Forests to Offset CO2: Uptake Rates by Tree Type

Nature-based solutions can among be the most effective ways to offset global CO2, with forests offsetting CO2 for $17-50/ton, decarboning liquid fuels for <$0.5/gallon and natural gas for $1/mcf. These numbers are based off of half-a-dozen studies, suggesting c5T of CO2 uptake per acre of forest per year.

This data-file shows CO2 uptake rates could be materially higher. CO2 absorption 8T/acre/year for three promising tree types, and as much as 15-30+ T/acre/year using faster-growing grasses. This would improve the economics of forests even further.

This data-file tabulates c75 data-points from technical papers and industry reports on different tree and grass types, their growing conditions and their rates of CO2 absorption. Included are oaks, pines, poplars, eucalyptus, mangroves, bamboos, sugarcane and elephant grasses.

Oxy-combustion: economics of zero-carbon gas?

Oxy-combustion is a next-generation power technology, burning fossil fuels in an inert atmosphere of CO2 and oxygen. It is easy to sequester CO2 from its exhaust gases, helping heat and power to decarbonise. The mechanics are described here. We model that IRRs can compete with conventional gas-fired power plants.

This is our model of the economics. It is constructed from technical disclosures. For example, Occidental petroleum and McDermott have already invested in one of the technology-leaders, NET Power, which constructed a demonstration plant in LaPorte Texas, starting up in 2018.

A review of recent project progress has also been added to the data-file in early-2020.  Details remain relatively secretive. But we find 9 potential deployments which are being moved towards commerciality. The details we have found are summarized in the data-file.

Ten Themes for Energy in the 2020s

This short presentation describes our ‘Top Ten Themes for Energy in the 2020s’. Each theme is covered in a single slide. For an overview of the ideas in the presentation, please see our recent presentation, linked here.

Energy Costs of Constructing Solar Assets

This data-file quantifies the energy costs of manufacturing solar panels, based on 10 studies and prior projects.

We see the average solar project requiring 5MWH/kW, with a 2.3-year energy payback, a c10x energy-return on energy-invested and CO2-intensity of 90kg/boe (for contrast, average oil is c440kg/boe and average gas is c350kg/boe).

The data-file contains calculations and data on different, individual studies, and estimates the net impact of solar on fossil fuel demand – past and present – after reflecting the net energy costs of solar manufacturing.

Scaling Up Renewables and Batteries

This model aims to calculate the average costs and the incentive prices required to scale up renewables in a typical developed world grid, from 25% to 40%, then to 50%, then to 60%.

The economics are modelled as a function of renewable costs, battery costs, curtailment rates, gas prices and carbon prices, which you can flex.

The calculations are based on Monte Carlo simulations using real-world data on wind and solar volatility, which dictates the curtailment rate of renewables and the utilziation rates of batteries that are built as a backstop.

We conclude that renewables will cap out at 45-50% of grids, even with the benefit of batteries. Beyond 50%, curtailment surpass 70%, trebling incentive pricing.  Large-scale batteries also increase incentive prices 5-25x. Natural gas is the best complement for renewables, with both between 25-50% of grid demand.

Offshore wind costs are inflating?

This data-file tabulates the capex costs of 35 offshore wind projects in the UK, with 8.5GW of capacity, which have been installed since the year 2000.

We model the incentive price for each project, i.e., the power price that is needed to earn a 10% levered but unsubsizided. There is little evidence for deflation. Rather, breakevens appear to have risen at a 2.5% CAGR over the past decade.

Please download the data-file to interrogate the findings, or view the individual project parameters. Continued technical innovation is needed in the wind industry. We find new airship concepts could help deflate logistic costs.

Utility-scale solar power: the economics?

This model indicates the economics of a typical utility-scale solar project, as a function of a dozen economic inputs: capex costs per MW, power prices, solar insolation, panel efficienccy, curtailment, opex, DD&A, loan metrics and tax rates.

Our base case calculations show utility scale can be extremely economic on a standalone basis, with 10% levered returns achieved at 4-7c/kWh input prices.

However, it is interesting to note how quickly the economics deteriorate: by c3-5c/kWh in areas where solar penetration is already high; and by 5-7c/kWh in less sunny locations.

Solar Energy: Where’s the IP?

This data-file tracks 110,000 solar patents filed by geography, by company, by year, since 2000; but particularly in 2019.

Solar patent filings peaked in 2012-13 at 11,500 patents per year. Many  geographies have since slowed by 50-90%; except China, which hit a new peak off 3,500 patents in 2019, leading the industry.

A granular breakdown for 2019 tabulates 6,000 patents, including their descriptions, which you can interrogate fully. 14 out of the top 25 solar patent filers in that year were Chinese companies.

The largest US and European patent filers are also shown. So are the Majors, which have recently filed c30 patents per year (0.5% of the total), two thirds of which can be attributed to a single SuperMajor, looking to scale up in solar.

Battery Storage Costs: the economics?

This model shows the full-cycle cost of storing a kWh of electricity, across ten different technologies that have been proposed to backstop renewables.

The model allows you to flex input assumptions, such as the costs of each battery, its useful life and the frequency of charge/discharge cycles.

Pumped storage currently screens as most economical for backstopping renewables, by a factor of 3x, under our base case assumptions.

Backstopping solar also looks about 3x easier than backstopping wind, as smaller batteries are needed, and costs are a function of system size. But no battery can truly backstop renewables.

Covered storage technologies include pumped storage, compressed air storage, lithium ion batteries, redox flow batteries, four other battery types, flywheels and ultra-capacitors.

Offshore Wind Patents: Majors and Services?

This data-file tracks wind patents, across 20 traditional energy companies, comprising cap goods conglomerates, Oil Majors and Offshore Oil Services. The aim is to assess which companies have differentiated IP to benefit from the scale-up of offshore wind.

Traditional offshore-focused energy companies (ie Majors and Oil Services) are not generally found to have differentiated wind IP, comprising <2% of the offshore wind patents since 2000. 2 Majors and 2 Service companies have, however, made interesting inroads.

Covered companies include: ABB, Aker, Alstom, Aramco, BP, Cameron, Chevron, Eni, Equinor, ExxonMobil, GE, OneSubsea, Saipem, Shell, Siemens, Subsea 7, Technip, TOTAL and Vestas.