BloombergNEF has over the years proven to have pretty solid forecasts. The current one about NEVs [1] has a few interesting points. Adoption of EVs is slowing down in the US due to policy changes but going to explode in countries like Vietnam because they are cheeper to buy an run. It is not BMWs and Mercs but Chinese brands.
In Europe and the US the Chinese EVs are kept outside with the help of tariffs but that is just closing the eyes to avoid facing the inevitability. Battery technology, production and raw materials is all China.
Last not least Europe is driving up KWh costs by an ideologically driven push for renewables which also doesn't help.
Renewables (especially wind) are now just about the cheapest way to generate electricity, and new battery technologies do much to help with their intermittency, so where’s the problem?
(Plus, the ‘ideology’ in question would seem to be: it’s bad to fry the planet, and also bad to run even a small risk of radioactively contaminating one’s landmass, and IMHO neither of these positions deserves to be called an ideology).
> Renewables (especially wind) are now just about the cheapest way to generate electricity, and new battery technologies do much to help with their intermittency, so where’s the problem?
The basics of economics are:
- market price is a function of supply and demand
- storage costs money
- distribution costs money.
- perishable goods a finicky in highly volatile markets
- CAPEX costs money
- businesses will try to maximise the difference between price and costs
Yet you know all this as you are a professor of economics in the UK. So how comes that the UK has the highest industry KWh prices in Europe? There must be an absolutely fantastic opportunity to make money and investors should be like vultures grabbing new projects for renewables.
Just the other day I read news that in Germany perfectly well functioning wind turbines are being turned down because they have reached the end of the phase of guaranteed KWh prices. So are the owners crazy and throwing money away? No, they simply do the business calculations and if the math doesn't play out, they simply remove them and build new ones with new subsidies.
The latest auction from the German gov for a new field in the baltic sea didn't even find one bidder.
China is doing lots of renewables but they calculate it down to the penny.
So yes, as you say "Renewables (especially wind) are now just about the cheapest way to generate electricity". To generate yes. But you need lots of CAPEX to store it and to distribute it. And you can not work with a 95%ile. You need 100% in any developed economy.
Despite marginal cost pricing it not interesting for investors without subsidies.
Old wind turbines might be perfectly fine but they are also no longer competitive with modern replacements. Usually it does make sense to replace them with more modern alternatives. Subsidies have gotten very low because carbon credits are now a much more important way for renewables to boost their income (most negative prices reflect that).
Offshore wind is facing the challenge that it is more expensive than onshore wind and also that solar is having a day with ever decreasing prices. Governments are trying hard to minimize the cost of the energy transition, offshore is primarily hurting because of this.
> Old wind turbines might be perfectly fine but they are also no longer competitive with modern replacements. Usually it does make sense to replace them with more modern alternatives.
I would just for once love to see a calculation for this. There have been no advancements in generator technology nor in blade technology. Generators in power stations have a life time of many decades. A third of the 31000 German wind turbines will be put down because of the end of subsidies.
Also subsidising solar power in the north of Germany makes no sense - for months there is no solar in winter but in summer solar adds to the already massive surplus of energy from offshore wind. It is a waste of money. If you believe that global warming is a problem (which I agree with) then the money should be put to efficient use.
There's a thriving second hand market for wind turbines.
Similar to EV discussions a lot of motivated reasoning seems to assume that these items are disposed of in a black hole or set on fire in a school playground after a few years to try to equalize the damage done by combustion alternatives.
In reality people are spending tens or hundreds of thousands to buy these used turbines because they have value.
I've not seen full calculations for wind but I assume they exist. I've read ones for solar which calculate replacing panels in a farm after 17 years and landfilling the old ones is still ecologically positive because the extra generation of the new panels would pay off.
Obviously this only gets better if you resell or recycle the old panels instead.
Sounds like you think renewables aren't cheaper. It is hard to tell, but we have a natural experiment going on in Australia that may shed some light.
The state of South Australia (SA) has no coal or gas, and is a long way from anywhere so importing those fuels are expensive. The eastern states live on a sea of coal and gas, exporting a huge amounts of it overseas.
Historically the price of electricity SA has always been more expensive than elsewhere. When renewables became an option, SA enthusiastically adopted them. Prices went up even more for a while presumable because of the CAPEX in building the renewable infrastructure. For a while SA, had the largest grid battery on the planet (others are now bigger), which is a little surprising for a place with a population of just 1.8M. Right over a year they average about 80% of renewable. From what I can tell the balance is supplied by gas peakers. They say they will be 100% renewable by 2027. SA is now paying about £0.20 / kWh retail.
SA transition happened over 2 decades. For the most of those two decades the eastern Australian states governments did mostly nothing, which is to say their coal fired power stations just kept chugging along. They couldn't do exactly nothing because the population is growing and they needed new supply. The cheapest way to add that was with renewables, filling in any gaps with more expensive gas peakers. The Federal government helped by subsidising solar. For the most of those 2 decades SA was transitioning impact of renewables in the eastern states was small, so their electricity prices remained stable while SA's went up. But it didn't stay that way.
Renewables contribution kept growing. Solar in particular accelerated. The Federal subsidies were designed to gradually reduce to 0 by 2030, but the impact of those reducing subsidies were more than offset by solar panel prices reducing. What those subsidies did do is train a generation of tradesmen on how to install them efficiently, and so Australia despite its high wages now has one of the cheapest installation costs for household solar. The end result of all that is now Australia has the highest penetration of household solar in the world, supplying well over 50% of demand when the sun is shining.
It turns out the renewables are free market poison for coal fired power plants. The coal plants were designed to make a profit by operating for 24 hours a day. Solar now reduces the wholesale price of electricity to $0 for 8 hours a day. Those wind installs intermittently rob them of income overnight. Compounding the problem is governments privatised the coal fired power plants while they were at mid life, priced on the basis of selling power for 24 hours. Presumably the logic was to sell them off while they were still making money, so the public purse could avoid shoulder the huge CAPEX of replacing them when the time came. But the introduction of renewables means they now aren't making money, so their private operators are shutting them down before their anticipated EOL has been reached, which has caused a mad scramble to replace the lost generation.
As the eastern states still have a low'ish penetration of renewables, the cheapest option to replace those coal fired generators is yet more renewables, supplemented with yet more gas peakers. The CAPEX needed to do that has created it's own crisis of sorts, so now the price of electricity in eastern states has reached parity with SA for the first time in history. Meanwhile the electricity produced by gas peakers is comparatively expensive, so expensive that with a little nudge it's cheaper for a household to buy a battery so they don't have to purchase gas electricity. The Federal government has just stepped in to provide that nudge, with a 30% subsidy (also gradually sun setting by 2030, I think). I'm not sure it was needed a wholesale battery prices dropped by 30% last year, but the publicity sure focused a lot of household owners minds on how to reduce their electricity bill. That has lead to an explosion of new battery installs and yet more solar, and a chronic shortage of installers which is amazing given the size of the solar industry in Australia.
If the price of solar and batteries keep dropping then the outcome looks to me that household solar + batteries will replace coal as the major supplier of electricity in Australia. Gas peakers will continue on for a while, but their high price means eventually renewables plus over provisioning plus storage will wipe them out. We've yet to figure out what we can do with all the excess but unreliable power that over provisioning will produce, but there are any number of entrepreneurs trying to figure out how they can make money out of it by producing ammonia, hydrogen and metallurgical refining.
SA will get there well before anyone else. If their own estimates are accurate, by 2028. Their continuing CAPEX will be mostly done at that point, and I guess their inflation adjusted electricity prices will start dropping. They may well have the lowest prices for electricity in mainland Australia for a while.
Frying the planet is bad. That said i don't see the reliance argument for uranium. There's a variety of existing sources on the planet and some we stopped mining. It's proportionally a super small financial element of the energy production process unlike with fossil fuels.
So in the case of let's say Putin's Russia you can avoid using their or let's say Kazakhstan's fuel and if you don't but don't take it's gas directly or via intermediaries like armenia then Russia still ends up in the financial shitter because their income from Rosatom/uranium one/... doesn't even compare.
It's almost inviting anti renewables arguments based on things like aluminium mostly being produced in china and russia or based on where the vast majority of panels are produced, etc.
Include it and it's still cheaper than, say, nuclear.
Also ... even when storage is included, you still gain freedom from opex spending for fuel (that is, lining oily pockets). Once there, renewables are "pure payoff".
Chiming in as Australian with no context on European situation. AFAICT the key drivers of cost inflation are to do with reconfiguring the electric grid to transfer power efficiently and reliably from plants that produce renewable energy. However, the grid is set up to do so from non-renewable sources. And you want to do it while smoothly operating the network. This is extremely hard. Doing so quickly therefore elevates prices. That’s the rationale I could imagine being the case in EU markets.
It's not that simple. For example, in the The Netherlands, the use of electricity was stable for a long time. Mostly because all kinds of equipment (light bulbs, etc) got more efficient.
Grid operators predicted that with the energy transition, demand would rise, but politics wanted to keep prices low and limited investments.
So now, there is a big problem in the entire country connecting companies or new residential areas to the grid independent of how electricity is generated.
At the same time, the government is extremely forward looking and builds massive interconnection points on the North-Sea. Not a bad idea in the long run, but in the short run it does make electricity from wind on sea more expensive.
That said, the biggest hit to EU countries is that cheap natural gas disappeared. Coal is not cheap and extremely polluting. Natural gas was cheap for a while. Until it wasn't.
The European situation is a bit more complicated. It was very well known for a long time that Russia is a ticking time bomb in our backyard yet we made ourselves nearly dependent on their energy supplies and now combined with the push for renewables (which in my opinion is the right thing to do) we have a crisis.
Now there are also lot of countries in the EU with different priorities, so while in theory we could build long-range HVDC connections across borders, it is very hard to do.
more like "it's bad to fry the planet so we will destroy our economy for 0.001% impact while the real impacters continue to advance and leave us in the dust"
It's not just Vietnam. It's almost any country anywhere in the world that is seeing healthy growth in EVs. Especially the ones that barely have a road network or a petrol distribution network.
This is an effect that is still underappreciated in western markets but developing markets embracing renewables and EVs means they are enabling some serious economic growth. They are eliminating chunks of fossil fuel imports from their balance sheet while enabling economic activity in areas that have poor grid coverage and limited access to fuel.
Pakistan is a good example. They have a very under developed grid. Solar and battery storage are enabling the locals to work around that and they have installed a lot of that in recent years. This is enabling local businesses that previously had very poor access to reliably power to now have reliable power and grow. The Pakistan government is also putting in place incentives to stimulate EV imports.
Ethiopia is going a lot further and has actually banned ICE car imports last year. They want to reduce the amount of fossil fuel imports on their balance sheets.
> Ethiopia is going a lot further and has actually banned ICE car imports last year. They want to reduce the amount of fossil fuel imports on their balance sheets.
My understanding is that they are more concerned about oil shipping as they are landlocked and the situation in the gulf of aden is less than ideal.
So you buy a battery for your tiny grid island and pay a little more so that you can also use for a drive? Or perhaps not even more, because the standalone battery is less mass market item.
Truly an interesting change, considering how much of the ICE market used to be hand-me-downs from more industrialized countries. I guess proximity to those is now a hindrance to the renewable revolution, because places with less access to hand-me-downs have a market (and mindset!) for low-priced new cars that never existed in places flooded with second hand cars? Will the upmarket-first kind of BEV ever work in that way?
Electricity costs in the UK (which I believe is still in Europe) are cheaper now than they've ever been if you have the right tariff and that's all due to renewables. Granted, that's primarily at night, but for EVs that's perfect.
One can get a tariff at <7p/kWh for 6 hours in the night. That's cheaper than gas (actual gas, not gasoline).
If that’s Octopus Intelligent Go, then it will also give you the 7p rate outside the normal nighttime slot if the car is charging and their algo calculates they can do it.
Renewables definitely help and I think the UK is doing quite well there but it's a little disingenuous to not even mention the price cap that the government has imposed!
The price applies to default tariff so it is a price that is always available to customers. This means other non-default tariffs like the one you linked have to compete with the flat rate of 26p/kWh.
The tariff you linked is much more expensive than the price cap for most people because most people don't have huge batteries for energy storage. Battery energy storage is worth money so essentially you are getting cheaper energy by selling that storage value to Good Energy. Overall the total value you get from Good Energy (taking into account the value of having storage) is going to be about the same as the value with the price cap and no storage.
Because the tariffs are competing, if all energy retailers were able to raise their prices to their true cost, then it would be all tariffs that increase in price; not just the ones that the cap applies to.
This is similar to why electricity prices went up when there was a gas shortage due to the Ukraine war. Everyone was like "but it's a gas shortage not an electricity shortage!". But of course electricity and gas are in competition in many cases (e.g. for heating), so their prices are linked by shared demand.
If you still aren't convinced, imagine the energy price cap was 1p/kWh. What do you think would happen to the price of EV tariffs then? (For a few weeks until the entire energy retail sector collapsed anyway!)
There's always going to be excess supply at night, because demand is lower. At the moment the difference is large because battery capacity is low, but even as more batteries come online, it will stay lower because battery capacity will respond to the differential (since that's where the profit is). What's interesting is domestic battery installation is so cheap that you can capture almost all the benefits as a private buyer.
FWIW Good Energy are outside the price cap on their standard tariff as well. You don't have to do that many miles for the EV tariff to pay off without any additional storage.
It is not an ideological push, but one driven by the necessity to fight climate change.
Maybe it is ideology to emphasize renewables over nuclear. But all over the world the energy transition seems to involve primarily renewables and only maybe a dash of nuclear.
For many years (20+?) Vietnam has had huge import tariffs on US/German/etc cars. It varies by origin country and engine displacement, but it's around 75% to 175%. Some trade agreements with other Asian countries result in much more reasonable tariffs for Asian brands, but some rich Vietnamese people have bought BMW or Merc with 150%+ tariff/tax. (I found it a bit mind-blowing.) So, it's pretty obvious why Asian made EVs are expected to "explode" in popularity over there. (I'm pretty sure the trend is already well underway, I know a retired guy there who replaced a Merc with a hybrid Mitsubishi (?) last year.)
In Europe and the US the Chinese EVs are kept outside with the help of tariffs but that is just closing the eyes to avoid facing the inevitability. Battery technology, production and raw materials is all China.
Last not least Europe is driving up KWh costs by an ideologically driven push for renewables which also doesn't help.
[1] https://about.bnef.com/insights/clean-transport/electric-veh...