The Lemon Fool

I think over the coming decade I would rely on Shell, and perhaps BP, to pivot into renewables whilst paying me an income, rather than rely on renewables players to deliver divis in any sort of scale.
Shame about my underwater capital in those transiting oil majors, but heyho.

V8

Peak Oil
BP has called time on the world’s rising demand for fossil fuels after finding that demand for oil may have already reached its peak and faces an unprecedented decades-long decline. Demand for oil may never fully recover from the impact of the coronavirus pandemic, according to the oil firm, and may begin falling in absolute terms for the first time in modern history. BP’s influential annual report on the future of energy, published on Monday,

(webcast to be this afternoon 1330, https://www.bp.com/en/global/corporate/ ... tlook.html)

- dspp

dspp wrote:Peak Oil
BP has called time on the world’s rising demand for fossil fuels after finding that demand for oil may have already reached its peak and faces an unprecedented decades-long decline. Demand for oil may never fully recover from the impact of the coronavirus pandemic, according to the oil firm, and may begin falling in absolute terms for the first time in modern history. BP’s influential annual report on the future of energy, published on Monday,

(webcast to be this afternoon 1330, https://www.bp.com/en/global/corporate/ ... tlook.html)

- dspp

Reuters article frontrunning this with pre-released graphs etc

https://uk.reuters.com/article/us-bp-en ... KKBN26410O

- dspp

folks starting to write more end of oil articles on the back of BP webcasts,

Lost in transition: Big Oil searches for purpose as peak demand looms
BP’s decision to slash its crude production this decade is brave. But its assumption that pivoting to low carbon will be profitable is heroic
https://energyflux.substack.com/p/lost- ... l-searches

the red bit is the problem I have been mentioning for a very long time.

regards, dspp

from US EIA, such as in https://www.eia.gov/todayinenergy/detail.php?id=45096
- dspp

The UK is poised to bring forward its ban on new fossil fuel vehicles from 2040 to 2030 to help speed up the rollout of electric vehicles across British roads.

https://www.theguardian.com/environment ... es-to-2030

- dspp

-

Airbus, we have the ambition to develop the world’s first zero-emission commercial aircraft by 2035. Hydrogen propulsion will help us to deliver on this ambition. Our ZEROe concept aircraft enable us to explore a variety of configurations and hydrogen technologies that will shape the development of our future zero-emission aircraft.

- etc

https://www.airbus.com/innovation/zero- ... zeroe.html

- dspp

What I can't determine is will the increasing amount of energy produced by renewables (solar and wind), along with whatever energy is produced by the oil companies, drive down the price of energy and thus the profitability of renewable energy stocks and IT's?

richfool wrote:What I can't determine is will the increasing amount of energy produced by renewables (solar and wind), along with whatever energy is produced by the oil companies, drive down the price of energy and thus the profitability of renewable energy stocks and IT's?

I think it already is doing this, and I have been saying this for a few years. However there are multiple things rolled up into the price signal so it is quite confusing to sort them out and at any given moment other factors also drive pricing.

I think that renewables has taken a wedge out of overall energy demand that is now equal to, or slightly greater than, the annual increase in global energy demand (~1% yoy from memory). That is why Oil & Gas are now building out at a slower rate than they were in the past. They can see that the investment signal is now for replacement only (~7% reservoir decline yoy from memory) or is in fact less as that renewables wedge gets bigger. In the short term most of that impact is going to coal, but it is coming for O&G as well.

Over time that will lead to erratically higher prices (during O&G supply disruptions) and erratically lower prices (during O&G demand disruptions, as now in covid19), but on aggregate lower prices. I think that effect is going on already.

Problem for your thesis (and mine as an RDSB holder) is that the merit order effect means that most expensive sources get squeezed first. So nuclear and oil are first on the block, if they can be replaced. For nuclear it is a cinch that it is no longer needed. For oil it is coming quick that it is no longer needed. The next 20-30 years are good for renewables + gas as they are the winners on a levelised cost basis

"In a dramatic reversal, one of the world's biggest makers of coal-fired power plants is to exit the market and focus on greener alternatives. US industrial giant General Electric said it would shut or sell sites as it prioritised its renewable energy and power generation businesses.....GE has said in the past it would focus less on fossil fuels, reflecting the growing acceptance of cleaner energy sources in US power grids. But just five years ago, it struck its biggest ever deal - paying almost £10bn for a business that produced coal-fuelled turbines."
https://www.bbc.co.uk/news/business-54242055

- dspp

dspp wrote:Problem for your thesis (and mine as an RDSB holder) is that the merit order effect means that most expensive sources get squeezed first. So nuclear and oil are first on the block, if they can be replaced. For nuclear it is a cinch that it is no longer needed. For oil it is coming quick that it is no longer needed. The next 20-30 years are good for renewables + gas as they are the winners on a levelised cost basis

Thank you for your assessment. Can I rightly conclude from the last part of your post, quoted above, that my holdings in JLEN and TRIG are not at risk (in terms of income flow or capital loss) for the next 20-30 years?

richfool wrote:

dspp wrote:Problem for your thesis (and mine as an RDSB holder) is that the merit order effect means that most expensive sources get squeezed first. So nuclear and oil are first on the block, if they can be replaced. For nuclear it is a cinch that it is no longer needed. For oil it is coming quick that it is no longer needed. The next 20-30 years are good for renewables + gas as they are the winners on a levelised cost basis

Thank you for your assessment. Can I rightly conclude from the last part of your post, quoted above, that my holdings in JLEN and TRIG are not at risk (in terms of income flow or capital loss) for the next 20-30 years?

Without delving into the detail of the JLEN and TRIG farms I can't comment.

regards, dspp

Tesla battery day presentation is at https://www.tesla.com/en_gb/2020shareholdermeeting

In it is this slide, which is consistent with everything else, and I've scribbled the $/kWh number on it



Courtesy ZachF on TMC at https://teslamotorsclub.com/tmc/posts/5015764/ you can get the basic arithmetic very well set out, using numbers that seem consistent to my eyes with Lazards etc,

$50/KWh at the pack level with 3000+ cycles means it costs about two cents to store a KWh of electricity.

Solar and wind are already printing levelized costs of ~2 cents per KWh to produce.

The O&M + Fuel costs for gas and nuclear are about 2.5 cents and 3-3.5 cents for coal. This is just to run an already existing plant. There is no scenario where 2 cent solar production costs and 2 cent storage doesn't sweep through the utility sector like the Cali wildfires.

(note these are US numbers, the differ somewhat in other countries but the punchline remains)

The question becomes how fast Tesla scale and how fast anybody follows them. With no followers it will be an elective decision for Tesla as to how to set the price/cost gap. With a follower the market will push that price/cost gap down quickly, and that in turn will end of life oil & gas & coal companies quite quickly.

regards, dspp

Should you ditch energy giants as the age of oil ends and swap to investments that look to green energy instead?

There has been talk of the demise of oil and gas for decades. But you know that things are getting serious when even the boss of oil giant BP, Bernard Looney, warns that demand for oil may peak in the next few years and then decline.

The so-called energy transition from fossil fuels to renewables is gaining momentum.

https://www.thisismoney.co.uk/money/inv ... -ends.html

richfool wrote:Should you ditch energy giants as the age of oil ends and swap to investments that look to green energy instead?

There has been talk of the demise of oil and gas for decades. But you know that things are getting serious when even the boss of oil giant BP, Bernard Looney, warns that demand for oil may peak in the next few years and then decline.

The so-called energy transition from fossil fuels to renewables is gaining momentum.

https://www.thisismoney.co.uk/money/inv ... -ends.html

Hi Rich,

As you may remember I'm 2 and half years new to investing. But regards what you've said above it's what I've done over the last few months. I sold out of all RDSB at about 1250p at about a 40% loss. Whilst I continue to hold engineers with some oil/gas/ICE-auto/aero customers, e.g. BOY and VCT, I'm reluctant to topup currently.

But I've topped up UKW (greencoat wind), and put down a speculative (about 0.8% of our total investments) holding in CWR (ceres power) the fuel cell people. Also looking at ITM power. Still umming and ahhing about TSLA.

My Dad gave me a recent article (Telegraph?) about a couple of firms Vestra (Danish) and Siemens Gamesa (German?) that build Wind turbine parts and have the service contracts, but uninspiring ONs (vestra) and lack of info (siemens gamesa) halted further investigation.

Matt

TheMotorcycleBoy wrote:

richfool wrote:Should you ditch energy giants as the age of oil ends and swap to investments that look to green energy instead?

There has been talk of the demise of oil and gas for decades. But you know that things are getting serious when even the boss of oil giant BP, Bernard Looney, warns that demand for oil may peak in the next few years and then decline.

The so-called energy transition from fossil fuels to renewables is gaining momentum.

https://www.thisismoney.co.uk/money/inv ... -ends.html

Hi Rich,

As you may remember I'm 2 and half years new to investing. But regards what you've said above it's what I've done over the last few months. I sold out of all RDSB at about 1250p at about a 40% loss. Whilst I continue to hold engineers with some oil/gas/ICE-auto/aero customers, e.g. BOY and VCT, I'm reluctant to topup currently.

But I've topped up UKW (greencoat wind), and put down a speculative (about 0.8% of our total investments) holding in CWR (ceres power) the fuel cell people. Also looking at ITM power. Still umming and ahhing about TSLA.

My Dad gave me a recent article (Telegraph?) about a couple of firms Vestra (Danish) and Siemens Gamesa (German?) that build Wind turbine parts and have the service contracts, but uninspiring ONs (vestra) and lack of info (siemens gamesa) halted further investigation.

Matt

Hi Matt,
You can get exposure to both Siemens and Vestra, in more modest doses through an ETF INRG. Mentioned on the thread, Green Infrastructure funds, - see PrefInvestor's post:
viewtopic.php?f=8&t=17343&start=300

https://www.hl.co.uk/shares/shares-sear ... -ucits-etf

You could gain exposure to Tesla through investment trusts: SMT in a larger percentage, or Monks in a smaller percentage.

"All new U.S. electricity generation capacity came from renewables this summer

According to ..... Federal Energy Regulatory Commission (FERC), renewable energy sources dominated new U.S. electrical generating capacity additions in the first eight months of 2020. Combined, they accounted for 63.3% — or 10,445 MW — of the 16,499 MW of new utility-scale capacity added during the first two-thirds of this year...... Moreover, all of the 2,781 MW of new generating capacity added during June, July and August was provided by solar (1,448 MW), wind (1,309 MW), and hydropower (24 MW). "

https://www.solarpowerworldonline.com/2 ... is-summer/

It is happening. NOW.



regards, dspp

UK Carbon Capture & Storage (CCS) tries again

Using utterly conventional amine scrubbing (just like I have operated for carbon capture offshore myself in the past):

The veteran North Sea oil extractor is leading a partnership including Italy’s state oil company Eni, Norway’s Equinor, National Grid, Royal Dutch Shell and French energy company Total in a plan to transport 17m tonnes of carbon dioxide every year from two separate carbon capture projects based in the Teesside and Humber industrial clusters on England’s east coast.

At Teesside, BP will work with the same oil companies, in a separate venture, to capture up to 10m tonnes of carbon dioxide a year from the industrial cluster – equivalent to the same emissions produced from the energy used by 3m UK homes – from the mid-2020s. Meanwhile, at the Humber a separate alliance including National Grid, Equinor and power generator Drax hopes to capture at least 17m tonnes of CO2 from hundreds of refineries, factories and the Drax coal-fired power plant. The new alliance will operate the pipes and storage facility needed to transport the emissions from both industrial zones and dispose of almost 50% of the UK’s industrial emissions in salt caverns beneath the North Sea seabed.

https://www.theguardian.com/environment ... e-projects

Cheap this is not,

"The UK government has promised £800m ...."

- dspp

dspp wrote:UK Carbon Capture & Storage (CCS) tries again

Using utterly conventional amine scrubbing (just like I have operated for carbon capture offshore myself in the past):

The veteran North Sea oil extractor is leading a partnership including Italy’s state oil company Eni, Norway’s Equinor, National Grid, Royal Dutch Shell and French energy company Total in a plan to transport 17m tonnes of carbon dioxide every year from two separate carbon capture projects based in the Teesside and Humber industrial clusters on England’s east coast.

At Teesside, BP will work with the same oil companies, in a separate venture, to capture up to 10m tonnes of carbon dioxide a year from the industrial cluster – equivalent to the same emissions produced from the energy used by 3m UK homes – from the mid-2020s. Meanwhile, at the Humber a separate alliance including National Grid, Equinor and power generator Drax hopes to capture at least 17m tonnes of CO2 from hundreds of refineries, factories and the Drax coal-fired power plant. The new alliance will operate the pipes and storage facility needed to transport the emissions from both industrial zones and dispose of almost 50% of the UK’s industrial emissions in salt caverns beneath the North Sea seabed.

https://www.theguardian.com/environment ... e-projects

Cheap this is not,

"The UK government has promised £800m ...."

- dspp

I’m curious to know where these salt caverns beneath the North Sea are. I assume they actually mean inject (at high cost) into sandstone reservoirs underneath the salt. Certainly not cheap.

dspp wrote:UK Carbon Capture & Storage (CCS) tries again

Using utterly conventional amine scrubbing (just like I have operated for carbon capture offshore myself in the past):

The veteran North Sea oil extractor is leading a partnership including Italy’s state oil company Eni, Norway’s Equinor, National Grid, Royal Dutch Shell and French energy company Total in a plan to transport 17m tonnes of carbon dioxide every year from two separate carbon capture projects based in the Teesside and Humber industrial clusters on England’s east coast.

At Teesside, BP will work with the same oil companies, in a separate venture, to capture up to 10m tonnes of carbon dioxide a year from the industrial cluster – equivalent to the same emissions produced from the energy used by 3m UK homes – from the mid-2020s. Meanwhile, at the Humber a separate alliance including National Grid, Equinor and power generator Drax hopes to capture at least 17m tonnes of CO2 from hundreds of refineries, factories and the Drax coal-fired power plant. The new alliance will operate the pipes and storage facility needed to transport the emissions from both industrial zones and dispose of almost 50% of the UK’s industrial emissions in salt caverns beneath the North Sea seabed.

https://www.theguardian.com/environment ... e-projects

Cheap this is not,

"The UK government has promised £800m ...."

- dspp

I’m curious to know where these salt caverns beneath the North Sea are. I assume they actually mean inject (at high cost) into sandstone reservoirs underneath the salt. Certainly not cheap.

Nimrod103 wrote:

dspp wrote:UK Carbon Capture & Storage (CCS) tries again

Using utterly conventional amine scrubbing (just like I have operated for carbon capture offshore myself in the past):

The veteran North Sea oil extractor is leading a partnership including Italy’s state oil company Eni, Norway’s Equinor, National Grid, Royal Dutch Shell and French energy company Total in a plan to transport 17m tonnes of carbon dioxide every year from two separate carbon capture projects based in the Teesside and Humber industrial clusters on England’s east coast.

At Teesside, BP will work with the same oil companies, in a separate venture, to capture up to 10m tonnes of carbon dioxide a year from the industrial cluster – equivalent to the same emissions produced from the energy used by 3m UK homes – from the mid-2020s. Meanwhile, at the Humber a separate alliance including National Grid, Equinor and power generator Drax hopes to capture at least 17m tonnes of CO2 from hundreds of refineries, factories and the Drax coal-fired power plant. The new alliance will operate the pipes and storage facility needed to transport the emissions from both industrial zones and dispose of almost 50% of the UK’s industrial emissions in salt caverns beneath the North Sea seabed.

https://www.theguardian.com/environment ... e-projects

Cheap this is not,

"The UK government has promised £800m ...."

- dspp

I’m curious to know where these salt caverns beneath the North Sea are. I assume they actually mean inject (at high cost) into sandstone reservoirs underneath the salt. Certainly not cheap.

I think they really mean salt diapirs, not salt caverns, but I have not had the will to investigate further. But I certainly agree re injection cost, and o/a cost. Maybe it will be a CCS project that actually gets built this time, or maybe not ........

regards, dspp