Search results for: “inflation”
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Inflation: will it de-rail the energy transition?
New energy policies will exacerbate inflation in the developed world, raising price levels by 20-30%. Or more, due to feedback loops. We find this inflation could also cause new energies costs to rise over time, not fall. As inflation concerns accelerate, policymakers may need to choose between delaying decarbonization or lower-cost transition pathways.
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Runaway train: energy, interest rates and inflation?
In the strange world of 2022-30, raising interest rates would not mute inflation, but would actually deepen it. By deepening the very energy shortages that are driving inflation itself. Each 1% increase in capital costs re-inflates new energies 10-20%, infrastructure 2-20%, materials 2-6%, and conventional energy 2-5%. What implications?
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Inflation in the energy transition?
This data-file aims to estimate how much inflation is likely to result from policies to decarbonize the global economy. Aggregate price levels might rise by 6% per $100/ton of CO2 abatement costs. New energies costs rise by 6-30%. Mobility and food rise by 15%. And materials costs rise by an average of 40%.
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US hydrogen production: by facility and by company?
10MTpa of hydrogen is produced in the US, of which 40% is sold by industrial gas companies, 20-25% is generated on site at refineries, 20% at ammonia plants and 15-20% in chemicals/methanol. This datafile breaks down US hydrogen production by facility. Owners of existing steam methane reforming units may readily be able to capture CO2…
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Auto manufacturing: the economics?
This is a simple model, to break down the $30k sales price of a typical mass-market automobile. c25% accrues to suppliers, c20% is sales taxes, c20% is dealer costs/logistics, c10% employees, c10% material inputs, c10% O&M, 1% electricity and c5% auto-maker margins. Prices may inflate 60% amidst industrial shortages.
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Global trade: balance or darkness?
Global trade has been growing more adversarial. US foreign relations are also shifting. Hence this 16-page note maps 20 trade categories, across energy, materials and capital goods; in each case, breaking down global imports by source, and global exports by destination. Our top ten conclusions follow.
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Material and manufacturing costs by region: China vs US vs Europe?
Material and manufacturing costs by region are compared in this data-file for China vs the US vs Europe. Generally, compared with the US, materials costs are 10% lower in China, and 40% higher in Germany, although it depends upon the specific value chain. A dozen different examples are contrasted in this data-file, especially for solar…
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Global energy capex: building in boom times?
Energy transition is the largest construction project in human history. But building in boom times is associated with 2-3x cost inflation. This 10-page note reviews five case studies of prior capex booms, and argues for accelerating FIDs, even in 2024. The outlook for project developers depends on their timing? And who benefits across the supply…
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Offshore wind: levelized costs?
This model estimates the levelized cost of offshore wind at 13c/kWh, to generate a 7% IRR off of capex costs of $4,000/kW and a utilization factor of 40-45%. Each $400/kW on capex adds 1c/kWh and each 1% on WACC adds 1.3 c/kWh to offshore wind levelized costs.
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Renewables: the levelized cost paradox?
There is an economic paradox where shifting towards lower cost supply sources can cause inflation in the total costs of supply. Renewable-heavy grids are subject to this paradox, as they have high fixed costs and falling utilization. As power prices rise, there are growing incentives for self-generation. Energy transition requires a balanced, pragmatic approach.
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