In this blog post in February I discussed BNEF’s forecast for 2018 clean energy investment. This forecast projected clean energy investment in 2018 would match that of 2017. A central theme was the unpredictability of what China would do made the forecast unreliable. This came to pass in June when China announced significant solar cutbacks of around 20 GW for the 2nd half of 2018.

This article discusses the reasons for China’s chaotic solar policy. Basically Investors in Solar manufacturing (like much of Chinese investment) don’t behave like western investors. Investors follow a “if you build it , they will come” approach. They think supply will create the demand. Unfortunately, solar developers can’t develop projects at a rate to match the increased solar manufacturing capacity due to constraints on transmission and distribution. As a result of the reduced demand, PV panels have fallen from around $0.35/W to $0.25/W. This may cause a shakeout in the PV business, but China may prop up companies and not let that happen.

Anyway with China’s reduction, clean energy investment will now decline in 2018. Overall investment will stay in the range it has been since 2011. The graphs above show the regional investment trends from 2005 to 2018. Yellow is solar, blue is wind. AMER is america (mostly US), EMEA is Europe and APAC is Asia, which is mostly China.

As can be seen America has been in a narrow investment range since 2011. European investment has been declining since 2011 and Chinese investment rose from 2011 to 2015, but has declined slightly since then. With Trump in the White house imposing stiff tariffs on PV panels and US subsidies being eliminated over the next few years, American investment is unlikely to grow for the foreseeable future. It is likely that investment in Europe will continue its downward trend since 2011. China’s reduction in PV deployment probably means that Chinese investment will continue its downward trend since 2015.

Germany has long been the driver of clean energy investment in Europe which makes the graph below all the more telling. Investment by Germany over the last three quarters is very low relative to past investment levels. This emphasizes the scale of European decline and is all the more disturbing given Europe's overall enthusiasm for clean energy and meeting the goals of the Paris agreement. The US and China are not uniformly enthusiastic about clean energy and the German reduction to such low level makes a lie of their clean energy aspirations. There is now no one credibly leading the charge for atmospheric CO2 reduction.

The overall declining world clean energy investment does not match the optimism about clean energy. This investment level will not reduce atmospheric CO2 levels The only reason for clean energy is to reduce CO2, otherwise why bother? There is lots of hype about 100% renewables and solar and wind cheaper than fossil fuels, but in the real world progress has stalled. The money tells the true story.

The problems with intermittent renewables are well understood and are becoming increasingly difficult for clean energy enthusiasts to ignore. Potential solutions are in development but are risky and many years from economic viability.

Stratosolar solves all the problems of current intermittent renewables and could be deployed rapidly to provide cheaper energy than fossil fuels in a timeframe that can meet the 450 ppm CO2 goal.

​By Edmund Kelly

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Bloomberg New Energy Finance (BNEF) tracks new energy investment trends. BNEF  just released their 2018 new energy outlook report which discusses current trends and also projects demand out to 2050. They bring a financial investment perspective to forecasting the future of the energy electricity generation business. This contrasts with academic or climate change advocate forecasts which tend to either ignore or have unrealistic expectations of the financial aspects of forging a clean energy future. It also contrasts with forecasts from government agencies like the IEA and the  EIA or industry forecasts like those from Shell or BP who largely downplay renewable energy.

My persistent theme is that we are not on a path to reduce CO2 emissions sufficiently to limit the damage to a 2 degree celsius rise in global temperature. StratoSolar and other speculative technologies will not get serious attention until it is clear and accepted that we won’t achieve this goal on our path with current wind, solar and storage technologies.

BNEF forecasts very large increases in wind, solar and other clean energy deployment (14 times current installed capacity) along with dramatic increases in improved energy storage technologies. They also forecast continuing price reductions in wind, solar and batteries. They estimate the overall investment in electricity generation will exceed $11.5T by 2050, or an average of $360B/y. They estimate that this will change generation from 66% fossil fuel today to 66% clean energy in 2050. This is a bullish assessment from a large professional team that understands the energy business.

However over this period energy demand rises significantly due to economic growth, so despite this reduction CO2 emissions don’t fall all that much from todays level. Their opinion at the end of their presentation is that significant new technologies are needed to either directly remove CO2 from the atmosphere or provide an economical means to replace the natural gas consumption still needed to provide for long duration intermittency and seasonality.

StratoSolar does not suffer from the long duration intermittency problem because it is above all weather effects. This means there is no need for natural gas generation and its CO2 emissions. Stratosolar's higher utilization makes the same cheap PV panels three or more times more effective. Cheap storage from gravity energy storage or the cheap batteries BNEF forecasts make Stratosolar a complete replacement for fossil fuels before 2050 for far less than the $11.5T BNEF forecasts.

The direct inherent ability of simply not having a long duration intermittency problem is Stratosolar’s key qualitative advantage over ground based wind and solar. Quantitative advantages in cost can be argued as unrealistic and ignored but qualitative advantages that make a solution move from impossible to possible are fundamental. The world has yet to accept the long duration intermittency achilles heel of wind and solar. This BNEF forecast states the problem clearly without much fanfare. It's not their main theme. Their general forecast is bullish for current clean energy investment. The fact that it is not solving the CO2 emissions problem is not an energy investor issue. Investors just want to make money.

By Edmund Kelly

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A few years ago I wrote a couple of blog articles on economic growth and inequality. Back then I mentioned a paper by Ray Dalio that discussed a simple model of the economy. Ray observed that the US economy goes through long term cycles where total US debt gradually builds up to unsustainable levels and then declines suddenly causing depressions. This happened in 1929 when total US debt reached 250% of GDP and then in 2008 when debt reached over 350% of GDP.

However, as the graph above shows, after a brief decline  in 2009 and 2010, US total debt has increased from $54T to over $70T and the debt/gdp ratio has stabilized at around 350%. It seems this level was manageable over the last decade because the fed kept interest rates very low and propped up asset prices with quantitative easing (QE). Dalio describes debt reduction as de-leveraging. It would appear that de-leveraging from the 2008 crisis has not occured. This disaster has yet to unfold.

It seems hard to believe that after all the pain of the last decade that the debt problem still remains. The chart below shows the share of debt categories over time.

After 2008, US government debt had to rise from 20% to 35% of total debt to deal with the great recession. Mortgage and consumer debt did decline from about 30% of total debt to 25% of total debt with massive foreclosures and layoffs. Financial system debt declined from about 40% to about 30% of total debt. Non-financial corporate debt has risen a few%.

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Debt at 350% of gdp is unstable and dangerous. So where in the current total US debt does the danger lie? There does not seem to be a housing bubble, and the federal government is still solvent. That leaves the non financial and financial sectors.

While the financial sector debt seems to have shrunk somewhat, it is an opaque sector with lots of debt in shadow banking and opaque financial instruments. QE has inflated all US asset classes, especially stocks and bonds. The corporate world has issued lots of junk bonds and borrowed a lot. Bond rating agencies have been raising red flags. Many corporations have been borrowing to remain alive.

Pressure on debt is building from many directions. The fed stopped QE purchases and has been slowly raising interest rates. Oil prices are rising toward $100/barrel again. The probability of US economic slowdown seems more and more likely every day.
Emerging markets are in trouble due to a stronger dollar. Financial troubles in Turkey, Venezuela and Argentina are in the headlines. Italy in the hands of right wing populists poses potentially severe systemic risks to European and US banking.

Some combination of events will likely trigger a sudden US stock market decline which in turn could expose over leveraged investors and begin the positive feedbacks that exposes more bad debt and leads to major corporate defaults. This was the path followed in the great depression in 1929. Once the real economy is in decline, deleveraging is inevitable and the Fed has fewer tools to deal with a harder problem than 2008.
On top of that throw in Trump and his dysfunctional administration and there is ample reason to be concerned.
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By Edmund Kelly

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This article by Michael Schellenberger in Forbes is another example of a committed environmentalist that is concerned with the problems of intermittent wind and solar power as solutions to reducing CO2 emissions. He points out that in the few markets like California and Germany where wind and solar have become a significant part of electricity generation, the price of electricity has risen in lock step with renewables penetration. This is not the long term cost problems of adding storage or transmission. This is the early stage deployment phase where wind and solar are added to existing grids and the existing generation adapts to the intermittent generation and acts as backup.

There are numerous studies that predict that intermittent renewables become less effective as their penetration increases. This is mainly due to reduced capacity factors as intermittent generation is curtailed when its generation is not needed. An equally significant factor is that fossil generation capacity is also curtailed when intermittent sources are generating. The system as a whole has an increasingly reduced capacity factor as intermittent generation becomes a larger percentage. Capital cost and fixed O&M costs are the biggest costs of generation. Lower capacity factor increases the cost of generation proportionally. As Michael points out, there is now evidence that this actually occurs.

As we have discussed endlessly, a solar based solution needs to 1) be much cheaper, 2) not have random intermittency and 3) have a cost effective storage solution for night time generation. Current solutions do not satisfy ANY of these criteria and cannot succeed. It seems that current wind and solar must fail before there is acceptance that these requirements apply.

Stratosolar does meet these criteria.  

By Edmund Kelly

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This article in the MIT Technology review discusses this paper in the journal Energy and Environmental Science.  The topic is the viability (or lack thereof) of 100% renewable electricity generation. The authors are all renowned scientists from several prestigious institutions. Recently, Mark Jacobson and his colleagues doubled down on their earlier study on the feasibility of 100% renewables with an updated study. This is part of a continuing increasingly public debate over the current economic viability of a 100% renewables energy policy. The following is the abstract of the Energy and Environmental Science paper.

Abstract
We analyze 36 years of global, hourly weather data (1980–2015) to quantify the covariability of solar and wind resources as a function of time and location, over multi-decadal time scales and up to continental length scales. Assuming minimal excess generation, lossless transmission, and no other generation sources, the analysis indicates that wind-heavy or solar-heavy U.S.-scale power generation portfolios could in principle provide ∼80% of recent total annual U.S. electricity demand. However, to reliably meet 100% of total annual electricity demand, seasonal cycles and unpredictable weather events require several weeks’ worth of energy storage and/or the installation of much more capacity of solar and wind power than is routinely necessary to meet peak demand. To obtain ∼80% reliability, solar-heavy wind/solar generation mixes require sufficient energy storage to overcome the daily solar cycle, whereas wind-heavy wind/solar generation mixes require continental-scale transmission to exploit the geographic diversity of wind. Policy and planning aimed at providing a reliable electricity supply must therefore rigorously consider constraints associated with the geophysical variability of the solar and wind resource—even over continental scales.
End Abstract
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The history of top down academic solutions to global energy system problems has not been positive. This does not bode well for the Jacobson solution. Global or even regional behaviour is too hard to coordinate. The one constant of energy and other commodity markets is that the low cost provider always wins. Payment for externalities can rarely be imposed on commodity producers.

StratoSolar reduces the cost of electricity to a fraction of electricity from fossil fuels. This makes it the lowest cost energy provider by a considerable margin, a margin sufficient to motivate rapid adoption. Being above the weather it does not suffer from the long duration intermittency that is the problem at the heart of the 100% renewables debate. It also includes a cheap energy storage option for nightime generation. It can be situated anywhere geographically. Were it proven, its significant cost advantage would rapidly make it the only energy source.

Renewables are still not cheaper than fossil fuel so they require carrots and sticks to promote adoption. The intermittency problems are still not exposed because their penetration levels are too small for the bad effects to show.

In a rational world, potential 100% renewable energy solutions would be explored. Unfortunately a political majority does not see an energy problem worth solving and the minority who do see a problem cannot agree on a path to viable solutions because they are focused on political solutions, not economically viable solutions.

By Edmund Kelly

Bloomberg New Energy Finance (BNEF) has ten predictions for 2018. One prediction is that PV installs in 2018 will be about the same as 2017’s 98GW. PV panel prices are predicted to decline slightly to $0.3/W to $0.33/W. Overall clean energy investment is expected to be about the same as 2017. This continues the level investment trend of about $250B/Y since 2011 that I discussed in this October 2017 post. Lower PV prices are not increasing PV manufacturer’s dollar sales. PV manufacturers have dramatically increased GW output within a constant revenue stream.

Both PV manufacturing and PV deployment are now dominated by China which significantly increased manufacturing capacity and almost doubled PV deployment in 2017. Bloomberg and others cannot predict China’s PV markets. Here is a Quote from the Bloomberg article.

“China’s boom, which saw an extraordinary 53GW installed in 2017, is still fundamentally irrational – the mechanism to collect the subsidies to be paid out has not been determined, and many of these projects are being built before they have secured ‘quota’ from the government to have access to the subsidy pool. However, it looks as if Chinese state-owned developers and investors will build them anyway, on the assumption that the government will find a way and, if not, compensation for the power itself will prevent a total loss.

A mandatory Renewable Energy Credit may be introduced in 2018 in China, and might answer part of the ‘where does the subsidy come from’ question. About half the new build in China will be distribution-grid-connected, ie smaller projects with the ability to sell to local power consumers. These are not subject to quota, but are limited by the ability of large developers to put together volumes of small deals.”

The PV market in China and worldwide is subject to the whims of government policy. The aggregate behaviour of China, the US and Europe has maintained a stable PV revenue stream since 2011. This has not been coordinated, other than China probably reacting to the drop in European demand by increasing Chinese demand to prop up Chinese manufacturers.  As Bloomberg has stated, China’s future behavior is not predictable. If China maintains its current level of dollar commitment to PV deployment, PV panel prices will probably continue to fall as Bloomberg predicts but it is hard to see dramatic price reductions of the magnitude we have seen already happening again. 

PV deployment is increasingly constrained by other costs which have not dropped at the rate of PV panels. Transmission, backup and storage costs loom as PV penetration increases. PV on its current path will not reduce CO2 emissions for a long time. Stratosolar can alter this dynamic.
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By Edmund Kelly

When we first evolved the PV version of StratoSolar, it was a surprise that we could find no prior mention of anything like it, despite trying hard. This has been reinforced over the years by the surprise and confusion that the concept always generates. It is constantly thought of as novel and is usually regarded more as science fiction than science fact.

Recently a colleague met Dr. Richard Swanson at a social occasion at Stanford and mentioned the StratoSolar concept to him. Dr. Swanson told him it was an old idea that had been described in a paper written by William R. Cherry in 1970. Dr. Swanson kindly forwarded a copy of the paper. Lo and behold the paper describes a concept remarkably like StratoSolar that discusses the major engineering challenges in detail. A pdf file of the paper is attached to this post.

I think that Dr. Swanson is probably the only person on the planet who remembers this paper which stems from the very early years of PV. William R. Cherry was a distinguished pioneer of PV and the prestigious Cherry award is named after him. Dr. Swanson himself is a world-renowned figure in the PV arena and the source of the famous “Swanson’s Law”.

To me, this nearly fifty-year-old paper is a validation of the StratoSolar concept from a well-respected source. I only wish we had found it sooner, though I have still not found the paper online, only the copy sent to me by Dr. Swanson. Human nature is naturally distrustful of ideas with no apparent historical precedent which goes some way to explaining the unwillingness to evaluate StratoSolar.

In 1970 PV was only used in space applications. It cost hundreds of dollars per watt compared to today’s cost of about $0.35/W. William Cherry was a visionary who contemplated the future of PV and examined space based, stratosphere, and terrestrial concepts as this later 1971 paper shows.

The Cherry paper from the 1970 Proceedings of the 8th IEEE Photovoltaics Specialists Conference describes a “floating mattress” system that is 1 mile by 1 mile and 100 ft deep floating at 50,000ft and higher in the stratosphere. Its cross braced rigid cubic structure is remarkably like StratoSolar. Its gas bags are polyethylene which was and still is the standard gas bag material, though better materials are now available. The tethers described use steel and taper from 3/8in diameter at the bottom to 3/4in. at the top. This would still be practical, but Kevlar and UHMWPE are better choices today. There are references to Goodyear for the tether and buoyancy calculations. The overall system plus tethers weighed around 10,000 tons, which is not far from what a similar sized StratoSolar system weighs. PV efficiencies have improved from the 7% in 1970 to over 20% today, so a same sized StratoSolar array would now generate three times the power.

The system could have been constructed in 1970 but the PV technology was then hundreds of times too expensive. The concept was too far ahead of its time and was forgotten. William Cherry died in 1980.

Today’s improved technologies make the concept viable and its inherent advantages of no long duration intermittency from weather and dramatically increased energy over PV on the ground make it potentially the cheapest source of energy on the planet, far cheaper than fossil fuels and available to all regardless of geographic location.
 
By Edmund Kelly

As the year winds down, various reports on CO2 growth and climate change have appeared. One of the more interesting is a report from a multi agency effort of the US government. Given Trump’s climate change denial I expect many of the authors have exited or plan to exit government. This just adds to the evidence that C02 levels continue to rise and the consensus view is we are already in trouble, but nothing like what is to come.

As I repeatedly point out there is no evidence yet for any CO2 reduction at a global level from current deployment of wind and solar. Running the numbers shows that current levels of investment ($250B/y) are insufficient to have a discernible impact. Despite great improvements current wind and solar still need considerable subsidy support (euphemistically called policy support) and need to address the full costs of integrating intermittent sources of electricity into a supply on-demand grid.

There has been very little public acceptance of the need to address intermittency. Nobody wants to be the bearer of bad news. I recently came across a report from the climate policy initiative group (CPI) that actually took a realistic view of a path forward that addresses intermittency.

Rather than demanding the perfection of a pure solution they settled on scenario that used CCNG as the long-term backup and Lithium Ion batteries for shorter daily cycling. In this approach the CCNG plants have a very low utilization factor which in an open market would produce a very high cost of their electricity. However, it only produces 10% to 20% the CO2 of a pure CCNG all gas solution.

As they point out the system would not be economically competitive with today’s Lithium Ion technology and the burden of CCNG capital costs and would need government policy support. They project that with current Lithium ion cost and reliability trends the system might be competitive by 2030.

That doesn’t sound so bad unless you take the climate change science seriously.  12 more years of increasing CO2 is hard to recover from. Its also based on governments coming up with substantially more money between now and 2030. Current politics are not favorable.
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It was refreshing however to read a report that addressed the real problems that need to be solved and are hopefully influencing governments of the reality of issues with current wind and solar deployment.
As always energy is driven by economics. The solutions have to be economically viable
 
By
Edmund Kelly

In this blog post on 10/2/2017 I discussed the EIA’s latest 2017 world energy projection out to 2050. The EIA is America’s congressional energy information body, equivalent to the Congressional budget office (CBO) for budgetary information. The IEA (international energy agency) is a similar energy information agency with 29 country members (including the US). The IEA has a more global developed world perspective. The IEA just released their 2017 world energy outlook. It is much the same as the EIA’s outlook, but presents more future “sustainable development scenarios” that address CO2 emissions and climate change, which the EIA avoids due to contentious American politics.  As is common with such scenarios they project what could be successful without saying how to achieve that success, or what the economic impact would be. The mechanism always depends on government policy to force change. So far, governments show no appetite for change on the scale indicted by the sustainable development scenarios.

CO2 emissions grew in 2017 after several years of steadying out mostly due to burning less coal and more natural gas. So, EIA and IEA projections are for CO2 emissions to reduce, but not to a level that keeps CO2 below 450 ppm by 2050 unless there is drastic change from current trends. Meanwhile yearly CO2 emissions continue to rise, not fall.

In 2017 solar PV is set to exceed 100 GW of new installs and wind about 60GW. This represents major growth in the last few years and sounds like a lot but unfortunately is a tiny fraction of what is needed. Getting a sense of the scale of what is needed to be relevant to CO2 reduction is daunting and demoralizing for advocates of current wind and solar.

In 2012 I made a video for solve for x that showed the scale of the necessary solution. Things have not changed much except that there are five fewer years to 2050. It will take about 0.8TW to 1TW of average new clean energy electricity generation every year for thirty years. This average generation translates into 4TW to 5TW of current new wind and solar nameplate capacity. Today's 100 GW PV manufacturing capacity would need to scale by 40X to 50X. Current utility scale solar is around $1/W, rooftop is over $2/W. If utility cost halves to $0.50/W that is $2T/y to $2.5T/y. This is about 10X current clean energy yearly investment. This is also not counting storage, backup or transmission costs. Allowing for more cost reduction brings cost into the $1.5T/y current total spent on energy.

As my last blog post discusses, clean energy investment has been stalled at about $250B for the last seven years. About half of this is government subsidies. Government policies are determining the current investment level. To get to sustainable clean energy growth it must become market driven growth. Energy is a commodity. Price determines demand. Instead of 4TW to 5TW Stratosolar only needs 1.2TW to 1.5TW each year, or $0.6T to $0.8T each year. The key point is that this is at a fraction of the cost of electricity from fossil fuels without needing any government subsidy. Electricity at $0.01/kWh to $0.02/kWh without any strings or hidden costs will simply replace fossil fuels at a rapid pace driven by market forces and high profits driving investment.

As is common with energy discussions, it is easy to get lost in the weeds. The only reason for clean energy is to reduce CO2 emissions. Wind and solar are not an end in themselves. They are a means to the end of reducing CO2 emissions. If they are not on a path to reducing CO2 they are failing their purpose, no matter how successful they are as businesses.  Stratosolar is a logical progression that takes today's solar PV from failing to reduce global CO2 to succeeding in reducing global CO2. That is a big deal and worthy of some attention.

By Edmund Kelly