The Energy Outlook for 2040

April 23rd, 2016 at 12:00 pm by David Farrar

Went to a presentation by the global forecaster for Exxon Mobil about what they think the energy outlook will be in 2040. They’ve been doing this for several decades. I did ask how accurate was their 25 year forecast in 1990 for 2015 and he said that they got the overall demand level about right but thought nuclear would be a bigger sector today than it actually is.

The forecast is here.

Some key forecasts are:

  • China will go from 10 cars per 100 people to 30 cars per 100 people
  • Per capita incomes in OECD countries will increase 60% by 2040 while non OECD countries will go up 135%
  • Coal generated electricity will drop from 40% to 30% of electricity
  • Natural gas will grow more than any other energy source which will meet 40% of new demand from 2014 to 2040
  • Energy related co2 emissions will peak around 2030 and then decline
  • Fuel economy for light vehicles will improve by around 80%
  • World population will reach nine billion and India reaches 1.6 billion to become the most populous country
  • China will be 20% of world GDP in 2040
  • India’s GDP per capita will triple
  • Energy demand will increase 25% with OECD demand dropping 5% and rest of the world increasing
  • OECD co2 per capita emissions will fall 30% by 2040 by which date China will have around the same per capita emissions
  • Average growth rates for energy sources will be oil 0.7% a year, gas 1.6%, coal -0.2%, biomass 0.3%, nuclear 2.9%, solar/wind 4.8%, hydro/geo 1.3%
  • World has 150 years supply of oil at current demand levels and estimates rise as technology gets better. So much for peak oil.


Energy storage

May 14th, 2013 at 2:00 pm by David Farrar

Slate looks at energy storage. Why might we need energy storage in future:

California enacted a renewable portfolio standard in 2002 that ordered all utilities in the state to get a third of their electricity from wind, solar, or hydropower by 2020. Twenty-eight other states and the District of Columbia have similar requirements. But as states ramp up their use of renewables, they’ll run into a problem nobody at the lectern talked about: energy storage.

Wind turbines and solar panels produce energy intermittently, often when the grid doesn’t need it. Much of the energy they make has to be put somewhere until demand rises. The energy storage solution now most commonly used is pumped-storage hydropower: Facilities send water up a hill when the grid is producing excess power, store the water behind a dam, then release it through a turbine when demand rises. But the system requires a lot of water, and water tends to be scarce where sun and wind are abundant. What’s more, all the good spots with the right topography in the United States are already taken.

So what is needed:

The ideal energy storage solution would have five qualities: It would put a lot of energy in a small space; it would be inexpensive; it would lose in transfer less than a fifth of the energy put into storage and taken back out; it would last decades; and it would release the energy quickly. The optimal energy storage technology would also be safe to transport and non-toxic to dispose of, as well as made of raw materials that can be obtained without causing major environmental damage.

We have compressed air:

Compressed air works like this: Electricity drives a pump to pack air into a tank. As the molecules become more densely packed, they heat up. The heat is later converted back into electricity. The problem is that transfer is inefficient. Danielle Fong, co-founder of a Berkeley company called LightSail Energy, told last year she’s invented a system that can get the efficiency up to 70 percent. (Randy Howard, LADWP director of power system planning and development, would like to see efficiency of between 85 and 90 percent.) Her prototype has impressed even investors skeptical of clean tech and attracted a fresh $37 million round of financing in November.

And flywheels:

Flywheels convert electricity to kinetic energy and back. Certain kinds can be up to 85 percent efficient, and they can run for decades with very little maintenance. But flywheel systems are expensive, becoming cost-effective only over a 20-to-30-year time horizon. Temporal Power, of Ontario, Canada, claims it has a technology that reduces energy losses; its first megawatt-size project is just getting off the ground.

But the real innovative solution:

Jim Kelly thinks he has the energy storage solution. In his 38 years in various R&D and engineering executive positions at Southern California Edison, Kelly built several pumped-storage hydropower facilities. Next month, on a ranch in the Tehachapi Mountains owned by one of the founders of the wind energy industry, Kelly’s company, Advanced Rail Energy Storage, will begin testing a variation on pumped hydro. Except instead of dams, channels, and water, Kelly’s new system has rail yards, train tracks, and electric locomotives hauling boxcars full of gravel.

These heavy-haul trains, borrowed from mining applications, use the same software as computerized trains at many airports. A motor hooked up to an electric third rail draws electricity from the grid to push the trains up a 7 to 8 percent slope; at the top, the energy is stored as potential energy. When the grid needs the watts back, the software allows the trains to run downhill at about 35 miles per hour, “releasing energy all the way,” Kelly explains. The locomotive’s motor becomes an electric generator, pushing the electricity back into the electrified rail and from there, to the grid. A large-scale storage facility that could handle 500 megawatts or more would take about 8 miles of track. The heavy boxcars are connected and disconnected according to how much power is being stored or sent back. The trains can store the power for an hour, a week, or a month with no loss over time—gravity doesn’t decay. And Kelly says they can achieve up to 90 percent efficiency. DWP’s Howard said that Kelly’s idea sounds “intriguing” and thinks it could work.

Human innovation is near endless. That is why doomsday predictions around peak oil and even climate change I have little time for. Both issues are real and important. But we shouldn’t rule out what future technology will bring us.

The costs that Greenpeace didn’t bother to calculate

February 12th, 2013 at 11:00 am by David Farrar

I blogged yesterday about the Greenpeace report that claimed all these economic benefits of New Zealand becoming 100% renewable and carbon free energy, and somehow was taken seriously despite not even calculating the costs of what they propose.

Someone said that there is no need for them to calculate the costs as they are environmental organisation, not an economic organisation. Now that would be true if their report was solely about the environmental benefits of implementing their policies. But this report is all about the economic benefits of their proposed policies. And to ignore costs when talking economic policies is just nuts. It’s like doing a report on the health system and ignoring the mortality rate.

Peter McCaffrey facebooked a good analogy:

In other news, my highly technical report which I’ve commissioned tells me that if the government provided every single New Zealander with their own personal satellite we could have the best Internet access in the world.

I have made a deliberate choice not to research the costs of such a program because the aim of the report is to spark a discussion rather than getting too bogged down in the numbers.

I’d like my own satellite and using Greenpeace logic it would be great for the economy if we all had own own satellites. Think of all the jobs it would create.

Now personally I am a fan of renewable energy and think it is a major part of our future. In fact it is a major part of our present also. But there is a difference between direction and absolutism. Now we do have some ideas of what the costs of the policies proposed might be, from the Greens’ own website:

Nikki Kaye: What advice has the Minister received on the statement by those who are promoting a 40 percent reduction in emissions by 2020 that a 100 percent renewable electricity supply is easily achievable by 2020?

Hon Dr NICK SMITH: I am advised that that would require, first, the writing-off of $4.5 billion of thermal generation assets. It would also require $11 billion for the replacement capacity of 2,500 megawatts, and $2 billion for additional renewable peaking stations needed to ensure security of supply in a dry year. This amounts to a total capital cost of $17.5 billion, excluding the additional transmission investment that would be required, and this would amount to a 30 percent increase in the power price for all consumers. Going 100 percent renewable would also require the equivalent of another seven Clyde Dams to be built by 2020. I do not describe $17.5 billion, a 30 percent power price increase, and seven Clyde Dams as being easy.

So just this aspect would cost $17.5 billion, increase power prices by 30% and require seven new Clyde Dams in the next seven years!

That will require those printing presses to really be working overtime.


The Mokihinui Gorge dam

April 8th, 2010 at 9:00 am by David Farrar

The Herald reports:

Commissioners who gave the green light to an 80m-high hydro dam in the Mokihinui Gorge north of Westport were overwhelmed by the gorge’s natural beauty, but said there were other equally beautiful gorges in the area.

John Lumsden, a civil engineer, and West Coast councillor Terry Archer outvoted fellow hearings commissioner Greg Ryder to say yes to the dam – the largest flooding of conservation land for hydro power ever proposed in New Zealand.

Explaining why they gave consent, the pair said: “If the Mokihinui River were to be considered in isolation, it would be difficult not to form the view that to build a dam and flood to gorge would be a travesty.

“When we walked through several sections … we could not help but be overwhelmed by its natural beauty.”

But they said that beauty was not unique on the West Coast, or even in the Buller District.

The renewable electricity the dam generated would give locals a more reliable power supply and take a load off fossil-fuelled power stations during dry years, they said.

This is the challenge facing NZ. If we want to have more renewable energy supply, then we need more dams. Yet, a dam has an environmental impact also.

What would people rather have – another coal powered power station, that only impacts a small area (yet releases huge amounts of greenhouse gases), or a renewable power hydro dam which impacts a larger area?

Some in the environmental movement are against all new energy projects. But that is a recipie for blackouts in a few years.

I’ve don’t know enough about Mokihinui to say whether the Commissioners made the right decision or not. But my challange to those who say it should not go ahead, is to specify an alternate location on the West Coast for a new power station.

Tidal Power

January 11th, 2010 at 1:25 pm by David Farrar

The Herald reports:

A tidal power station on the Kaipara Harbour seafloor could be providing power to a quarter of a million homes by the end of the decade.

The Environment Court has made a positive recommendation to Conservation Minister Tim Groser on a plan to generate electricity from the harbour’s swift tidal flow.

I think using renewable energy is the way of the future. That doesn’t mean I think we can or should transition there overnight, as if you suddenly switch off Huntly, there will be blackouts.

Fran thinks big

December 19th, 2009 at 2:38 pm by David Farrar

Fran thinks big:

Instead of tilting at windmills, the dairy industry should think big.

If cows are housed indoors for much of the time, their poop can easily be captured for commercial biogas.

And while they are about it, why not invent a gas exchange system to extract methane from the air inside cowsheds.

We could even follow the Swedes and run a railway on biogas produced from digesting the parts of cows that usually get discarded at slaughterhouses to extract residual methane.

The big upshot is our tourism industry will also be protected. And I will get my fishing back.

Is this genius or lunacy? Or both?

Drill baby drill

November 19th, 2009 at 7:00 am by David Farrar

Gerry Brownlee has announced an action plan for unlocking and maximising New Zealand’s petroleum potential, primarily offshore.

“New Zealand’s largely unexplored petroleum resource could be one of the country’s most significant economic opportunities. A successful and flourishing petroleum industry will be a significant and essential contributor to lifting New Zealand’s economic performance going forward and to improving the quality of life for all New Zealanders,” he said.

Currently the petroleum sector accounts for around $3 billion per annum of New Zealand’s export revenue. Should the estimated resources in our unexplored basins be developed, this could increase to $30 billion per annum in export revenue by 2025. Crown receipts alone could increase to more than $10 billion per annum over the next 40 years.

That would help take care of the deficit!

As I have said before, if we want to be able to fund the same level of healthcare, of universities, of schools as Australia, we need to be increasing our national wealth. All power to Gerry.

Labour’s dividends from energy sector

September 14th, 2009 at 4:45 pm by David Farrar

I now have some more info on Labour’s reaping of profits from energy SOEs, and contrasting that to Phil Goff now decrying a $236 million dividend.

I blogged earlier that over the last five years, the SOEs made $3.27b after tax. Going back for their full nine years, the figure is $4.47 billion.

I also have the dividend figures. So this is the money actually paid out to the Government, and excludes profit that was retained for investment purposes etc in new generation.

  1. 2000: $255m
  2. 2001: $236m
  3. 2002: $290m
  4. 2003: $148m
  5. 2004: $154m
  6. 2005: $250m
  7. 2006: $949m
  8. 2007: $428m
  9. 2008: $383m
  10. Total: $3.09b

So its okay to take a $949million dividend payout in 2006 but wrong to take dividends a quarter that amount in 2009.

Again I’m not saying that the level of dividends is right at the moment, but when you raked them in during times of massive surpluses, it is a bit rich to do a sudden mea culpa and say that they should be much lower during a time of huge deficits.

Power Company Dividends

September 14th, 2009 at 9:00 am by David Farrar

I’m very cynical of Labour’s new stance on state owned power company dividends. The reality is that during a period when the Government enjoyed massive and record surpluses, Labour took in hundreds of millions of dollar in dividends.

And then suddenly within a few months of losing office, they now say it is wrong to do so – at a time when the Government is now running massive and record deficits and any reduction in dividends would be far more difficult.

I’m not arguing for the energy SOEs to price gouge – far from it. The sector needs reform. But there does need to be a return on capital that at least matches the cost of financing crown debt.

Labour also seems to be confused about the difference between dividends and retained earnings:

“Labour can and will stop price gouging. We will not demand excessive dividends coming back into state coffers above what is needed for investment in new generation.”

The dividends do not fund investment in new generation. It is almost the opposite. It is the amount of profit that you do not pay out in dividends that is used to fund new generation.

I’ve just added up the total net profit after tax for the six state owned energy companies for the last five years, and they were:

  1. 2004 – $406m
  2. 2005 – $561m
  3. 2006 – $1,230m
  4. 2007 – $622m
  5. 2008 – $451m
  6. Total – $3.27b

So under the last five years of Labour, the state made a profit of $3.27 billion (after tax) from the energy sector. And again, this was at a time of record crown surpluses. I don’t have handy how much was paid as dividends, but people should remember the $3.27b when Labour go on about excessive profits. Over their total nine years, it might be as high as $5b.

Waitaki River power station approved

December 3rd, 2008 at 8:10 am by David Farrar

Good news that commissioners have given consent to Meridian Energy for a 1100Gwh to 1400GWh power station on the Waitaki River.

If we want to transition away from non-renewable energy to renewables, then projects like these are essential.

Of course this is just the first step of the consent process. There are inevitable appeals to the Environment Court. Actual construction is still four years away from beginning!

ODT on Labour and energy

October 6th, 2008 at 11:30 am by David Farrar

The ODT blasts Labour over high power prices:

Management inadequacies have been one of the features of the Clark Government in its leadership of the administration of public services and the guidance of enterprises whose activities have a crucial impact on our daily lives.


One of the most obvious of these has been the failure, over most of the period from 1999, to put together as a matter of high priority a comprehensive energy plan for present and predicted demand and ensure it can be met with appropriate infrastructure.

The plan seems to be to hope for rain.

The self-serving Clark Government statement last week, that Contact Energy’s “alarming” 10%-12% planned price increases for its Dunedin consumers could not be justified, underlines the inadequacy of the response to energy supply and pricing issues.

Especially ironic as it comes at the same time they passed the ETS which will send prices up even more.

Nationally, household power prices have increased by an estimated 66% on average since 1999, when the Clark Government was elected, which is a rate way ahead of the rate of inflation.

And further increases to come.

Espiner on Energy

August 15th, 2008 at 1:30 pm by David Farrar

Colin Espiner blogs on National’s energy policy:

I don’t know whether the party takes any notice of blogs or media commentary, but they have certainly concurred with advice dished out by many of us in the commentariat: forget about the secret tapes, roll out the policy, and release background papers – not just a one-page summary.

It was good to see the fuller papers. Blogs are well read in National (in fact in all of Parliament) but I would hesitate before going from a correlation to a causative effect. The fact Labour in the House tried to make the non-release of the background papers sound sinister was probably a big influence. Why make it easy for your opponents to run their secret agenda line.

Likewise, Deputy Prime Minister Michael Cullen yesterday accused John Key of “gambling your children’s future” on gas and coal in spite of an abundance of renewable energy and said National stood for “no action on climate change, no hope and no vision”.

Strong stuff. But does the rhetoric match the reality? You’d think from this level of hyperbole that the Nats had announced plans to build a large nuclear power plant on the North Shore (not a bad idea, some might say) or that Gerry “sexy coal” Brownlee had vowed to overturn the ban on coal fires in Christchurch homes.

Governments will always attack policies from the Opposition (inless they are going to adopt them themselves) but the hyperbole on this one was over the top.

It’s true National has pledged to overturn the ten-year ban on the building of new thermal power stations and promised to take a more “realistic” approach to calculating the future growth in the nation’s energy requirements.

It’s difficult to see how this equates to embracing a lump of coal or a petajoule of gas, however, particularly since Labour’s so-called moratorium was rapidly developing a distinctly “Clayton’s” feel to it. The ban, in practice, was always more hot air than reality, since the Government slipped so many caveats into it (only applies to baseload, above a certain megawattage, can be overruled in the interests of the nation’s energy security or in a crisis) that it was largely meaningless.

Key called it “damaging political symbolism” yesterday – I’d call it ineffectual political grandstanding. Industry sources have been saying Labour would have been forced to abandon the ban if it won the election anyway, given the current pressure on the national grid.

Indeed. You just have to look at the history of the last decade to know it was unrealistic to go into a total ban.

Greenpeace won’t like it, but I think National has got the mix about right. As we continue to shiver through the nastiest winter in many a year, I reckon the vast majority of people would far rather the lights stayed on and heaters warm than risk the country blowing a fuse because renewable energy sources let us down.

And God forbid if there is not enough power to keep computers connected to the Internet 🙂

It’s all very well talking the talk, as Key said yesterday – it’s another thing walking it. And while Labour’s fine ambitions are all well and good, the reality is that nothing the Government has yet done has made a blind bit of difference to our emissions levels or is likely to in the near future. In fact the only thing that has reduced our emissions profile recently has been the soaring price of petrol and diesel.

There is an irony in Labour attacking National for being pro-thermal, too, because the Nats are also promising to streamline the consents process under the RMA to get more renewable projects such as wind and hydro through the planning stages more quickly.

This is what puzzles me with the status quo. The Government has made it difficult for almost any power plant to get consented quickly. These things should not take five years.

I’m not trying to sound anti-green technology here. I’d like a clean, green environment as much as the next person. But I do believe the Government is on the wrong side of public opinion with its stance on energy and climate change. I think the public care about security of supply far more than they do about pollution. The simple fact is the cold, damp homes are going to kill people than climate change for many years to come.

And think about the lessons to be learnt from biofuels.

Having said that, National’s energy policy is conservative and lacking in new ideas. There’s nothing about energy efficiency, for example, or suggestions about how we are going to meet the estimated 2% a year increase in demand for electricity. What it has delivered is a short-term, pragmatic policy lacking in vision. But unlike Labour, it is probably a policy in step with current public opinion.

A damn with faint praise at the end.

Energy Editorials

August 15th, 2008 at 8:20 am by David Farrar

This is quite amusing:

NZ Herald: Laudable unity on energy goals

The Press: Energy divide

So what do they say beyond the headlines. The Herald:

Broad long-term agreement on energy matters is a decided plus for a country that has become uncomfortably accustomed to the threat of power shortages. The National Party’s support yesterday of the Government’s 2007 energy strategy, notably the target of 90 per cent renewable electricity generation by 2025, and an emissions trading scheme is, therefore, welcome. This is not an instance where the National Party should be criticised for saying ‘me, too’. Security of supply is too important for that.

National has correctly identified that the major obstacle to such security is the lack of clear and consistent rules to encourage power companies to invest in new water, wind, geothermal, tidal and other renewable generation. Its major remedy is an urgent reworking of the Resource Management Act. It would introduce priority consenting for large power projects, as well as streamlining the working of the act and putting an end to frivolous objections. Priority consenting would mean consents would be “called in” and determined centrally, and a decision would be made within nine months. Other details have not been announced, and National must ensure the balance does not swing too far against community interests.

If we do not want more coal or thermal stations, we need to make it easier to get wind farms and hydro plants. Just vainly hoping our energy demand grows half as quickly as it has historically is not much of a strategy.

The Press:

For Labour, the focus is on renewable energy, and particularly on a new concept, “reversibility”. For National, with the memory fresh in everyone’s mind of the third winter in recent years in which energy security has skirted close to a crisis, the focus is meeting present needs and preparing for those of the future.

The reality is that Labour’s focus on renewable energy has been rhetoric. 75% of new capacity under Labour has been thermal.

The difficulty with renewable sources of energy, however, is that no matter how much people may profess to admire the concept, they run into the same problems as other energy projects no-one seems to want one anywhere near them. Wind turbine projects, large and small, up and down the country have met ferocious resistance. And the revival by Contact Energy of proposals for more hydro dams on the Clutha River, while welcomed by some, has also prompted a threat of determined opposition by others.

And David Parker has ruled any future Clutha dams out.

National is selling its energy policy as an integral part of its plan to try to lift the country’s productivity growth. Productivity growth, which is crucial to economic prosperity, has sagged badly under the present Government and National believes, probably correctly, that secure and efficient electricity supply is essential to help try to revive it. Whether it can achieve this while paying more than lip-service to environmental commitments remains to be seen.

One has to have sufficient secure electricity. The environmental issues around certain forms of energy will partly be met by a workable Emissions Trading Scheme which sets a price for carbon.

National’s Energy Policy

August 14th, 2008 at 3:00 pm by David Farrar

Now letThree documents on this. The speech by John Key, the press release by Gerry Brownlee and the 11 page policy document. Key aspects:

  • Plan for realistic levels of future demand growth, because running out of electricity is a risk we are not prepared to take (Labour is saying growth will be only 1.2% despite historial average of 2.2%)
  • Introduce priority consenting for some large energy projects
  • Reverse the ban on new base-load thermal power stations
  • Consider abolishing the Electricity Commission (has been mega expensive)
  • Introduce an Emissions Trading Scheme within nine months of taking office
  • Support a target of 90% renewables for new energy projects, but not at the expense of security of supply
  • Expect no new coal stations unless technologies emerge for carbon capture and storage
  • Introduce a $1,000 per household solar water heating grant and simply consent rules for solar power
  • Invest $25m in seismic exploration over next three years to tap the potential 24 billion barrels of oil equivalent we have

Now let’s look at thermal generation in more detail. 75% of new generation under Labour has been thermal. To pretend you can go from 75% to 0% overnight is nuts. Even Labour sort of know this, and have left wriggle room – their ban is more of a slogan.

The Dom Post reports a leading energy lawyer saying the ban probably would have to abandoned by Labour after the election.

I think everyone agrees the long-term future is renewables, but it will take a while to get there. And the consenting process for hydro takes so long a ban on thermal will see shortages. Just look at this ODT story about David Parker saying no to any more hydro dams on the Clutha. I love wind power but wind alone is not a secure supply. We need more hydro, and until we get that hydro we will need more thermal.