"The Switch" by Chris Goodall

Things I noticed and thought were interesting
Week ending 15th April 2018

1, Spain vehicle charging. Utility Iberderola said it would install 25,000 chargers, mostly in homes, by 2021. Customers can buy electricity from them at 3 !!!8364; cents per kilowatt hour for 01.00-7.00 am charging, about one fifth of the average European domestic power price. The company says that this implies a cost of !!!8364;0.50 for 100 km driving, about one tenth of the price of petrol for a similar distance. Iberderola also announced a partnership with a large petrol retailer to put rapid (50 kW) chargers on its forecourts. 50 kW provides enough electricity in just over 20 minutes to drive 100 km.

2, Brazil renewables. EdF won contracts for wind in Brazil, quoting prices of little more than $20 a megawatt hour for a 110 MW farm. This is almost a Latin American record low. The solar auctions held at the same time resulted in higher prices, but winning bids average less than $35 a megawatt hour (3.5 cents a kilowatt hour). Brazil has very good steady onshore winds in the world in its northeastern states, partly explaining the low prices offered by EdF.

3, 'Virtual Power Plants'. Another interesting plan to use batteries to avoid a grid upgrade. The utility covering Lebanon, a small New Hampshire town, is offering to subsidise household batteries for 300 homes. The aim is to avoid a $0.6m substation improvement cost but, more importantly, to reduce the need to import power into the area at times of high prices. The utility will be able to control the batteries during such periods. The supplier also wants to switch to a !!!8216;time of use!!!8217; tariff for its battery-equipped homes, promising the owners savings of $500 a year. I suspect that this type of arrangement will become conventional: the utility will control the home battery and use this control to hold down demand peaks or to deal with unexpected grid events. The homeowner will see lowered bills if she transfers most electricity use to the cheaper hours of the day.

4, Batteries and grid reliability. The world!!!8217;s largest battery, at Hornsdale in South Australia, has proved its value in its first months of operation. The Australian grid operator released a report saying that the 129 MWh Tesla battery !!!8216;can provide a range of valuable power system services and including rapid, accurate frequency response and control!!!8217;. It also stated that the unit !!!8216;is capable of responding more rapidly to a contingency event than conventional synchronous generation!!!8217;. The grid operator concludes that batteries should be rewarded more generously than other forms of electricity supply because of their greater responsiveness.

5, !!!8216;Peak stuff!!!8217;. Does demand for material goods stabilise and then fall as an economy matures? This is the thesis I have pushed for the last few years. A new paper in Nature Geoscience supports a different conclusion, showing that metals demand continues to rise as GDP increases. There!!!8217;s no necessary inconsistency in the two views: my contention is that metal use is at its maximum as an economy goes through its phase of rapid building of infrastructure in the form of office and residential buildings, transport links and factories. For example, China!!!8217;s use of metal has spiked at the same time as its GDP has grown rapidly. But I claim that the cause of the rise in metal utilisation is not GDP growth per se, but rather the rapid increase in infrastructure investment that happened at the same time. As support for my hypothesis, the current semi-official Chinese view is that steel, by far the most important global metal in terms of tonnes, will see small falls in output over the next years as the economy continues to grow but infrastructure investment tails off. Whoever is right, the answer to this debate is crucial to the world!!!8217;s future; materials use is closely correlated with carbon emissions. (Thanks to HM Dittersdorf for alerting me to this).

6, Hydrogen from coal. The Australian government sponsored a US $400m trial that will see hydrogen production at the country!!!8217;s largest coal power station. The plant sits close to huge lignite (brown coal) reserves. This is an absurd vanity project from the coal-obsessed Australian federal government. The production of hydrogen from lignite results in higher CO2 emissions than simply burning the coal in a new power station. And that is before the hydrogen is shipped to Japan. Even with full scale carbon capture and storage in the Bass Strait (an idea voiced by the federal government), the CO2 footprint of lignite-to-hydrogen is no better than a new gas power station. Moreover, this project is expected to reach a fully commercial stage no earlier than the 2030s. By that time, the production of hydrogen from water electrolysis is likely to be a fraction of the cost of generation from coal. Kawasaki, the main industrial sponsor of the Australian madness, is also backing electrolysis in Norway. The Norwegian project could be ready long before the Australian lignite plant, would have a negligible carbon footprint and claims to be already cheaper.

7, Vehicle to grid. Renault said it was launching a trial of !!!8216;vehicle to grid!!!8217; electricity on the Portugese island of Porto Santo, close to Madeira, later this year. Porto Santo is small, with a population of only 5,000 spread over 40 square kilometres, but this experiment is intended to show the viability of building 100% renewable islands, using vehicle batteries as the main storage medium. 1,000 cars would provide about 10 hours of typical Porto Santo electricity consumption if used continuously. !!!8216;Second life!!!8217; batteries from local cars will also be deployed at the island!!!8217;s wind and solar farms.

8, North European fast charging. Fastned, the Dutch leader in rapid charging, reported that quarter 1 revenues were up almost 150% on 2017. At less than !!!8364;1m a year, sales are still tiny but the company said that 30% of its charging stations were covering their running costs. Capital has been in short supply for European charging specialists but Fastned announced that it is raising !!!8364;30m to build out another 80-100 locations in the Netherlands and Germany. Many of these will be able to charge at 175/350 kW, at least four times the current maximum rate. The improving environment for fundraising reflects increasing confidence in the capital markets about the future growth of electric cars. (Disclosure: I chair the board of a UK charging company).

9, Subsidy-free solar. Baywa r.e., the German solar specialist, announced that it had secured a purchaser for the electricity from its proposed Spanish !!!8216;subsidy-free!!!8217; solar farm and construction will now begin. The 170 megawatt farm, just south of Seville, will be one of the largest in Europe and is expected to produce about 300 GWh a year, or about 0.1% of total Spanish use. The purchaser will be Norwegian utility Statkraft. Rumours are that the agreed price is just 3.8 !!!8364; cents per kilowatt hour, well below last year!!!8217;s average wholesale price in Spain of over 5 !!!8364; cents. The rise of European renewables paid for entirely by the value of the electricity that they generate is one of the most striking phenomena of the last six months.

10, Carbon reuse. The Carbon XPrize announced its ten finalists, whittled down from 27 qualifiers over the last eighteen months. These groups have all shown early success in capture of carbon dioxide and conversion into a useful commodity. The successful ten companies now have two years to scale up their technologies at a gas and a coal power station. Four companies are Canadian, only Scotland's CCM comes from Europe. The finalists include four groups turning CO2 into building materials, three are focusing on making plastics, two on very high value nanocarbon products and one from India will make methanol. Building materials are an obvious choice; around five billion tonnes of cement is made each year and plastics are less than a tenth of this figure. But, by contrast, global CO2 emissions are about 40 billion tonnes a year.

1, Aviation fuel from wood. RedRock Biofuels said it was starting construction at its long-delayed project in the middle of Oregon woods. It will use forest waste products to make about 60 million litres a year of jet fuel for its customers including Federal Express and Southwest Airlines. (This refinery will have an annual output of less than 1% of one day’s global consumption of aviation fuel). The key subcontractor is probably US/UK company Velocys, which has pioneered the refining of biomass into liquids at a smaller scale than previously financially viable. Moving waste wood is expensive so the companies making fuels need to be able to locate smaller plants close to the raw material. Velocys is in prime position to address this potentially huge market.

2, Total S.A buys into renewables. Total, one of the super-majors of world oil, indicated it would buy Direct Energie, the third-placed French electricity supplier, for about €1.3bn. As well as retailing energy, Direct controls almost 1.4 GW of power production capacity and a 2 GW pipeline of renewable energy projects. 50% of its electricity comes from renewable sources today. As with Shell’s purchase of the UK’s First Utility in February, this is a relatively inexpensive hedge for a large oil company against the rapid growth of EVs and the rising consumer interest in renewable electricity.

3, Utilites and EV charging. In the UK, leading independent utility OVO (900,000 subscribers) introduced a vehicle-to-grid charger for domestic homes and promised free EV charging to those who allow the charger to manage the car battery for grid stabilisation purposes. Vattenfall, the state-owned Swedish utility, announced the formation of a new business unit to run car charging activities across northern Europe. It will enter France, the UK and Norway in addition to the nearly 9,000 existing charging points operating in Germany, the Netherlands and Sweden. It indicated it wanted to be ‘a leading EV charging operator’ within five years, an ambition shared by an increasing number of European utilities and oil companies.

4, Electric trucks. Volvo Trucks said it would start full-scale production of an electric truck next year. Two prototypes of its FL electric vehicles are already on the road in Gothenburg. Depending on the battery capacity, the truck will be able to drive up to 300 km. The company has identified urban waste collection as an early market, partly because electric vehicles are far quieter than diesel trucks and can therefore operate at night. But despite the commitment from Daimler, Tesla and now Volvo, the idea that freight vehicles cannot be electrified is taking a long time to die.

5, Power to liquids. The consensus is strengthening that the world needs to 100% decarbonise by 2050 or earlier. In my opinion, the only way this can be achieved is using surplus electricity to make synthetic natural gas and liquid fuel substitutes. German think-tank Agora Energiewende published a pathbreaking analysis of the economics of making these synthetic fuels. This is an intellectually rich report, even if one can question many of the assumptions. The key conclusion? That synthetic fuels will cost approximately twice the price of the electricity used to make them. The lowest cost PV in the world is currently being sold for about 2 US cents per kWH. The wholesale price of petrol is about 6 cents a kWH today. The report itself isn’t anywhere near as optimistic as this but it seems to me that synthetic fuels are already competitive with fossil in the lowest cost PV locations. (Thanks to Sam Arie)

6, Gravitricity. A UK company proposed a new type of energy storage and discharge device. A heavy weight in an existing mine shaft will be winched up to use excess electricity or let drop to put power back. The company claims the prototype device has a high efficiency (85% of the electricity used to raise the weight is available during power discharge). Gravitricity says that the overall cost of electricity storage using its technology is lower than lithium ion. It quotes research suggesting a capital cost of around $570 per kilowatt of discharge capacity, a number which it says is 6% lower than lithium ion batteries. The lithium ion cost seems too high to me; Musk installed the huge South Australia battery farm late last year for about $500 per kilowatt and the cost of new batteries continue to fall fast. Two further points undermine the business case for Gravitricity. First, it aims at what is called the ‘fast frequency response’ (FFR) market. Participants in this market have to be able to respond almost instantaneously to grid surpluses and deficits. As EV increase in number, batteries in static cars will be more effective at addressing this opportunity (see 3 above). Second, even in the company’s own analysis Gravitricity’s technology would be extremely costly for longer-term storage. (Thanks to Nick Goddard for pointing me to this story).

7, Belgian offshore wind. Belgium said it expected new offshore wind to be built with zero subsidy and targeted 4 GW by 2030, up from less than 1 GW today. A 2017 auction saw a guaranteed price of €79 per megawatt hour, but recent bids around the North Sea have seen much lower prices and Belgium expects to be able to achieve prices below €50. As with the Netherlands, Belgium covers the costs of grid connection centrally and has installed an offshore hub to which wind farms can connect. This is the right model for offshore; the infrastructure should be built by a central authority that allows electricity suppliers to plug in. (The UK does things differently, obliging wind farms to each create their own connection to the shore). A rational European policy for offshore wind would go further than Belgium’s approach, and build new islands in the North Sea that allowed power to move from country to country.

8, CO2 removal using rock weathering. An interesting study showed that enhanced rock weathering could conceivably capture three times the volume of CO2 emitted each year from fossil fuels. The idea is that minerals are ground into fine particles and spread on the soil in a thin layer. The particles capture the CO2 in a chemical reaction and then slowly dissipate into the ground. This technique can be used to improve the fertility of soil if, for example, basalt is the source rock. (Basalt contains potassium, a mineral being rapidly depleted in some soils). However basalt is slower to take up CO2 than some alternatives and the cost is assessed at $200 per tonne of CO2 abstracted, before taking the fertility benefit into account. Another material, dunite, could capture far more carbon at costs as low as $60 a tonne, but contains trace amounts of metals such chromium that are potentially toxic. This is a vital study because it shows the potential scale and costs of using rock weathering as a CO2 reduction tool, a field that has been largely been ignored in discussions of carbon capture.

9, Off-grid solar. D.light raised another $50m from banks and other lenders in the latest fundraising from this leading off-grid PV company. D.light sells and rents $10 lanterns as well as systems than can power TVs and other basic household equipment. It targets reaching 100 million people by 2020 and seems well on track. Importantly, this is the first time the company has raised finance in the form of debt, demonstrating the increased confidence of bankers in the reliability of income flows from simple solar products aimed at households in Africa and Asia.

10, Indoor growing. YesHealth, a Taiwanese company which operates the largest vertical farm in Asia, said it would build the biggest European equivalent in York, England. The proposed £25m investment will build the daily capacity to grow up to 20 tonnes of leafy vegetables. The UK currently imports about 6,500 tonnes of vegetables a day but as the divorce from Europe proceeds, the difficulties of shipping highly perishable goods will grow. YesHealth claims that it can achieve 100 times the productivity of outdoor land and also says that labour requirements are far lower than on a conventional farm with the same output. It has minimal environmental impacts because no nitrate fertiliser is wasted and pesticides are far less likely to be necessary.