Breakout Year (again): Renewables Plus Storage are Here

January 22, 2018


RenewEconomy (Australia):

UK-based billionaire Sanjeev Gupta is looking to buy equipment from and use part of the old Holden factory in South Australia to create an electric vehicle production line in what would be a remarkable transformation of Australia’s car industry and economy.

Gupta, whose GFG Alliance last year bought the OneSteel business in Australia with a view to powering the Whyalla and other steelworks with renewable energy and storage, has the backing of the South Australia government, keen to support what it sees as the “inevitable” transition to EVs.

The proposal to buy the disused GM assets would be a partial reprise of the Tesla story in California, which used an old factory in Fremont, once jointly owned by GM and Toyota, to launch its Tesla Model S electric vehicle.

Any EV production plant at GM’s former operations in Elizabeth, north of Adelaide, would likely source steel from Gupta’s newly acquired steel operations, and use renewable energy supplied by its newly merged SIMEC Zen energy business.

Gupta has insisted that supplying the Whyalla steelworks with renewable energy – solar, pumped hydro, battery storage and demand management – is critical to reverse its fortunes of the ageing Whyalla steelworks and make it profitable.

The plan is a direct rebuttal of claims that renewable energy would be the death of manufacturing and energy intensive businesses in Australia. Numerous big energy users are now turning to wind and solar to slash their electricity costs.

Gupta intends to take the same model to his even more energy intensive operations in Victoria and NSW, which he also bought as part of the OneSteel package.

Gupta has teamed up with Zen Energy, now SIMEC Zen, to provide electricity to the South Australia government pending the construction of the new solar tower and storage facility in Port Augusta. SIMEC Zen’s contribution will be renewable once its new solar plants and storage are built.



Meanwhile, the cost of lithium-ion batteries plunged by an additional 24% last year, which raises the odds that by the mid-to-late 2020s, EVs could beat out conventional gasoline and diesel-powered vehicles not just on the lifetime cost, but even on upfront cost.

Battery costs will continue to decline this year, but at a slower rate than in the past. Soaring prices for cobalt and lithium carbonate will offset some of the declines in cost, to be sure, but BNEF still sees the average cost of battery packs falling by an additional 10% to 15%. Economies of scale, larger average battery pack size, and an additional 5% to 7% improvement in energy density will continue to boost the economics of batteries, BNEF argues.

EV sales will hit 1.5 million units in 2018, and again, China will lead the way with more than half of that total.

The recent rally in oil prices (and somewhat for gas) will aid in the transition to cleaner energy, making wind, solar and EVs more competitive.

It isn’t all clear skies for clean energy, however, as there are some pitfalls on the horizon. Geopolitical surprises could run headlong into the aggressive bull rally in global stock markets, leading to a selloff. BNEF says that a war in the Middle East, or on the Korean peninsula, or even political turmoil in the U.S., could upset financial markets, which would spell trouble for clean energy.

On top of that, the ongoing withdrawal of monetary stimulus from the U.S., Europe and Japan could raise interest rates, raising the cost of capital and hurting the economics for clean energy, which is an industry characterized by low operating costs, but high capital costs.

In the U.S., the Trump administration could decide to slap tariffs on imported solar panels, a decision that is expected as soon as this week. If onerous, the solar tariffs could “boost local prices for PV modules and render a meaningful portion of the U.S. solar project pipeline economically unviable,” BNEF wrote.

Still, the Trump administration will be unable to arrest the decline of coal, regardless of what it says. Cold weather has led to a slight uptick in natural gas prices and may have temporarily boosted coal-fired generation a bit, but the sector is in structural decline. Natural gas production is expected to break new records this year, and BNEF forecasts Nymex prices to average about $3/MMBtu. Ultimately, 2018 is shaping up to be the second largest year for coal plant retirements, with an estimated 13 GW of capacity expected to be shut down.

With coal on the way out in the U.S., coal will make its “last stand” in India. Coal producers around the world have pinned their long-term hopes on India, but from 2019 onward, BNEF predicts, renewable energy will surpass fossil fuels in terms of new electricity generation. “This will be a major milestone for a country that most see as a key battleground for the fight to stabilize global greenhouse emissions growth,” BNEF says.


One Response to “Breakout Year (again): Renewables Plus Storage are Here”

  1. That Mr Gupta is far far ahead of the pack.
    Apparently, even though he is in the Steel Business from statements it appears he will be using Carbon Fibre (Do we see complementary CO2 atmospheric extraction on the way – especially if he can get paid to extract the Carbon he will then use to build his vehicles). Using the Murray iStream technology (Gupta is also from England so more than likely even knows the man – both innovators)

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