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mspohr
Well-Known Member
Indeed, I think this is likely among commercial fleets. Most semis get rebuilt engines after about 8 years of service. I suspect in the last generation of new diesel trucks, a lot of these engines will not get rebuilt. It will be cheaper to buy say a used 4 year old diesel than to rebuild an 8 year old. The is very much like old coal plants that need expensive upgrades to keep going the next 10 years or so. Under the old assumptions, such a plant was worth the upgrade, but in the face of tough competition, the upgrade is a capex hurdle that can lead to early retirement.
I'd also point out that this engine rebuild issue could lead to a market for new EV trucks that is twice as a large as the current truck market. To see this, consider that most new trucks are simply replacing trucks that are about 16 years old, while engine rebuilds are extending trucks that are about 8 years old. In theory, new EV trucks could be replacing both the 16 year-olds and the 8 year-old rebuilds. So this combined market is nearly twice the existing market for trucks. Whether this is realized or not will depend on how efficient the truck market is at avoiding stranded assets. But to avoid asset stranding the new truck market will need to flip to nearly all EVs very quickly and prefer to rebuild 8-year-old semis to buying new semis early on in the transition.
Also check out my comment on this: How Feasible Are Electric Trucks? | OilPrice.com
TheTalkingMule
Distributed Energy Enthusiast
I just read an IEA projection that has global demand increasing 1Mb/d in 2023. They are simply spouting a reality that has no chance of existing in support of short term benchmark pricing. Same old same old.
TheTalkingMule
Distributed Energy Enthusiast
Today marks another major milestone in the OPEC(Saudi) effort to juice oil markets ahead of a potential Aramco IPO at the end of this year.
March 2017 - OPEC surprises the world and invites hedge fund managers to their member meeting.
May 2017 - Shipments to the US are magically cut in half and US inventories drop, shifting the global glut perception.
March 2018 - OPEC heads to Houston to meet with frackers who are pushing record US production levels.
May 2018 - ???
What's to come of these meetings? How might we invest based on the assumption of frackers somehow being "paid" to slow production for 2 or 3 quarters? Certainly that's the goal of the meeting and certainly the Saudis can go as high as the bidding takes them if it means a successful IPO.
Also, what's next for 2019? Cutting US shipments raised the price a good bit, but then frackers rushed in and neutered that play. If the Saudis cut a deal with frackers today for 6-9 months.....what's after that? For instance, will frackers simply keep drilling, pocket the Saudi payoff, and then resume pumping post-IPO? That's certainly playable in multiple directions over 2018/19.
I think we might be seeing a good opportunity to time the permanent macro breakdown in brent oil pricing. Perhaps these frackers can be bought off to get the IPO through, but after that it almost makes sense for prices to drop below $30 on a semi-permanent basis. Given the downward pressure from every angle imaginable, as noted in this thread.
There's no moves left after this other than good old global warfare.
March 2017 - OPEC surprises the world and invites hedge fund managers to their member meeting.
May 2017 - Shipments to the US are magically cut in half and US inventories drop, shifting the global glut perception.
March 2018 - OPEC heads to Houston to meet with frackers who are pushing record US production levels.
May 2018 - ???
What's to come of these meetings? How might we invest based on the assumption of frackers somehow being "paid" to slow production for 2 or 3 quarters? Certainly that's the goal of the meeting and certainly the Saudis can go as high as the bidding takes them if it means a successful IPO.
Also, what's next for 2019? Cutting US shipments raised the price a good bit, but then frackers rushed in and neutered that play. If the Saudis cut a deal with frackers today for 6-9 months.....what's after that? For instance, will frackers simply keep drilling, pocket the Saudi payoff, and then resume pumping post-IPO? That's certainly playable in multiple directions over 2018/19.
I think we might be seeing a good opportunity to time the permanent macro breakdown in brent oil pricing. Perhaps these frackers can be bought off to get the IPO through, but after that it almost makes sense for prices to drop below $30 on a semi-permanent basis. Given the downward pressure from every angle imaginable, as noted in this thread.
There's no moves left after this other than good old global warfare.
DurandalAI
Member
Demand growth should slow, but demand likely will continue to grow. The biggest threat to oil production in older fields such as the United States is that they had been producing but had slowed when using older traditional methods of production. Advanced recovery techniques have boosted the US to be a top producer again, but that will undoubtably peak in a few years, and then drop off, likely at faster rates than when he US last peaked.
The old guard at The Oil Drum would have likely commented similar to what I allude to above. So I would agree that supply will tighten in the next 3-4 years until the transportation sector electrification really gains traction starting in 2022.
TheTalkingMule
Distributed Energy Enthusiast
It's almost as if these interests are colluding to maintain a false narrative.
Saudi Aramco Says Fears of `Peak Oil Demand' Are Overblown
....because transition to cheaper and far superior technology is never swift.
Edit to add: The Aramco IPO timing language has also now changed from "before the end of 2018" to "where and when [the Saudi government decides]".
DurandalAI
Member
The transition of Saudi Arabia to solar electricity generation says lots more to me than anything else. They might be stupid rich but they’re not stupid.
They are talking about EVs only impacting 20% of oil demand. This means they are in clear denial of commercial EVs.
Gasoline is about 26% of oil demand, and diesel 29%. Thus 55% of demand is at risk, not counting kerosene, jet fuel or residual fuel oil. Also non-gasoline light distillates can pretty much be replaced with natural gas and NGLs, which can also feed petrochem.
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Neoen plans world’s biggest solar + wind powered hydrogen hub in S.A.
Neoen wants to build another integrate renewable complex 40km from the Hornsdale complex where the 100MW Tesla battery is. The new complex would integrate 150MW wind, 150MW solar, 400MWh and 50MW hydrogen electrolyzer. It looks like this bundle will be fully dispatchable and will never have to sell power when prices are low.
The wind and solar should gross about 2250MWh per day. Battery storage losses at 10% would consume about 40MWh per day. The hydrogen electrolyzers, assuming 75% utilization and 75% efficiency would consume 900 MWh per day to yield 20t hydrogen. So net power generation would be about 1300MWh per day highly dispatchable, and curtailment of electrolyzers can act as seasonal or back up power.
I'm not sure how the economics on 20t/d of hydrogen and some oxygen works. It needs to suffice to pay for the electrolyzer and some fraction of the wind and solar. After that think about this as an extra 50MW that can be brought up at anytime for back up power that runs on an unlimited supply of negative fuel. That is, it stops making fuel when power is needed.
I do think that a complex like this is pretty close to what is needed for a zero carbon grid.
Neoen wants to build another integrate renewable complex 40km from the Hornsdale complex where the 100MW Tesla battery is. The new complex would integrate 150MW wind, 150MW solar, 400MWh and 50MW hydrogen electrolyzer. It looks like this bundle will be fully dispatchable and will never have to sell power when prices are low.
The wind and solar should gross about 2250MWh per day. Battery storage losses at 10% would consume about 40MWh per day. The hydrogen electrolyzers, assuming 75% utilization and 75% efficiency would consume 900 MWh per day to yield 20t hydrogen. So net power generation would be about 1300MWh per day highly dispatchable, and curtailment of electrolyzers can act as seasonal or back up power.
I'm not sure how the economics on 20t/d of hydrogen and some oxygen works. It needs to suffice to pay for the electrolyzer and some fraction of the wind and solar. After that think about this as an extra 50MW that can be brought up at anytime for back up power that runs on an unlimited supply of negative fuel. That is, it stops making fuel when power is needed.
I do think that a complex like this is pretty close to what is needed for a zero carbon grid.
hydrogen, major boondoggle
for a cost is no problem, H2 fuel cell is 60% efficient max
for a cost is no problem, H2 electrolyizer is similarly 60% efficient max
60% x 60% is 36% for cost is no problem.
closer to real life, H2 fuel cell is more like 50%, and electrolyzer would be 50%
50% x 50% is 25% for "affordable" solution
pick a car like the honda clarity and compare the efficiency between H2 and BEV operation
67 / 114 = 58%, so a fuel cell vehicle with price is no object is 58% efficiency of an xEV to be sold in real quantity.
then look at utilization rates perhaps 10%, aaagh
for electricity, pumped hydro will always have economic and efficiency superiority to H2. (pumped hydro is about 75% round trip efficient which is about double that of H2)
Let me be clear, I do not think hydrogen vehicles are a good idea. Electrolyzers are important, however. Here's my basic argument.
First, we need to replace fossil sourced natural gas as soon as possible. Thus, we need shrink demand for gas, not increase it. Thus, hydrogen cars are a bad idea because they increase demand for natural gas and renewable substitutes for gas.
Second, we do need to increase the supply of renewable gas, particularly to attend to heat and industrial chemical industries. P2G technologies can be a critical source of renewable gases. For example, hydrogen is needed for making steel. Most of this hydrogen is derived from natural gas. Hydrogen electrolyzers, however, could provide a renewable source of hydrogen that could push natural gas out of that market.
Thus, hydrogen vehicles, even if they only use renewable hydrogen, actually impose an opportunity cost. The capital and power they use could be put to better use removing fossil based gases from heat, industrial gas, and even petrochem markets.
So once you accept that there are genuine needs for renewable gases, developing electrolyzers make good sense. Fortunately, advances are being made. We are seeing demonstration projects reaching 75% efficiency with potential to push out to 80%. KIT - Das KIT - Medien - Presseinformationen - PI 2018 - Power-to-Gas mit hohem Wirkungsgrad
I think it is wrong to think of P2G as an electric storage system. Round trip efficiency is awful, even with recent advances. I don't think this is even necessary to do seasonal balancing. It is enough for electrolyzers to act as dispatchable load only without FC as dispatchable generation.
What we have in a 50MW electrolyzers is true base load that can be disrupted as needed. It can be operated at 50% to 100% utilization throughout the year and create a non-electrical value stream as much it is operated. It is interesting that Neoen is integrating this with a massive battery. The battery is really managing the real time fluctuation is grid prices and renewable generation. They are not using the electrolyzers for power management. Rather the battery assures that there is a steady flow of power to the electrolyzer so that it can operate optimally. However, the electrolyzer can be shut down when the price of power is too high for too long. For example during peak summer months the electrolyzer can idle. This means that incremental renewable energy can be harnessed for peak seasonal needs. So the value of this seasonal supply of renewable energy is an important part total economics for electrolyzers. Essentially their ability to shut down as needed with minimal labor and capital cost is being traded off for a seasonal supply of renewables.
I've been trying to understand how this relates to the debate about the role of nuclear power in decarbonization. As I think about this, I tend to think that nuclear is not needed with the daily supply of renewables as smoothed out with batteries is more than adequate. This means that in deep decarbonization nuclear may only be needed for 2 to 4 months out of the year in many markets. A capacity factor of 15% to 35% would really not make sense for nuclear. The economics would be horrible. So the basic problem for nuclear is that their capacity factors are way too high. So you need to pair this virtually 100% baseload generation stream with baseload load that can be curtailed as needed to assure that sufficient value is being created throughout the year. So could electrolyzers fill this role? Maybe but the variable cost of nuclear power makes this hard to pencil out. Suppose the electrolyzer needs poer at an average orice of $15/MWh to produce competitively priced gases. Does the nuclear plant make enough revenue over 12 months when 9 months of output is sold at $15/MWh? Also scale matters. Suppose you have 3GW of nuclear that needs to be paired with say 1GW of swing load like electrolyzers. It may be a strain to come up with that scale of swing load. Matching 50MW of electrolyzer swing load with 150MW wind and 150MW solar seems to be at a reasonable scale and can be replicated. Ultimately, the amount of swing load needed will be determined by the grid, but too much nuclear in a grid could bump this up to excessive levels. When that happens, the nuclear power plants simply will not get enough revenue in a year to be profitable.
So this hydrogen hub is an interesting experiment in finding a business model that is compatible with deep decarbonization.
First, we need to replace fossil sourced natural gas as soon as possible. Thus, we need shrink demand for gas, not increase it. Thus, hydrogen cars are a bad idea because they increase demand for natural gas and renewable substitutes for gas.
Second, we do need to increase the supply of renewable gas, particularly to attend to heat and industrial chemical industries. P2G technologies can be a critical source of renewable gases. For example, hydrogen is needed for making steel. Most of this hydrogen is derived from natural gas. Hydrogen electrolyzers, however, could provide a renewable source of hydrogen that could push natural gas out of that market.
Thus, hydrogen vehicles, even if they only use renewable hydrogen, actually impose an opportunity cost. The capital and power they use could be put to better use removing fossil based gases from heat, industrial gas, and even petrochem markets.
So once you accept that there are genuine needs for renewable gases, developing electrolyzers make good sense. Fortunately, advances are being made. We are seeing demonstration projects reaching 75% efficiency with potential to push out to 80%. KIT - Das KIT - Medien - Presseinformationen - PI 2018 - Power-to-Gas mit hohem Wirkungsgrad
I think it is wrong to think of P2G as an electric storage system. Round trip efficiency is awful, even with recent advances. I don't think this is even necessary to do seasonal balancing. It is enough for electrolyzers to act as dispatchable load only without FC as dispatchable generation.
What we have in a 50MW electrolyzers is true base load that can be disrupted as needed. It can be operated at 50% to 100% utilization throughout the year and create a non-electrical value stream as much it is operated. It is interesting that Neoen is integrating this with a massive battery. The battery is really managing the real time fluctuation is grid prices and renewable generation. They are not using the electrolyzers for power management. Rather the battery assures that there is a steady flow of power to the electrolyzer so that it can operate optimally. However, the electrolyzer can be shut down when the price of power is too high for too long. For example during peak summer months the electrolyzer can idle. This means that incremental renewable energy can be harnessed for peak seasonal needs. So the value of this seasonal supply of renewable energy is an important part total economics for electrolyzers. Essentially their ability to shut down as needed with minimal labor and capital cost is being traded off for a seasonal supply of renewables.
I've been trying to understand how this relates to the debate about the role of nuclear power in decarbonization. As I think about this, I tend to think that nuclear is not needed with the daily supply of renewables as smoothed out with batteries is more than adequate. This means that in deep decarbonization nuclear may only be needed for 2 to 4 months out of the year in many markets. A capacity factor of 15% to 35% would really not make sense for nuclear. The economics would be horrible. So the basic problem for nuclear is that their capacity factors are way too high. So you need to pair this virtually 100% baseload generation stream with baseload load that can be curtailed as needed to assure that sufficient value is being created throughout the year. So could electrolyzers fill this role? Maybe but the variable cost of nuclear power makes this hard to pencil out. Suppose the electrolyzer needs poer at an average orice of $15/MWh to produce competitively priced gases. Does the nuclear plant make enough revenue over 12 months when 9 months of output is sold at $15/MWh? Also scale matters. Suppose you have 3GW of nuclear that needs to be paired with say 1GW of swing load like electrolyzers. It may be a strain to come up with that scale of swing load. Matching 50MW of electrolyzer swing load with 150MW wind and 150MW solar seems to be at a reasonable scale and can be replicated. Ultimately, the amount of swing load needed will be determined by the grid, but too much nuclear in a grid could bump this up to excessive levels. When that happens, the nuclear power plants simply will not get enough revenue in a year to be profitable.
So this hydrogen hub is an interesting experiment in finding a business model that is compatible with deep decarbonization.
SebastianR
Active Member
@jhm - I like this base-load discussion and indeed the capacity factors will kill most traditional power plants economy. Long-term I think we need to move away from the "base load", "load following" and "peaker" terminology. So in this sense I really like the idea of finding chemical and mechanical processing / other electricity consumption that can fluctuate with seasons and availability of power. For instance, I could well imaging certain chemical processing plants that have their own solar / wind power generation and either sell to the grid if the grid wants power or do their processing (e.g. water desalination etc.) if the economics for selling power are not working out.
I know that BASF (chemical company in Germany) is very proud of the super tight integration of processes: whatever comes out as "waste" of one chemical process is immediately used for "input" in a different process. Their factory is massive, their integration amazing. I could see similar things appear with power being part of the factor in future.
Aside from this: we (hopefully) have a massive way to buffer electricity in cars coming up: while power fluctuation over the day / season can be substantial, I think a massive fleet of vehicles that can be used to intelligently manage power demand is a great way to also match power consumption rather than only power production.
In short: if we continue to have the terminology of "base", "fast following", "peaker" - we might want to expand that to power consumption, too and/or just abandon these terms and use terms aligned with financial portfolio management (e.g. "demand matching") - in the end, we don't have "base financial instruments", "fast following financial instruments" and "peak financial instruments" to manage our retirements. We have stocks, bonds and derivatives that we combine into a portfolio...
I know that BASF (chemical company in Germany) is very proud of the super tight integration of processes: whatever comes out as "waste" of one chemical process is immediately used for "input" in a different process. Their factory is massive, their integration amazing. I could see similar things appear with power being part of the factor in future.
Aside from this: we (hopefully) have a massive way to buffer electricity in cars coming up: while power fluctuation over the day / season can be substantial, I think a massive fleet of vehicles that can be used to intelligently manage power demand is a great way to also match power consumption rather than only power production.
In short: if we continue to have the terminology of "base", "fast following", "peaker" - we might want to expand that to power consumption, too and/or just abandon these terms and use terms aligned with financial portfolio management (e.g. "demand matching") - in the end, we don't have "base financial instruments", "fast following financial instruments" and "peak financial instruments" to manage our retirements. We have stocks, bonds and derivatives that we combine into a portfolio...
This Neoen hydrogen superhub will also likely source the 400MWh battery from Tesla. Love that growth in demand.
Also South Austrailia is already at about 50% renewables and wants to get to 80% by 2026. This is super aggressive and headed into uncharted territory. This is why they need huge storage now, and it is not too early to work out P2G strategies for deep decarbonization.
Average load is about 550MW, since the 400MWh battery will provide 18% of load for 4 hours in the case of a black out. Leading up to 80% renewable I could see the state needing some 2GWh of batteries.
Also South Austrailia is already at about 50% renewables and wants to get to 80% by 2026. This is super aggressive and headed into uncharted territory. This is why they need huge storage now, and it is not too early to work out P2G strategies for deep decarbonization.
Average load is about 550MW, since the 400MWh battery will provide 18% of load for 4 hours in the case of a black out. Leading up to 80% renewable I could see the state needing some 2GWh of batteries.
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RobStark
Well-Known Member
South Australia is having an election March 17 that could throw a monkey wrench into deep decarbonization plans.
Musk's BFF Jay Weatherhill's Labor is down 2% in latest poll.
Xenophon's SA-BEST slumps in a South Australian Newspoll, while Turnbull's better PM lead narrows
Musk's BFF Jay Weatherhill's Labor is down 2% in latest poll.
Xenophon's SA-BEST slumps in a South Australian Newspoll, while Turnbull's better PM lead narrows
ValueAnalyst
Closed
SebastianR
Active Member
$1.6 Trillion In Fossil Fuel Investments Are At Risk | OilPrice.com
Good old carbon trackers doing their work again:
"A new study from the Carbon Tracker Initiative predicts that the world will need $4.8 trillion in investment in oil, gas and thermal coal between 2018 and 2025 under a business-as-usual scenario, but considerably less if governments step up policy initiatives to combat greenhouse gas emissions.
If the world sticks to its 2-degree-Celsius target, there would only be a need for $4 trillion in investment through 2025. Moreover, in a more aggressive scenario in which the world keeps warming at a 1.75 degrees C, fossil fuel investment would fall to just $3.3 trillion. All that extra spending by the energy industry would be put at risk."
The way I see this unfold is that oil is under a dual threat: if the macros turn sour with a trade ware coming up, oil may tank (see the article on that on oilprice.com) at the same point in time, more and more countries will need to get serious around climate change....
Good old carbon trackers doing their work again:
"A new study from the Carbon Tracker Initiative predicts that the world will need $4.8 trillion in investment in oil, gas and thermal coal between 2018 and 2025 under a business-as-usual scenario, but considerably less if governments step up policy initiatives to combat greenhouse gas emissions.
If the world sticks to its 2-degree-Celsius target, there would only be a need for $4 trillion in investment through 2025. Moreover, in a more aggressive scenario in which the world keeps warming at a 1.75 degrees C, fossil fuel investment would fall to just $3.3 trillion. All that extra spending by the energy industry would be put at risk."
The way I see this unfold is that oil is under a dual threat: if the macros turn sour with a trade ware coming up, oil may tank (see the article on that on oilprice.com) at the same point in time, more and more countries will need to get serious around climate change....
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mspohr
Well-Known Member
Interesting the magnitude of fossil fuels investment. How much renewable energy infrastructure could that buy?$1.6 Trillion In Fossil Fuel Investments Are At Risk | OilPrice.com
Good old carbon trackers doing their work again:
"A new study from the Carbon Tracker Initiative predicts that the world will need $4.8 trillion in investment in oil, gas and thermal coal between 2018 and 2025 under a business-as-usual scenario, but considerably less if governments step up policy initiatives to combat greenhouse gas emissions.
If the world sticks to its 2-degree-Celsius target, there would only be a need for $4 trillion in investment through 2025. Moreover, in a more aggressive scenario in which the world keeps warming at a 1.75 degrees C, fossil fuel investment would fall to just $3.3 trillion. All that extra spending by the energy industry would be put at risk."
The way I see this unfold is that oil is under a dual threat: if the macros turn sour with a trade ware coming up, oil may tank (see the article on that on oilprice.com) at the same point in time, more and more countries will need to get serious around climate change....
$4 trillion about 40 gigawatts solar ($100/MW)
Or, $4 trillion about 200 GWh solar ( probably a better measure since fossil fuels are not renewable) ($0.02/Wh)
Macron pledges 700 million euros for new solar projects
French President Emmanuel Macron on Sunday pledged hundreds of millions of dollars for solar projects in developing countries, as world leaders met in India to promote greater investment in renewable energy.
Macron, who in December warned that the global shift to a green energy future was too slow, said France would extend an extra 700 million euros ($861.5 million) through loans and donations by 2022 for solar projects in emerging economies.
He and Modi will open a new 100 megawatt solar plant near the holy Indian city of Varanasi on Monday. The French leader will also visit the Taj Mahal in Agra later Sunday.
Macron pledges 700 million euros for new solar projects
French President Emmanuel Macron on Sunday pledged hundreds of millions of dollars for solar projects in developing countries, as world leaders met in India to promote greater investment in renewable energy.
Macron, who in December warned that the global shift to a green energy future was too slow, said France would extend an extra 700 million euros ($861.5 million) through loans and donations by 2022 for solar projects in emerging economies.
He and Modi will open a new 100 megawatt solar plant near the holy Indian city of Varanasi on Monday. The French leader will also visit the Taj Mahal in Agra later Sunday.
Macron pledges 700 million euros for new solar projects
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