Bravo Duncan. This is a very impressive piece of work.
The detail is important, even if it is hard going (for me at least) to process. The overall picture makes total sense. We can see the intermittency, grid costs, impact on running gas plant inefficiently etc.
The figures for Ireland are likely to be even more challenging. The current "plan" even includes building new deepwater ports at the cost of billions to address the complexity of greater depths than in the North Sea and of course we have no baseload nuclear.
One comment. Lets assume the UK relies to a significant extent on gas and collects the global "cost" figure for CO2 of c. 150/t, this means a very substantial saving would still be achieved but a huge sum would be collected. The "environmental / political" deal could then be that this is spent / invested in geographies were much greater emissions savings are possible.
A dollar spent on offgrid rooftop solar in Nepal would most likely achieve greater emissions reductions than forcing wind onto the grid on Northern Europe. Its a win for the taxpayer, the environment and possibly a school or hospital somewhere too. I suppose this would be ruined by a ridiculous carbon trading system but we need to get beyond ideologies if it clearly makes sense to burn and pay in Europe and achieve more elsewhere.
US domestic electricity bills are ~2x not 4x lower UK: transporting natural gas by LNG does raise the price somewhat, and this is mostly why (even though some gas is imported from pipelines, this could never be all of UK gas consumption hence the LNG import costs set the price at the margin). US industrial bills are 3.5-4x lower than the UK, but industrial bills in most energy systems (e.g. Germany pre-Ukraine war) are considerably lower than domestic because industrial uses tend to have lower variance of energy usage (so need less transmission per unit consumption, and less spent on intra-day balancing, and so forth, hence can pay close to the wholesale cost of electricity)
Excellent post young man, congratulations on nailing it. And thank you!
You have covered many of the points that I - a power industry veteran of 40y - have been trying to communicate for several years in my own articles. I am particularly impressed to note you cutting through the fraudulent obfuscation on 2 specific points that even most knowledgeable Net Zero critics do not properly understand:
1. The capture rate, which I have expressed as market curtailment at times when supply exceeds demand. The need to overbuild renewables to meet peak demand inevitably means an ever-reducing capture rate as the lunacy proceeds. Miliband's current mud-at-the-wall approach to solar will make the problem even worse.
2. Your observation that "electricity is not an aberration. It is a preview". Impressed as I was before getting to it, I honestly thought you were going to miss this key point. As I posted - yet again - on TwiX only today: "NZ is not just about 🔌! It's about replacing gas heating, ICE transport, your Sunday roast & your foreign holiday. Wind won't fix that, nuclear won't fix it. It's inherently unfixable."
You may be interested in some of the many energy articles on my own Substack page (johnsullivan.substack.com), and in this comprehensive (lengthy!) assessment of true Net Zero (not just Clean Power 2030) costs viewed entirely from an empirical perspective: https://sites.google.com/view/the-lpf/home.
Won’t a sudden implementation of dropping explicit/implicit subsidies of renewable energy severely decrease demand for new renewable energy construction? I’m worried that this might kill the sector, displaying skilled labour, which will drive up marginal prices in a few years when demand for new renewables resumes. Do you have a rough idea of what the impact on the renewables sector will be?
Soft costs (i.e. those amenable to home-country industry experience) are only 10-15% of total PV cost reductions (https://www.nature.com/articles/s41560-023-01286-9), and seem highly persistent over long time horizons hence are likely regulatory (https://news.mit.edu/2023/improving-solar-looking-beyond-hardware-0817). For such as can be reduced by learning by doing, interfirm spillovers seem large also, so the gains within a country may be small vs international best practice (https://www.sciencedirect.com/science/article/pii/S2542435119305793). Hence if we later wished to build more renewables the rise in installation costs would probably be small relative to the total cost of such an endeavour even if installation capacity today greatly declined
> Soft costs (i.e. those amenable to home-country industry experience) are only 10-15% of total PV cost reductions [since 1980; this is bad evidence because this is in comparison to hardware improvements, which is irrelevant here, but also heavily skewed by economy of scale in production; soft costs make up about half the cost of installation of PV, so elasticity of price of PV w.r.t. soft costs is about 1/2 also] (https://www.nature.com/articles/s41560-023-01286-9), and seem highly persistent over long time horizons hence are likely regulatory [this is true; they have hit a wall by 2017] (https://news.mit.edu/2023/improving-solar-looking-beyond-hardware-0817). For such as can be reduced by learning by doing, interfirm spillovers seem large also, so the gains within a country may be small vs international best practice (https://www.sciencedirect.com/science/article/pii/S2542435119305793) [I agree]. Hence if we later wished to build more renewables the rise in installation costs would probably be small relative to the total cost of such an endeavour even if installation capacity today greatly declined.
I think I agree with the conclusion. Soft cost reductions due to improvements in international best practice will probably dominate increases in soft costs.
First rate, many thanks!
Bravo Duncan. This is a very impressive piece of work.
The detail is important, even if it is hard going (for me at least) to process. The overall picture makes total sense. We can see the intermittency, grid costs, impact on running gas plant inefficiently etc.
The figures for Ireland are likely to be even more challenging. The current "plan" even includes building new deepwater ports at the cost of billions to address the complexity of greater depths than in the North Sea and of course we have no baseload nuclear.
One comment. Lets assume the UK relies to a significant extent on gas and collects the global "cost" figure for CO2 of c. 150/t, this means a very substantial saving would still be achieved but a huge sum would be collected. The "environmental / political" deal could then be that this is spent / invested in geographies were much greater emissions savings are possible.
A dollar spent on offgrid rooftop solar in Nepal would most likely achieve greater emissions reductions than forcing wind onto the grid on Northern Europe. Its a win for the taxpayer, the environment and possibly a school or hospital somewhere too. I suppose this would be ruined by a ridiculous carbon trading system but we need to get beyond ideologies if it clearly makes sense to burn and pay in Europe and achieve more elsewhere.
A fantastic post, which should be widely read. Thank you.
Very useful and interesting thank you!
I saw you said at one point that with a different system based on gas and a nationally optimal carbon price bills would fall by 44%
I also read something else today which said that the US electricity price was a quarter of ours
Where’s that further 30% reduction coming from?
US domestic electricity bills are ~2x not 4x lower UK: transporting natural gas by LNG does raise the price somewhat, and this is mostly why (even though some gas is imported from pipelines, this could never be all of UK gas consumption hence the LNG import costs set the price at the margin). US industrial bills are 3.5-4x lower than the UK, but industrial bills in most energy systems (e.g. Germany pre-Ukraine war) are considerably lower than domestic because industrial uses tend to have lower variance of energy usage (so need less transmission per unit consumption, and less spent on intra-day balancing, and so forth, hence can pay close to the wholesale cost of electricity)
Thanks for the explanation!
Excellent post young man, congratulations on nailing it. And thank you!
You have covered many of the points that I - a power industry veteran of 40y - have been trying to communicate for several years in my own articles. I am particularly impressed to note you cutting through the fraudulent obfuscation on 2 specific points that even most knowledgeable Net Zero critics do not properly understand:
1. The capture rate, which I have expressed as market curtailment at times when supply exceeds demand. The need to overbuild renewables to meet peak demand inevitably means an ever-reducing capture rate as the lunacy proceeds. Miliband's current mud-at-the-wall approach to solar will make the problem even worse.
2. Your observation that "electricity is not an aberration. It is a preview". Impressed as I was before getting to it, I honestly thought you were going to miss this key point. As I posted - yet again - on TwiX only today: "NZ is not just about 🔌! It's about replacing gas heating, ICE transport, your Sunday roast & your foreign holiday. Wind won't fix that, nuclear won't fix it. It's inherently unfixable."
You may be interested in some of the many energy articles on my own Substack page (johnsullivan.substack.com), and in this comprehensive (lengthy!) assessment of true Net Zero (not just Clean Power 2030) costs viewed entirely from an empirical perspective: https://sites.google.com/view/the-lpf/home.
Won’t a sudden implementation of dropping explicit/implicit subsidies of renewable energy severely decrease demand for new renewable energy construction? I’m worried that this might kill the sector, displaying skilled labour, which will drive up marginal prices in a few years when demand for new renewables resumes. Do you have a rough idea of what the impact on the renewables sector will be?
Soft costs (i.e. those amenable to home-country industry experience) are only 10-15% of total PV cost reductions (https://www.nature.com/articles/s41560-023-01286-9), and seem highly persistent over long time horizons hence are likely regulatory (https://news.mit.edu/2023/improving-solar-looking-beyond-hardware-0817). For such as can be reduced by learning by doing, interfirm spillovers seem large also, so the gains within a country may be small vs international best practice (https://www.sciencedirect.com/science/article/pii/S2542435119305793). Hence if we later wished to build more renewables the rise in installation costs would probably be small relative to the total cost of such an endeavour even if installation capacity today greatly declined
Square brackets are my comments:
> Soft costs (i.e. those amenable to home-country industry experience) are only 10-15% of total PV cost reductions [since 1980; this is bad evidence because this is in comparison to hardware improvements, which is irrelevant here, but also heavily skewed by economy of scale in production; soft costs make up about half the cost of installation of PV, so elasticity of price of PV w.r.t. soft costs is about 1/2 also] (https://www.nature.com/articles/s41560-023-01286-9), and seem highly persistent over long time horizons hence are likely regulatory [this is true; they have hit a wall by 2017] (https://news.mit.edu/2023/improving-solar-looking-beyond-hardware-0817). For such as can be reduced by learning by doing, interfirm spillovers seem large also, so the gains within a country may be small vs international best practice (https://www.sciencedirect.com/science/article/pii/S2542435119305793) [I agree]. Hence if we later wished to build more renewables the rise in installation costs would probably be small relative to the total cost of such an endeavour even if installation capacity today greatly declined.
I think I agree with the conclusion. Soft cost reductions due to improvements in international best practice will probably dominate increases in soft costs.