in 5 to 15 years. In China, China National Petroleum Corp. issued a report over the summer predicting oil consumption will begin to fall by 2030, if not sooner.

Others, though doubting peak demand will come quickly, are still preparing for it.

European oil companies are already shifting investment to sectors like petrochemicals or clean power that have better growth prospects. French oil supermajor Total SA has said it wants 20% of its portfolio to consist of low-carbon businesses before 2040.

Saudi Arabia, the world’s largest exporter of oil, is diversifying away from oil by investing in petrochemical plants and publicly listing state oil company Aramco, to raise money for other industries.

Meanwhile, Exxon and others are pouring money into natural gas as Chinese energy giants are aggressively embracing natural gas as a fuel for power generation and transportation.

For the companies supporting the oil industry there will be plenty of work decommissioning aging and unprofitable rigs at first. Next would come projects like Statoil, the Norwegian state oil company, and its floating wind farm where they could leverage experience with offshore oil rigs. Statoil also operates two carbon capture and storage (CCS) projects, technology which many fossil fuel companies support as a solution to emissions.

Oil and Tech Companies Invest in Low-Carbon Technologies – 11/28/16

As more governments and customers begin to worry about climate change, companies are stepping up investment in low-carbon technologies. Around 60% of Fortune 100 companies have renewable-electricity or climate change policies, according to Bloomberg New Energy Finance (BNEF).

Companies tend to invest in renewable energy in one of three ways: long-term agreements with wind and solar projects; buying stakes in green power projects; or buying renewable-energy credits. Long-term agreements have become the preferred way to invest in clean energy. By locking in electricity prices for up to 15 years, the deals let companies hedge against natural gas and coal price volatility by reserving renewable power.

Since 2008, U.S. companies have signed agreements to purchase 10GW of solar and wind power. BNEF expects that pace to increase over the next decade, with an additional 22GW in long-term agreements. For these sorts of deals, the largest buyers tend to be technology companies like Amazon.

Oil companies are also investing in low-carbon technologies, though in a very different way.

As part of the Oil and Gas Climate Initiative, ten of the world’s biggest oil companies, including Saudi Arabian Oil Co., Royal Dutch Shell PLC and BP PLC, plan to invest an average of $100 million annually over the next 10 years as part of an initiative to boost low-carbon technologies.

The announcement came on the same day that a climate treaty negotiated in Paris to cap emissions and curb global warming comes into force.

The investments will focus on carbon capture and storage technology and efforts to reduce methane emissions from the oil-and-gas industry. The consortium said the joint fund will come in addition to individual investments in alternative energy and lower-emission technology.

French oil super major, Total SA, owns one of the largest solar companies in the world and earlier this year bought French battery maker Saft Group SA. Shell Oil has created a “new energies” division to invest in renewables and low carbon power, and Saudi Arabia is developing solar power within the Kingdom.

The Initiative was created in 2014 with UN backing to find ways the industry can support efforts to tackle climate change without abandoning their oil reserves.

Solar’s Future: Probably Brighter Than You’d Think – 11/18/16

In his only major energy speech, the president-elect said he would rescind environmental regulations and revive U.S. coal, but the impact of his presidency on renewable energy may be limited. Solar’s position in particular is better than one might expect.

Rooftop solar in the U.S. is largely safe for two reasons: net metering policies are decided at the state-level and the federal tax credit to offset the cost of installations, first signed into law under George W. Bush in 2005, were extended by a Republican Congress last year. Nowadays, some of the most powerful GOP voices in Congress come from states like Texas that have benefited immensely from the rise of solar power. It would not be surprising to see more red states with economic incentive stand with blue states in support of solar.

by state

Texas’s economy has already benefited greatly from wind power development in the state and solar appears poised to make a similar performance in the state. According to Bloomberg New Energy Finance, Texas is one of the few states for which solar power is competitive with both coal and natural gas.

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With a combination of cheap land leases and abundant sunlight, the state has the potential to match even California for raw quantity of solar power capacity.

With a major powerhouse behind them, solar incentives should at least have enough support to keep current programs in place for their current duration. For the solar investment tax credit that duration extends slightly past the 2020 presidential election.

Solar panel prices have also dropped, on average, more than 15% a year since 2013. Even if all of the incentives and subsidies that support solar were suddenly removed, the industry would eventually recover as prices continue to fall. Economies of scale and other factors that have driven the price of solar panels down for decades, but only recently has solar power begun competing with fossil fuels, in major markets, purely on price.

solar power

All in all, solar’s position is more stable than most would think with a GOP Congress and White House thanks to the fact that, for the first time in modern history, it has both environmentalist and capitalist support in both red and blue states.

EIA Reports on U.S. Energy Consumption History – 11/16/16

Energy consumption in the United States has changed significantly over the past hundred years, according to data collected by the EIA.

In 1908, the country consumed just 15 quadrillion British thermal units (Btu), of which 75% was coal, compared to 1997 when it totaled 94 quadrillion Btu with coal’s share of total consumption reaching only 25% and with significantly higher shares for natural gas and nuclear power.

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The share of nonhydro renewable consumption is actually lower today (10%) than it was in 1908 (15%), largely because wood (technically a renewable biomass fuel) was displaced by coal. Today, solar and wind generation are increasing and make up most of the total nonhydro renewables.

As the primary transportation fuel, petroleum has remained a major component of energy consumption in the U.S. with no other fuel eating into its share as was the case with coal. The effects of affordable self-driving and/or electric vehicles remains to be seen, but will almost certainly become noticeable in the next decade.

The EIA data below shows in better detail the trending of U.S. energy consumption away from coal use and towards the use of natural gas over the last 15 years. The shift accelerated in the last few years as fracking opened up vast natural gas resources throughout the U.S. and environmental regulations favored gas for its less carbon intensive burn.

US total production

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