5 ms·

> "Without providing price detail, which companies say is commercially sensitive, Clarke said Carlton had struggled to finance the planned gas plant in part bec

> "Without providing price detail, which companies say is commercially sensitive, Clarke said Carlton had struggled to finance the planned gas plant in part because of uncertainty over the revenues it would generate and the number of hours it would run." This is the crucial point. Political uncertainty about the future energy system is jacking up the rate of return investors are demanding of gas plant projects without contracted revenues. This is the main reason why gas projects are falling through. At the same time, there is currently no scalable storage system for time-shifting surplus renewable generation over weeks-to-months, so that it can offset renewable troughs. This means surplus renewable generation is simply being wasted, and for that reason, is so low cost that even hours-to-days battery storage - which is a mature storage system - is economical. It's far less clear this is a long-term proposition for at-scale storage, as the longer you can store energy for the higher the efficiency of matching surplus to deficit. Hydrogen and pumped hydro can store energy for far longer.

toomuchtodo 3y ago
Your first point is excellent, that this sends capital market signals to investors to not invest in fossil generation. But to your other point, seasonal storage is not required. All available evidence indicates overbuilding renewables and simply making peace with excess curtailment can solve for that, along with transmission and perhaps pumped hydro where geography allows for that.
- triplepoint217 3y ago
  The nice thing is as long as these markets stay reasonably competitive, economics can figure out what to do with excess renewables. When renewables are in excess, the spot (instantaneous) energy price will drop to near zero (or sometimes negative in weird situations). That is good for existing (short term) batteries (they can recharge cheaply), but it will also provide price signals to people considering investing in longer term storage (since their cost of energy could be near zero, they only have to recoup the costs of building and operating the storage).
  - s1artibartfast 3y ago
    >since their cost of energy could be near zero, they only have to recoup the costs of building and operating the storage If cost of storage and operation is lower than battery operators can sell it for, then eventually the cost producers will sell at will increase. It will be interesting to watch
  - marcosdumay 3y ago
    > the spot (instantaneous) energy price will drop to near zero Yes, and that means generation will become unprofitable. We seem to be a decade or so away from the point where the investment on generation can't be decided by direct ROI. And nobody is preparing for this. Governments need a long time to regulate that kind of thing... so we can expect some problems on the near future.
    - JumpCrisscross 3y ago
      > that means generation will become unprofitable For that time period. At the same time, using energy becomes supremely profitable. This isn’t a weird quirk of the power markets; compute time is also instantaneous. It’s just less noticeable because we haven’t unified a market for it. These are amply solvable problems.
      - marcosdumay 3y ago
        > For that time period. For the time period that the most common generators generate the most energy. By itself, that guarantees that there won't be enough investment to create excess renewables. Or at least that markets won't make that investment. If you want excess renewables (and they are a safety and security necessity), you need to fund it by something that isn't interested on direct ROI.
        JumpCrisscross 3y ago
        > If you want excess renewables Sure, agreed. I don’t think this is something we should necessarily want. But if it is, it would require subsidy.
- 7thaccount 3y ago
  That's at a cost of trillions though - perhaps annually (just something to keep in mind). Transmission is crazy expensive and hard to secure right of way for. The investment costs on renewables are also pretty high.
  - bryanlarsen 3y ago
    The world spends $5T on fossil fuels annually. Spending trillions to decarbonize may still be a money saving measure.
- snewman 3y ago
  Source? My understanding is that this can be true in some regions but requires fairly aggressive use of, not only overbuilt renewables (which may pose challenges in land use and siting), but also long haul transmission (also difficult to site), demand response, etc. And then there's the scary possibility of an extended weather anomaly (several weeks with no wind and minimal solar). Having some long term storage in the mix, probably in the form of green hydrogen or another e-fuel, greatly increases our options for building a robust fossil-free grid. Putting more clean firm sources such as nuclear or advanced geothermal in the mix also helps, but I am not optimistic regarding nuclear, and advanced geothermal is still pretty immature.
  - toomuchtodo 3y ago
    https://www.mr-sustainability.com/stories/2021/overbuilding-solar-wind https://www.mr-sustainability.com/stories/2021/overbuilding-... https://www.youtube.com/watch?v=KcgECmaMkAg https://www.youtube.com/watch?v=KcgECmaMkAg https://cleantechnica.com/2020/09/07/the-best-electricity-plan-overbuild-solar-wind-power-plants/ https://cleantechnica.com/2020/09/07/the-best-electricity-pl... https://pv-magazine-usa.com/2020/05/14/overbuilding-solar-at-up-to-4-times-peak-load-yields-a-least-cost-all-renewables-grid/ https://pv-magazine-usa.com/2020/05/14/overbuilding-solar-at... https://energycentral.com/c/em/overbuilding-curtailing-renewables-more-cost-effective-adding-storage-study-mn https://energycentral.com/c/em/overbuilding-curtailing-renew... https://ases.org/firm-power-generation/ https://ases.org/firm-power-generation/
    - Emma_Goldman 3y ago
      Interesting and bold proposition, but I suspect the reason why this has not been treated as a feasible vision by any government is that it is optimised for least-cost in the median scenario, not high energy security in the extreme scenario of wind and sun droughts, and that it does not factor in the limits to wind and PV deployment rates. Also, the first scenario still favours electrolytic hydrogen over li-on batteries anyway.
      - toomuchtodo 3y ago
wolfram74 3y ago
When thinking of load balancing over years, you need to weigh seasonal loads that have low capital costs and high energy costs running for 30~50% of the year vs a battery that only discharges ~once a year. The amortization prospects of such a storage medium are grim.
- Symbiote 3y ago
  A gas storage facility is closer to a once-a-year battery medium. Example: https://en.wikipedia.org/wiki/Rough_(facility) https://en.wikipedia.org/wiki/Rough_(facility)
dpierce9 3y ago
Why call this political uncertainty as opposed to economic uncertainty? The future is intrinsically uncertain. The only thing that has changed is new entrants to the market. If gas plants can be replaced by something cheaper then they will be. If gas plants make economic sense, they will be built. The fact that gas developers have to model additional players in their markets to prove their economic viability seems fine to me. The fact that they are riskier investments means higher capital costs also seems fine (they are riskier!). Would you rather the politicians say no batteries because that would make financing gas plants harder?
- Emma_Goldman 3y ago
  > "If gas plants can be replaced by something cheaper then they will be" This is a simplification of what is a highly complex, interdependent, path dependent and regulated system, with long lead times, and more priorities than just least-cost. The energy system's development isn't the unfolding of an endogenous economic rationality - it's very messy! For all those reasons, it's usually best understood through the lens of political economy. Also, I don't know why you think there's an anti-green sentiment implicit in my comment. My own views are precisely the opposite.
  - deleted 3y ago
    [deleted]
- bumby 3y ago
  >Why call this political uncertainty as opposed to economic uncertainty? I'm assuming this is because so much of the energy market is directed through political mechanisms like subsidies, research funding etc. It's the political uncertainty that undergirds the economic uncertainty.
  - s1artibartfast 3y ago
    Not to mention taxes, mandates, sanctions , and even wars

toomuchtodo 3y ago

Your first point is excellent, that this sends capital market signals to investors to not invest in fossil generation. But to your other point, seasonal storage is not required. All available evidence indicates overbuilding renewables and simply making peace with excess curtailment can solve for that, along with transmission and perhaps pumped hydro where geography allows for that.

triplepoint217 3y ago
The nice thing is as long as these markets stay reasonably competitive, economics can figure out what to do with excess renewables. When renewables are in excess, the spot (instantaneous) energy price will drop to near zero (or sometimes negative in weird situations). That is good for existing (short term) batteries (they can recharge cheaply), but it will also provide price signals to people considering investing in longer term storage (since their cost of energy could be near zero, they only have to recoup the costs of building and operating the storage).
- s1artibartfast 3y ago
  >since their cost of energy could be near zero, they only have to recoup the costs of building and operating the storage If cost of storage and operation is lower than battery operators can sell it for, then eventually the cost producers will sell at will increase. It will be interesting to watch
- marcosdumay 3y ago
  > the spot (instantaneous) energy price will drop to near zero Yes, and that means generation will become unprofitable. We seem to be a decade or so away from the point where the investment on generation can't be decided by direct ROI. And nobody is preparing for this. Governments need a long time to regulate that kind of thing... so we can expect some problems on the near future.
  - JumpCrisscross 3y ago
    > that means generation will become unprofitable For that time period. At the same time, using energy becomes supremely profitable. This isn’t a weird quirk of the power markets; compute time is also instantaneous. It’s just less noticeable because we haven’t unified a market for it. These are amply solvable problems.
    - marcosdumay 3y ago
      > For that time period. For the time period that the most common generators generate the most energy. By itself, that guarantees that there won't be enough investment to create excess renewables. Or at least that markets won't make that investment. If you want excess renewables (and they are a safety and security necessity), you need to fund it by something that isn't interested on direct ROI.
      - JumpCrisscross 3y ago
        > If you want excess renewables Sure, agreed. I don’t think this is something we should necessarily want. But if it is, it would require subsidy.
7thaccount 3y ago
That's at a cost of trillions though - perhaps annually (just something to keep in mind). Transmission is crazy expensive and hard to secure right of way for. The investment costs on renewables are also pretty high.
- bryanlarsen 3y ago
  The world spends $5T on fossil fuels annually. Spending trillions to decarbonize may still be a money saving measure.
snewman 3y ago
Source? My understanding is that this can be true in some regions but requires fairly aggressive use of, not only overbuilt renewables (which may pose challenges in land use and siting), but also long haul transmission (also difficult to site), demand response, etc. And then there's the scary possibility of an extended weather anomaly (several weeks with no wind and minimal solar). Having some long term storage in the mix, probably in the form of green hydrogen or another e-fuel, greatly increases our options for building a robust fossil-free grid. Putting more clean firm sources such as nuclear or advanced geothermal in the mix also helps, but I am not optimistic regarding nuclear, and advanced geothermal is still pretty immature.
- toomuchtodo 3y ago
  https://www.mr-sustainability.com/stories/2021/overbuilding-solar-wind https://www.mr-sustainability.com/stories/2021/overbuilding-... https://www.youtube.com/watch?v=KcgECmaMkAg https://www.youtube.com/watch?v=KcgECmaMkAg https://cleantechnica.com/2020/09/07/the-best-electricity-plan-overbuild-solar-wind-power-plants/ https://cleantechnica.com/2020/09/07/the-best-electricity-pl... https://pv-magazine-usa.com/2020/05/14/overbuilding-solar-at-up-to-4-times-peak-load-yields-a-least-cost-all-renewables-grid/ https://pv-magazine-usa.com/2020/05/14/overbuilding-solar-at... https://energycentral.com/c/em/overbuilding-curtailing-renewables-more-cost-effective-adding-storage-study-mn https://energycentral.com/c/em/overbuilding-curtailing-renew... https://ases.org/firm-power-generation/ https://ases.org/firm-power-generation/
  - Emma_Goldman 3y ago
    Interesting and bold proposition, but I suspect the reason why this has not been treated as a feasible vision by any government is that it is optimised for least-cost in the median scenario, not high energy security in the extreme scenario of wind and sun droughts, and that it does not factor in the limits to wind and PV deployment rates. Also, the first scenario still favours electrolytic hydrogen over li-on batteries anyway.
    - toomuchtodo 3y ago

wolfram74 3y ago

When thinking of load balancing over years, you need to weigh seasonal loads that have low capital costs and high energy costs running for 30~50% of the year vs a battery that only discharges ~once a year. The amortization prospects of such a storage medium are grim.

Symbiote 3y ago
A gas storage facility is closer to a once-a-year battery medium. Example: https://en.wikipedia.org/wiki/Rough_(facility) https://en.wikipedia.org/wiki/Rough_(facility)

dpierce9 3y ago

Why call this political uncertainty as opposed to economic uncertainty? The future is intrinsically uncertain. The only thing that has changed is new entrants to the market. If gas plants can be replaced by something cheaper then they will be. If gas plants make economic sense, they will be built. The fact that gas developers have to model additional players in their markets to prove their economic viability seems fine to me. The fact that they are riskier investments means higher capital costs also seems fine (they are riskier!). Would you rather the politicians say no batteries because that would make financing gas plants harder?

Emma_Goldman 3y ago
> "If gas plants can be replaced by something cheaper then they will be" This is a simplification of what is a highly complex, interdependent, path dependent and regulated system, with long lead times, and more priorities than just least-cost. The energy system's development isn't the unfolding of an endogenous economic rationality - it's very messy! For all those reasons, it's usually best understood through the lens of political economy. Also, I don't know why you think there's an anti-green sentiment implicit in my comment. My own views are precisely the opposite.
- deleted 3y ago
  [deleted]
bumby 3y ago
>Why call this political uncertainty as opposed to economic uncertainty? I'm assuming this is because so much of the energy market is directed through political mechanisms like subsidies, research funding etc. It's the political uncertainty that undergirds the economic uncertainty.
- s1artibartfast 3y ago
  Not to mention taxes, mandates, sanctions , and even wars