Prediction: Coal has fallen. Nuclear is next then Oil.

[ItsNotAboutTheMoney]

The problem with the collapse in oil prices is that it makes gas so cheap that there is no incentive to switch to EVs!

No financial incentive.

There's also no financial incentive to switch from smaller vehicles to larger vehicles, but people do it anyway.

Although much higher gas prices would help the transition, the fundamental shift we need isn't in the gas price, it's much cheaper PEVs. That needs cheaper batteries and much higher volume battery manufacturing.

The positive characteristics of PEVs will take care of the rest.

 

[TheTalkingMule]

The problem with the collapse in oil prices is that it makes gas so cheap that there is no incentive to switch to EVs!

A lot of states will take this as an opportunity to quietly raise gasoline taxes. And EVs aren't being bought because they're cheap, people either want to save the planet or really want a Tesla(or both).

 

[dazizmor]

I see you have same problem as Musk has with autonomous driving. You both think it is simpler and easier than it is in reality.

And besides, what "vehicles"? Do you think stuff will magically teleport out or into vehicle?

Exactly. I've visited sites that are actively decommissioning and seen plenty of video and photos as well - trust me, they're ALREADY using lots of remote robotics and mechanization...that's one of the reasons its so expensive.

 

[dgpcolorado]

A lot of states will take this as an opportunity to quietly raise gasoline taxes. And EVs aren't being bought because they're cheap, people either want to save the planet or really want a Tesla(or both).

The number of people who buy an EV to save the planet or because they really want a Tesla is limited. In places with high gasoline prices, such as Europe, the lower operating cost is a factor in the sales of EVs.

In the USA, the low gas price contributes to the sales of brontosaurus-class SUVs and huge trucks. With $2/gallon gas, I expect that trend to continue. The auto manufacturers love it since they make big profits on gas-guzzling trucks. I find it disappointing because, like some others here, I'd like to see a transition away from fossil fuels.

 

[mspohr]

Wind and solar plants will soon be cheaper than coal in all big markets around world, analysis finds

Wind and solar plants will soon be cheaper than coal in all big markets around world, analysis finds

Building new wind and solar plants will soon be cheaper in every major market across the globe than running existing coal-fired power stations, according to a new report that raises fresh doubt about the medium-term viability of Australia’s $26bn thermal coal export industry

Carbon Tracker’s Matt Gray, a co-author of the report, said proposed coal investments risked becoming stranded assets that locked in increasingly expensive power for decades. The analysis found that developers risked wasting more than $600bn if all mooted coal-fired plants were built.

“The market is driving the low-carbon energy transition but governments aren’t listening,” Gray said. “It makes economic sense for governments to cancel new coal projects immediately and progressively phase out existing plants.”

 

[mspohr]

Teck’s Oilsands Mine: The Case Kept Getting Worse and Worse - Resilience

The abrupt decision by Teck Resources to withdraw its application for the Frontier bitumen mine project reveals a truth that politicians like Jason Kenney and other industry boosters continue to deny — that investing large sums of money in Canada’s oilsands no longer makes any financial sense.

“I think it’s a huge market signal for the oilsands,” said Kathy Hipple, an analyst with the New York-based Institute for Energy Economics and Financial Analysis. “There’s a very real risk of stranded assets for oilsands projects and there’s a huge risk even for other oil and gas projects going forward, they’re not needed.”

 

[mspohr]

Morgan Stanley: Duke, other utilities ignoring profit opportunity by failing to decarbonize rapidly: As the cost of clean energy has plummeted, energy analysts have reported with increasing frequency that a transition by utilities from coal to less costly clean energy would save the nation’s electricity customers billions of dollars. The latest, and perhaps more surprising, wave of reporting comes from Wall Street analysts, who now say that in addition to saving customers money, a rapid coal-to-clean energy transition would also be highly profitable for utilities’ investors...the analysts found that the switch to lower-cost renewables creates an opportunity for the utilities to invest $64 billion in capital expenditures through 2025, creating profit opportunities while saving customers money. Source: Energy and Policy Institute

 

[nwdiver]

We're going to be using nuclear and petroleum for energy for years but I think 2020 will be the final year anyone sees any real profit in pursuing more of either.

Fluor is the last US company seriously pursuing new nuclear with their subsidiary NuScale. At least people with Boeing stock can be glad they don't own Fluor.

 

[mspohr]

Oil prices could fall below zero: Analyst

Excess supply from OPEC and Russia, coupled with crumbling demand "are leading to concerns about a surplus that could overwhelm global storage,” wrote Francisco Blanch, a commodity strategist at Bank of America.

 

[TheTalkingMule]

In the USA, the low gas price contributes to the sales of brontosaurus-class SUVs and huge trucks. With $2/gallon gas, I expect that trend to continue. The auto manufacturers love it since they make big profits on gas-guzzling trucks. I find it disappointing because, like some others here, I'd like to see a transition away from fossil fuels.

There aren't many consumers on the fence about buying a massive SUV or a Model Y.

Tesla vehicles are the best in the world, that's primarily why people buy them.

 

[dgpcolorado]

There aren't many consumers on the fence about buying a massive SUV or a Model Y.

Tesla vehicles are the best in the world, that's primarily why people buy them.

Tesla is still a tiny player in the auto market. If gas prices were much higher there would be more demand for EVs and more auto manufacturers would be forced to produce them. The transition to EVs could happen more rapidly.

As I recall, one of Tesla's corporate goals was the widespread adoption of EVs as soon as possible. I support that goal, which is why I have been driving an electric car for more than eight years.

 

[mspohr]

Bloomberg - Are you a robot?

Weak demand had already sent energy costs down before a price war between Russia and Saudi Arabia pushed oil prices even lower. That makes the economic case for renewables even more convincing, the CEO said.

Investment in renewable energy will continue and the disruption may even weaken efforts to slow the change, he said in an interview.
The drop in electricity prices takes away space from lobbyist forces that were ideologically opposed and remain opposed to renewable sources,” he said. “We have demand from large customers who have decided to go on renewables for economic reasons.”

 

[TheTalkingMule]

When TSLA started to move parabolicly upward, that was like a month after rational investors stopped handing money to unconventional oil extraction projects.

Clearly there are trillions of dollars sitting earning NOTHING right now. Given a reality with nowhere else to turn, the cash will take the reliable returns related to renewable energy. I actually think we need to flip things, pool these global projects, and make the banks fight over the privilege to fund solar/wind/storage projects.

 

[ItsNotAboutTheMoney]

Electric Power Monthly!

March edition, for capacity changes and generation January 2020. In Electric Power Monthly time, the Wuhan virus hasn't hit the USA yet.

Unfortunately they have not yet published capacity factors for January 2020.*

Coal capacity dropped 1,629.7MW in January 2020 to end at 227,611.7MW. Forecast capacity reductions increased. Last month, the 12 month net capacity change forecast was -6,143.8MW. This month the forecast decreased by 2,229.0MW to -6,743.1MW.

Coal's rolling 12 month share dropped another 0.76% to 22.50%, a drop of 4.48% from 12 months ago. Coal was 48.21% of generation in 2008. January 2020 generation was 65.2TWh compared to 101.0TWh in 2019, down and rolling 12 month generation falling to 930.3TWh compared to compared to 1,131,2TWh a year ago.

Nuclear capacity fell only very slightly in January 2020, down 27.8MW to 98,042.4MW.

Nuclear generation was slightly up in January 2020 (74.2TWh v 73.7TWh), with rolling generation up to 809.9TWh compared with 806.1TWh to January 2019.

Coal generation is normally highest in January, so it's amazing that January 2020 generation was lower than all months of 2019 except April. As in April 2019, coal generation was lower than nuclear.

Rolling 12 month coal generation has fallen 200.9TWh in 12 months. The difference between coal and nuclear 12 month rolling generation is now only 123.8TWh. Coal generation could be lower than nuclear generation before the end of 2020.

Also, as a small note, petroleum liquids and petroleum coke generation have also fallen to new lows.

Coal:

Capacity (MW):

Period	Prior	Change	New	Change
Month	229,241.4	-1,629.7	227,611.7	-0.71%
YTD	229,241.4	-1,629.7	227,611.7	-0.71%
Rolling	242,491.4	-14,879.7	227,611.7	-6.14%
Plan +12mo	-6,143.8	-2,229.0	-6,743.1	.

Generation (GWh):

Year	Month	YTD	Rolling	Month %	YTD%	Rolling
2019	101,008	101,008	1,131,211	28.08%	28.08%	26.98%
2020	65,170	65,170	930,311	19.08%	19.08%	22.50%
Difference	-35,838	-35,838	-200,900	-9.01%	-9.01%	-4.48%

Nuclear:

Capacity (MW):

Period	Prior	Change	New	Change
Month	98,070.2	-27.8	98,042.4	-0.03%
YTD	98,070.2	-27.8	98,042.4	-0.03%
Rolling	99,391.6	-1,349.2	98,042.4	-1.36%
Plan +12mo	-1,597.5	-27.8	-1,597.5	.

Generation (GWh):

Year	Month	YTD	Rolling	Month %	YTD%	Rolling
2019	73,701	73,701	806,136	20.49%	20.49%	19.23%
2020	74,204	74,204	809,912	21.72%	21.72%	19.59%
Difference	503	503	3,776	1.23%	1.23%	0.36%

* I emailed the EIA to ask if the capacity factor data would be made available. Because that's what I do now.

 

[adiggs]

The problem with the collapse in oil prices is that it makes gas so cheap that there is no incentive to switch to EVs!

The joy of the collapse in oil prices is that a lot of oil producers will find it non-economic to produce oil. That'll keep oil in the ground - an excellent place for it to stay.

What we don't know, yet, is whether oil production will come back with the economy (of course it will to some degree), or whether some of that demand destruction will stay destroyed as it's replaced by new renewable sources (of course there will be some of that too).

The interesting question - is whether it's mostly replaced, or mostly comes back...


Something @jhm has pointed out - to the degree that energy investors get burned as their fossil fuel investments crater - will they come back and finance oil companies when the economy comes back? My thinking is that no - they'll get habituated to new investments, and they'll demand a higher return to come back and finance oil companies than they demand today. That extra return will make investments perform that much worse, and will keep some / many of them from starting in the first place.

 

[ItsNotAboutTheMoney]

The number of people who buy an EV to save the planet or because they really want a Tesla is limited. In places with high gasoline prices, such as Europe, the lower operating cost is a factor in the sales of EVs.

In the USA, the low gas price contributes to the sales of brontosaurus-class SUVs and huge trucks. With $2/gallon gas, I expect that trend to continue. The auto manufacturers love it since they make big profits on gas-guzzling trucks. I find it disappointing because, like some others here, I'd like to see a transition away from fossil fuels.

If you want mass electrification, you need it to handle low fuel prices anyway. Forget low gas prices as a problem.

In the USA new BEVs will have sell on subjective value, and by far the biggest thing standing in the way of that is price.

 

[jhm]

Shorting Oil, Hedging Tesla

Crude oil is now cheaper than coal on per Btu basis. Brent is at parity with coal at about $28/b and with LNG at $19/b. Heat market and power markets will heat up as oil becomes price competitive. Of course with wind-solar-battery being competitive with both coal and LNG in many power markets, oil will come into more direct competition with renewables in some very crowded markets.

I think this is the kind of scenario that causes oil and nat gas to peak at the same time (after coal has peaked).

 

[mspohr]

Shorting Oil, Hedging Tesla

Crude oil is now cheaper than coal on per Btu basis. Brent is at parity with coal at about $28/b and with LNG at $19/b. Heat market and power markets will heat up as oil becomes price competitive. Of course with wind-solar-battery being competitive with both coal and LNG in many power markets, oil will come into more direct competition with renewables in some very crowded markets.

I think this is the kind of scenario that causes oil and nat gas to peak at the same time (after coal has peaked).

Isn't there a lot of friction caused by the necessity of building power plants?
If you're going to invest in infrastructure, the current cost is almost irrelevant. What you look at is the cost over the life of the plant. From that perspective, fossil fuels are a wild ride with predictions about the future being difficult.

 

[jhm]

Isn't there a lot of friction caused by the necessity of building power plants?
If you're going to invest in infrastructure, the current cost is almost irrelevant. What you look at is the cost over the life of the plant. From that perspective, fossil fuels are a wild ride with predictions about the future being difficult.

There is generally an over capacity of fossil generators, which allows switching in terms of which generators are generating the most in power markets. But I would not throw much capital switching. That said, coal plants sometimes get retrofitted to run on other fuels. Importing LNG may be more costly than importing crude or fuel oil. So retrofitting a boiler can create some local opportunities for switching. Since all fuels are trade globally, a few local opportunities anywhere in the world for low capex switching might be all that is needed rebalance the global market. So it is not necessary to envision a single firm doing fuel switching, it is something that mostly plays out in trade across very diverse local markets.

In fact, the persistent price differences between coal and LNG already factors in issues around capex switching costs, import infrastructure costs, environmental costs and a whole host of other issues. If we look back in the chart, we might consider that reflecting the impact of those other costs, coal at $28/boe is already near parity with LNG at $32/boe. As oil has plummeted, LNG has also fallen to $19/boe. How much of this is price competition between oil and LNG? I'm not sure. Regardless, it still holds that LNG and coal are in price competition with each other. So coal production will need to decline to maintain this price differential with LNG. So it is not necessary for oil and coal to directly fuel switch. If the oil price impacts LNG prices, it will at least indirectly impact coal demand too.

So one way or another, cheap crude (below $30 down from above $60) has got to apply pressure to both coal and gas. But this is a race to the bottom competing to be the lowest cost BTU.

 

[SmartElectric]

Pellet solution will save on power plant conversion costs - Northern Ontario Business

Instead of spending $400 million to convert the 306-megawatt coal burner to natural gas, the cash- trapped Ontario government has elected to go with a specialty wood pellet that handles and burns like coal.

Very expensive to switch from coal to natural gas, this article notes $1.50 / MW of production!

price tag, have yet to be finalized, but Chris Fralick, OPG manager for both plants, said the capital costs will be a fraction of the $170 million being spent at Atikokan.

Expensive to switch, even if the fuel burns similarly, mostly for the cost of systems related to getting the fuel into the boiler.