Category: Report

This 11-page note summarizes the key conclusions from our energy transition research in 1Q24 and across 1,400 companies that have crossed our screens since 2019. Volatility is rising. Power grids are bottlenecked. Hence what stands out in capital goods, clean-tech, solar, gas value chains and materials? And what is most overlooked?

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1,400 companies have been mentioned 3,000 times in our research since 2019, and our energy transition research now includes over 1,300 research notes, data-files and models.

Hence we want to do a better job of summarizing key conclusions, for busy decision-makers, in a regular and concise format (see pages 2-3).

The two key themes from our energy transition research in 1Q24 are rising volatility in global energy markets and rising bottlenecks in the power grid. The implications are summarized on pages 4-5.

The biggest focuses in our energy transition research in 1Q24 have been across the solar supply chain and gas value chains, and where could consensus be wrong? (pages 6-7)

The most overlooked theme in the energy transition is discussed on page 8, and centers on materials value chains.

Specific companies where we have reviewed product offerings or patent libraries in 1Q24 are reviewed on page 9.

The most mentioned companies in our research in 1Q24, and from 2019-2024 more broadly, are discussed (including some specific profiles) on pages 10-11.

The downside of a concise, 11-page report, is that it cannot possibly do justice to the depth and complexity of these topics. A TSE subscription covers access to all of the underlying research and data.

We are also delighted to elaborate on our energy transition conclusions from 1Q24, and discuss them with TSE clients, either over email or over a call.

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Power grids: the biggest bottleneck in the world?

Energy market volatility: climate change?

What if large quantities of power could be transmitted via the 2-6 GHz microwave spectrum, rather than across bottlenecked cables and wires? This 12-page note explores power beaming technology, advantages, opportunities, challenges, efficiencies and costs. We still fear power grid bottlenecks.

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Power grids are shaping up to be the biggest bottleneck in the energy transition, with implications across every sector (page 2).

Hence what opportunity exists to bypass bottlenecked cables and wires, by transmitting electricity as electromagnetic waves? Far field radiative power transmission, aka power beaming, was championed a century ago, by Nikola Tesla.

Electromagnetic radiation is simply the synchronized, energy-carrying oscillation of electric and magnetic fields which moves through a vacuum at 300,000 km per second (aka the Speed of Light, c). Relevant physics are re-capped on pages 3-4.

Magnetrons are the devices needed to convert electricity into microwave energy for power-beaming. Their functioning and efficiency are on page 5.

Rectennas are the devices needed to convert microwaves back into DC electricity. Their functioning and efficiency are on page 6.

Advantages of microwave power transmission are long ranges, minimal permitting requirements and flexibility in directing and re-directing loads.

Additional opportunities for power beaming go beyond the resolution of power grid bottlenecks. Without wishing to channel something out of Dune II, they could be used to power flying aircraft or to beam solar power from space (pages 7-8).

The efficiency of beaming power, from generation sources to end consumer, is modeled across a simplified value chain on page 9.

Costs and challenges of beaming power are explored on page 10. At long distances, we do think microwave transmission could cost less than HVDCs and other transmission lines.

Companies involved in power transmission via the microwave spectrum, are noted on page 11. One notable private company is EMROD. We also found a notable public company specializing in smaller-scale devices.

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What if the world is entering an era of persistent power grid bottlenecks, with long delays to interconnect new loads? Everything changes. This 16-page report looks across the energy and industrial landscape, to rank the implications of grid bottlenecks across different sectors and companies.

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Our growing fear is that power grids are shaping up to be the biggest bottleneck in the energy transition. Hence what if the developed world is entering a strange, new era, where grid tie-ins cost an order of magnitude more, and take an order of magnitude longer?

The implications of grid bottlenecks extend across every sector that consumes electricity and every energy source that produces electricity (ranked by size on page 3).

The biggest impacts are seen for the rise of the internet, manufacturing, and consumer prices, leading to inflation (pages 4-5).

Most impacted are new energies categories that rely upon timely electricity supplies from the grid, although our outlook differs for green hydrogen, heat pumps and electric vehicles (pages 6-7).

Most controversial are the outlooks for power electronics, power cables and underlying materials such as copper (pages 7-8).

Renewables growth is also impacted, but again, our outlook differs for wind versus solar, and along their supply chains (pages 9-10).

The first half of the report focuses on challenges in these different industries, so that we can understand the best way of resolving them.

The second half of the report assesses the outlook for other generation sources, across natural gas, smaller-scale gas, diesel generation, batteries, coal and nuclear (pages 12-13).

A growing number of facilities need ratable, round-the-clock power, yet are struggling to secure this from the grid. The best metric is the Levelized Cost of Total Electricity (page 11).

Renewable-heavy grids: dividing the pie?

Energy savings behind the meter also become more valuable, especially where they can reduce the peak sizes of grid connections. Our favorite ideas range from growth-stage niches to mega-caps (pages 14-16).

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Power grids will be the biggest bottleneck in the energy transition, according to this 18-page report. Tensions have been building for a decade. They are invisible unless you are looking. And power grid bottlenecks could last a decade. Further acceleration of renewables may be thwarted. And we are re-thinking grid back-ups.

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Power grid bottlenecks remind us weirdly of the US housing market in 2007-08. Capable of world-changing economic upheaval. Imbalances have been building for a decade. But they are invisible unless you are looking. So where should we be looking and what will we find?

In the most likely route to net zero by 2050, global electricity demand would grow by 2.5x, transmission and distribution miles grow by 3-5x and global grid capex rises by 5x. Charts and numbers are on pages 2-4. But will this actually happen?

The functioning of low-voltage distribution network is discussed on pages 5-6. We predict what might indicate distribution network bottlenecks. And these indicators are starting to look worrying.

The capacities of individual grid nodes are modelled on pages 7-8, using a modified Maxwell-Boltzmann distribution. We predict what would be the most likely indicator for grid node bottlenecks. These indicators are increasing, but not exponentially.

The functioning of the high-voltage transmission network is discussed on pages 9-12. The crucial conclusion is that interconnecting large new loads — wind, solar, data-centers, electric vehicles, etc — pulls on the entire network, not just the point of interconnection.

Indicators for transmission network bottlenecks include renewables curtailment rates (page 13), interconnection costs (page 14), interconnection timelines (page 15) and attempts to circumvent network costs by co-developing renewables plus batteries (page 16).

The evidence in this note suggests bottlenecks have slowly been building up over the past ten years. Some indicators of grid bottlenecks are ‘going exponential’ in 2024. Implications for batteries, load-shifting, natural gas and even diesel gensets are on pages 17-18.

Global solar: absorption spectrum?

Smooth operators: who benefits from volatile power grids?

Some topics in our research have tended to seem so large and far-reaching that we have struggled to capture all of the implications in a concise 18-page note. If you are a TSE client and would like to discuss this report, then please do contact us.

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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 chain?

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A key challenge in our roadmap to net zero is the sheer amount of investment needed, stepping up from $3trn per year to $9trn per year. Where we see the biggest boom times ahead is summarized on page 2.

The thing about all of these booms is that no one seems to be in a rush. Especially amidst the political and geopolitical limbo of 2024.

Mega-projects have a checkered reputation among investors. Some commentators seem to despise them! But frankly, there is no other way to build world-changing infrastructure at a reasonable overall cost. We illustrate the economies of scale on pages 3-4.

In this note, we challenge the notion that it is better to wait. Building in boom times almost always rewards being early or counter-cyclical.

Our first case study for building in boom times is the Australian LNG industry, where projects later in the queue cost 2x more (page 5).

Our second case study comes from the costs of developing 130 oil and gas fields, developed offshore Norway in 1975-2024 (page 6).

Other case studies include Energy Majors’ development capex (page 7), UK offshore wind projects (page 8) and recent green hydrogen projects (page 9). Peak costs are 2-3x trough costs.

For project developers, the key conclusion is to target the front of the queue. Early projects are likely to achieve materially better outcomes than later projects. Conclusions for investors, the energy service supply chain and policymakers are on page 10.

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Solar semiconductors have changed the world, converting light into clean electricity. Hence can thermoelectric semiconductors follow the same path, converting heat into electricity with no moving parts? This 14-page report reviews the opportunity for thermoelectric generation in the energy transition, challenges, efficiency, costs and companies.

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Semiconductors have already changed the entire global energy industry by converting light into clean electricity (i.e., photovoltaic solar) and efficiently converting electricity back into light (i.e., LEDs).

But semiconductors can also convert temperature differences into electricity (the Seebeck Effect) and convert electricity into temperature differences, or in other words, very localized cooling (the Peltier Effect).

Perspectives on the rise of semiconductors, and the potential for thermoelectric generation to follow the path of PV solar generation, are discussed on pages 2-4.

The opportunity is vast. In our breakdown of global energy, 60% of primary energy is effectively wasted as heat. We discuss where thermoelectrics could unlock the largest opportunities on pages 5-6.

Thermoelectric devices are already commercial today, in a c$500M pa niche, ranging from NASA space probes, to remote power generation, to stove fans (available to purchase on Amazon for $20-60 apiece). Today’s commercial applications of thermoelectric generators and cooling devices are discussed on pages 7-8.

The efficiency of thermoelectric generation hinges on its Figure of Merit, aka ZT score, which we have modeled from first principles, and explained on pages 9-10.

Improved thermoelectric materials are needed for this market to accelerate. Today’s devices are 2-10% efficient, whereas photovoltaic solar really took off once it had become 15-20% efficient. Avenues to improve thermoelectric figures of merit are discussed on pages 11-12.

Our company screen covers twenty leading companies in thermoelectrics, from incumbent semiconductor manufacturing companies, to remote power generation specialists, to companies developing more novel technologies, as summarized on page 13.

What conclusions for decision-makers in the energy transition? For example, what would happen to fuel cells in a world that unlocked 40-50% efficient thermoelectric generators, with no moving parts and no decline rates? Closing observations are on page 14.

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We have attempted a detailed breakdown of global energy demand across 50 categories, to identify emerging opportunities in the energy transition, and suggesting upside to our energy demand forecasts? This 12-page note sets out our conclusions and is intended a useful reference.

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Global energy demand is not really a thing. It is a constellation of over fifty major categories underpinning human civilization. 27 of those categories consume more than 1% of global energy.

Hence our goals in this note are to disaggregate global energy demand by end use, in order to derive more accurate demand forecasts, and to identify the biggest opportunities for energy efficiency initiatives.

Our methodology for breaking down global energy demand is to look line by line, through all of the economic models, energy intensity models and supply-demand models we have built over the past five years, as explained on pages 2-3. (Note the distinction between primary and useful energy). All of our models are fully auditable for TSE clients.

The biggest constituents to global useful energy demand are residential heat (15%), steel (7.5%), plastics (6%), cars (5.4%), commercial heat (5%), hydrogen (4.6%), cement (3%), oil refining (3%), agriculture (3%), aviation (2.6%), air conditioning (2.5%), cooking (2.2%), lighting (2.2%) and shipping (1.4%) (page 4).

The first key reason for our breakdown is to improve our forecasts for global energy consumption. The trajectory is one of the most active debates in the energy transition, as summarized on pages 5-6.

If we look line-by-line through the categories in our breakdown, we would adamantly argue global energy demand will rise by at least 50% in useful terms by 2050, and by 20% in primary terms by 2050 (page 8).

The second key reason for our granular breakdown is to identify the biggest opportunities for energy savings and decarbonization. The biggest categories might seem to offer the biggest savings (page 7). But the most interesting opportunities to us are in the materials sector (page 9) and in recovering waste heat (page 10).

A third observation is that the energy transition is itself likely to stoke demand. Producing over 430GW pa of solar modules now consumes around 1.4% of all useful global energy. Similar numbers are explored for wind, electric vehicles, CCS, hydrogen and energy storage, together with conclusions on pages 11-12.

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How much new solar can the world absorb in a given year? And are core markets such as the US now maturing? This 15-page note refines our forecasts for global solar additions using a new methodology. Annual solar adds will likely plateau at 50-100% of total electricity demand growth in most regions. What implications and adaptation strategies?

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Solar is the new energy source that excites us most, with potential to abate 11 GTpa of CO2 emissions by 2050 in our roadmap to net zero, ramping 18x from 2022, to supply 25,000 TWH of useful energy in 2050, or 20% of total global useful energy. But how much can solar grow?

The answer hinges on relative costs. When global electricity demand is growing, then as a general rule, new sources of electricity generation will be constructed in order to meet this increasing demand. The relevant comparison is the LCOE of constructing new solar versus the LCOE of constructing new wind, hydro, nuclear, gas, coal, biomass, diesel gensets and geothermal (as discussed on page 3).

However, when solar growth starts exceeding total electricity demand growth, then new solar is no longer competing with new coal, gas, etc. It is competing with the cost of simply fuelling pre-existing power plants. These economics are much more demanding (pages 4-5).

Hence global solar additions will likely face new challenges when solar growth exceeds total electricity demand growth. We discuss this issue, country by country, across China, India, the broader emerging world, the US, Europe, Japan, Canada and Australia. The most interesting market is US solar, because it is now maturing? (pages 6-7).

What implications and adaptation strategies? We can see three pragmatic options for the solar industry, as 40% of the global solar market is now concentrated in more mature markets. Implications and recommendations are on pages 8-10.

Electrification initiatives and power grid expansions would seem to be the most important bottlenecks for global solar additions to continue accelerating from here. This is because we are increasingly tempted to model solar additions by country by multiplying total electricity demand growth x share of demand growth met by solar (pages 11-12).

A new methodology for modeling global solar additions by country and by region is captured in our wind and solar capacity additions model. Key outputs from the model, including our solar forecasts for 2024, 2025, 2026 and beyond, are described on pages 13-15.

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Momentum behind enhanced geothermal has accelerated 3x in the past half-decade, especially in energy-short Europe, and as pilot projects have de-risked novel well designs. This 18-page report re-evaluates the energy economics of geothermal from first principles. Is there a path to cost-competitive, zero-carbon baseload heat?

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Geothermal power is produced from 200 geothermal fields globally, feeding 16GW of power capacity, generating around 110 TWH of useful electricity, which equates to 0.4% of the world’s electricity and 0.15% of its total useful energy. But this is confined to geological hotspots. Broader geothermal resources are 5x total global energy demand, the key challenge is simply accessing them (page 2).

In 2020, we wrote excitedly about the potential to begin accessing deep geothermal energy, using improved drilling and completion technologies that were originally developed by the amazingly innovative US shale industry.  But the world has changed, in ways that amplify demand for geothermal, especially in European gas markets (pages 3-4).

Hence momentum has accelerated. Early enhanced geothermal projects were disappointing. More recent projects have been 3x more prevalent. And recent demonstration projects have categorically de-risked prior issues. Ten projects in particular, are reviewed on pages 5-7.

The other major change from 2020 to 2024 is not just the world. It is us. We have spent the past four years trying to deepen our knowledge of the energy from first principles. There is a definitive pathway to cost-competitive deep geothermal, hinging on the enthalpy of hot fluids (page 8), avoiding the energy costs of pumps (page 9) via thermosiphons (page 10), prioritizing heat rather than Rankine cycle power (pages 11-12), and reducing drilling and completion costs (page 13).

Sensitivities for the costs of deep geothermal electricity and deep geothermal heat are discussed on pages 14-15.

Eavor Technologies is a private company founded in 2017, headquartered in Calgary, Alberta, employing c100 people. It is the enhanced geothermal company that has made the most interesting progress over the past 3-4 years, including large ongoing projects in Europe. Hence we have reviewed Eavor’s patents, drawing conclusions on pages 16-18.

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Oil markets endure 4 major volatility events per year, with a magnitude of +/- 320kbpd, on average. Their net impact detracts -100kbpd per year. OPEC and shale have historically buffered out oil market volatility, so annual oil output is 70% less volatile than renewables’ output. This 10-page note explores the numbers and the changes that lie ahead?

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Our outlook for 2024 is that global energy markets should balance, but this base case will likely be overwhelmed by unexpected volatility (page 2).

An era of rising volatility is starting to grip global energy markets more broadly, due to mega-trends in the energy transition itself (page 3).

But haven’t oil markets always been volatile? And how volatile? To answer these questions, we have aggregated oil production by country by month. Then we have reviewed the data line-by-line, excluded conscious decisions to raise/lower production in response to prices (e.g., during COVID-2019), and tabulated 80 events where individual countries’ output varied by +/- 100kbpd YoY, on a trailing twelve month basis. Our methodology is explained on pages 4-5.

Upside volatility versus downside volatility? The statistical distribution of oil market volatility is quantified on pages 6-7. Disruptions can occur, but they can also reverse.

Oil market volatility versus oil market surprises? Large new field start-ups do create statistical volatility in individual countries’ oil output. But not in a way that is entirely unexpected. The prevalence of oil market surprises is quantified on page 8.

Counteracting volatility? Core members of OPEC and US shale have very clearly acted to counteract oil market volatility over the past 15-20 years. On pages 9-10, we wonder whether this buffering role will continue in the future, especially as US shale growth slows?

Ultimately, volatility benefits those with flexibility: from upstream producers, to midstream companies, to flexible energy consumers.

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