This Is How Fossil Fuels Die

By: John Rubino | Wed, Nov 11, 2015
Print Email

Some interesting stories from, of all places, Texas, offer the first clear glimpse of the coming energy revolution. The short version: Combine wind at night, solar during the day, and next-generation batteries, and you get an energy economy that doesn't need oil, coal, or gas.

Wind power is so cheap at night in Texas, some companies give it away

(Grist) - In Texas, you could have a full-out appliance party at your house -- with the dishwasher whirring, oven broiling, and laundry spinning -- and as long as it's after 9 p.m. and you're on the right electricity plan, the extra energy use won't cost you a thing.

More than 50 Texas utility companies are offering plans that give away free electricity at night, thanks to bountiful wind power, among other factors. The New York Times explains:

... Texas has more wind power than any other state, accounting for roughly 10 percent of the state's generation. Alone among the 48 contiguous states, Texas runs its own electricity grid that barely connects to the rest of the country, so the abundance of nightly wind power generated here must be consumed here.

Wind blows most strongly at night and the power it produces is inexpensive because of its abundance and federal tax breaks. A shift of power use away from the peak daytime periods means lower wholesale prices, and the possibility of avoiding the costly option of building more power plants.

Companies in other states have dabbled with incentivizing electricity use during off-peak hours, but the Lone Star State is unmatched in this huge energy experiment. And it makes sense: After all, there was that one September night in Texas when the price of electricity dropped below zero -- meaning that the state's power producers actually paid to have energy taken off their hands.

You might not have expected the historically oil-obsessed Texas to be a pioneer in alternative energy plans. But environmental concerns aren't the driving factor behind this free nighttime electricity. Instead, it was spurred on by tough competition in a deregulated energy market. According to the New York Times, utility company executives readily admitted that these plans are "overwhelmingly a marketing tool."


 

World's Cheapest Solar Power Lands In Austin, Texas -- Under 4¢/kWh! (Sort Of)

(Cleantechnica) - Texans likes to be #1. Well, a lot of people like to be #1, but Texans are particularly known for this. For the time being, the Lone Star State can now lay claim to being #1 again with the cheapest solar power on the planet.

Not long ago, Dubai grabbed the title with a bid for a large solar project coming in under 6¢/kWh. As that article explains, that 5.98¢/kWh bid (now actually down to 5.84¢/kWh) shattered the previous record for the world's cheapest solar power (or the world's lowest solar power bid, since there is a slight difference). That article also noted that the second-lowest bid would have taken the record if the lowest hadn't existed, showing that it wasn't just a crazy anomaly from one developer. The Dubai solar bids were very exciting, and the talk of the industry for months, but records don't last very long in the world of solar these days.

Austin Energy, the city of Austin's utility, recently put out data on solar project bids for the utility's 600 MW procurement plan. To show how competitive this landscape is, Khalil Shalabi, Austin Energy's vice president of resource planning, noted that 7,976 MW worth of solar projects were bid in April in competition for this 600 MW.

But that only partly shows how competitive things have gotten. 1,295 MW of those solar project bids came in below 4¢/kWh! (Talk about shattering records.)

There is a difference between these bids and the Dubai one, of course -- there are no subsidies for solar in Dubai, while these Texas solar projects can take advantage of the US federal tax credit for solar. But even accounting for the 30% tax credit, these projects would come in below 6¢/kWh (below 5.71¢/kWh, in fact). In other words, these do indeed represent the lowest solar power bids we've seen worldwide.

Update: For context, note that no other source of electricity production other than wind has a levelized cost of electricity (LCOE) below 5.71¢/kWh, or even below 6¢/kWh. Furthermore, solar power was projected to hit a low of 6¢/kWh in 2017.


 

The costs of solar and onshore wind will continue their swift descents

(British Petroleum) - The cost of onshore wind power will fall by 14 per cent with every doubling of cumulative installed capacity, while the cost of solar will drop by 24 per cent with every doubling, according to BP predictions. This is thanks to the litany of small components that make up renewable energy systems declining in cost much faster than larger, more capital-intensive modules such as nuclear reactors.

Between 2030 and 2040 BP predicts solar will break through the 30 per cent efficiency rate. Advances in offshore wind farms will include design technologies to support taller towers, the development of new materials for larger blades, and better sensors to allow for aerodynamic control throughout the blade length.

Assuming that all of the the above is correct -- especially about the continued decline in the cost of solar and wind -- the question becomes not if they'll displace fossil fuels, but when. And that's a tougher one because a system as extensive and entrenched as today's energy market doesn't change overnight. Tesla, the leading electric car maker, will deliver 55,000 cars next year in a world where tens of millions of new vehicles are produced annually. Solar and wind, despite pockets of dominance, account for less than 5% of global energy production. So this revolution is in its infancy. The BP study referenced above expects the transition to take many decades.

But we've seen some other revolutions lately, and they imply that when a technology's day arrives, its path to dominance can be shorter than most expect. Digital cameras, for instance, were a novelty 20 years ago and now own the photography market. Smart phones were toys of the rich in the mid-2000s and are now ubiquitous.

Let the cost of solar and wind have another ten years like the last ten and no one with a middle class income will even consider gasoline-powered vehicle or a house lacking solar panels on the roof and batteries in the basement.

Obligatory gloom-and-doom note: The rise of alt-energy is exciting on many levels, from pollution to decentralization to geopolitics. But it won't change the fact that the developed world is heading off a financial cliff. A good analogy is the 1930s, when auto sales boomed while the global economy was mired in Depression. So solar, wind and electric car stocks might or might not be great investments, depending on which trends the markets choose to focus on.

 


 

John Rubino

Author: John Rubino

John Rubino
DollarCollapse.com

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners in the Green Tech Boom, The Collapse of the Dollar and How to Profit From It, and How to Profit from the Coming Real Estate Bust. After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a currency trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He now writes for CFA Magazine.

Copyright © 2006-2017 John Rubino

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com