Ferg's Finds

This is a short weekly email that covers a few things I’ve found interesting during the week.

Article(s)

ExxonMobil Global Outlook had some interesting insights regarding the increase in annual decline rates.

To put it in concrete terms: With no new investment, global oil supplies would fall by more than 15 million barrels per day in the first year alone.

The success of fracking and ISR has enabled huge amounts of supply to be added in a relatively short time frame, but it is a double-edged sword in that it comes with equally steep decline rates.

Podcast/Video

Mark Mills comes at the energy debate in an interesting way:

2024 Investor Day | Goehring & Rozencwajg

The Unpopular Truth About Electric Vehicles | Mark P. Mills

Quote

“You don't want to be in a career where people who have been doing it for two years can be as effective as people who have been doing it for twenty—your rate of learning should always be high.”

-Sam Altman

Tweet

Thanks to Emanuel for pointing out this article, which is quite something.

The nation’s energy regulator has warned consumers may be paying more than they should for electricity because major coal and gas generators dominate the market at peak times despite a massive influx of new wind, solar and battery projects over the last two years.

The only Net-Zero we are on course to achieve is IQ with these journalists.

Charts

While platinum inventory has been declining the last decade, the more important trend has been China gradually cornering the market. Europe, Japan, and the rest of the world are now running next to no inventory.

This trend has accelerated in the last few years, with China now controlling the majority of above-ground platinum stocks, which it does not export.

Something I'm Pondering

I’m pondering how quickly we could see wind power additions roll over from here.

China sets renewable power subsidies lower at 5.4 billion yuan in 2024

This is important because Chinese wind power is driven by policy incentives, with every province in China having a minimum consumption target for non-hydro renewable energy.

Reducing the renewable subsidies by 27% vs. 2023 is one thing; removing the electricity purchase guarantee for renewable generators is a far bigger deal.

China has been scaling back support to push renewable power generators to compete on a market basis.

The government from April (2024) ended a guarantee that grid operators would buy nearly all renewable power generators’ production at a rate tied to the coal index. That means renewable generators have been increasingly subject to less favourable market pricing, cutting into profit margins.

Since the Chinese aren’t driven by Net-Zero ideology but a focus on energy security, it makes sense they will stamp the brakes when the economics cease to make sense with renewables pushing electricity prices negative (usually at ~20% wind & solar penetration while the Chinese are now at ~16%).

Yes, it can be pushed higher with storage, but the Chinese are pragmatic about it. Take this example of batteries combined with coal (which you won’t hear via IEA).

It would include 8.5 gigawatts of solar panels, 4 gigawatts of wind turbines, six 660-megawatt coal power generators and 5 gigawatt-hours of battery storage, the company said in the filing.

Why this matters is Chinese has been propping up global wind additions, with it expected to make up 75% this year before falling to 40% in 2026, following which the rest of the world is supposed to ramp up, which I don’t see happening.

Take the countries supposedly going to add 39% of wind additions in 2026 and ramp massively every year after.

UK to Offer Record £800 Million Support for Offshore Wind

Britain will offer record support for new offshore wind farms in an upcoming auction after the process failed to attract bidders for the technology last year.

Trump: ‘We’re going to try to have a policy where no windmills are being built’

“We’re going to try and have a policy where no windmills are being built,” Trump said, adding “they don’t work without subsidy. …

German Budget Crisis to Deepen As Renewable Subsidies Double

The state will pay as much as €20 billion ($21.7 billion) to wind and solar operators through the end of 2024, twice what grid operators had forecast in October, Economy Minister Robert Habeck told reporters in Berlin on Wednesday.

Failed offshore auction highlights how Denmark missed winds of change

The Danish system does not offer any subsidies or revenue stabilisation which makes it less attractive for developers compared to similar offshore wind auctions in Poland, the Netherlands and Britain, industry lobby group WindEurope said.

Lastly, these countries are best suited to wind power with high average wind speeds.

I hope you’re all having a great week.

Cheers,

Ferg

P.S. If you’re interested in my story and why I started this Substack, you can read the story here.