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Benton D Struckcheon

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Member since: Fri Jan 18, 2013, 09:06 PM
Number of posts: 2,347

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China Laughed When It Saw How Cheap Solar Could Be

From Mike Sankowski, who's thesis on the Death Spiral of the Utilities from last December has, in half a year, become the conventional wisdom, another very bold prediction, this time re China:

Do you remember when Dr. Evil was going to hold the world ransom for $1,000,000?
This is what we are facing today in Solar Ė the Dr. Evil ultimatum. The cost to get Solar to coal parity is going to be laughably tiny.
The cost sounds like a lot of money to old people, or to people who havenít thought it through, or to people who do not know how large world GDP is today and how much we spend on energy already.
But the cost is tiny, and China laughed when they found out the cost.
It turns out Solar will be cheaper than coal for China very, very soon. SunTech estimates Solar will be cost competitive with coal power in China by 2016 and 2017 at the latest. This is in line with what people expect for Solar parity in the United States, given the cost of coal based power.
Still, letís assume SunTech exaggerating, and the time for Solar/coal parity is really 2018.
Both parts of this assumption are reasonable. Suntech is probably exaggerating the time for Solar to get cost competitive with coal. But it canít be more than a year or two, because electricity is so much more expensive in China than it is in the United States.
Coal power is expensive in China, simply because they need to import coal from Australia. China canít make the cost of coal lower with cheap wages.
Industrial users in China should pay about 80% more for electricity as similar users do here in the United States. So if unsubsidized Solar is about double the cost of coal here Ė which we know was true a lifetime year ago Ė then Solar must be close to coal parity in China today.
Many people are calling for thousands of coal plants to be built in China in the years from 2020 to 2030. However, if you think about it from the perspective of how China has acted in the past, this does not make much sense. China has shown again and again it is willing to make what appears to be insane levels of investment to achieve goals.
I contend given the current levels of pollution in China, paying a modest premium for energy is completely worth it to them. If Solar ends up being the same cost as coal in just a few years, China will shift over to Solar power in an astonishing way. They will just stop building coal plants, and build an incredible amount of Solar plants instead.
Look at what China did in Shanghai. The city was entirely transformed in 20 years. China put up the equivalent of Chicago in 20 years.
Why would their response to cheap, clean energy be different? It wonít.

Full article, well worth reading. There's a lot more there: http://www.businessinsider.com/china-laughed-when-it-saw-how-cheap-solar-could-be-2014-6
Posted by Benton D Struckcheon | Fri Jun 6, 2014, 09:39 PM (12 replies)

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.
Posted by Benton D Struckcheon | Wed Jun 4, 2014, 09:00 AM (1 replies)

Ukrainian Oligarchs 101

A kind of field guide: Ukraine's puppet masters - A typology of oligarchs

No sides taken in this one; just a straightforward description of who's who and who they're connected with. With obligatory bit about how Ukraine needs to get past oligarchy somehow. Which isn't even going to happen in my lifetime in the US, never mind Ukraine, so not too concerned with that part. The rest is informative though, and might come in handy as the news over there develops.
Posted by Benton D Struckcheon | Tue Jun 3, 2014, 08:11 PM (0 replies)
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