Renewable Energy

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How needs a carbon tax when the taxpayer is already forking out almost 100% of capital cost for the grand projects ref'd by the sciguy who ignores economics.

If the LCOE is so cheap for these massive RE plants ................ the business case would be self-evident. It isn't. It wasn't. Therefore the massive Corporate/Finance Welfare handouts.

It's called Rent Seeking btw. Rent seeking is an economic concept that occurs when an entity seeks to gain added wealth without any reciprocal contribution of productivity. Typically, it revolves around government-funded social services and social service programs.

https://www.investopedia.com/terms/r/rentseeking.asp
https://en.wikipedia.org/wiki/Rent-seeking

We do need a national carbon tax but a carbon tax is a nonstarter in many parts of the US right now. Many states have one or are considering one but the states that need it the most are going to be the last ones to accept it.


The LCOE are cheap the problem is even the utilities that have some market functions are not even close to free markets. Many utilities have rates set by costs, they are allowed a percentage over costs. Many of these utilities run silly community outreach programs because it increases their cost. These companies avoid cost cutting. Some community outreach in general may be desirable but much of what I have seen is bloat. LCOE also does not factor time of generation. Many plants were set up to run at 100% or shut down. They can also be engineered for hot stand by. This does not require new equipment but does require the creation of new procedures. Running multibillion dollar assets with very low turnover makes the industry extremely risk adverse.


There are some US utilities that compete to generate power at the lowest cost but even here there are many things that distort the market. Access to the grid is a big one some applications get stuck for years and some locations require the applicant to make major grid upgrades in that location. A fossil fuel plant probably has significant development around it making most of them an unlikely candidate for solar or wind. While the exact mechanisms vary greatly across the US utilities are highly regulated everywhere and they work within the rules they have. Those rules are often designed specifically to protect fossil fuels in some regions as much as they are designed to promote renewables in others. Wyoming which produces by far the most coal of any state has created many regulations to stop the closures of in state coal plants. West Virginia another large coal mining state has crafted a number of subsidies specifically designed to prop up coal. When some announcements to close coal plants were made in some cases local politicians pushed new subsidies to stop the closures.


You can try to claim that utilities are mostly market driven but it is far from true. 

[SeanAU]

WHO needs a carbon tax when the taxpayer is already forking out almost 100% of capital cost for the grand projects ref'd by the sciguy who ignores economics.

We do need a national carbon tax but a carbon tax is a nonstarter in many parts of the US right now. .....
You can try to claim that utilities are mostly market driven but it is far from true. 

 

Excellent list of excuses for failure (and likely all true) while completely ignoring the bigger elephant in the room ....

which was the current Fed Biden/Democrat laws means taxpayers (Govt welfare)  are paying as much as almost 100% (?) for all new current RE power plants nation wide mainly through Tax Credit rebate systems (Capital/Production) combined with Grants in Cash (depending).

The mega wealthy line up, secure the Loan for the Banks based on being repaid to build plants whether they are viable long term or not under normal economic conditions because the upfront CapEx is essentially as little as $0 (after rebates over the long term)....

Later they can sell the Project at "market prices" as a going concern and make another killing in mega profits becoming even more wealthy ..... the Banks win, Biden looks like a hero for a day, and the taxpayers and electricity consumers are on the hook for decades with no guarantee supply will be sufficient to meet demand.

No one bats an eyelid. Let's make some money - USA:101 

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 I think the biggest problem in the US power industry (and probably most others except China, India and to a lessor degree a few others) is the rate at which they move. That rate is glacial, sure it adds up to massive amounts overall but percentage wise it is extremely slow. In the US the electric power industry replaces about 2% of generation a year. I did that calculation about a year ago but it is more than just nameplate capacity because some assets run a lot more (capacity factor) than others. That represents a stagnant level of generation demand and on average a 50 year life for generation assets. Generation demand is starting to grow from data centers, cryptocurrency mining, electric vehicles, heat pumps and other electrification projects. Sadly the first two which are net increases in energy consumption are doing more than the last three which are switching from a different energy source to electricity.

 
New generation assets are starting to increase additions of nameplate capacity but solar at 23% capacity factor has to add about 2.5 times as much nameplate capacity as gas at 59% capacity factor. Wind is 34% capacity factor and coal is 42% capacity factor. All of these capacity factors are for 2023. Another thing to consider is plant life. Hydro plants last 100+ years, nuclear about 60 years, coal plants about 50 years, gas plants about 50 years, solar plants are guaranteed for 25 years but will probably last about 30 years and wind plants I think are expected to last around 30 years but I am less certain about that number. All of this means that adding 2.5 GW of solar adds about the same amount of generation as 1 GW of gas but 5 GW will be needed over the life of a gas plant.
A few comments about the charts the left axis is for the monthly change and running monthly average and the right axis is for the total nameplate capacity. The running monthly average is the average change of the previous 12 months. I have not decided how best to label that.

 
Coal has been closing about one GW per month. There was a surge of closures around the first half of 2023 and there is a dearth now. Some closures are planned years ahead and close as scheduled others are unannounced or are announced shortly before closing. Others are announced but the closure date gets pulled forward or pushed back. There are few coal closures scheduled between now and December of 2025 but some surprises could occur.
Long term gas plants were adding about 750 MW a month with significant variability. For the next two years gas plants are scheduled to add slightly more than are closing. Beyond next two years is hard to determine. I think we are approaching peak gas nameplate capacity but that is far from certain.
New wind generation had reached as high as 1.5 GW a month for a time but is averaging about 600 MW a month now. The outlook is even bleaker going forward but informing the government about future plans is not the first priority when things change.
Solar was about 1.5 GW a month and has been creeping up to 2 GW. That is scheduled to grow to 3 GW a month but may not sustain that level. The current growth level of 2 GW is only 1.4% per month but that sounds better than it is. Current US solar generation is only 4% of total generation so 1.4% a month increase of 4% takes a really long time to be noticeable. In any case it probably makes more sense to focus on GW and not percentages. The inflation reduction act was passed when solar was growing 1.5 GW a month and will soon hit 3 GW a month. So it doubled the growth of utility solar.
Gas and coal account for about 59% of electricity generation assuming unlimited loss and free battery storage (obviously not possible) and only solar is used the US needs 2050 GW of nameplate solar or 1911 GW more solar at current demand levels. Obviously there is loss in battery storage and we do not posses anything close to that level of storage. Further at least some (more likely a large amount) excess generation will be more economic than only using storage. At 3 GW a month that will take 53 years assuming old solar plants are repowered at their end of life as well. At 10 GW a month it would still take 16 years or until 2040 and that assumes demand does not grow at all.

[SeanAU]

OK here's a long bow but it is connected.

It's like a feeding frenzy of Piranhas

COP28 Outcomes Shape Private Equity Investment in Renewables
https://www.linkedin.com/pulse/cop28-outcomes-shape-private-equity-investment-renewables-sklar-dn99e
Blackrock et al
https://www.afr.com/policy/energy-and-climate/billions-in-capital-ready-to-finance-the-transition-20230817-p5dxdk
https://www.power-technology.com/data-insights/privateequity-activity-renewable-energy-power-industry/
https://www.linkedin.com/pulse/family-offices-private-equity-race-snap-up-renewable-energy-sklar-omq3e

Chris Hedges discusses the Private Equity Fund scourge which is turning Americans (and others) into serfs
".... Residents of nursing homes owned by private equity firms, for example, experience 10 percent more deaths because of staffing shortages and reduced compliance with standards of care. Private equity owned hospitals have created a crisis in the health-care system. Nursing shortages have contributed to one of every four unexpected hospital deaths or injuries caused by errors."

The U.S. economy is being held hostage by a small cohort of financiers who run private equity firms --- Apollo, Blackstone, the Carlyle Group and Kohlberg Kravis Roberts. These equity firms buy up and plunder businesses, piling on debt, refusing to reinvest, slashing staff and often driving companies into bankruptcy.  --- while  bleeding taxpayers of hundreds of billions in subsidies made possible by bought-and-paid-for  prosecutors, politicians, and regulators.
https://chrishedges.substack.com/p/the-chris-hedges-report-with-pulitzer/comments

If they do not care about patients, but only profits at any cost, will they care about reducing emissions RE projects or the environment long term?



RE equivalent to almost >100% CapEx credit over time ... this was first pointed out soon after the IRA was announced. It was almost achievable by combining multiple Govt issued benefits/grants and tax credits. I recall it but can't find any of the refs now .... search is hard these days. So the following will have to do for now, if I find the info one day I'll post it ....

The Inflation Reduction Act at a glance - Green Giraffe Advisory
12 July 2023 ... If you meet all ITC provisions, a project can receive up to 60% of the project CAPEX cost back in tax credits. Or USD 31.20 per MWh of ...
https://green-giraffe.com/publication/article/the-inflation-reduction-act-at-a-glance/


Renewable energy: US tax credits for wind and solar mostly benefit big banks
Renewable tax credits were never intended as a backdoor subsidy for Wall Street. Yet they now provide major tax shelters for banks; ones that need highly complex partnership forms to be legal at all. The renewable tax equity market was worth as much as US$18 billion in 2020 alone.
https://theconversation.com/renewable-energy-us-tax-credits-for-wind-and-solar-mostly-benefit-big-banks-173965

Production Tax Credit and Investment Tax Credit for Wind Energy
 the full production tax credit amount of 2.6 cents per kilowatt-hour or full investment tax credit of 30%
under the IRA, projects can receive stackable 10% (PTC) or 10 percentage point (ITC) bonus credits for either or both
The environmental justice bonus credits are stackable with the domestic content and energy community bonuses noted above
The Production Tax Credit (PTC) allows owners and developers of wind energy facilities (land-based and offshore) to claim a federal income tax credit on every kilowatt-hour of electricity sold to an unrelated party for a period of 10 years after a facility is placed into service.
Residential Renewable Energy Tax Credit for qualified expenditures- The credit applies to existing homes, newly constructed homes, principal residences, and second homes but not rental properties. There is no maximum credit.
projects beginning construction by Dec. 31, 2024, the IRA extends the ITC for up to 30% of the cost of installed equipment
the ITC is a one-time credit based on the dollar amount of the investment and is earned when the equipment is placed into service.
Starting in 2025, the IRA will convert energy tax credits into emissions-based, technology-neutral tax credits
The IRA creates new advanced manufacturing production credits
The IRA also reinstates a 30% Advanced Manufacturing ITC
https://windexchange.energy.gov/projects/tax-credits

During the initial 30-day application window, the IRA's Low-Income Communities Bonus Credit Program received more than 46,000 applications for new wind and solar projects, representing more than 8 gigawatts of proposed capacity. The 2023 allocation for the program is only 1.8 gigawatts.
https://www.reuters.com/sustainability/climate-energy/us-treasury-swamped-by-demand-bonus-wind-solar-tax-credits-low-income-areas-2023-12-04/

The other main issue was that these federal credits are Uncapped .... anyone who can get a project through the technical/admin hoops get the funds no questions asked, no limitations.

Still, Govts offering Incentives for positive actions that are good for the nation/people is a valid activity.
The unknown is will this IRA program be a Net Benefit to the common good, and solve the problem of reducing GHG emissions cost-effectively or not?
Maybe it is simply throwing money at a wall and hoping it sticks in the long run.
Will the US people ever know anyway because it will take years (if ever) to see how this pans out.
Cheers

[gerontocrat]

IEA's Monthly Electricity Statistics report including December 2023 data for the OECD - Summary (from email)

The latest IEA's Monthly Electricity Statistics report including December 2023 data shows that:

- In the OECD, the total net electricity production was 925.3 TWh in December 2023, down by 2.6% compared to December 2022. In 2023, total net OECD production was 10 674.2 TWh, reflecting a decrease of 1.5% compared to 2022. The year was marked by the shift from fossil fuels towards renewables and nuclear power.

Figure 1: OECD share of electricity generation by source (1st image attached)

- Electricity production from renewable sources rose to 318.7 TWh in December, marking a 7.7% increase compared to the same month last year. Over the course of 2023, production from renewable energy increased by 2.8%, driven by a significant growth in solar (+15.1% y-t-d) and wind (+4.4% y-t-d) electricity generation. However, hydropower production experienced a decline in 2023 compared to 2022, dropping by 1.6%, as production in the OECD Americas fell short of previous years due to lower precipitation and rising concerns of water availability in North America.
 
- Similarly, nuclear power production increased in December 2023 (+2.5% y-o-y) and closed the year with a similar increase on a year-to-date basis (+2.5%). This growth was driven by the OECD Asia Oceania region (+14.0% y-t-d), with higher production in Japan (+49.6% y-t-d) and Korea (+2.9% y-t-d). In OECD Europe despite the phase out of nuclear in Germany at the start of the second quarter (-79.5% y-t-d), the increase in generation in France (+14.9 y-t-d) compensated for the difference, resulting in an overall higher production in 2023 (+0.6% y-t-d).
 
- Conversely, electricity production from fossil sources in December 2023 decreased by -10.4% y-o-y, driven by reductions in coal (-17.7% y-o-y) and natural gas (-4.3% y-o-y) power generation. Looking at the full year, coal power production reached its lowest point in the past 10 years since the beginning of our data collection (-14.4% y-t-d), falling below the levels seen in 2020, which had been the lowest in the period. Natural gas power generation remained relatively stable in 2023 compared to 2022 (+0.4% y-t-d), with higher production in the OECD Americas (+9.1% y-t-d) counterbalancing the decrease in usage in OECD Europe (-16.7% y-t-d) and OECD Asia Oceania (-8.1% y-t-d).

Figure 2: Absolute change and relative change in electricity generation in selected economies between 2022 and 2023 (2nd image attached)

Non-OECD:
 
The trend of increased generation from renewables is also evident among non-OECD countries. However, electricity generation from fossil fuels still experienced growth in 2023 compared to 2022. Among the major non-OECD economies in our dataset, most of them demonstrated an increase in total net electricity production. In China, total production increased by 8.0%, with a significant contribution of coal power production (+6.9% y-t-d) and wind power (+27.2% y-t-d). India also witnessed a notable increase in net production by 8.0% y-t-d, with coal playing a major role in this increase (+10.4% y-t-d), while solar and wind power made smaller contributions (+19.2% and 17.2% y-t-d, respectively). In Brazil, generation rose by 4.1% y-t-d, driven primarily by renewable sources, including substantial increases in solar (+63.2% y-t-d) and wind power (+16.8% y-t-d).

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A new record solar generation day on the 4th at 621GWH.

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Another new record US solar generation on 4/14/24 at 677 GWH