Cal on May 23rd, 2017

Switzerland has voted in a referendum to provide billions of dollars in subsidies for renewable energy and to ban new nuclear plants. A proposed new Swiss law (“Energy Strategy 2050) plans to increase domestic renewable energy, reduce fossil fuel use, and reduce reliance on foreign energy supplies. The European country wants to increase solar and wind power capacity by 400% by 2035. The government estimates this goal will cost the average family 40 francs more a year, based on a higher electric grid surcharge to fund renewable subsidies. Solar and wind now account for less than 5% of Switzerland’s energy output, compared with 60% for hydro and 35% for nuclear. The country has 5 nuclear plants with plans to close them.  The first will close in 2019.

The Chinese government is expecting seven million electric vehicles to be sold per year by 2025 and EVs will account for all new vehicle sales growth. By 2025 EVs will account for 20% of all vehicles sold in China. Last year EV sales in the Asian country represented just 2% of total car sales. The plan also hopes to double average lithium-ion battery energy density and reduce battery pack prices to $150 per kilowatt-hour by 2020. According to analysis from Bloomberg New Energy Finance, the price target looks achievable but the density target will be very challenging.

By next year electric vehicles in Europe will be at price parity with gasoline and diesel vehicles according to investment bank UBS. Parity will reach China in 2023 and the US in 2025. The firm said the EV powertrain is $4600 cheaper to produce than it had estimated previously and there is more cost reduction potential in the system as EV production reaches economies of scale.  UBS also raised its forecasts for global electric car sales by 50% to 14% by 2025 or 14.2 million vehicles. Europe will lead the way with 30% of its total automobile sales electric by 2025. The current share is close to 1%. The US will  electric car sales reach 5% of total sales in 2025.

Mainstream forecasts for electric car sales range from between 10 and 15% of the global market by 2025. Volkswagen expects this to hit 25%.

The International Energy Agency has weighed in on India’s plan to sell only electric vehicles by 2030.  The purpose of the plan is to cut oil imports and reduce pollution from the transportation sector. The IEA says the plan is ambitious and will require more than 10 million EVs need to be sold if the country is to meet this goal. This is nearly eight times the existing global stock of such vehicles. Successful implementation would reduce India’s oil imports by 10% and, coupled with China’s plans, have major implications for world crude oil prices. Currently India has about 5000 EVs on its roads. EVs sell for 3 times the price of a vehicle with an internal combustion engine.

Consumer Affairs says self-driving cars are expected to drive big changes in the car insurance business. A report from Accenture and Stevens Institute of Technology predicts by the middle of the next decade individual consumers in the US will begin dropping their traditional insurance policies as self-driving cars become commonplace. “Autonomous-vehicle technology will drive a significant shift in risk from human error to malicious third party, software, hardware and infrastructure risk,” said Chen Liu, co-author of the report. While there will still be car insurance, it will cover different and less costly risks. Human error is the major cause of automobile accidents and the human aspect will be gradually removed from the equation as self-driving vehicles take over the road. The implication is that individual insurance premiums should be quite low for self-driving cars. The risk will shift to automakers, fleet owners, software publishers, and others taking out policies covering cybersecurity, product liability, and public infrastructure insurance. Cybersecurity insurance is expected to be the most essential new coverage and biggest source of new revenue for insurance companies. It would provide protection against remote vehicle theft, unauthorized entry, ransomware, and hijacking of vehicle controls, as well as coverage for identity theft, privacy breaches, and the theft or misuse of personal data.

A recent survey by the American Automobile Association found more than three out of four respondents say they are afraid of riding in a self-driving car. While over 50% say they want autonomous technology in their next vehicles, giving full control to a computer seems to be the line most drivers are not ready to cross just yet.  Moreover, 90% of drivers said they not would feel safer sharing the road with an autonomous car.

South Korea is in the process of building a whole new city for self-driving cars. The mock city is being designed to help facilitate the development of autonomous vehicle technology. The goal is to run self-driving cars through identical scenarios multiple times, something not always possible when a self-driving car tests on public roads. Korean firms Samsung, Hyundai, and Kia are involved with the project as it gives them an opportunity to test their technology. The city will at first only encompass highways, but next year dense urban areas will be added, bus-only lanes, and other challenges for self-driving cars will be put in place.

A new study by the McKinsey Global Institute says that robots and other forms of automation will dramatically impact at least half of North American jobs by as early as 2035. In Latin America and Asia, the impact of automation may be bigger, because more people work in repetitive manufacturing or agricultural jobs that can be easily replaced by robots. Automation may affect more than 51% of the jobs in Mexico, Colombia and Peru; about 50% in China, India and Brazil; 48% in Argentina; and 46% in the United States and Canada, the study says. However, McKinsey paints a pretty optimistic picture, saying that only 5% of worldwide jobs will be fully automated, and that most jobs will be only partially replaced by machines. Most people will work alongside robots that will take over the most tedious parts of their jobs, productivity will increase, and countries that embrace automation will become more prosperous. Yet many economists are concerned that technology is increasing at such an incredibly fast pace that it may create greater unemployment in many countries.

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Cal on May 23rd, 2017

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Cal on May 23rd, 2017

Chinese Vehicle Sales 2012-2025

Including Electrics

(e = estimate)




Source: Bloomberg New Energy Finance, China Expects All Car Sales Growth to Be Electric, Now

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Cal on May 23rd, 2017

FILE PHOTO: Labourers load coal onto a supply truck on the outskirts of Jammu, India, April 6, 2017. REUTERS/Mukesh Gupta/File Photo

Cal on May 22nd, 2017

Cal on May 21st, 2017

China and Japan have started harvesting methane ice from the seafloor.  Commercial development of the globe’s huge reserves of methane hydrates or “combustible ice” has moved closer to reality after these Asian companies have successfully extracted the material from the seafloor off their coastlines. Methane hydrate is a frozen mixture of water and concentrated natural gas that can be lit on fire in its frozen state and is believed to comprise one of the world’s most abundant fossil fuels. A Chinese drilling rig operation successfully mined the fuel in the South China Sea last week. Meanwhile, a drilling crew in Japan reported a similar successful operation two weeks earlier offshore the Shima Peninsula. Methane hydrate has been found beneath seafloors and buried inside Arctic permafrost and beneath Antarctic ice. The US and India also have research programs pursuing technologies to capture the fuel. The consensus within the energy industry is that commercial development will not happen until at least 2030. James Taverner, a senior energy industry researcher at IHS Market, said:

Commercial-scale production could be transformative for northeast Asia, particularly for Japan, which imports nearly all its hydrocarbon needs.

Estimates of worldwide methane hydrate reserves range from 280 trillion cubic meters (10,000 trillion cubic feet) up to 2,800 trillion cubic meters (100,000 trillion cubic feet), according to the US Energy Information Administration. This means methane hydrate reserves could meet global natural gas demands for 80 to 800 years at current consumption rates. The fuel could displace renewables such as solar and wind power according to Columbia University’s Center on Global Energy Policy.

This week India’s cabinet approved plans to build 10 nuclear reactors with a combined capacity of 7 terawatts. India presently has installed nuclear capacity of 6.8 TW from 22 plants and plans to add another 6.7 TW by 2022 through projects currently under construction.

A new agreement between China and the US has opened the door for US liquefied natural gas (LNG) producers to export vast energy supplies to China. It is the first step for the US. to become a key supplier to the world’s largest energy consumer. The trade deal invites Chinese companies to import American LNG and negotiate long-term contracts to ensure future supply. Last year the US supplied only 1% of China’s imported LNG. Bloomberg predicts imported natural gas may account for 40% of China’s total natural gas consumption by 2020, up from one-third today. US LNG exporters who tap into the Chinese gas market now could find it a tremendous opportunity for growth as their capacity grows.

According to Bloomberg, China’s coal power generation capacity may grow as much as 19% in the next five years. The country recently canceled 120 gigawatts of additional coal power plants, but still plans to add coal-fired electric power plants to nearly 1.1 terawatts of power — the same generating power as 1,000 nuclear power stations, which typically produce 1,100 megawatts each. This is three times the present coal-power capacity of the entire US coal industry.

The price of solar energy in India has fallen to a new record low, making it cheaper than fossil-fuel generated power. At a solar auction in Rajasthan last week the price of solar energy was 18% lower than the average price for electricity generated by coal-fired plants. Phelan Energy and Aaada Power offered to charge 2.62 rupees per kilowatt-hour (kWH) of solar-generated electricity, lower than the lowest price of  3.15 rupees per kWH at the previous month’s solar auction. After the auction India Energy Minister Plyush Goyal said  India would meet its ambitious target to deploy more than 100 gigawatts of solar power by 2022.

The American Wind Energy Association reported that another 21 gigawatts of wind energy capacity is now under construction or in advanced development in the US — enough to power an additional 5 million average American homes. Forty-one US states now have utility-scale wind power projects. Federal government credits for wind energy production, state government renewable energy mandates, and falling costs to build and install wind turbines are combing to drive growth in wind energy capacity.

The Terawatt Workshop projects US solar power will become less expensive than conventional, fossil-fueled electric generating sources by 2020.  Moreover, more efficient solar panels combined with lower cost battery storage will threaten the economic viability of the entire electric utility distribution grid by 2030. In effect, if consumers can economically produce, store, and swap electrical energy, they will not need the conventional power grid. They can replicate it with other technologies and at lower costs. The Terawatt Workshop concluded solar photovoltaic power costs could decline to 3¢ per kilowatt-hour by 2020 (from around 5¢ per kWh now) as compared with 10¢ per kilowatt-hour for the US electric grid.

China’s latest plan for it’s auto industry calls for two million ‘New Energy Vehicles’ to be sold per year by 2020 and seven million a year by 2025. If the targets are achieved this would represent 20% of the total domestic auto market in 2025, with all of the growth coming from electric models.

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Cal on May 20th, 2017

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Cal on May 20th, 2017