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Doggydogworld
Active Member
Sure. Some are used often, some a couple times per year. The original statement implied the rarely used ones are easier to beat:
Did you notice that their "goal is to outcompete not just rarely used and expensive gas peaker plants, but...
The opposite is true, for reasons you describe. If you only use the battery a few times per year you need a ridiculously low upfront capital cost to be competitive. Batteries are best suited to provide a few hours of peaking every day.
The issue with baseload is duration. Batteries are ideal for high frequency, low duration.
adiggs
Well-Known Member
Just think 1984, by Orwell.
“War is peace.
Freedom is slavery.
Ignorance is strength.”
“Doublethink means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them.”
1984 Quotes by George Orwell
I think I need to go back and read it again.
Off Shore
Off Topic Member
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” ― Upton Sinclair
Doggydogworld
Active Member
California politicians are captive to unions. That's the #1 reason electricity (and many other) prices are so high. That said, the 3.3 cents/kWh headline number is a blended price. Phase 1 is:"drive up electricity prices ..." @ 3.3 cents per kwh?! Are we already at the point where people no longer understand what they're spouting?! Sometimes I wonder if we're really worth saving.
- 2 cents/kWh for 200 MW (peak) of daytime solar, plus
- 8.65 cents/kWh for up to 4 hours of 100 MW non-daytime dispatchable stored solar
Numbers are from this article (the text says Phase 1 storage is only 50 MW/200 MWh, but I trust the table). Also note this pricing assumes the contract is signed in 2019, to get the full 30% tax credit, but is not built until 2023 after four more years of component price declines.- 8.65 cents/kWh for up to 4 hours of 100 MW non-daytime dispatchable stored solar
Very crudely, the blended price is:
8 hours * 200 MW + 4 hours * 100 MW = 2000 MWh average daily output
8 hours * 200 MW * $19.97/MWh + 4 hours * 100 MW * $86.50/MWh = $66552
Blended price = $66552 / 2000 MWh = $33.28/MWh = 3.3 cents/kWh
2 cents/kWh for solar fed directly into the grid is terrific. 8.65 cents/kWh for stored solar is also very good and the lowest I've seen, but still higher than other dispatchable sources. Knowing CA politics and electricity pricing games, it would not surprise me one bit if this led to higher rates.
Final note - this project underscores the obvious benefits of daytime EV charging and V2H in sunny regions such as the SW US. Instead of paying 4x as much for the stored solar after the sun goes down, you get it "for free". At least it's free once car battery cycle life extends beyond the useful life of the car. We aren't there yet with cost-effective chemistries, but we're getting close.
adiggs
Well-Known Member
I think it's time to go reread some of these classics. It's been a long time since I read 1984 - I find it .. relevant.
I'm reading these descriptions differently. What they seem to be after is a dispactble solar with a 50% capacity factor. How do you do that with an average of 6 hours a day of solar?
Begin with 400MWdc solar. Gross generation is about 2400 MWh per average day. Clip this to just 200MWac max output. Store the excess solar power in upto 800MWh battery capacity and output at upto 200MWac. The hybrid system has maximum combined output of 200MWac with average daily output of 2400MWh, so this yields a 50% capacity factor.
In terms of pricing the PPA is simply $33/MWh as a package price. The power is dispatched so as to provide maximum value to the utility. So in particular the stored power is likely to be dispatched in the peak 4 hours when solar production is insufficient. There is no need to confuse the PPA price with the bidding price. The marginal cost of power is pretty close to zero to the developer/operator. But with the PPA, the utility pays for it whether or not it is used. So the utility should simply use paid-for resource in the manner that creates the most value.
This also makes it clear how threatening such a resource can be to other generators. There really is no marginal cost to the utility to use power already purchased under the PPA. So the bidding price can go to zero. There is, however, an opportunity cost that governs how much power is stored and when it is discharged. But the stored power can be a price taker at times of peak prices. It can underbid any fuel based peaker. So all those IBEW workers are concerned that a hybrid system like this can bid below the cost of fuel, labor and other marginal costs at thermal plants.
Mining giant looks to wind and solar to power huge nickel project | RenewEconomy
I love this, hybrid wind-solar-battery solutions for miners. In some cases, this avoids paying $400/MWh for diesel power. This is a wonderful way to decarbonize the supply chain for EVs and a whole lot more while saving money.
Miners may have an addition tailwind in the form of negative interest rates. Investors are hungry for bond like investments that can actually generate positive interest. These hybrid power systems are very heavy on capex and low on opex. This is very attractive for an industry concerned about weathering a recession but having access to cheap debt. I would expect investors to get on board with this. By comparison diesel power systems require both capex and opex. If economic conditions deteriorate to the point where operateling the mine does not pay the fuel bill, then the whole enterprise can be put at risk. But peeling off fuel as opex can allow the mine to continue to operate in more economically adverse conditions. So the hybrid power systems can help miners weather a recession.
I love this, hybrid wind-solar-battery solutions for miners. In some cases, this avoids paying $400/MWh for diesel power. This is a wonderful way to decarbonize the supply chain for EVs and a whole lot more while saving money.
Miners may have an addition tailwind in the form of negative interest rates. Investors are hungry for bond like investments that can actually generate positive interest. These hybrid power systems are very heavy on capex and low on opex. This is very attractive for an industry concerned about weathering a recession but having access to cheap debt. I would expect investors to get on board with this. By comparison diesel power systems require both capex and opex. If economic conditions deteriorate to the point where operateling the mine does not pay the fuel bill, then the whole enterprise can be put at risk. But peeling off fuel as opex can allow the mine to continue to operate in more economically adverse conditions. So the hybrid power systems can help miners weather a recession.
Dow Signs Deal To Source Oil From Plastic Waste | OilPrice.com
This is pretty interesting. It sounds like Fuenix Ecogy is pyrolyzing plastic waste. This separates it into gas, liquid (oil), and solid (char) forms. Dow will be using the pyrolytic oil as feedstock for plastics. This actually gets around the degradation that happens with other recycling approaches. It would be nice to know what is being done with the pyrolytic gas and char. I'd guess that the gas is used to run the pyrolysis. The char is inert carbon (about 2/3 of the carbon originally in the plastic waste). Char is a way to sequester the carbon for a long time.
I suspect they are burning the gas to run pyrolysis. It would be really cool if they used surplus power in microwave prmyrolysis instead. This could help balance the grid and increase usage of renewable power. The pyrolytic gas could also be used for petrochem feedstock or to displace other uses of natural gas.
I think of microwave pyrolysis as another technology like electrolysis that can help with grid balancing and convert power to gas and oil. As an added bonus it can do valuable carbon sequestration. Pyrolysis of organic waste can be an economical pathway to net negative carbon emissions. Handling plastic waste is also critically important even it it is net carbon positive.
This is pretty interesting. It sounds like Fuenix Ecogy is pyrolyzing plastic waste. This separates it into gas, liquid (oil), and solid (char) forms. Dow will be using the pyrolytic oil as feedstock for plastics. This actually gets around the degradation that happens with other recycling approaches. It would be nice to know what is being done with the pyrolytic gas and char. I'd guess that the gas is used to run the pyrolysis. The char is inert carbon (about 2/3 of the carbon originally in the plastic waste). Char is a way to sequester the carbon for a long time.
I suspect they are burning the gas to run pyrolysis. It would be really cool if they used surplus power in microwave prmyrolysis instead. This could help balance the grid and increase usage of renewable power. The pyrolytic gas could also be used for petrochem feedstock or to displace other uses of natural gas.
I think of microwave pyrolysis as another technology like electrolysis that can help with grid balancing and convert power to gas and oil. As an added bonus it can do valuable carbon sequestration. Pyrolysis of organic waste can be an economical pathway to net negative carbon emissions. Handling plastic waste is also critically important even it it is net carbon positive.
Doggydogworld
Active Member
That site is 7+ hours for single axis trackers.
Phase 1 is 200 MW ac capacity but only 400 MWh storage. You seem to be mixing Phase 1 and combined Phase 1+2 numbers.
The article estimates 265 MW of panels for Phase 1. That's 1850+ MWh/day gross. The author expects bi-facial, so add a little.
No, it's 19.97/MWh for solar plus a 13/MWh "adder" if the customer selects the storage option. The adder applies to all MWhs, though. Spreading the incremental cost of a few stored MWhs over the much larger base of all MWhs is good marketing, but it misleads people into thinking "solar+storage" is generically 33/MWh. Isolating the incremental cost of the stored MWhs lets us estimate pricing for a larger system. The incremental price I get for the stored (aka dispatchable) electricity is 86.5/MWh. That's not competitive with other dispatchable or baseload sources. For example, if you upsized Phase 1 to supply 200 MW 24x7 the overall price would be:
(1600 * 19.97 + 3200 * 86.50) / 4800 = $64.23/MWh
Let's be clear - that's extremely good for solar+storage. But it's not $33.
The problem is solar doesn't "bid". Solar can drive the market price for all other participants to zero (or less), but solar still receives full price. I understand why they rig it this way, if solar had to bid in the wholesale electricity market very few solar projects could attract funding. But we should dispense with this make-believe notion of a marketplace when in reality the winner is pre-determined.
It sounds like you think we are in disagreement here. Look, the PPA is a legal contract to buy power at a predetermined price. It does not really matter how the developer costs out the system. If you buy a PPA at $33/MWh, that's what you pay. Except when whole prices are negative (which would lead to curtailment), there is no marginal cost to the PPA holder to use the power, though there may be an opportunity cost associated with not using it optimally. So we are in agreement that bidding is not really an issue. The PPA holder is generally buying power to supplement what is already provided by the PPAs they hold. Although if this were in surplus, the PPA holder could be selling power from the PPA into the wholesale market. But either way the PPA holder is essentially a price taker.
I see in such an offtake agreement anything that is a matter of "rigging" the market or having a "pre-determined winner." That sort of language sounds like you think a PPA contract is a bad thing. It is essentially at type of lease. A utility could build out a system like this and own it entirely. That would put them essentially in the same position. Whatever power it can produce they will use or sell on the market so as to reap the highest return on the investment. So rather than have the utility own it. They lease it on a per MWh delivered basis. This safeguards the utility from a system that underperforms and from uncertainty about the residual value of the system once the PPA terminates. Additionally when utilities own assets they can typically get a 10% rate of return via ratepayers. A PPA may well be based on lower interest financing. So a PPA can minimize risk to the utility and reduce costs recovered from ratepayers. I think a PPA is a very good instrument, and it has been essential for building out wind and solar fleets. The one risk that the PPA does not avoid however is market risk. Is it possible that all the power delivered under the PPA could have been provided at lower cost by resources trading in the wholesale market? If so, then the PPA was priced too high in hindsight. But it is also possible that depending on the wholesale market would have been more expensive on average. If the PPA was priced too low in hindsight. Of course, hindsight is 20/20. Generally, the buyer believes prospectively that the PPA has higher value than the terms of the contract. So why would the developer want to sell below the expected value? The PPA helps them lock in capital at lower rates and have an asset to sell. They want to develop the power system, sell the PPA and get their money out of the deal. The developer does not want to wait ten years or more to break even on the deal, and they don't want the market risk themselves. There is no rigging here. It is just a matter a structuring a deal that is good for all parties.
As side digressions, I think it is interesting that we see solar developers so eager to overbuild (Wdc/Wac) and to add storage. Without getting into the weeds of this particular deal, suppose hypothetically that a developer wanted to sell a 100 MWac PPA, but builds 150 MWdc. Essentially the PPA buyer is contracting to buy the first 100MW of power produced whenever the sun is shining. What happens to the other up 50MW that that is in surplus to the PPA contract.
Well it could just be wasted. But then why have a DC:AC ratio so high? (Also note that this sort of clipping creates a higher capacity factor for the first 100MWac than for the 150MWdc, which can explain the difference between 6 hours for DC versus 7+ hours for AC. So the utility may think a higher CF resource is more valuable to them.)
Another option is that the owner of the physical system could sell it in the spot market. But this requires a bigger inter connection and dilutes the value of the PPA for the buyer. So that's not so good either.
A third possibility is that the developer adds a battery big enough to capture most of that excess power, then sell it onto the wholesale market to fetch peak prices. So in this situation the PPA holder has no claim on the power in the battery, and its power will usually be discharged when prices are well above the PPA price so no dilution of value. In this set up the developer is creating a residual asset that competes as an independent power producer with other peaking generators.
So what is the value of this residual stored power asset? Value depends not on the cost of the asset, but rather on the average price that the power is expected to sell at in the market.
So think of it this way the developer makes one hybrid system, but has two contracts to sell: 1) a PPA on the first 100MW of solar and 2) a PPA for stored residual power. Contract 2) clearly has substantially more value per MWh delivered than contract 1). So the developer wants to price both of these contracts on the basis of the value of the powered delivered rather than the cost of the total system or any break out of the system components. Profit to the developer is the selling prices of the two contracts minus the system cost.
I think this lends some insight into why we cannot look at the PPA contracted prices and infer back to underlying costs. Prices reflect value not cost. I think this explains why the solar only PPA is so incredibly cheap. The PPA on solar only could actually be priced below 100MWac as a stand alone system. The opportunity for residual stored power could be so great that it subsizes the solar only PPA.
If this hunch is correct, we could see all sorts of super low solar PPAs quoted. I'm actually not too worried about whether a utility buys the stored power PPA, as there are other investors who could want to step in and buy it. As the price of batteries decline, eventually it will be worthwhile for someone to buy up that residual power and trade it on the market. So solar developers may as well build out systems with high DC:AC ratios and capture the full value in one or two contracts.
@jhm following up on your post a page or two back, Mark Jacobson from Stanford has described two methods of making steel that have very low carbon emissions. See Chapters 2.4.7.1 and 2.4.7.2 here: https://web.stanford.edu/group/efmh/jacobson/Articles/I/NonEnergySolutions.pdf
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The Real Reason Why US Oil Production Has Peaked | OilPrice.com
So now we're seeing discussion of peak oil production in the US. If the US peaks that well could mean that global production peaks.
What's going on? I suspect the basic problem is that oil prices are running too low to keep attracting heavy investment. I don't buy the idea that decline rates are insurmountable. I think it is more about the flow of cash than geology.
Ok, so if investment levels are high enough to grow production, what's next? The author affirms believe in quantitative demand growth. So there is this suggestion that if production declines, the price will go back up eventually. But will it? First, if investors are becoming less enamored with holding oil as a financial asset, the huge hoards of oil stock could become supply. Stock levels could fall, but this need not mean the price will rise. We've actually been seeing this happening in the IS with natural gas. Inventory is at five-year lows, but the price lingers at five-year lows as well. So basically, if investors lose the appetite to hold oil stock, inventory levels can decline without triggering much of a price response.
So the decline in inventory actually allows consumption to continue at levels higher than production. How long could that go on? If the deficit is not too severe, it could go on for years. And each year that drags on puts us a year closer to peak demand. So in this slow draw down scenario, the price of oil could stay low as production declines until consumption begins to decline as well.
This is just one scenario, but I think it is interesting. It suggest that production can peak several years before consumption declines all while the price of oil remains low. In fact it is the inability of a tightening oil market to raise prices that makes it possible for production to peak before consumption.
So what is this scenario, peak production or peak demand? Not really either. It is mostly about a withdrawal in investor support. Producers make due with less capital and find it less costly just to sustain production levels rather than grow them. Inventory loses value and is slowly drawn down. And consumers become more interested in EVs and other alternatives enough so that prices don't surge up high enough improve investment levels.
Perhaps the should be called the Meh Oil scenario.
So now we're seeing discussion of peak oil production in the US. If the US peaks that well could mean that global production peaks.
What's going on? I suspect the basic problem is that oil prices are running too low to keep attracting heavy investment. I don't buy the idea that decline rates are insurmountable. I think it is more about the flow of cash than geology.
Ok, so if investment levels are high enough to grow production, what's next? The author affirms believe in quantitative demand growth. So there is this suggestion that if production declines, the price will go back up eventually. But will it? First, if investors are becoming less enamored with holding oil as a financial asset, the huge hoards of oil stock could become supply. Stock levels could fall, but this need not mean the price will rise. We've actually been seeing this happening in the IS with natural gas. Inventory is at five-year lows, but the price lingers at five-year lows as well. So basically, if investors lose the appetite to hold oil stock, inventory levels can decline without triggering much of a price response.
So the decline in inventory actually allows consumption to continue at levels higher than production. How long could that go on? If the deficit is not too severe, it could go on for years. And each year that drags on puts us a year closer to peak demand. So in this slow draw down scenario, the price of oil could stay low as production declines until consumption begins to decline as well.
This is just one scenario, but I think it is interesting. It suggest that production can peak several years before consumption declines all while the price of oil remains low. In fact it is the inability of a tightening oil market to raise prices that makes it possible for production to peak before consumption.
So what is this scenario, peak production or peak demand? Not really either. It is mostly about a withdrawal in investor support. Producers make due with less capital and find it less costly just to sustain production levels rather than grow them. Inventory loses value and is slowly drawn down. And consumers become more interested in EVs and other alternatives enough so that prices don't surge up high enough improve investment levels.
Perhaps the should be called the Meh Oil scenario.
Exxon Mobil Corp. is poised to drop out of the S&P 500 Index’s 10 biggest companies for the first time since the index’s inception some 90 years ago, the consummation of a long-term trend of tech titans replacing industrial giants in the top ranks of U.S. stock market.
Exxon Poised to Drop From S&P 500’s Top 10 for First Time Ever
Exxon Poised to Drop From S&P 500’s Top 10 for First Time Ever
"Twenty-six U.S. oil-and-gas producers including Sanchez Energy Corp. and Halcón Resources Corp. have filed for bankruptcy this year, according to an August report by the law firm Haynes & Boone LLP. That nearly matches the 28 producer bankruptcies in all of 2018, and the number is expected to rise as companies face mounting debt maturities."
Oil and Gas Bankruptcies Grow as Investors Lose Appetite for Shale
Oil and Gas Bankruptcies Grow as Investors Lose Appetite for Shale
TheTalkingMule
Distributed Energy Enthusiast
What are the odds that happens given the nature of human beings?
Math folks like @neroden might be inclined to see it this way because it makes sense economically. But this is the largest economic disruption in human history, all happening within a 10 year window. I think we're much more likely to see chaos as the entire means of global wealth concentration disappears.
Logically anything over a $25/barrel cost basis is done, if not now then within 3 years. Peak demand being visible to the investor class is all it takes and that should be consensus now, but if not it'll certainly set in at some point over the next 36 months. Once the first rats start fleeing the ship, we can draw a line somewhere in the extraction cost spectrum over which no one will invest again.
What does that do to pricing? Who knows, it depends where the line is drawn, when it's drawn, and where demand sits. Mathematically we should see cheap oil from there til the end(no matter when are where it's drawn), but what happens when fracking abruptly ends along with all of-shore exploration and drilling?
Certainly the stark end to investment will cause major price spikes. The big difference being....no one's gonna response to these price spikes, not even frackers. Perhaps this is why we see the majors flooding into the Permian. Is their idea that these price spikes are inevitable and they can simply sit on drilled wells for years waiting to extract when WTI hits $170?
My thesis has always been that oil nations get their acts together and pump like mad til the end to maximize revenue, but I'm throwing that out the window. It's far to easy for SA to drone strike Iranian export infrastructure and reap the double reward of hurting Iran and throwing itself a pricing lifeline. We're all gonna die unless we get moderately lucky.
ZachF
Active Member
Kind of... I'm still of the opinion that the floor price will remain higher because petro states need much higher prices than the true cost of production, because their entire government revenue structure depends on it.
Sure, Saudi Arabia production "cost" is only like $10/barrel, but if prices got anywhere near that for even a small extension of time, the Saudi economy would collapse. Saudi Arabia needs oil money to keep it's dollar peg and fund it's exports. Saudi Arabia needs oil money to fund it's government. The amount of austerity the Saudi government would have to install if prices stayed at $25/barrel for a prolonged period of time would cause a revolution. Most of the other petro states aren't much better.
Look at Venezuela, Venezuela was the weakest link petro-state... That is IMHO the unfortunate future for many petro-states as the transition happens.
dc_h
Active Member
The destabilization caused by declining oil prices is not likely going to result in a linear decline in prices. After each step down a weaker producer, like Venezuela, will collapse. A small rise will follow with a slow walk back down. Political processes, like locking Iran out of the market will likely continue. Diplomacy is cheaper then war, but it seems this will break down at some point. The Saudi’s seem more likely to go bankrupt then Iran, since they don’t have a complex economy behind the oil economy.
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