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13 July 2013

Press review 13-07-2013

Before diving into the review itself a quick note on Portugal. Wednesday things took an unexpected twist with a public announcement by the President, he tacitly rejected a fresh government by the ruling Conservatives/Liberals coalition and set on to seek an accord between all the parties that signed the initial aid programme (the coalition and the Socialists). My initial reading was this meaning a Monti style solution to take the Executive up the end of the programme (June of 2014), and along the way negotiate the terms of a now inevitable second aid programme. But the President's address was cryptic enough to allow for alternative interpretations. What is certain is that for now all negotiations with the lenders are suspended, and the relationship with them will change markedly. Also of note is the large indifference from the international media towards this evolving situation (with the clear exception of the Spanish media). In some cases, like the BBC, the President's message was simply misunderstood, with a small report clearly contradicting the facts. Jump to the EuropeanTribune for a slightly longer digest.

This review starts with some interesting hints from the PV world. It seems that the anti-dumping tariffs imposed by the Commission on China are yet to halt the cost decline of this energy technology. Installation costs keep on foundering, now approaching 1000 €/kWp, with lifetime electricity costs down to 0.1 €/kWh in certain regions of Germany. This figure is now remarkably close to electricity generated from German coal.
Deutsche Wella
'Solar power cheaper than coal'

Deutsche Welle: You build large solar energy plants worldwide. How much does the energy from a solar park cost today?

Berhnard Beck: In Germany, solar power can now be generated for 10 euro cents per kilowatt-hour. That is a very good price. With that, we are approaching the costs of generation from new conventional power stations.

How much does solar power cost in countries that receive a lot of sunshine?

With more sunshine, there is generally more production and the kilowatt-hour costs less. But often, the operating expenses also increase: the modules must be cleaned and the solar parks incorporated into weak electrical networks. But the trend in sun-rich regions is that power is produced for less than 10 euro cents per kilowatt-hour.

What does that mean?

Generally you could assume that solar power plants in sun-rich countries produce electricity cheaper than wind, coal and gas power plants. Electricity from large solar power plants are becoming competitive with electricity produced using conventional methods.
Still in Germany, a new record amount of power was set by grid-connected PV, just an inch shy of 24 GW. At that instant this equated to 40% of demand, meaning that installed capacity can double before storage becomes an issue. Naturally, such a doubling of the solar park, to take place linked to the grid, might require relevant grid upgrades to properly dispatch localised excessive voltage.
Germany Sets Solar Power Record (Again) — 23.9 GW
Zachary Shahan, 07-07-2013

Sure enough, a few hours ago, solar output climbed above the 22.68 GW solar power output record Germany set in April. Not long after, it climbed above the 23.4 GW solar power output record set in June. At its peak at about 1:45pm local time (one hour ago), the output got up to 23.9 GW. (Actually, I thought I saw it reach 24 GW at that time, but the replay isn’t showing it go above 23.9 GW.)

I’m sure an official number still needs to be confirmed, but a full 0.5 GW increase according to SMA’s site makes for a very safe conclusion that we have a new record. It is an estimate based on the output of thousands of SMA solar power systems spread across the country.

Germany’s peak electricity demand at midday is about 60 GW, so at 1:45pm or so, solar power was providing about 40% of the country’s electricity demand. Impressive. Approximately 1.3–1.4 million solar power systems were involved in creating that massive electricity output, our German solar expert Thomas tells me. And about 8.5 million people live in buildings where solar power systems are used to produce electricity or heat.
Now here is one of those piece of news I don't like so much. There's at least one of these every week, and the promise is always to revolutionise (or even save, if humility lacks) the world. The important message here is that avenues are still open exist for further declines in solar technology costs.
Low-Cost Solar Energy — New Process Utilizing Antifreeze & Inexpensive Materials Aims For Cheap Solar

Solar cells that are cheaper to produce and contain fewer toxic compounds may be a reality in the near future, thanks to new research from Oregon State University.

By utilizing a commonly used antifreeze — ethylene glycol — and some other comparatively cheap materials to produce solar cells in a “continuous flow reactor,” the costs of solar cell manufacturing can be cut down considerably, according to the researchers. A continuous flow reactor is an approach to creating thin-film solar cells that could be easily scaled up to industrial levels.

The research has found that ethylene glycol can function effectively in a continuous flow reactor as a low-cost solvent, replacing more expensive options. The researchers also discovered that the approach will work with CZTS — copper zinc tin sulfide — a compound that had already gotten the attention of researchers in the solar energy field thanks to its notable optical properties and the reality that the compound is cheap and relatively environmentally benign.
In an article in the Wall Street Journal discussing a spat between small investors and the electric establishment the impact of declining PV costs is posed in a very expressive way: "largest near-term threat to the industry". Indeed, and in more than one way.
The Wall Street Journal
Utilities Dealt Blow on Solar-Power Systems

Under a typical payment arrangement, called "net metering," solar-equipped homeowners often have lower monthly electric bills than their neighbors because of the power they can sell to their utility.

The lost revenue resulting from net metering can cut into utility profits.

A recent report distributed by the Edison Electric Institute, the industry's main trade group, said the growth of small-scale solar systems represents the "largest near-term threat" to the industry, and recommended that utilities work to change net-metering policies like the ones under debate in Idaho and Louisiana.

Entergy and Idaho Power told regulators that under current state rules, solar-powered homes aren't paying their fair share of costs to maintain power lines and respond to outages.

Solar advocates disagree, saying that solar rooftops provide benefits like reducing the need to build new power plants.
How a single sentence can contain such a huge amount of information. The frailty of a shale oil well is a mind boggling thing; basically production from a resource of this kind will immediately go into decline the moment drilling stops growing.
Oil & Gas Financial Journal
Forecasting shale oil production
Magnus Nysveen, 11-07-2013

Shale oil wells typically decline 10% to 15% faster than shale gas wells over the first year (Fig 2). In the high-pressure zone of the Bakken, decline rates above 90% over the first year of production are common. But since the decline is also highly hyperbolic, the ultimate reserves can still correspond to more than 500 days of the initial production rate. Artificial lift by using pump-jacks also contributes to long flat tails as the downhole pressure falls.
Finishing off with world politics, there's an absolutely not to be missed interview with Chris Cook on Iran. I'm always marvelled by the way Chris can build perspectives into political/financial issues from completely unexpected angles. Iran's success without the traditional financial system, if it comes to happen, might also be the seed of a new monetary/financial system for the XXI century.
Strategic market consultant: Iran at the crossroads
D.Khatinoglu, 09-07-2013

Cook is a former director of the International Petroleum Exchange. He is now a strategic market consultant, entrepreneur and commentator.

Having visited Iran seven times since 2004, I have the highest regard for this great country and I look forward to many more visits in the future.

I believe that the election of President Rohani represents a crossroads not only for Iran, but regionally and globally. Iran has converged from two directions at this crossroads: an energy road and a financial one.

How Sanctions Benefit Iran

When I made a presentation at Iran's Chamber of Commerce in July 2012, I said the current sanctions regime was the best thing that could have happened to Iran and I was asked to explain this provocative statement.
Have a nice weekend, enjoy the sun while it lasts.

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