Downloads Insights- Thunder Said Energy

Albedo of different landscapes: a challenge for reforestation?

Forests are darker than their surroundings? So does their low albedo curb our enthusiasm for nature-based solutions? This data-file aggregates the average albedo of different landscapes, based on technical papers and internet sources. The albedo impact of reforestation seems numerically very small. There is even an intriguing link where forests can increase the formation of clouds, which have the highest average albedo of any reflective category.

Our latest roadmap to net zero assumes that c20% of all decarbonization of the 2050 energy system will come from new forests and other nature-based solutions to climate change. These solutions need to prove they are real, incremental, measurable, long-lasting and have other social and ecological benefits, to score highly on our nature-based project screens.

However, some commentators have criticized that forests are a not a good climate solution, because they are darker than the surrounding landscape. Forests have an average albedo of 13% versus open landscapes at 20%. Thus they absorb more heat. Thus could planting more forests increase warming in addition to the impacts of CO2?

Four observations on this argument are summarized below, and supported by the data in this data-file.

(1) Starting with a definition: Albedo is the percentage of incoming radiation that a surface reflects. This includes both visible light (from violet at 380nm to red at 700nm), which is c43% of the incoming energy reaching the Earth’s surface; and infra-red radiation, which is 49%; and ultra-violet light, which is the remaining 8%. Physics’s theoretical ‘black body‘ has an albedo near 0%, and the brightest whites have an albedo near 100%. So it is true that land uses with a lower albedo will absorb more heat. But how much more heat?

(2) Albedo impacts are a rounding error? Overall, our roadmap to net zero sees 3bn acres of the planet going from ‘not forest’ to ‘forest’ (note here), which is 8% of the world’s total land (40 bn acres in total) and 2.4% of the planet’s total surface (126bn acres in total) (database here). Moreover, where land use is moving from ‘not forest’ to ‘forest’ in our models, it is mainly moving from pastureland or grassland (average albedo of 20%) to forest. We are not reforesting ice sheets (average albedo of 60%) or the Sahara desert (average albedo of 35%). And there may even be some areas where albedo increases, if reforestation occurs on dark and bare soils (albedo of 10%) or when planting mangroves that fill in open bodies of water (albedo of 8%). However, overall, a 7pp heat absorption delta on 2.4% of the world’s land is a rounding error. And it may itself be counteracted…

(3) Clouds and the cooling impacts of transpiration. One of the most interesting links in technical literature is that forests may increase cloud cover, and in turn, clouds have an average albedo of 63%, which is the highest of any surface condition that is averaged in our data-file. The best paper to cross our screen evaluated 10-years of satellite data over large oak and pine forests in Europe, finding 5-15pp higher absolute cloud cover during summer months over the forests (compared with surrounding cropland), and consistently higher cloud cover downwind of the forest. The downwind effect was most pronounced when wind speeds were higher, and absolute cloud cover decreased by 20pp after a large portion of one of these forests was damaged by a storm in 2009 (see Teuling, et al, 2017). Another recent study also found increased cloud cover over forests, and calculated that this would amplify the net carbon benefits of reforestation, especially at mid-latitudes (see Cerasoli, et al, 2020).

(4) Conflicting conclusions. It should also be highlighted that other technical papers have found more mixed links between forest cover and cloud cover. From the technical papers that crossed our screens, there seems to be much less certainty and much more debate than in other areas of climate science that we have reviewed. Even the science of measuring albedo is quite full of controversy, varying over time, with the seasons, with weather conditions. Some commentators argue that in winter, Arctic-latitude forests are much darker than snow, but to this I say, come visit me in Estonia in December-January, and see how little daylight there is to absorb/reflect!! Our summaries of different technical papers are in the data-file, along with average values for the albedo of different landscapes.

Overall, we still think that protecting and restoring nature is climate-positive, as well as being a philosophical virtue in the eyes of any true environmentalist (almost as a defining criterion!). We will continue to screen nature based CO2 removals in our research in 2023, and hope to see a new array of exponentially improved projects coming to the market.

Goldwind: frequency response from wind turbines?

Goldwind is one of the largest wind turbine manufacturers in the world, having delivered over 50,000 turbines by early-2023. The company was founded in 1998, headquartered in Beijing, it has 11,000 employees, and shares are publicly listed.

The wind industry is increasingly aiming to mimic the inertia and frequency response of synchronous power generators. Goldwind has published some interesting case studies, boosting power by 6-10%, within 1-2 seconds, for 5-6 seconds. Hence this data-file reviews Goldwind frequency response patents to look for an edge?

Synchronous power generators have ‘inertia’. If the grid suddenly becomes short of power, due to a large new load switching on, or a large power source disconnecting, then all of these synchronized machines will slow down very slightly, and in unison. Harvesting their rotational energy provides more power to the grid. But it also lowers the ‘frequency’ of the grid. At least for a few seconds, until firing rates can be ramped up. Generally, the larger the synchronous power generators, the higher their ‘inertia’, the more power that can be drawn out as they slow down, and the less grid frequency will drop per unit of incremental power. This is all crucial to the functioning of a modern power grid.

Wind turbines do not inherently provide any inertia or frequency response. Interestingly, they have about the same amount of angular momentum as conventional power generators, as they spin. But it is not synchronized with the grid. A wind turbine spins at 15-20 revolutions per minute, whereas a typical grid at 50 Hz (or 60 Hz in the US) is completing 50 full AC cycles per second.

An increasing goal for the wind industry is to ‘mimic’ some of the inertia and frequency responses of synchronous generators. Recently, Goldwind has published interesting case studies at wind farms, e.g., in Australia, boosting power by 6-10%, within 1-2 seconds, for 5-6 seconds (chart below).

The goal of this patent screen is to evaluate whether Goldwind’s frequency response algorithms give it an edge over other wind turbine manufacturers. We were unable to de-risk this idea from reviewing the patents, for the reasons explained in the data-file.

There are three key challenges for implementing frequency responses, as a form of ‘synthetic inertia’ and wind power plants, which are also borne out by the patent analysis. It takes time to implement the response (certainly longer than a battery, capacitor bank or conventional generator). Second, it is challenging to coordinate the responses of dozens of turbines, each with a different operating state. Third, there is always a danger that the wind drops at the precise moment you want to implement your frequency response, due to natural wind volatility.

Goldwind frequency response? Goldwind discusses possible solutions to each of these challenges in its patents. The bright spot is that we think many of the solutions are software-side, which will lower their implementation cost, and not pull too hard on already-bottlenecked power electronics. However, as usual, we find it harder to de-risk algorithm-heavy patents.

LNG shipping: company screen?

This data-file is a screen of LNG shipping companies, quantifying who has the largest fleet of LNG carriers and the cleanest fleet of LNG carriers (i.e., low CO2 intensity). Many private companies are increasingly backed by private equity. Many public companies have dividend yields of 4-9%.

In total, there are 650 LNG carriers in operation in 2023. A dozen companies control half of the fleet and are captured in this data-file. They have an ‘average’ fleet size of 13 vessels (ranging from 6 to 70 vessels).

The CO2 intensity of the LNG carrier fleet is measured on an AER basis, at 9 grams of CO2 per deadweight ton mile travelled, which equates to 18 grams of CO2 per effective ton mile travelled (factoring in the return journey).

The lowest carbon and most efficient vessels currently being delivered are large (174,000m3+) and have two-stroke, low-speed propulsion such as MEGI (Man) and X-DF (WinGD), yielding AER CO2 intensities below 5 grams of CO2 per dwt-mile. Conversely, older vessels and steam vessels can have AER CO2 intensities above 12 grams per dwt-mile.

Another theme that stands out from the screen is the high 4-9% dividend yields of leading public LNG shipping specialists, with high-quality fleets and vessels locked-in on long-term contracts, with high-quality charterers.

A final theme that stands out is the growing involvement of private equity firms, including taking public LNG carrier companies private and investing to expand and modernize future fleets.

Please download the data-file for an overview of the LNG shipping companies and the fleets of gas carriers. Further details can be found in our broader LNG research, including the economics of LNG shipping.

Global energy: ten themes for 2023?

This 14-page note lays out our top ten predictions for global energy in 2023. Brace yourself for volatility, a recession due to energy shortages, and deepening bottlenecks on accelerating new energies? However, the biggest change for 2023 is that an energy super-cycle is now gradually coming into view.

Exploration capex: long-term spending from Oil Majors?

This data-file tabulates the Oil Majors’ exploration capex from the mid-1990s, in headline terms (in billions of dollars) and in per-barrel terms (in $/boe of production). Exploration spending quadrupled from $1/boe in 1995-2005 to $4/boe in 2005-19, and has since collapsed like a warm Easter Egg. One cannot help wondering about another cycle?

The peer group comprises ExxonMobil, Chevron, BP, Shell and TOTAL, which comprise c10% of the world’s oil production and 12% of the world’s gas production. As a good rule of thumb, this group can be thought of as c10% of global production.

This peer group quadrupled its exploration expenditures, from $5bn pa spent on exploration in 1995-2005 to an average of $20bn pa on exploration at the peak of the 30-year oil and gas cycle in 2010-2015. Exploration spend ramped from $1/boe to $4/boe over this timeframe. It has since fallen back to $1/boe, or around $1bn per company pa in 2022.

The US has always been the most favored destination, attracting c25% of all exploration investment, both offshore (e.g., Gulf of Mexico) and increasingly for short-cycle shale. During the last oil and gas cycle, the largest increases in exploration investment occurred in Africa, other Americas, Australasia; and to a lesser extent Europe and the Middle East.

One possible scenario for the future is that this peer group continues to limit its exploration expenditures to the bare minimum, below $1bn per company per year, or below $1/boe of production; under the watchwords of “capital discipline”, “value over volume” and “energy transition”.

However, it is somewhat terrifying to consider that the industry needed to spend an average of $2.5/boe on exploration from 2005-2019 in order to hold its organic production “flattish”.

Under-investment across the entire industry may foreshadow a sustained shortage of energy, especially if 50% lower-carbon gas is intended to replace coal as part of the energy transition, per our roadmap to net zero, or more pressingly as Europe faces sustained gas shortages. Hence one cannot help wondering if industry-wide exploration capex in the 2020s and 2030s is going to resemble the 2000s and 2010s?

This data-files aggregates the Oil Majors’ exploration capex, across ExxonMobil, Chevron, BP, Shell and TOTAL disclosures, apples-to-apples, back to 1995.

Decarbonizing global energy: the route to net zero?

This 17-page report revisits our roadmap for the world to reach ‘net zero’ by 2050, after integrating over 1,000 pieces of research from 2019 through 2022. Our updated roadmap includes large upgrades for renewables and energy efficiency; less reliance on new energies breakthroughs; but most of all, simple, pragmatic progress is needed as bottlenecks and shortages loom.

Offshore wind: installation vessels and time per turbine?

Offshore wind installation vessel time per turbine

Wind turbine installation vessels are estimated to cost $100-500/kW in the breakdown of a typical offshore wind project’s capex. Total offshore construction time is around 10 days per turbine. Offshore wind installation vessel time per turbine averages around 5 days per turbine. Data from past projects are tabulated in this data-file.

The average offshore wind project comprises 90 turbines. Hence over the entire course of offshore construction, a full turbine is installed every 10-days on average.

However, over 50% of the time is spent on preparations, foundations, cable-laying and commissioning. The average wind turbine installation vessel installs a full turbine every 5-days.

The numbers vary by project. The best installation vessels operating under the best conditions can install an entire turbine upon pre-laid bases/foundations in a single day.

At the other end of the spectrum, installation can take over ten days per turbine, especially amidst bad weather, delays with parts, mechanical issues, and projects that are a long way from ports.

Offshore wind installation vessel time per turbine? Data on the times taken to install an offshore wind turbine are aggregated across 35 offshore wind projects in this data-file. While the data are interesting, there are few correlations to be drawn between simple headline metrics.

Some eagle-eyed readers will have spotted, in the charts above, that some projects appear to have higher WTIV days per turbine than total construction days per turbine, which seems confusing. The reason is that recent large offshore wind projects will tend to have 2-3 installation vessels operating simultaneously. Thus they can achieve 2-3 WTIV-days of work per calendar day. More vessels will mean faster construction. And probably lower total costs. But it will also require booking out more vessels from the total fleet.

Overall, we think that installation vessels and support vessels could be a bottleneck for accelerating offshore wind. Amazingly, some of the largest projects in the history of the industry had 60 – 100 vessels operating at peak construction activity.

For perspective, recent offshore wind projects likely have total installation costs of $2,000-6,000/kW (offshore wind cost data here, breakdown of turbine cost here). Cost is saved by larger turbines. The other large bottleneck is in downstream power electronics for integrating wind with power grids.

Leading companies in offshore wind turbine installation vessels include DEME, MPI, Van Oord, Cadeler, Eneti (Seajacks), and increasingly, private-equity backed vessels gearing up for an expansion of offshore wind, especially in the US.

Jetti Resources: copper leaching breakthrough?

Jetti Resources has developed a breakthrough technology to recover copper from low-grade sulfide ores, by leaching with sulphuric acid, thiocarbonyls, ferric iron (III) sulphates and oxidizing bacteria. The patents lock up the technology, presenting some of the most detailed experimental data of any patent library that has crossed our screen. But what are the costs of copper production, what CO2 intensity and what technical challenges remain?

Jetti Resources was founded in 2014, it is headquartered in Boulder, Colorado, and employs c50 people. It aims to “unlock, vast stranded copper resources” via a breakthrough technology. This matters as our roadmap to net zero sees global copper demand rising 3x by 2050.

The company has raised $100M via a Series D financing round in October-2022, valuing Jetti at $2.5bn. Its technology is being used in two commercial deployments, including Capstone Copper’s Pinto Valley Mine in Arizona.

The technology extracts copper from low-grade sulfides, which make up 70% of the world’s copper resources, worth $20trn, such as chalcopyrite, the most common copper mineral ore.

However, these challenging ores are currently stranded. The copper cannot be leached out using sulphuric acid and then electrowon; as a passivation layer forms on the surface of sulfide ores. And the financial and environmental costs of transporting these ores to Asian smelters are also high.

We have reviewed Jetti Resources’ technology. Its patent library is concentrated, with two particularly clear patents, containing some of the most detailed experimental data that has crossed our screens in all of our patent reviews (the chart below shows how thiourea, and other reagents, enhances copper recovery). We can partly de-risk the technology based on our patent review. It does seem like a technical breakthrough.

Some variants in the patents also show a complementary benefit combining thiocarbonyls with carbon black, which raises the intriguing possibility of providing an offtake for the carbon black coming out of turquoise hydrogen plants.

There are four major challenges to explore, based on our Jetti Resources technology review. They include thiocarbonyl pricing (and resultant copper pricing), thiocarbonyl quantities needed (i.e., kg of thiourea per kg of copper recovery), environmental credentials and the need for co-reagents. There could be variants of the process that are as expensive and CO2-intensive as conventional copper smelting. Data are tabulated and discussed in the data-file.

Energy costs of energy transition?

Reaching net zero requires building wind, solar, grid infrastructure, energy storage, electric vehicles and capturing CO2. Energy is needed to build all of these things. The total energy costs of energy transition reach 1% of total global primary energy in 2025, 2% in 2030, 4% in 2040 and 6.5% in 2050. In other words, energy transition is materially easier to achieve from a period of energy surplus. You can stress-test numbers in this simple model.

We want to achieve an energy transition, by ramping wind and solar to 25% of the world’s total useful energy by 2050 (note here), building a global fleet of over 2bn efficient electric vehicles, constructing power grid and storage infrastructure, and capturing over 6GTpa of CO2 via various forms of CCS.

This data-file compiles our estimates for each category, quantifying (a) how many units do we want to build? (b) what is the energy cost per unit? (c) by simple multiplication, what are the total energy costs of each category in TWH and as a percent of global primary energy.

However, building all of these things absorbs energy. There are energy intensive materials in a solar plant. There are energy intensive materials in a wind-turbine. And in electric vehicles. Around two-thirds of the energy costs for expanded power grids is embedded in the aluminium of power cabling. Finally, energy storage consumes energy in the form of round-trip efficiency losses, while CCS consumes energy in regenerating amines.

By 2025, around 1,500 TWH of primary energy, or 1.0% of total global primary energy, will be needed specifically to construct these energy transition technologies. The near-term is most heavily weighted to solar, then wind, then electric vehicles.

The numbers grow ever larger as we extrapolate out into the future. The energy transition itself will consume 2% of the world’s primary energy by 2030, 4% by 2040 and 6.5% by 2050.

These are simply enormous numbers. The 2025 number is equivalent to the total primary energy consumption of a country such as Spain or Australia. While the 2050 number is equivalent to two Saudi Arabias worth of oil production.

It is clearly going to be easier to build the important assets and infrastructure needed in the energy transition from a position of energy surplus, and it is going to be more difficult (even, inflationary) if the world is suffering from sustained energy shortages. This is why we think restoring the world’s energy surplus is the most important ESG goal of the 2020s.

The data-file also contains energy balances for each theme in the energy transition. Wind is already in a position of large energy surplus, because wind plants require 50-70% less up-front energy to construct than solar plants (per unit of ultimate generation, e.g., in kWh). The solar chart below is also more finely balanced through the mid-2020s, because solar additions are still accelerating sharply (note here). EV growth is seen accelerating so sharply that building ever more EVs will absorb more energy than they save through the mid-2030s (note here).

The technology that looks most challenged on this roadmap is green hydrogen. Converting useful, rateable electricity into green hydrogen generates no energy savings. There are simply efficiency losses, due to entropy increases, over-voltages at the anode, storage, transport, fuel cells, etc. Our chart above has <0.1% of the world’s useful energy in 2050 coming from green hydrogen. But if the number were 10%, then the total energy requirements of the energy transition would literally double.

The technology that looks least challenged on this roadmap is natural restoration (note here). Nature based solutions may create a 20GTpa CO2 sink with long-term pricing around $50/ton. But planting trees is not an energy intensive activity. There is even an argument that it generates energy, although consuming this energy has varying CO2 credentials.

A key objective for the new energies industry is going to be deploying new technologies that can improve efficiency and lower the energy intensity of energy transition. Hence our own research is also delving into opportunities in energy efficiency.

What are the energy costs of the energy transition? You can stress test numbers in the data-file, flexing total wind and solar installations, total EV deployment, CCS deployment, grid storage, green hydrogen, and the energy intensity factors of each technology.

Nature based solutions: CO2 removals in 2022?

Is the nascent market for nature-based carbon offsets working? We appraised five projects in 2022, and contributed $7,700 to capture 440 tons of CO2, which is 20x our own CO2 footprint. This 11-page note presents our top five conclusions. Today’s market lacks depth and efficiency. High-quality credits are most bottlenecked. Prices rise further in 2023. A new wave of projects is emerging?

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