Industry news
Things I noticed and thought were interesting
Week ending 20th September 2020
1, Energy transition. Two reports illustrated the developing consensus on what it will take to achieve net zero by 2050. BP’s most aggressive scenario proposes that about 60% of primary energy will come from renewable electricity while the Energy Transitions Commission (ETC) suggested about 70% of all energy use would be electrified. Total installations of wind and solar will multiply about 20 fold from today’s levels. Both BP and ETC see huge increases in hydrogen production by 2050. Surprisingly BP’s estimate is over 40% higher than the ETC. BP also sees natural gas production falling faster than the ETC to about half the current level. As might be expected, the BP prediction for oil use remains at about 25% of today while the ETC sees a fall of over 90%. The ETC costs the transition to net zero by 2050 at 0.5% global GDP per year, which is around the same number as BP’s estimate for the 2030s. Carbon capture is a vital part of both net zero plans.
2 Solar performance. Fraunhofer, the influential German research institute, produced its report on the solar PV industry. The interesting figures I noted included an estimate that solar produced about 2.2% of world electricity last year and that the growth rate in installations, now a total of about 635 gigawatts, has been about 35% per year over the last decade. Fraunhofer estimates that the slope of the ‘learning curve’ – the cost reduction that arises every time total accumulated production doubles is about 24%, a higher figure than the 20% usually estimated. This suggests future cost reductions may be even greater than expected. The issue of 'Energy Return on Energy Invested' continues to be a nagging concern in some quarters for no good reason. The institute confirms that the energy payback on panels installed in southern Europe is about 1 year and about 1.5 years in northern areas of the continent. Assuming that panels typically last about 35 years, the energy cost of making a panel installed in Spain or southern Italy is therefore about 3% of the power output over its life.
3, Lithium ion battery recycling. At the moment recycling lithium ion batteries makes little or financial sense. The materials recovered are less valuable than the cost of recycling. But eventually separation of constituent metals will become one of the biggest industries in the world. We are beginning to see some jostling for position in this new market. Belgian chemicals giant Solvay announced a tie with French waste company Veolia to begin large-scale recovery of the metals (nickel, cobalt and lithium) contained in most of today’s EV batteries. Solvay claims to be in discussion with car manufacturers and battery cell producers. In the US Redwood Materials, the battery recycler set up by JB Straubel, the former Tesla CTO, received investment from the $2bn Amazon climate fund. Straubel says that his business is already doing limited amounts of recycling of batteries from consumer electronics and scrap from the original Tesla Gigafactory in Nevada.
4, Micro nuclear reactors. Hitachi cancelled the plans for a large nuclear plant in north Wales, leaving one new power station in construction and two in planning in the UK. But even as the prospects for large plants worsen, levels of interest in small nuclear reactors remain buoyant. In a recent report one group of consultants advocated 20 MW reactors to generate electricity constantly as a means of producing hydrogen more cheaply. Their report pointed out that renewable energy sources suffer from the disadvantage that intermittency means that expensive electrolysers might only work a fraction of the hours in a year. Their calculations showed the possibility of hydrogen at less than $1/kg, a cost which make electrolysis competitive even with cheap natural gas. And small nuclear will use far less space. Separately, the University of Illinois in the US expects funding soon for the development of a 15 MW micro reactor to generate steam and a small quantity of electricity on campus. One of the professors involved gave a YouTube talk on the operation of micro-reactors which I found very illuminating indeed.
5, Energy consumption of E-bikes. The researcher Kees van der Leun pointed out that replacing the average Dutch person’s entire car use with a e-bike would require about 60 kilowatt hours of electricity a year. That’s about a week’s power use for a typical European household. If all car journeys were actually made using an e-bike, Dutch electricity use would rise by less than 1%. Cars use approximately fifty times as much energy. A very useful Twitter thread is here.
6, Automated ecological restoration. Oxford-based Dendra Systems raised €10m from Airbus Ventures, amongst other investors. Dendra is active in the business of ecological restoration, using drones and AI. About 15 per cent of the world’s land surface is heavily degraded and the company claims it can cheaply restore some of this area. Its first customers are Australian mining companies that are obliged to repair the land they have disturbed. However the bigger market will eventually be areas that have been ruined by inappropriate agriculture around the world. Dendra says its drones can plant 120 seeds a minute and it can calculate the carbon capture benefits of tree growth from month to month. Large corporations in high fossil fuel use industries seem to be moving more cash into ventures which are only distantly related to their core business.
7, Effectiveness of voluntary reforestation progammes. An academic paper (paywall) produced a strong conclusion that REDD (Reduced Emissions from Deforestation and Forest Degradation) programmes have limited or no effect on emissions. The article states that ‘overall, we find no significant evidence that voluntary REDD+ projects in the Brazilian Amazon have mitigated forest loss’. This seems very robust research and should cast real doubt on whether carbon offsetting using reforestation is likely to be successful.
8, Vertical farming. Another huge financing in the sector. Berlin-based InFarm will raise about $200m from investors to fund its international expansion. InFarm makes small vertical farming modules that are installed inside large supermarkets. It counts 17 of the world’s top 50 food retailers as customers and targets emissions-free food production next year.
9, Synthetic fuels. Nordic companies Wartsila and St1 sponsored a report from LUT University that showed how CO2 captured from paper making processes in Finland could be combined with hydrogen to make synthetic substitutes for oil products. The work suggested that building synthetic fuel plants at the ten largest Finnish pulp mills could enable the production of 250% of Finland’s needs for hydrocarbons. The publicity materials for this study say that the country could become fully energy self-sufficient in this way and improve its trade balance by €10bn, or about 15% of its current total exports. Improving national self-sufficiency seems to be becoming an important driver of the energy transition. The backers of the research state the economics of their proposal require the state to introduce quotas for the percentage of synthetic fuels in petrol/gasoline and diesel. The need for hydrogen would mean that Finland’s electricity production would have to almost triple but since Finland under-uses its wind resources, this should not represent a major problem.
10, Car charging. An EV charging site in the east of England will be able to handle simultaneous charging of 30 cars when it opens later in the year. The park will also contain several retail outlets and an EV education centre (although I would think that most people visiting a charging park would already be pretty well informed). Locations like this, mostly powered by renewable electricity and containing shops and restaurants, will take over a large fraction of total public charging, pushing aside crowded petrol/gasoline stations with single EV chargers. Although industry participants, at least in the UK, continue to press for subsidies for charging installations, this is surely one part of the energy transition that needs absolutely no government intervention.
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