Nicely done. One of your best. I guess we have to wait to see who the other guest is.
A couple related items have come across my radar over the last few days. One was the SHIFTKEY podcast with Jesse Jenkins on the relative benefits of rooftop solar, https://heatmap.news/podcast/shift-key-episode-five-rooftop-solar , "Does Rooftop Solar Actually Help the Climate?" The answer basically is that it depends and he argues that in most cases it just displaces other less expensive solar, i.e. utility solar. I'm not sure I agree but you hardly ever want to challenge Jesse on such an issue. I put solar on my house 4 years ago and in the meantime my utility has had trouble adding solar because of supply issues. In my mind, a clean kWh today beats a clean kWh tomorrow. I think he concedes my point in the broadcast but in the end the listener is left questioning the value of rooftop solar which seems counterintuitive.
Aren't most of these prices an illusion, even in the middle term? I think it's good to encourage people to see that the first stage of the energy transition is 'affordable' in our daily context, but the reality is, emissions are an existential problem that has to be solved, or at least ameliorated, even for the super wealthy with their ideas of digging a bunker in case of societal breakdown. If your house is on fire with all your money in it, counting the money while things are burning (including money) is a maladaptive response.
Bunkers are a good comparison on price, because obviously for some of us (ahem, Mark Zuckerberg), the price is right for a bunker. Interestingly, the price is still wrong for Zuckerberg to turn Facebook into a giant climate education and social contract generating machine.
Inferred by that logic, with super-wealth, there is no price worth the constraints of a functioning democracy. Life in a bunker is better than democracy.
Sidenote: if you really were in a bunker, any of the prices that seem familiar to us today are already out the window (or hatch, I guess). Do you have a dentist in your bunker?
There is also a middle term crisis that dwarfs prices as we know them: what happens if 100 million climate migrants try to enter the US over a 10 - 20 year period? That number could be on the low side judging by this paper:
My guess is that if anything pushes us to spraying sulfate aerosols in the stratosphere, it will be the existential necessity of trying to keep a billion people in their own regions, after having bungled our concept of pricing in every decade prior.
Love it! However, I'd love to see some more work on terms. One minute we're talking about a 90% clean grid - and the next minute the study seems to include biofuels for jet fuel? I'd love to see a study into estimates of cost for just a clean grid and industry and ground transport system - without jet fuel. Basically anyone who has been following this story for a while knows jet fuel is tough.
But I'd love to see cost estimates for the recent baby-steps into electric mining and smelting and green steel (with hydrogen as reductant) extrapolated out into at least all ground based electricity, transport, and industry supplied. Because after reading heaps of Blakers et al, I'm sure it would be cheaper than fossil fuels and all their externalised costs. Professor Andrew Blakers won the Queen Elizabeth Prize for Engineering. Here's his model for Australia, with Overbuild, geographic spread, and off-river PHES calculated. It was cheaper than coal in 2017 prices! Imagine today? http://www.sciencedirect.com/science/article/pii/S0360544217309568
According to CSIRO Wind & Solar - even firmed - are the cheapest form of power ever.
For in a post-oil economy - who knows how many of us will be flying? Will slower airships come back for certain economic cases - and hydrogen jets for others (with of course less passengers and therefore more cost per seat)? Basically - I wonder at how entitled we've got to fly everywhere all the time. Now that we have the internet and a culture of using video-conferencing after covid lock-downs, surely we can reduce flying? However, I remain optimistic that Tony Seba's "Super-Power" (excessive wind and solar from Overbuilding to reduce storage) could end up so cheap that maybe those hydrogen jets will not be as expensive as we fear?
I love the article. And I'm very optimistic that the cost of going the last 5%-10% to get to Net Zero will be a good bit lower by the time we get there. Batteries, for example.
Can you elaborate on this from the article?
The Russian invasion of Ukraine is intimately tied to fossil fuels.
Thank you for summarising lots of information. Several questions crossed my mind but fortunately I let them fade away! Maybe let readers know that ERCOT is this: Electric Reliability Council of Texas. Not know for its stellar performances in the recent past. It was interesting also to see that rooftop solar was relatively expensive unless it was part of a grid. Two final words: uncertainty and solid grid security. Thx again. zf
Great article, thank you. I think we also have now enough studies that show that the cost of inaction far outweighs the cost of action, yet we are not moving forward substantially with the transition. This is because it is not about the cost of the transition, but who pays it, or who is set to lose from it. Big Oil is set to lose its market if we move forward, and it will do everything it can to delay the transition.
I think also that the energy transition should really also develop the concept of energy sovereignty. That is how the development of local renewable energy, better energy efficiency, insulation, storage and alternative energy resources can reduce a country's vulnerability to foreign volatile fossil fuel prices. This is the kind of economic argument that can make the energy transition move forward I believe.
This is a great piece inasmuch as it drives home the point that eliminating the final 10 % of our carbon addiction won't look like the first 10% -- it will be more costly and far more difficult to achieve.
I have a problem, however, with this sentence: "A significant amount of the discourse about RE focuses on the cost of achieving net zero by 2050, which requires completely eliminating fossil fuels." Well, that is certainly true of achieving zero emissions by 2050, but "zero" and "net zero" are not the same thing, and of course I know that you know the difference. It's just that the terms are used rather interchangeably throughout.
To my mind, it has always seemed far more pragmatic to shoot for, say, an 85% reduction in hydrocarbons with the rest being sequestered, than for total elimination, at least in the time frame we're talking about. I mean, we have yet to even reach peak carbon! Completely eliminating fossil fuels by 2050 seems a rather fantastic goal.
For me this article is a gold mine, thank you very much, but can you explain how Putin's war on Ukraine is connected with to oil?
In New Zealand we have mostly hydroelectricity generation, with a little geothermal. Fossil fuel is burned mainly in dry years when the rain forgets to fall - the total hydro lake storage is not enough to avoid it (stations are effectively "run-of-the-river").
The former government proposed a pumped-hydro station at Lake Onslow but with a change of government the little twerp responsible for energy cancelled the preparatory investigation. Naturally he has no answer for the forthcoming power outages.
I was in Oxford when another ideological nitwit became prime minister - Liz Truss - but she lasted less time than a fresh lettuce, the money market saw to that. When the full cost of burning fossil fuel hits the wealthy their money will talk again.
Fantastic perspective. Thank you for sharing this! Those 57% and 90% renewable energy adoption numbers can be pushed higher as the cost of energy storage falls as well.
LCOE is an incomplete, inadequate metric, even with grids that are dominated by dispatchable power. Over the last 20 years, we've been able to economically shut down over 300 coal-fired powerplants, reducing the electrical sector's CO2 emissions by over 30%, because we've built out a blend of natural gas units along with wind and solar. Unless and until electricity storage becomes very inexpensive, the cost of adding gigawatts of intermittent renewable generating capacity includes the cost of adding additional infrastructure that offsets that intermittency.
A better way to examine the economics of transitioning to low-carbon electricity is to sum up the capital costs, operating and maintenance costs, plus fuel costs, for the overall, evolving blend within a geographical region. This kind of assessment tells us the true cost of the transition and, at the same time, makes it clear that we do not yet have all the technologies ready -- at affordable prices -- that we will need.
The Nobel-Prize-winning scientist, Richard Smalley (1943-2005), used to give talks where discussed the top-ten "miracles" that we need in order to transition to a sustainable civilization. We've done a great job of reducing the capital cost of solar and wind but we do not yet have low-cost energy storage.
The IEA currently projects that the world will hit peak anthropogenic CO2 emissions during this decade. This is both a surprising and wonderful thing, if we can make it come true. However, to economically achieve the balance between anthropogenic emissions and removals by sinks, called for in section 4 of the 2015 Paris Agreement, we need to keep investing additional low-carbon energy technologies including bioenergy, hydrogen and fuel cells, and get them to scale.
Amazing. But there is another way to accelerate the transition to renewable energy. This method lies on the financial level. It is necessary to direct financial market capital into green energy - so that investing in green energy is very profitable without the participation of subsidies and sponsors. I am currently implementing a start-up to create a bridge for the flow of financial capital into green energy in a market-based way. If successful, market capital will replace subsidies from national budgets and will exceed the current volume of investment in renewable energy tenfold. The industry will become attractive to both investors and clean energy producers. The greatest development is achieved in the field of activity that is conducive to the involvement of large resources in it. This is not the case with green energy: and I found an original market solution to make investments in green energy profitable even in the current conditions, when without subsidies the production of clean energy is not profitable..
I came across a recent substack post by Energy Bad Boys, EBB, claiming that wind and solar make for expensive electricity. They used a very limited example of California and their home state of Minnesota to make that claim. I countered with Iowa and South Dakota that have very high percentages of wind and cheaper electricity, which they dismissed.
This motivated a more complete analysis using data from EIA, https://www.eia.gov/electricity/data/browser/ , for 2022 for all 48 contiguous states comparing average retail electricity prices to the percentage of renewable electricity generation - wind plus all solar, i.e., utility solar plus small solar. The data for 2022 extends the percentage of renewables out to greater than 60%, https://photos.app.goo.gl/wXUpvgwyiE8Mc3e .
Bottom line: There is no correlation between state electricity prices and percentage of renewables. If anything there is a slight trend towards lower prices with increased penetration.
I think one of the most interesting questions is how cheap do clean, firm sources (e.g. geothermal, nuclear etc.) and significantly longer-duration storage have to get to materially reduce 1) the cost of decarbonizing the last ~10% and 2) the massive overbuild and accompanying resource use of excessive reliance on solar/wind plus short-duration storage.
I’ve spoken with people in energy policy agencies and utility regulators, and this is on their minds as well. Incentivizing earlier deployment of these technologies, necessary to get them ready and to ride down the learning curves, is challenging but important.
Nicely done. One of your best. I guess we have to wait to see who the other guest is.
A couple related items have come across my radar over the last few days. One was the SHIFTKEY podcast with Jesse Jenkins on the relative benefits of rooftop solar, https://heatmap.news/podcast/shift-key-episode-five-rooftop-solar , "Does Rooftop Solar Actually Help the Climate?" The answer basically is that it depends and he argues that in most cases it just displaces other less expensive solar, i.e. utility solar. I'm not sure I agree but you hardly ever want to challenge Jesse on such an issue. I put solar on my house 4 years ago and in the meantime my utility has had trouble adding solar because of supply issues. In my mind, a clean kWh today beats a clean kWh tomorrow. I think he concedes my point in the broadcast but in the end the listener is left questioning the value of rooftop solar which seems counterintuitive.
The other thing that I saw that I want to give a shout out for is the analysis at Carbon Brief that talks about the effect of electing Trump on carbon emissions, https://www.carbonbrief.org/analysis-trump-election-win-could-add-4bn-tonnes-to-us-emissions-by-2030/ . We need to be reminding people, especially younger voters, that we cannot afford to go backwards on climate change.
Aren't most of these prices an illusion, even in the middle term? I think it's good to encourage people to see that the first stage of the energy transition is 'affordable' in our daily context, but the reality is, emissions are an existential problem that has to be solved, or at least ameliorated, even for the super wealthy with their ideas of digging a bunker in case of societal breakdown. If your house is on fire with all your money in it, counting the money while things are burning (including money) is a maladaptive response.
Bunkers are a good comparison on price, because obviously for some of us (ahem, Mark Zuckerberg), the price is right for a bunker. Interestingly, the price is still wrong for Zuckerberg to turn Facebook into a giant climate education and social contract generating machine.
Inferred by that logic, with super-wealth, there is no price worth the constraints of a functioning democracy. Life in a bunker is better than democracy.
Sidenote: if you really were in a bunker, any of the prices that seem familiar to us today are already out the window (or hatch, I guess). Do you have a dentist in your bunker?
There is also a middle term crisis that dwarfs prices as we know them: what happens if 100 million climate migrants try to enter the US over a 10 - 20 year period? That number could be on the low side judging by this paper:
https://www.pnas.org/doi/pdf/10.1073/pnas.1910114117
Meanwhile, the US will be experiencing internal migration.
https://us.macmillan.com/books/9780374171735/onthemove
My guess is that if anything pushes us to spraying sulfate aerosols in the stratosphere, it will be the existential necessity of trying to keep a billion people in their own regions, after having bungled our concept of pricing in every decade prior.
The 3 wars in the Mid East cost the U.S. about $6 trillion. And the military cost of protecting the oil and gas industry costs $billions every year.
Well done!
Other factors that will make net zero cheaper are:
Nuclear/Geothermal
Continuing storage technological development (batteries, hydrogen electrolysis
Dynamic pricing of power
Carbon Sequestration will permit not driving gross emissions to zero.
Love it! However, I'd love to see some more work on terms. One minute we're talking about a 90% clean grid - and the next minute the study seems to include biofuels for jet fuel? I'd love to see a study into estimates of cost for just a clean grid and industry and ground transport system - without jet fuel. Basically anyone who has been following this story for a while knows jet fuel is tough.
But I'd love to see cost estimates for the recent baby-steps into electric mining and smelting and green steel (with hydrogen as reductant) extrapolated out into at least all ground based electricity, transport, and industry supplied. Because after reading heaps of Blakers et al, I'm sure it would be cheaper than fossil fuels and all their externalised costs. Professor Andrew Blakers won the Queen Elizabeth Prize for Engineering. Here's his model for Australia, with Overbuild, geographic spread, and off-river PHES calculated. It was cheaper than coal in 2017 prices! Imagine today? http://www.sciencedirect.com/science/article/pii/S0360544217309568
According to CSIRO Wind & Solar - even firmed - are the cheapest form of power ever.
My pick for storage:- sodium batteries for 2 hours; off-river PHES (Pumped Hydro) for 2 days. Overbuild W&S capacity at least twice to reduce storage, which is where the real costs are. http://publications.csiro.au/publications/publication/PIcsiro:EP2022-2576
For in a post-oil economy - who knows how many of us will be flying? Will slower airships come back for certain economic cases - and hydrogen jets for others (with of course less passengers and therefore more cost per seat)? Basically - I wonder at how entitled we've got to fly everywhere all the time. Now that we have the internet and a culture of using video-conferencing after covid lock-downs, surely we can reduce flying? However, I remain optimistic that Tony Seba's "Super-Power" (excessive wind and solar from Overbuilding to reduce storage) could end up so cheap that maybe those hydrogen jets will not be as expensive as we fear?
I love the article. And I'm very optimistic that the cost of going the last 5%-10% to get to Net Zero will be a good bit lower by the time we get there. Batteries, for example.
Can you elaborate on this from the article?
The Russian invasion of Ukraine is intimately tied to fossil fuels.
Thank you for summarising lots of information. Several questions crossed my mind but fortunately I let them fade away! Maybe let readers know that ERCOT is this: Electric Reliability Council of Texas. Not know for its stellar performances in the recent past. It was interesting also to see that rooftop solar was relatively expensive unless it was part of a grid. Two final words: uncertainty and solid grid security. Thx again. zf
Great article, thank you. I think we also have now enough studies that show that the cost of inaction far outweighs the cost of action, yet we are not moving forward substantially with the transition. This is because it is not about the cost of the transition, but who pays it, or who is set to lose from it. Big Oil is set to lose its market if we move forward, and it will do everything it can to delay the transition.
I think also that the energy transition should really also develop the concept of energy sovereignty. That is how the development of local renewable energy, better energy efficiency, insulation, storage and alternative energy resources can reduce a country's vulnerability to foreign volatile fossil fuel prices. This is the kind of economic argument that can make the energy transition move forward I believe.
This is a great piece inasmuch as it drives home the point that eliminating the final 10 % of our carbon addiction won't look like the first 10% -- it will be more costly and far more difficult to achieve.
I have a problem, however, with this sentence: "A significant amount of the discourse about RE focuses on the cost of achieving net zero by 2050, which requires completely eliminating fossil fuels." Well, that is certainly true of achieving zero emissions by 2050, but "zero" and "net zero" are not the same thing, and of course I know that you know the difference. It's just that the terms are used rather interchangeably throughout.
To my mind, it has always seemed far more pragmatic to shoot for, say, an 85% reduction in hydrocarbons with the rest being sequestered, than for total elimination, at least in the time frame we're talking about. I mean, we have yet to even reach peak carbon! Completely eliminating fossil fuels by 2050 seems a rather fantastic goal.
For me this article is a gold mine, thank you very much, but can you explain how Putin's war on Ukraine is connected with to oil?
In New Zealand we have mostly hydroelectricity generation, with a little geothermal. Fossil fuel is burned mainly in dry years when the rain forgets to fall - the total hydro lake storage is not enough to avoid it (stations are effectively "run-of-the-river").
The former government proposed a pumped-hydro station at Lake Onslow but with a change of government the little twerp responsible for energy cancelled the preparatory investigation. Naturally he has no answer for the forthcoming power outages.
I was in Oxford when another ideological nitwit became prime minister - Liz Truss - but she lasted less time than a fresh lettuce, the money market saw to that. When the full cost of burning fossil fuel hits the wealthy their money will talk again.
Fantastic perspective. Thank you for sharing this! Those 57% and 90% renewable energy adoption numbers can be pushed higher as the cost of energy storage falls as well.
LCOE is an incomplete, inadequate metric, even with grids that are dominated by dispatchable power. Over the last 20 years, we've been able to economically shut down over 300 coal-fired powerplants, reducing the electrical sector's CO2 emissions by over 30%, because we've built out a blend of natural gas units along with wind and solar. Unless and until electricity storage becomes very inexpensive, the cost of adding gigawatts of intermittent renewable generating capacity includes the cost of adding additional infrastructure that offsets that intermittency.
A better way to examine the economics of transitioning to low-carbon electricity is to sum up the capital costs, operating and maintenance costs, plus fuel costs, for the overall, evolving blend within a geographical region. This kind of assessment tells us the true cost of the transition and, at the same time, makes it clear that we do not yet have all the technologies ready -- at affordable prices -- that we will need.
The Nobel-Prize-winning scientist, Richard Smalley (1943-2005), used to give talks where discussed the top-ten "miracles" that we need in order to transition to a sustainable civilization. We've done a great job of reducing the capital cost of solar and wind but we do not yet have low-cost energy storage.
The IEA currently projects that the world will hit peak anthropogenic CO2 emissions during this decade. This is both a surprising and wonderful thing, if we can make it come true. However, to economically achieve the balance between anthropogenic emissions and removals by sinks, called for in section 4 of the 2015 Paris Agreement, we need to keep investing additional low-carbon energy technologies including bioenergy, hydrogen and fuel cells, and get them to scale.
Amazing. But there is another way to accelerate the transition to renewable energy. This method lies on the financial level. It is necessary to direct financial market capital into green energy - so that investing in green energy is very profitable without the participation of subsidies and sponsors. I am currently implementing a start-up to create a bridge for the flow of financial capital into green energy in a market-based way. If successful, market capital will replace subsidies from national budgets and will exceed the current volume of investment in renewable energy tenfold. The industry will become attractive to both investors and clean energy producers. The greatest development is achieved in the field of activity that is conducive to the involvement of large resources in it. This is not the case with green energy: and I found an original market solution to make investments in green energy profitable even in the current conditions, when without subsidies the production of clean energy is not profitable..
I came across a recent substack post by Energy Bad Boys, EBB, claiming that wind and solar make for expensive electricity. They used a very limited example of California and their home state of Minnesota to make that claim. I countered with Iowa and South Dakota that have very high percentages of wind and cheaper electricity, which they dismissed.
This motivated a more complete analysis using data from EIA, https://www.eia.gov/electricity/data/browser/ , for 2022 for all 48 contiguous states comparing average retail electricity prices to the percentage of renewable electricity generation - wind plus all solar, i.e., utility solar plus small solar. The data for 2022 extends the percentage of renewables out to greater than 60%, https://photos.app.goo.gl/wXUpvgwyiE8Mc3e .
Bottom line: There is no correlation between state electricity prices and percentage of renewables. If anything there is a slight trend towards lower prices with increased penetration.
I think one of the most interesting questions is how cheap do clean, firm sources (e.g. geothermal, nuclear etc.) and significantly longer-duration storage have to get to materially reduce 1) the cost of decarbonizing the last ~10% and 2) the massive overbuild and accompanying resource use of excessive reliance on solar/wind plus short-duration storage.
I’ve spoken with people in energy policy agencies and utility regulators, and this is on their minds as well. Incentivizing earlier deployment of these technologies, necessary to get them ready and to ride down the learning curves, is challenging but important.
Shouldn’t the cost comparison be to the marginal cost of NG or coal, not the
LCOE?
If the FF resource is still needed for capacity value (at lower utilization) the build costs and fixed OPEX are not avoidable just by building VRE.
To actually avoid the need for those resources a much higher level of VRE overproduction + storage is needed…