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Jay McKinsey

Clean Energy Is Canceling Gas Plants

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Over the past two years, interconnection queue data from PJM and ERCOT have shown a drastic shift away from new gas and a steep rise in renewable energy projects. In these two regions, investors finance projects based on expected returns in the competitive market—not based on expectations of cost recovery allowed by regulators of monopoly, vertically-integrated utilities. In other words, this trend represents the shifts in internal risk and reward calculus among investors in highly competitive markets, and reflects a market-based, consensus view of the underlying economic value of different power sources. https://rmi.org/clean-energy-is-canceling-gas-plants/

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Mr. McKinsey 

Just for edification purposes, you may want to preserve that article from the Rocky Mountin Institute as an outstanding example of how information is presented so that public perceptions - and opinions - are both shaped and influenced.

Nowhere in that article is made mention of the Production Tax Credits nor the Investment  Tax Credits which will expire/phase out in 90 days.

Anything not under actual construction gleans no benefits, hence the frantic rush these past few years to get projects to qualify.

In fact, should you or anyone check the EIA's chart showing future expected power production, wind drops off a cliff past 2022 as practically  no new projects will break ground after January 1, 2021.

 

Of FAR more immediate  consequence,  however, is the anticipated effects of FERC's MOPR decision which will be nothing short of a knockout blow to new Renewables (sic) if it stands as presently declared.

One other item of consequence, perhaps, is the criminal  case now lodged against Ohio politicians  for accepting bribes from the nuke boys for passing regulations  which have dimmed competition from the gas boys.

Actually, Mr. McKinsey, there are several massive CCGPs under construction in the Appalachian Basin with West Virginia just granting its first go ahead despite ferocious opposition from the coal industry.

 

BTW, your expectations regarding that massive wind project in Wyoming sending juice to California is getting a little ... dicey.

The pols in the Cowboy State are none too thrilled about Oakland's obfuscation surrounding the big coal export terminal proposed in Oakland. Likewise, placing relatively high tax rates on Wyoming-produced wind output is fast gaining traction.

A bump up in rates is the last thing you Californians need right now.

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On 10/4/2020 at 12:19 PM, Coffeeguyzz said:

Mr. McKinsey 

Just for edification purposes, you may want to preserve that article from the Rocky Mountin Institute as an outstanding example of how information is presented so that public perceptions - and opinions - are both shaped and influenced.

Nowhere in that article is made mention of the Production Tax Credits nor the Investment  Tax Credits which will expire/phase out in 90 days.

Anything not under actual construction gleans no benefits, hence the frantic rush these past few years to get projects to qualify.

In fact, should you or anyone check the EIA's chart showing future expected power production, wind drops off a cliff past 2022 as practically  no new projects will break ground after January 1, 2021.

 

Of FAR more immediate  consequence,  however, is the anticipated effects of FERC's MOPR decision which will be nothing short of a knockout blow to new Renewables (sic) if it stands as presently declared.

One other item of consequence, perhaps, is the criminal  case now lodged against Ohio politicians  for accepting bribes from the nuke boys for passing regulations  which have dimmed competition from the gas boys.

Actually, Mr. McKinsey, there are several massive CCGPs under construction in the Appalachian Basin with West Virginia just granting its first go ahead despite ferocious opposition from the coal industry.

 

BTW, your expectations regarding that massive wind project in Wyoming sending juice to California is getting a little ... dicey.

The pols in the Cowboy State are none too thrilled about Oakland's obfuscation surrounding the big coal export terminal proposed in Oakland. Likewise, placing relatively high tax rates on Wyoming-produced wind output is fast gaining traction.

A bump up in rates is the last thing you Californians need right now.

The renewable tax credits do not explain why gas in the queue has been steadily dropping:

CEP-Exhibit-2.png

If Biden wins then FERC will be kicked to the curb. If Trump wins then the states will leave the market. Also note that the market applies to merchant electricity sales, not PPA. PPA alone will support robust renewable growth.

Coal in Wyoming is dying and as wind takes over an appropriate tax rate will be arrived at and $1 MWh is hardly a burdensome problem.

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On 10/5/2020 at 5:39 PM, Jay McKinsey said:

The renewable tax credits do not explain why gas in the queue has been steadily dropping:

CEP-Exhibit-2.png

If Biden wins then FERC will be kicked to the curb. If Trump wins then the states will leave the market. Also note that the market applies to merchant electricity sales, not PPA. PPA alone will support robust renewable growth.

Coal in Wyoming is dying and as wind takes over an appropriate tax rate will be arrived at and $1 MWh is hardly a burdensome problem.

Details matter.

RE: why gas is leaving the queue: how does electricity demand look right now? Also, how much of that gas capacity is peaking plants being replaced by battery storage - a technology distinct from renewables with its own business case? Finally, of course they're going to build less gas if they're receiving subsidies for renewables. Let's see what happens after the subsidies dry up and everyone realizes more renewables require more grid investments.

Also, what does this chart look like when you correct for capacity factors? It's all fine and well to say there are 80GW of solar power in the pipeline, but what really matters is energy. I.e. find the expected capacity factor of these plants, and calculate expected energy production. The resulting plot won't be so poignant.

Solar is forever stuck at a 20-25% capacity factor because the sun goes down at night. Physical limit. Wind can theoretically achieve 50-60% capacity factor - if you build 12MW turbines in the North Sea on the tallest possible towers. Most locations don't fare so well. You can build out excess wind, but then you have a windy day and end up curtailing production. I.e. you don't achieve your 50-60% capacity factor. And of course, the wind and solar aren't always where your demand is, so you have to build long transmission lines. And you still have to build synthetic inertia. As you increase your renewable production, this all becomes progressively more expensive. The chart you listed above represents not only the influence of subsidies, but also a grid that hasn't yet hit physical constraints. We're still in the honeymoon phase of renewable development.

Meanwhile, battery storage will not only shave demand peaks, but also fill demand troughs. I.e. we're going to see an increase in base load demand. That means more of your coal, gas, and nuclear plants running flat-out. What's the limit of that? Nuclear power plants run at 90+% capacity, with the <10% downtime accounted for almost entirely by refueling outages. Gen IV reactors will be around 95% capacity factor. Coal and natural gas easily achieve 85%. With the right maintenance, they could probably match nuclear.

Could wind and solar take over the grid? I suppose it's theoretically possible, but many things would have to become extremely cheap. We don't have a technology roadmap to that - much less working prototypes. I would bet the future of the grid includes lots of natural gas, nuclear, coal, and batteries.  Renewables will exist where renewable resources are exceptionally abundant or to appease the masses. Then, once demographics shift toward conservatism (liberals aren't procreating), renewables will finally be isolated to their proper niche.

Greenies will point toward ever cheaper wind and solar. As an engineer, I would point toward physical limits we're rapidly approaching. You can only make a tower so tall, a turbine blade so long, a solar panel so efficient, and any of these so cheap - not for some contrived business or legal reason, but because there are physical limits.

Physics does not bend. If you want to change physics, you need another Einstein. I don't typically base investment decisions on whether another Einstein appears, but you do you.

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(edited)

On 10/19/2020 at 7:39 AM, BenFranklin'sSpectacles said:

Details matter.

RE: why gas is leaving the queue: how does electricity demand look right now? Also, how much of that gas capacity is peaking plants being replaced by battery storage - a technology distinct from renewables with its own business case? Finally, of course they're going to build less gas if they're receiving subsidies for renewables. Let's see what happens after the subsidies dry up and everyone realizes more renewables require more grid investments.

Also, what does this chart look like when you correct for capacity factors? It's all fine and well to say there are 80GW of solar power in the pipeline, but what really matters is energy. I.e. find the expected capacity factor of these plants, and calculate expected energy production. The resulting plot won't be so poignant.

Solar is forever stuck at a 20-25% capacity factor because the sun goes down at night. Physical limit. Wind can theoretically achieve 50-60% capacity factor - if you build 12MW turbines in the North Sea on the tallest possible towers. Most locations don't fare so well. You can build out excess wind, but then you have a windy day and end up curtailing production. I.e. you don't achieve your 50-60% capacity factor. And of course, the wind and solar aren't always where your demand is, so you have to build long transmission lines. And you still have to build synthetic inertia. As you increase your renewable production, this all becomes progressively more expensive. The chart you listed above represents not only the influence of subsidies, but also a grid that hasn't yet hit physical constraints. We're still in the honeymoon phase of renewable development.

Meanwhile, battery storage will not only shave demand peaks, but also fill demand troughs. I.e. we're going to see an increase in base load demand. That means more of your coal, gas, and nuclear plants running flat-out. What's the limit of that? Nuclear power plants run at 90+% capacity, with the <10% downtime accounted for almost entirely by refueling outages. Gen IV reactors will be around 95% capacity factor. Coal and natural gas easily achieve 85%. With the right maintenance, they could probably match nuclear.

Could wind and solar take over the grid? I suppose it's theoretically possible, but many things would have to become extremely cheap. We don't have a technology roadmap to that - much less working prototypes. I would bet the future of the grid includes lots of natural gas, nuclear, coal, and batteries.  Renewables will exist where renewable resources are exceptionally abundant or to appease the masses. Then, once demographics shift toward conservatism (liberals aren't procreating), renewables will finally be isolated to their proper niche.

Greenies will point toward ever cheaper wind and solar. As an engineer, I would point toward physical limits we're rapidly approaching. You can only make a tower so tall, a turbine blade so long, a solar panel so efficient, and any of these so cheap - not for some contrived business or legal reason, but because there are physical limits.

Physics does not bend. If you want to change physics, you need another Einstein. I don't typically base investment decisions on whether another Einstein appears, but you do you.

No technology roadmap? No prototypes?? We are almost halfway through the roadmap which consists of Solar, On shore Wind, Batteries, Off shore Wind, Transmission, Hydrogen

Utility scale on shore wind and solar are already cheaper than new NGCC:

image.thumb.png.011c3a919371b3e521991b1ebdda09cf.png

https://www.lazard.com/media/451419/lazards-levelized-cost-of-energy-version-140.pdf

Grid storage batteries continue to drop in cost at 45-50% every 3 years. That puts us just three or four years away from wholesale batteries plus solar being cheaper than new NGCC (the halfway point in the roadmap). The key thing to realize about batteries is that they dramatically increase the revenue of solar and wind by solving the intermittency problem which allows them to sell electricity at higher dispatchable rates and to capture the low price maximum production time periods ( low price because that is when all the other units are also at maximum production often leading to zero price because of curtailiment) and shift that production to peak rate periods. 

image.thumb.png.6bf15ceaeaf701de92b285b9ddc8cc98.png

https://www.lazard.com/media/451418/lazards-levelized-cost-of-storage-version-60.pdf

Off shore wind is at $86 MW/h (the diamond in the wind category of the first chart). It needs to drop by half and that is likely a decade away.

The primary transmission additions we need are in the form of HVDC. These cabes are dropping in cost as production scales and will be driven very dramatically by the expansion of off shore wind which relies upon them. 

Green hydrogen will provide long term storage for seasonal shifting and is also likely a decade away from hitting scale.

No Einstein's needed. Just build it out.

 

 

Edited by Jay McKinsey
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Just build it out with natural gas. Something that has proven it can do the job. It is superabundant and can be piped to where it is needed and then produce electricity. Natural gas is virtually free aside from the transportation and it requires less infrastructure since that is already built in the United states. Other countries around the world have very large finds, I just read on Oil Price about new finds in Columbia. All the countries with new finds plan on using their natural gas. 

Using equipment made in Asia or Europe does not benefit the United States. We need to make our own. 

Your ideas are only good if they can prove themselves at scale. They have never done that. Germany will be using coal for quite awhile. America is the leader in improving air quality among large nations by replacing coal with natural gas. 

 

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