We told you so IRINA SLAV
More bad news is coming from wind power, and I’m not even talking about the turbine breakages, I’m talking about a slump in output that’s seen a surge in gas generation in the United States.
We told you so
JUL 29
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PAID
About a year ago, I wrote a post on heat pumps suggesting they weren’t going to live up to the promise and ambitions of their supporters because they were too expensive and their optimal operating conditions were a rarity rather than the norm. This month, we learned that heat pump sales in Europe are dropping. Everyone’s surprised, of course.
Also this month we learned that the absence of enthusiastic demand for EVs has started to really bite, with carmakers including Ford, Mercedes, Stellantis, and Nissan reporting massive losses on their EV sales that have dragged down their overall earnings. Again, it’s a big surprise. For some.
More bad news is coming from wind power, and I’m not even talking about the turbine breakages, I’m talking about a slump in output that’s seen a surge in gas generation in the United States. Because the wind’s just not blowing, which happens frequently during the summer.
Meanwhile, the UN is going after carbon credits because the good climate people at the organisation feel those are stopping companies from actually reducing their own emissions — which is precisely the reason for the existence of carbon credits. I wonder what gave them a clue.
It has been a bad month for the transition and things are going to get worse in the coming months. A lot worse. It’s the backfire of the century and that’s not an exaggeration.
That the energy transition is a fragile creation has been obvious to many for a while now but this fragility is now being exposed increasingly frequently. This is because everything transition, from heat pumps through EVs to wind and solar, has depended entirely on one single thing: government support.
It was government support in the form of regulations and subsidies that drove the massive buildout of wind and solar in Europe. So massive was this buildout that electricity prices started dipping below zero during periods of excessive production. This has now prompted one European government, namely Germany, to reconsider its support for the darling industries.
Starting next year, Germany will no longer pay the minimum guaranteed price for wind and solar electricity in a stark departure from a policy that has been in effect for two decades. The state is running out of money. It’s that simple. And it’s a matter of time before others follow in Germany’s footsteps. As governments run out of money to prop up the transition, the transition will run out of steam.
In the UK, meanwhile, utilities are waking up to the fact that passing on transition costs to the end consumer can only work for a while and when it stops working, it’s bad for those utilities. So they are proposing moving those costs from electricity to gas. Because gas remains cheaper than electricity — four times cheaper, to be precise.
The situation, then, is this. Having too cheap electricity from wind and solar is bad because generators are incurring losses for lack of demand. But having too expensive electricity from wind and solar is also bad because it is stopping people from buying EVs, for years advertised as the better choice because they’re not exposed to oil price swings, among other myths. It’s also probably stopping people from going full-electric in their homes.
The transitionistas just can’t catch a break these days. For all their efforts, emissions remain on the rise and transition targets remain extremely elusive. Despite record investments, which in the U.S. in the first quarter reached an impressive $71 billion. And what do they do? Why, they ask for more money, again.
The latest plea came from RWE in the UK, when the utility suggested that the government offer higher prices for offshore wind electricity to motivate more bids. I guess the extra money would be transferred to people’s gas bills as proposed by the good people at Octopus and EDF Energy.
An executive from the French utility had some ominous comments on the situation, per the FT: “Electricity costs much more than gas in the UK. We understand this is the result of past policy decisions over several years, but the time has come to change it. Otherwise, the future ahead of us will become inaccessible as people will find it hard and overly expensive.”
Interesting and completely unexpected despite scores of people warning the transition could never work as planned because of things like cost, energy density, and, well, the weather. Also, we warned, repeatedly, that you cannot force the transition down people’s throats for very long.
But happily they marched, ignoring total costs in favour of LCOE, ignoring intermittency and maintenance, ignoring the weather that makes both wind and solar prohibitively expensive on a total cost basis, and essentially ignoring everything that didn’t fit in with their narrative. Now that the narrative is breaking apart it’s a huge surprise even though we told you so. Again and again. It’s satisfying in an annoying sort of way.
It’s also, as usual, not a little amusing. Take this recent piece of news, for example. Platinum ETFs have seen a considerable increase in inflows this year amid flopping EV sales and signs from the car industry they would be making more hybrids and regular petrol and diesel cars.
Gas producers and generators are being vindicated on a literally daily basisas grid operators source more electricity from gas-fired plants due to low wind speeds. Oh, and the biggest joke? Let me quote from Reuters.
“European companies focused on clean energy are abandoning expansion plans, bracing for lower sales or see funding of U.S projects in doubt because of fears over what a potential election victory for Donald Trump could mean for their sector.”
In case there are still people believing that transition technology has a chance in a free market environment that was greater than the chance of a snowball in Hell, that should put this belief to eternal rest. Because the fear of an election outcome is as clear evidence that the transition is entirely reliant on government support as there could be. Remove all the government support and watch the transition shrivel and die.
What Reuters calls “the Trump effect” kills all arguments for competitive wind and solar, for EVs as a more economical alternative to internal combustion engine cars, and for the transition as a whole as a viable alternative to the current energy system of the world. Apparently, China’s energy trajectory wasn’t proof enough.
Of course, when I say that the Trump effect kills all arguments as does all the recent evidence of transition failings, I mean this theoretically. No transitionista will admit that the transition is failing. Why, just this month the IEA said that wind and solar are going to cover solid portions of new global energy demand in the coming years.
“The 4% growth expected for 2024 is the highest since 2007, with the exceptions of the sharp rebounds in 2010 after the global financial crisis and in 2021 following the Covid-induced demand collapse,” the IEA wrote in a report cited by Bloomberg. Solar, per the IEA, would meet “roughly half of the growth in global electricity demand to 2025. Together with wind power generation, it will make up almost 75% of the increase.”
Denial, thy name is IEA. It is also the name of the European Commission, the UK government, the outgoing U.S. administration and the Trudeau regime in Canada. Denial is the name of the transition game, whether we’re talking about heat pump takeup, EV sales, or electricity generation.
The problem with denial is that those with a severe form of that state would go to any lengths to keep reality away. The good news is that these lengths would galvanise normal people into action. I fully expect heat pump mandates at some point and an actual transfer of the “green tax” from Britons’ electricity bills to their gas bills. A potential ban on carbon credits would crown the denial cake. It’s going to be a cowpat show even better than the opening ceremony of the Paris Olympics.