Ferg's Finds

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

Article(s)

Always worth a read: Horizon Kinetics 3rd Quarter 2024 Commentary

I particularly enjoyed the section from page 12 on: Surprise News #2: China Technology, How Do You Do? Please Meet U.S. Technology

• Huawei racks up 3 mln pre-orders for tri-fold phone before Apple's iPhone 16 reveal

• Huawei readies new AI chip to challenge Nvidia in China, WSJ reports

Podcast/Video

This was a banger of an interview with Steve asking Matt some great questions: Coal Industry Deep Dive: What Investors Need to Know!

Quote

"Success is when your kids want to be with you when they're adults."

- Paul Orfalea 

Tweet

In the last two European winters, betting on cold temperatures to boost coal/gas demand has been a losing bet.

While I've zero edge in forecasting weather, it doesn't take a statistician to work out that a cold winter could be on the cards, and Europe is unprepared for it.

No one has been over this more than Alexander Stahel, who I interviewed prior to last winter on the gas situation.

Charts

Using generation and capacity interchangeably is similar to using nominal and real interchangeably.

It’s fine until the consequences start showing up in your life.

Take this example:

Google "capacity factor by energy source" view images, and you can sort through dozens of infographics similar to the one below-stating solar has a capacity factor of 23-27%.

Solar's capacity factor is an average, with seasonality getting worse the further you are from the equator. Take Spain, where the winter low is 38% of peak summer generation (which battery storage doesn't stand a chance of balancing).

Who is actually achieving this 24-27% capacity factor?

Here is Wikipedia's breakdown of global solar capacity factors in 2023, with an average global capacity factor of 13%.

Something I'm Pondering

I’m pondering the effect of this Green push by Indonesia as we are seeing many countries dial back their Green ambitions.

Granted it’s talk at this point with 1GW of wind and solar capacity vs 281.5GW of coal and gas electrical generation (2023).

Even if I think it has a snowballs chance in hell of being implemented it matters as Indonesia isn’t going to come to the rescue of the supply demand gap opening up with seaborne thermal coal in the late 2020s.

We’ve seen thermal coal CAPEX strangled for years in Australia, US and more recently Colombia by the ESG/Green agenda.

I had figured Indonesia and Russia would take advantage of this and ramp thermal coal CAPEX (Russia hasn’t due to its own issues: How sanctions are strangling Russian coal).

Indonesia was the only country which has significantly ramped seaborne thermal coal exports the last few years as you can see below (yes Mongolia has massively ramped exports to China via land).

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.