US gasoline demand rose last year in another reminder that the US really no longer has a set of climate plans that will result in falling national emissions. Here in 2024, the US is not unlike a large school system that’s long had the goal to raise grades, test scores, and college admissions. First efforts do result in stabilizing these academic measures, and the school begins to slowly climb upward in a positive direction. The next round of gains however require a renewed, and in many ways, a more challenging effort. And, that’s the problem the US now faces: the early gains were easier to harvest, and the next round of gains would require trudging through the politically risky badlands of the country’s transportation sector, and automobile fleet.
Despite the poor performance of wind and solar last year, the promising growth of these two increasingly cheap technologies gives the impression the US is on course to the next round of emissions reductions. It isn’t. The big gains so far in the national emissions portfolio have of course come from a rapid and very impressive collapse of coal. This is the big win that clearly promotes a sense of hope and optimism, but it shouldn’t. Another analogy: investors deepen their commitment to companies that are able to sustainably grow earnings. But growing earnings year after year, decade after decade, eventually gets hard—even, if not especially, for the best run companies. The gains made so far in US emissions reductions are just like that. You can’t just produce a miracle once. You’ve got to generate successive miracles to keep the momentum going, and now the US has entirely lost that momentum. We ate into coal. All good. Now we need to eat into oil, and natural gas. But oil consumption is not falling, and natural gas consumption continues to grow. By alot.
If you want to make the argument that the US has set in motion an array of good initiatives that could produce a good round of reductions, you really need to specify that those are longer term; outcomes that will land next decade. Presently, there is nothing to generate any meaningful declines from here to 2030. We can retire more coal. But natural gas continues to grow. We can adopt more EV, but EV adoption while restraining road fuel growth is not able, by itself, to actually create reductions until much later in the fleet turnover process. Again, next decade.
• coda: At the most recent Academy Awards show, host Jimmy Kimmel gave a shout out to director Greta Gerwig, referencing the widespread criticism that she had been unfairly snubbed in the Best Director category. When the audience applauded loudly, Kimmel then said, “Whoa, whoa, whoa! You are all the voting members of the Academy, you are the ones who made this happen!” And this is precisely where America is right now, as it faces the next round of efforts to reduce emissions. The gap between a voiced agreement that the US should fight climate change, and the willingness of individuals to actually do something about it, is about as wide as it can be.
Europe is very much winning the emissions fight. Last year, EU emissions fell to 60 year lows as power sector emissions fell hard, and transportation emissions fell also on the back of a long arc of EV adoption, and fuel efficiency. Although oil consumption is down roughly 13% since the highs of 2005/2006, it’s still the case that Europe too finds it hard to get off oil. The difference between the US and the EU, however, is that while also killing coal, the EU actually does something about petroleum emissions, and has more recently started to fight natural gas. Power sector emissions fell by a whopping 19%, and you can see that pretty easily in the chart below, as both coal and natural gas were crushed.
The West likes China’s leadership in building wind and solar, but then doesn’t like it so much when China floods the world with cheap PV. According to a big write-up at the Financial Times, China’s solar production capacity is now so enormous, that it dwarfs current global output:
China, the dominant solar equipment supplier, doubled production capacity last year to more than 1tn watts and now produces nearly three times more panels than global demand, according to the International Energy Agency and Wood Mackenzie. Global prices for panels have fallen 50 per cent in the past year to as low as 10 cents a watt.
What’s not to like? The commodification of solar is an outcome that should be embraced by everyone. If that means solar PV manufacturing doesn’t get off the ground (much) in the OECD, who cares? The value-add to electrification and clean generation all comes through batteries, software, interoperability, time-shifting solutions, and great economics. There is a huge volume of value-add up for grabs in energy transition and much of it will result from creative applications, not raw materials.
As Cold Eye Earth has pointed out for years, comparative advantage (Ricardo) is generally in alignment with environmental goals. For example, even if Chinese solar panels are made using electricity from a grid that relies heavily on coal power, the cost advantage that China can offer spurs global PV adoption, wiping out and rendering moot the composition of China’ power supply. Indeed, the greater the volume of solar China produces, the bigger the pressure on its own fleet of coal-fired generation.
The West of course has social goals and political constraints. We are currently in a kind of Christmas-tree phase where every public project or investment gets saddled with a bunch of aspirational targets that often seem aimed to remediate past instances of unfairness. As a concept, that’s totally fine. But if we agree that climate change poses an existential threat, one that is itself potentially very inflationary and very threatening to how the world works, we might want to narrow the number of sectors we’re trying to protect as work of energy transition rolls onward. Protecting incumbent auto industries is probably unavoidable. But trying to stave off a commodity product like solar PV is self-defeating.
Battery storage represents an existential threat to fossil fuels, similar to wind and solar. At a large enough scale, battery storage starts to look more like generation. And while we’ve not yet hit that level just yet, it’s clear the mighty S curve is about to make itself more visible. So it’s probably time Cold Eye Earth did a primer on battery storage. Let’s go.
Like wind and solar, battery storage cannot run 24/7/365. The only power source that runs nearly 100% of the time is nuclear power, and an important reality behind that continuity of generation is that starting and stopping nuclear power plants is not easy. Accordingly, we use a term called a capacity factor to help us deflate the amount of power various sources can provide to the grid. Nuclear for example doesn’t quite reach 100% but instead has a capacity factor of 92%. In other words, if you are running a nuclear power plant that has a nameplate capacity of 2 GW over the course of one year, which is composed of 365 days of 24 hour periods, deflated by 92%, and then multiplied by the nameplate capacity of 2 GW, you get an equation that looks like this:
365 x 24 x .92 x 2.00 = 16,118.4 gigawatt hours, or GWh.
Because Cold Eye Earth is a chronicler of large domain energy data, typically on the state or national level, the unit preferred here is much larger: the terawatt hour, or TWh. Converting 16,118.4 GWh to TWh means we divide by 1000, to produce 16.1184 TWh. Helpfully, we have a real world example of just that size nuclear plant, here in the US, in the Millstone Nuclear Power Plant in Connecticut whose capacity is 2.098 GW. How much power did Millstone produce in 2021? Yeah, your guess is probably pretty close: 17.216 TWh. And finally, let’s set the larger context: The EU uses about 2800 TWh per year, and the US is now using around 4100 TWh per year.
As you can see, one large nuclear power plant—despite running nearly 24/7/365—is just a drop in the bucket of US national electricity generation/use. How can wind and solar compete with that? After all, solar has a very low capacity factor, of just 25%. And onshore wind power is a bit better at 35%. Using the formula above, therefore, you can now easily gauge how much new power a giant half a megawatt utility scale solar plant in the West will produce.
365 x 24 x .25 x 0.50 = 1,095 GWh or 1.095 TWh.
Oh hey, look at that: the Topaz Solar power plant in California, with a nameplate capacity of 0.55 GW produced 1.036 TWh last year. Math is magic!
Now that you’re educated, let’s take a look again at a graphic design the EIA here in the US likes to trot out each year, which gets lots of people super excited. However, fresh off being informed about capacity factors, you probably have a more restrained reaction. This is from just last month:
There is no question that solar growth will be pretty impressive this year, on course to add 36.4 GW of new capacity. That new solar capacity will roughly produce 79.7 TWh of clean electricity each year, and that’s very good news.
What about the battery storage though? How do we measure its capacity factor? Well, current lithium-ion utility scale battery storage tends to have 4 hours of output, before it must be charged up again. Leaving aside how many charge-discharge cycles are possible in a single 24 hour period, the National Renewable Energy Laboratory (NREL) offers the following capacity factor guidance. 16.7%. That may seem stingy, but NREL says the current industry standard is to project that each utility scale battery array that’s capable of a 4 hour discharge, should be regarded as being able to discharge just once per day. Or, in math terms, 4/24 = 16.7%
Well, that sure is deflating! How excited should we be therefore, about the growth of battery storage?
Wind and sun decide when to blow or shine, but with batteries, we get to decide. We’re going to discover, therefore, that a little bit of battery can go a long way. You can think of batteries just as you think of any other kind of human-invented storage: canned food, monetary reserves, petroleum stockpiles, and so forth. Humans have been deploying storage for thousands of years, especially since the agricultural era began. You will also know that having a little bit of storage can save people, or whole societies, not merely from shortages, but from the stiff market pricing that often accompanies shortages. Indeed, storage often provides not one tactical advantage, but several.
We should be excited therefore that we are now deploying utility scale storage at the GW level. This year, EIA projects that 14.3 GW will come online. How much power will that produce?
365 x 24 x .167 x 14.3 = 20,919 GWh or 20.919 TWh.
Wow! That’s more annual generation than a 2 GW nuclear power plant. Now let’s move on to the third tactical advantage of storage: if you own a solar power plant, and you own storage, then you are now able to bank generation from your solar plant that might have gone to waste, as too much power came onto the grid at mid-day. And it gets even better: that power you banked can often be sold back to the grid at a higher price between 5PM and 9PM, than you could have sold it directly to the grid at lunchtime, when power prices were low.
Battery storage is ultimately a method to get even more clean power to the grid, because it creates an economic incentive to build it and charge a fee for it. It’s a way to maximize existing wind and solar power, squeezing every last drop of that clean power, and ultimately crowding out the ability to compete from coal and natural gas.
That the US is going to deploy that much storage in a single year is very impressive, and very meaningful. Let’s finish this primer off with a final thought: natural gas power plants are increasingly efficient, and agile. Latest technologies in the sector allow for high-performance arrays of turbines that can come online in minutes, run for several hours, then shut off again. This is an example of survival through a tech advance, which is currently staving off obsolescence in natural gas power. In other words, the latest natural gas facilities can operate like batteries. On, off, over and over again. But battery storage can perform the exact same feat, but with fewer moving parts, and without the need for a fossil-fuel input line. So if you are prospecting for ways to kill natural gas, wind and solar are still your best candidates, but storage is going to be the dangerous assassin for energy transition overall.
• News briefs • Volkswagen is seeking to partner with other car companies in order to accelerate EV production and stave off competition from China. Perhaps this is a spirit of practicality that US automakers might consider? Just a thought. • The FOMC holds its rate decision meeting this week, with a conclusion to be released to the market on Thursday, 20 March. Futures markets have erased the possibility that the Fed cuts this month; and a cut at the April meeting looks unlikely too. Rather the market will be intensely focused on June, and will look to Chairman Powell for hints as to whether that plan is still on track. • The Biden administration released a large collection of grants to communities and cities to repair damage done by 20th century freeway building. Nice idea, but the details are getting mixed reviews. A key quote from Yonah Freemark of the Urban Institute sums up the problem: Given the huge grants to Boston & Portland to supplement highway expansions, I’m a wee bit concerned that instead of, you know, reconnecting communities to reshape areas butchered by roadway construction, the program is smearing lipstick on the pigs of the highway program. • Lithium Americas, the company that intends to develop the Thacker Pass lithium deposit in Nevada, was awarded a $2.2 6 billion loan from the Department of Energy. The project has been controversial, and illustrates the tough trade-offs between local topographies and the larger problem of climate change. That said, the proposal made it through all the legal challenges, and federal reviews. If we want to build alot of battery storage, we are going to need a lot of lithium. •
—Gregor Macdonald