So successful has the state’s switch to renewable energy been that at times the small island grid systems are creating too much energy, or conversely, others are generating too little. Unfortunately, the significant swings in power supply cause enormous system management problems. Hawaii is not alone of course, the islands display a microcosm of what most countries with a significant proportion of renewable power generation suffer: coping with the variability of renewable power supply.
The Smaller the Grid, the Bigger the Shifts
According to the WSJ, though, the smaller the grid the harder it is to manage and they don’t get much smaller than Hawaii’s. Every island has its own grid, none of them connected to any other, compared to the US mainland where just three grids cover 48 states.
The larger the grid, the more capacity it has to absorb fluctuations in power levels. The islands still burn oil for 70% of their power pushing power costs to 34 cents per kilowatt-hour; as a result there has been a massive adoption of solar panels and wind turbines. On Oahu 13% of residential utility customers have solar panels, unprecedented in the US, even compared to green California or super sunny Arizona.
Source: Wall Street Journal
In Hawaii, at any time, up to a third of power could be coming from renewables. If a cloud passes, power levels fluctuate significantly. On Maui, the WSJ reports peak electricity demand is about 200 megawatts. The island has 150 megawatts of renewable capacity, half of it consisting of wind turbines. That means sometimes as much as 75% of power generated comes from variable sources like the wind and sun. Read more
The job of 3D-printing the world’s first office building is being tackled and 27 states have filed a lawsuit against the EPA over new water rules.
3D-Printed Office Building
Plans have been made to 3D-print a 2,000-square-foot office building – along with the furniture for its clients. Shanghai design company Winsun Global will work with architecture firm Gensler, structural engineer Thornton Tomasetti and construction manager Syska Hennessy Group on the project and plans to use reinforced concrete, fiber-reinforced plastic and glass-fiber-reinforced gypsum in a 20-foot-tall 3D printer. The project should require up to 80% less labor and could reduce construction waste by as much as 60%.
Several lawsuits have been filed by 27 states against the Environmental Protection Agency‘s expanded water rules. The states are concerned that the EPA violated the Clean Water Act and other laws when it extended its authority. The separate suits are expected to be combined into one case in federal court.
Silicon is essentially sand. But for use in semiconductors and solar panels it needs to be refined to a purity of 99.99999 %. This makes the second-most abundant resource in the world a commodity as its availability is limited by worldwide refining capacity.
We have long lamented the trade war going on over refined silicon over the last few years. Big companies such as German-based multinational Solarworld, Inc., want higher prices, saying their panels are of higher quality than those offered by smaller, mostly Chinese, producers.
Meanwhile, Elon Musk’s SolarCity, an entirely American-owned operation, is building a massive $5 billion “gigafactory” in Buffalo, NY. When the silicon solar panel factory is completed and running full-tilt (projections within two years), it will be the biggest solar panel plant in North America. To run at full speed, the plant will need an elaborate network of suppliers and service firms to support it.
Is Domestic Demand There Yet?
Is there enough solar demand for companies like SolarCity and SolarWorld to get their prices increases AND see sales grow? A significant price spike in silicon in the renewables MMI this week is certainly a step in the right direction. The tariffs placed on Chinese panels and silicon seem to be having the desired effect, as well. The European Union renewed similar duties this week, essentially stifling Chinese exports to the West with high tariffs in both markets.
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The renewables market lost ground again this month, going from being an unspectacular but steady market to just an unspectacular one. It’s even now from the range it had been hovering in since last November.
The monthly Renewables MMI® registered a value of 58 in June, a decrease of 3.3% from 60 in May.
What’s concerning is that while we certainly didn’t expect renewables to break out and hit new highs this year, they’ve actually lost significant ground compared to late 2014 when the range hovered between 60 and 70. 58 is a new all-time low. We can only chalk this drop up to more incentives for end-use products using silicon in the solar market and the overall weakness in the rare earths market for neodymium.
In California this month, a state cap-and-trade program is now giving away crystalline silicon photovoltaic panels to low-income homeowners. While this will certainly help adoption, it won’t do any favors to companies such as SolarWorld, Inc. which are trying to bring prices of the panels, and silicon itself, up to achieve higher profit margins.
Silicon will also inevitably feel the pinch from a wave of mergers in the semiconductor industry that will force the involved companies to adopt better procurement and lean operations principles.
The more interesting renewable market is that of grain-oriented electrical steel. While the US GOES price actually went up this month, the GOES M3 price, a much better indicator of actual purchasing activity, went down. More on that tomorrow.
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We at MetalMiner have long covered the US domestic policy front as pertains to US manufacturing industries, and time and again, we hear industry experts extolling the virtues of “all-of-the-above” strategies, rather than unilateral regulatory decrees.
So is the federal government, in conjunction with individual states, pursuing “all-of-the-above” strategies to their fullest potential when it comes to US energy policy?
As the final rule of the EPA Clean Power Plan gets closer to being finalized (word on the street: it’s happening this summer), we got an insider perspective from Michael Whatley at Consumer Energy Alliance on the issues for US manufacturers surrounding the potential effects of the final rule. Below is a condensed and edited version of our conversation.
All-of-the-Above Fuel Mix
MetalMiner: So when we talked to AISI and NAM, there was sort of like this clear-cut division. There [seem to have] been trust issues between EPA and industry. Are you guys in the same boat as that?
Michael Whatley: We feel very strongly that we’ve seen rules that have been put in place over the last 15 to 20 years across multiple presidencies that are reducing the role that coal is going to play in the nation’s energy power supply. But at the end of the day, in order to ensure that we have affordable, reliable electricity for all of our consumers, whether those are industrial or individual and residential, we have to make sure that we have a fleet mix – a generation mix – for electricity that is going to work. If we’re going to say unilaterally, the way that this administration’s EPA has said, that we’re going to move away from coal, then we…can’t just take 30 or 40% of our power supply of the grid in a short period of time without having ramifications. Electricity [demand], over the long haul, is projected to increase across the country. So if we’re going to be making major changes to our fuel mix, we’ve got to make sure that we’re able to replace the coal if the coal is going to go away. And in this short of a time, we just don’t think that’s realistic.
MM: Is that what you mean by fleet mix? Does that have a different meaning than the fuel mix?
MW: No, fleet mix is the fuel mix. Frankly, as much as we support solar and wind and other renewables, those are not ready to take on a baseline generation capacity in most states yet. Even though we have natural gas that is online and have massive reserves nationwide, the infrastructure to be able to get the natural gas from those reserves to new electricity plants that are yet to be built, as well as the pipeline capacity, is going to be a challenge for us. We have to make sure that the timelines EPA puts in place for the states here are going to be realistic.
MM: So what are you guys advocating at CEA?
MW: We are advocating that if we’re going to move forward with any set of rules, they have to be done in a way that is not going to set up unrealistic emissions generation cuts or unrealistic timelines, because we can’t do this in a way that’s going to foster blackouts or price spikes, as we’ve seen in some states already. In California, that state has taken steps to say “we’re not going to have any coal-fired power plants.” Yet, they import electricity from a bunch of other states. If you take that same model and apply it nationally, then we’re not going to be able to get enough renewables online in the timelines they’re talking about. Read more
This is part two of a series on carbon-dioxide taxes and how quickly they could affect energy industry companies. Part one ran yesterday.
One could, and many will, dismiss the International Monetary Fund report “How Large Are Global Energy Subsidies,” as so much drivel, that, while there are undoubtedly costs to burning fossil fuels, due to health and pollution, the energy industry also pays huge amounts of taxes and provides low economic cost energy that allows our economies to function.
Whatever we may or may not think of the validity of this argument we should remember the IMF rarely deviates from the thinking of the US Treasury. If the IMF have gone public with this approach it will have widespread support among influential circles.
Subsidies and Energy
The basis for the IMF’s case is that fossil fuel companies have been allowed to keep huge profits while dumping the consequences on the rest of society, and that the only way to dissuade this practice is to tax the fuels sufficiently to compensate society, an analytical approach developed by Arthur Pigou, an early 20th century economist according to the London Telegraph newspaper.
If the full cost, under this model, were applied coal would become uneconomic overnight. Compare the article’s figure of $5.7 trillion with the annual subsidy for renewables of $77 billion, with the latest solar investments operating without any subsidy in some parts of the world.
The COPS21 conference is aiming to limit the rise in carbon to 450 particles per million (ppm) and to cap the rise in temperature to 2 degrees Celsius above pre-industrial levels by the end of the century. Climate scientists claim that we are currently on course for 4 degrees Celsius, and while their claims have been often shown to be wildly pessimistic the reality is a) temperatures are rising and b) if lawmakers believe the science it probably makes no difference what individuals think action will be taken.
Source: London Telegraph
China has the additional drivers to limit emissions in that, more than any other nation, they are suffering the consequences of fossil fuel air pollution. Read more
We have already written this year on the risk to the fossil fuel industry posed by potential carbon taxes. Consensus that such taxes are coming seems to be building surprisingly quickly, helped, it must be said, by a historic agreement between the USA and China to work together to agree on emission targets and add momentum for an agreement to emerge from the COPS21 conference planned in December in Paris.
The most noise is, not surprisingly, coming from fear that trillions of investments in fossil fuels, principally coal but also oil and even natural gas, could become uneconomic if some form of carbon tax is agreed upon. Probably more because of this worry than any more altruistic notion major investors are already beginning to turn their backs on coal in particular. The latest is the world’s largest sovereign wealth fund, Norway’s $916 billion fund has decided this week to pull any investments from companies whose business relies more than 30% on coal according to the FT. Read more
Oakland nonprofit Grid Alternatives is using $14.7 million raised through the state’s cap-and-trade system to install the panels in lower income neighborhoods for free. The fees were paid by industries whose emissions exceeded the state “cap” set by the new law. The fees were donated by state to Grid and the money came out of the Greenhouse Gas Reduction Fund (GGRF), also established by the cap-and-trade law.
Silicon was the biggest mover this week on our renewables MMI, as well.
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The facility will draw Marcellus Shale gas from UGI’s Auburn gathering system, then chill it to produce up to 120,000 gallons per day in liquid form. While we have regularly reported the slowdown in both new shale oil and LNG projects in the US this year — and the subsequent cutbacks in oil country tubular goods production — investments are still being made, in the US and overseas, in drilling.
Plants, Projects Planned
Bloomberg Business reported this week that Anadarko Petroleum Corp. selected a group of developers including Chicago Bridge & Iron Co. for a potential $15 billion LNG project in Mozambique.
CBI’s joint venture with Japan-based Chiyoda Corp. and Saipem SpA, based in Italy, will work on the onshore project that includes two LNG units with 6 million metric tons of capacity each, Anadarko said Monday. Construction plans also include two LNG storage tanks, each with a capacity of 180,000 cubic meters, condensate storage, a multi-berth marine jetty and associated utilities and infrastructure, according to Texas-based Anadarko, which says it will make a final investment decision by the end of the year.
Last week, the Department of Energy gave Cheniere Energy Inc. final approval for the nation’s fifth major export terminal at Corpus Christi in Texas, which will ship the fuel from 2018. Read more
Most of our commodity metals posted gains this month. Even laggards such as the Construction and Raw Steels MMIs were able to post at least a flat month and avoid a loss. Only the markets that were generally flat to down before commodities’ big downturn, Rare Earths and Renewables, lost ground this month.
The big question, is, then are these metals’ prices truly going back up or are we merely experiencing temporary gains with the downward trend soon to continue? It honestly may be too soon to tell.
We have seen several commodities fall much lower this year after outside-influenced one-month rallies. As my colleague Raul de Frutos wrote regarding the copper market this month, “we know that trying to guess the bottom is a terrible strategy to take.”
The Dollar and Oil Prices
The big outside influence, of course, is actual weakness in the US dollar, the first real weakness seen this year. The oil price reduction that has kept most commodities low this year has moderated, with oil hitting $60 a barrel this week. A 0.7% fall in the dollar index was the biggest drop of 2015. Further weakness in the dollar throughout the rest of the year would give a bigger boost to commodities and foreign markets.
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