Category Archives: Energy Insights

Energy Insights – IEA 2016 World Energy Outlook

Energy Insights is a series where we pull out key points from energy articles around the web. This is not a full summary but a taste – if you like the ideas then please watch the full presentation.

Previous posts in this series include A Look at Wind and Solar.

This post highlights some of the key points from the 2016 IEA World Energy Outlook presentation. The presentation hosted by the Center for Strategic & International Studies is well worth a watch.   I also recommend subscribing to the CSIS channel on YouTube – it is full of interesting energy content.

Middle East oil production at a maximum of last 40 years (35% of global production).

Middle East output is at a historical high due to:

  • A period of relative calm with countries like Iraq producing oil.
  • Low price of oil incentivising oil producers to maximize output to maintain cash flow.

This period of high production could come to an end with any instability that the Middle East is historically known for.

Approval of new oil projects lowest since 1950s – same for discoveries

The low oil price environment is leading to project financing drying up. It will likely take a few years for the effects of the lack of investment

Combining this with the potential for Middle East supply to reduce we could see a quite interesting oil market in a few years.

Oil investment is required for:

– 2/3 for decline in existing fields.

– 1/3 for growth in oil demand.

This is an interesting point – it is not only the demand in growth but the decline in existing fields that requires investment.

Slowdown in oil growth – but no peak yet. Still growth.

– Decline in power generation (still used a lot in Middle East).

– Decline in heating and passenger cars (double of fleet size by 2040 but improved efficiency -> small reduction in passenger car oil use).

BUT

– Growth in trucks, aviation and petrochemicals.

This is a somewhat controversial part of the IEA 2016 Outlook – that the peak in oil demand is yet to come. Many other forecasters predict a decline in oil demand.

This also highlights that electrification of passenger cars alone won’t slow down our oil demand growth.  Efforts in other sectors like aviation and petrochemicals are crucial to reducing oil consumption.

Chinese gas consumption – global = 25%, China = 5%

This statistic gives me hope – there is still a large low hanging fruit in China of converting coal to gas. In this low natural gas price environment projects like this should be attractive. I would expect that it is supply of gas that is the issue – which the growing LNG market can help support.

Thanks for reading!

Energy Insights – A Look at Wind and Solar

Energy Insights is a series where we pull out key points from energy articles around the web.  This is not a summary but a taste.   The full articles contain even more interesting insights!  

This post covers a series of two articles.  If you are short of time I recommend reading Part Two – a brilliant article that highlights some issues that may limit renewable penetrations.  Part One is also worth a read, detailing the progress of renewables so far.

Part One – How Far We’ve Come

Together, wind and solar increased from 1.1 percent to 3.3 percent of global electricity over that same period (2008 – 2016)

This shows both the impressive relative growth (300% increase) and not so impressive amount of wind & solar in the entire global mix.

Of the power generation growth (TWh) between 2003 and 2016, 10.9% came from wind and solar

2003 to 2016 is a long period of time – it would be interesting to understand how this percentage has changed from 2003 to 2016.

Part Two – Is There An Upper Limit To Intermittent Renewables?

It is increasingly difficult for the market share of variable renewable energy sources at the system-wide level to exceed the capacity factor of the energy source.

This idea of a limit on renewables deployment based on the capacity factor is based not on technical but economic constraints.

The marginal value of variable renewable energy to the grid declines as the penetration rises.

This declining value is what leads to limiting renewables penetration via the merit order effect in wholesale markets.