An interesting report came out last week from Reclaim Finance. Reclaim Finance is a campaign group promoting renewable energy and professionally criticising organisations that continue to invest in oil, gas, and coal. last week, REclaim Finance had reason to be angry.
The McKinsey report seems to make the precarious presumption that the current high cost of electricity will remain high forever. Previous booms and busts in the energy industry seem to have faded from their memory. (Those busts are seared into MY memory). If they invest in renewables at today’s inflated prices for solar panels and turbines, what happens to their payback period when the price of energy drops back down to pre-crisis levels?
Well, it’s not genuine in that I know what the answer is: their payback period increases significantly. But it is a reasonable question to ask because when markets are allowed to work, “high prices are the cure for high prices“ and they eventually come down. When calculating the return on investment for a particular project, it is important to consider all possible scenarios. I’m old enough to remember many times in the past 50 years when people thought energy prices were going up forever, only to have an oversupplied market return. That’s what happens in markets driven by supply and demand, the pendulum tends to swing between under supply and over supply. Your question is a legitimate one though, because it appears policy makers are making policy decisions that are designed to keep all energy prices high. I can’t figure out why they are doing it.
Always a good read! As far as I can see, we're smack in the middle of or rather the very beginning of what some analysts call "the revenge of the old economy". As far as "climate catastrophe" goes, that is simply another over the top claim by the virtue signaling politicians. Yes, there is anthropogenic climate change, yes we need to do something about it (and we have! we solved acid rain for example and will gladly do more if allowed to do so). Even at this rate it will be generations upon generations before there is anything even remotely close to a "runaway greenhouse effect" that would turn Earth into Venus. You have to be extremely egocentric to think that an astronomical body that is over 4 billion years old will undergoes some "catastrophe" in your puny, tiny, insignificant human lifetime. Get a grip!
I admit I'm still quite unclear in what exactly "privilege" constitutes these days but I wasn't joking about arrogance. I believe it is extremely arrogant to consider yourself so singularly important and mighty that you, as a species, can kill a whole planet. The history of Earth suggests we can't.
Andrew, thanks for sharing the link! Did you notice in the article, the solar farm makes 3 times the electricity the plant uses on a sunny day, but because of intermittency it still only provides 40% of their electricity needs on average. They still have to get electricity from the grid 60% of the time. I’m not saying it’s not worth it. I think it’s great! Everyone who wants a solar farm should get one. The problem is even if everybody gets a solar farm, we will still need energy from the grid, energy made by some form of consistent power.
Absolutely. In the UK, there seem to be lots of people looking to build battery storage etc near windfarm grid connection points, so they can get both grid power and off-grid power.
"I, meanwhile, need comparative figures to become convinced." Yes, THIS! Endless cheerleading for renewables with no comparative figures is rarely questioned in the press, just amplified.
I guess we're at the "climate catastrophe" phase of the global warming fake emergency. We had "existential threat" phase in 2019, but then the Current Thing, BUG19, came and suddenly made it no threat at all. That was interesting how it suddenly became ... nothing.
Thanks a lot for yet another outstanding article. I read all your material with great interest, they are always so bullshit-free!!!
Thank you, Paolo! I do try to clear up the bullshit as much as my limited abilities allow it.
I agree with Paolo - great article - I have one question - With as much great content as you produce when do you sleep? Again Great job.
Well, Stu, I'm a 10 pm-5am woman generally, but sometimes I move it to 11-6. :D
The McKinsey report seems to make the precarious presumption that the current high cost of electricity will remain high forever. Previous booms and busts in the energy industry seem to have faded from their memory. (Those busts are seared into MY memory). If they invest in renewables at today’s inflated prices for solar panels and turbines, what happens to their payback period when the price of energy drops back down to pre-crisis levels?
Is this a genuine question?
Well, it’s not genuine in that I know what the answer is: their payback period increases significantly. But it is a reasonable question to ask because when markets are allowed to work, “high prices are the cure for high prices“ and they eventually come down. When calculating the return on investment for a particular project, it is important to consider all possible scenarios. I’m old enough to remember many times in the past 50 years when people thought energy prices were going up forever, only to have an oversupplied market return. That’s what happens in markets driven by supply and demand, the pendulum tends to swing between under supply and over supply. Your question is a legitimate one though, because it appears policy makers are making policy decisions that are designed to keep all energy prices high. I can’t figure out why they are doing it.
Always a good read! As far as I can see, we're smack in the middle of or rather the very beginning of what some analysts call "the revenge of the old economy". As far as "climate catastrophe" goes, that is simply another over the top claim by the virtue signaling politicians. Yes, there is anthropogenic climate change, yes we need to do something about it (and we have! we solved acid rain for example and will gladly do more if allowed to do so). Even at this rate it will be generations upon generations before there is anything even remotely close to a "runaway greenhouse effect" that would turn Earth into Venus. You have to be extremely egocentric to think that an astronomical body that is over 4 billion years old will undergoes some "catastrophe" in your puny, tiny, insignificant human lifetime. Get a grip!
My thoughts exactly. We may never hit peak oil or gas but we definitely hit peak arrogance.
Funny comment Irina. I'm guessing peak privilege provides us peak arrogance.
I admit I'm still quite unclear in what exactly "privilege" constitutes these days but I wasn't joking about arrogance. I believe it is extremely arrogant to consider yourself so singularly important and mighty that you, as a species, can kill a whole planet. The history of Earth suggests we can't.
Privilege: I used to think my assets, family, friends, and country. Now, I'm a tad more uncertain.
Our arrogance: go outside on a clear night away from lights and look at the sky.
I wonder if the chemicals plant with its own solar farm could be this one.
https://www.solvay.com/en/news/hectares-solar-panels-power-chemical-plant
A private wire arrangement avoids grid costs and tax, apparently.
Andrew, thanks for sharing the link! Did you notice in the article, the solar farm makes 3 times the electricity the plant uses on a sunny day, but because of intermittency it still only provides 40% of their electricity needs on average. They still have to get electricity from the grid 60% of the time. I’m not saying it’s not worth it. I think it’s great! Everyone who wants a solar farm should get one. The problem is even if everybody gets a solar farm, we will still need energy from the grid, energy made by some form of consistent power.
Absolutely. In the UK, there seem to be lots of people looking to build battery storage etc near windfarm grid connection points, so they can get both grid power and off-grid power.
"I, meanwhile, need comparative figures to become convinced." Yes, THIS! Endless cheerleading for renewables with no comparative figures is rarely questioned in the press, just amplified.
As long as the word is sent out they can relax and see it shape opinions and or influence minds. Great article.
I guess we're at the "climate catastrophe" phase of the global warming fake emergency. We had "existential threat" phase in 2019, but then the Current Thing, BUG19, came and suddenly made it no threat at all. That was interesting how it suddenly became ... nothing.
Frogs in slowly heating water...
Thanks for this article. It had me laughing. Well written and easy to digest as well as offering an informed perspective. Please keep writing!
Thank you. I will. :)