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Wed Jun 4, 2014, 09:00 AM

Death Spiral of the Utilities, Part 3.5: Technology, not regulation, will kill coal fired power

Link: http://www.abc.net.au/news/2014-06-04/technology-not-regulation-will-kill-coal-fired-power/5500356

The Obama administration's plan to reduce power plant emissions may be a bold effort to put climate change back on the political agenda, but it doesn't exactly have the big generators in the US quivering with fear.
Not yet anyway.
On BoA-Merrill Lynch figures, the rule changes to the Clean Air Act effectively amount to a 1 per cent per year reduction in carbon from 2013 levels...
However, another report put out by a different investment bank two weeks before the EPA came out with its new carbon rules may give the coal burners a far greater concern for their future.
British banking giant Barclays downgraded the entire electricity-generating sector of the US high-grade corporate bond market because of the challenges posed by renewables and the fact that the market isn't pricing in those challenges.
The thesis from the Barclays credit team is that it's not so much regulations that will choke off coal burning, but technological advances.
And it's serious money Barclays is talking about.
According to the Barclays data, electricity utilities represent about 7.5 per cent of the investment-grade corporate bond market in the US, or about $280 billion in outstanding debt.
What makes the report particularly interesting is that it's driven by hard-nosed financial considerations rather than the ideology surrounding renewable energy.
Barclays' credit team is advising its investors to stop viewing the utilities as a "sturdy and defensive subset of the investment grade universe".

Australia's generators are looking on anxiously.
About 10 per cent of their capacity has been mothballed due falling demand and increased uptake of renewable alternatives.
Once big institutional investors and credit rating agencies start writing down the value of assets, funding costs can start rising, which in turn puts pressure on pricing making alternatives look cheaper still.
Or, as Elias Hinckley puts it, "eroding demand and eroding profitability, and the best available option is to increase the price per unit of electricity, which only accelerates the economic competitiveness of the competing technology."
Thus starts the death spiral.

Personal opinion: I know there's a lot of retired folks on this board. If you are generating income via utility stocks or bonds, you need to look at this seriously. I am firmly of the opinion the whole solar revolution is being seriously underestimated. To me, adoption will look like Internet adoption; it will reach a point where you will suddenly see an en masse adoption of rooftop panels. At that point, the whole idea of the grid is going to have to be rethought.

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Reply Death Spiral of the Utilities, Part 3.5: Technology, not regulation, will kill coal fired power (Original post)
Benton D Struckcheon Jun 2014 OP
happyslug Jun 2014 #1

Response to Benton D Struckcheon (Original post)

Wed Jun 4, 2014, 11:16 AM

1. Yes, we are getting to the point where solar roof are cheap


The most recent technology have solar panels replacing tiles. The difference in price is now marginal between replacing a roof with tiles or solar panels that can also be used as roof tiles.

This is more important then most people think. Old slate tiles could last over 100 years; but since the 1960s fiberglass has become the title of choice for they tend to be half the cost of slate. The downside of fiberglass is a life expectancy of just 20 years (they often last longer but no where near skate).

Thus as more and more roofs have to be replaced, solar panels are looking more and more the more cost effective choice.

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