Shell’s (Possible) Move. Interesting to read that the CEO of Shell is publicly considering a sale of the renewable power unit. I say interesting because Shell was founded on the basis of the energy transition from coal to oil. It was the British Navy’s decision to use oil as the fuel that not only created a major market for Shell but ultimately built the BP empire. Now that the transition from molecules to electrons is happening, it would make sense for the oil majors to lean in on the transformation and recognize that batteries are the new oil tankers and generation is the commodity feeding the growing energy demand across the world. Given how portfolio sales have priced recently (see Duke), now wouldn’t be the greatest time to make this move.
Arbitrage Value. Curtailment is an unfortunate side effect of renewable resource growth in the market. The sun shines when the sun shines and wind is similar. With curtailment comes inherent value of arbitrage because the delta between time X and time Y expands if time X (time of production) goes to 0.
Happy Birthday! To my oldest son, turning 13 today!
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Texas Breaks Records. Hard to fathom that ERCOT is forecasting peak demand of over 82GW several times in the next week. Not just for this individual moment with less than 10% capacity reserve margin but for what that means in the future. This week I wrote about the global temperatures causing family members across Europe to install air conditioners in their homes, when they never had to in the past. Along the electrification that consumers are going through with appliances and electric vehicles, the grid has the added strain of the real energy transition. As a society we will use more and more energy, that's the natural course of progress. The energy transition is electrification, shifting more of the energy from molecules to electrons and the grid has to be resilient and therefore intelligent enough to let the lights stay on every time the consumer wants or more critical applications like hospitals require. (originally posted on my Linkedin)
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Cheaper EVs Driven By Choice And Supply. At last count there are around 60 EV options available to US consumers, more if you count hybrids and more if you expand the global market. In any supply and demand market more choice will create some increased demand and comfort by being a follower, i.e. not an early adopter. But if that demand doesn’t outpace supply, there will be excess inventory that should drive down the price or create additional incentives for consumers to buy the cars (free charging perhaps?). With EVs there’s also the additional layer of charging complexity that follows. First, car dealers still don’t know how to sell EVs and make consumers comfortable owning this new to them technology. Second, more EVs on the road means that charging networks need to keep up, no more 2 or 4 charging pods at Whole Foods, we need an entire row of chargers. I say this noting that the three closest grocery stores to me in Florida have zero combined charging stations in their parking lot. But price elasticity will build more tolerance to the secondary objections that the consumer may have, who doesn’t want a cheaper car that also comes with a massive tax credit. This should build up the EV portfolio on the road AND on the grid.
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