Record wildfires burn a million acres in the Pacific Northwest; It’s official: June 2014 was the hottest June globally on record; EPA moves to block massive Pebble Mine; California moves to block oil industry polluting groundwater.
The U.K. will keep a target to cut greenhouse gases by half through 2025, Energy Secretary Ed Davey said, foiling the Treasury’s effort to weaken the target.
Tom Konrad CFA
In the first
article of this survey of yield cos, I noted that many of the
recent yield co IPOs have risen so far as to “lend the very term
“yield co” a hint of irony” because rising stock prices are
accompanied by fallin…
The rise of the U.S. was very much tied to innovation and creation. This conservative propensity of arguing for antiquated occupations to save menial jobs instead of embracing the sort of change that made the U.S. the world power it is today…
Japan thinks of itself as famously poor in energy, but this national identity rests on a semantic confusion. Japan is indeed poor in fossil fuels — but among all major industrial countries, it’s the richest in renewable energy like sun, wind, and geothermal. For example, Japan has nine times Germany’s renewable energy resources. Yet Japan makes about nine times less of its electricity from renewables (excluding hydropower) than Germany does.
by William Gregozeski, CFA
China is the world’s largest producer of electricity, surpassing
the United States in 2011, with demand increasing alongside its
strong, sustained growth in GDP. Electricity generation in
China has increased 9.6% annually, from 2005 to 2013, reaching
5,425.1TWh of electricity. Coal-fired plants currently make up
over two-thirds of power generation, which is partly the result of
an abundance of coal in China. Despite this growth, the
country expects demand to continue to increase at a rapid pace,
reaching 7.295TWh of demand in 2020 and 11,595TWh in 2040.
However, the growth in electricity production from coal-fired plants
has resulted in an increase in air pollution and general lack of
efficiency. China is now moving aggressively to curb pollution
and increase the supply of renewable power. The central
government has prohibited new coal-fired plants to be built around
Shanghai, Guangzhou and Beijing, which is currently in the midst of
having all of its coal plants being converted to natural gas.
Its 12th Five Year Plan, running through 2015, targeted non-fossil
fuel energy to account for 15% of total energy consumption.
One of the key industries expected to help meet these goals is wind
China is the world’s largest wind energy producer, with over 90GW of
installed capacity as of the end of 2013. Despite this large
figure, the country added 16.1GW of capacity in 2013, up from 13.0GW
of new capacity in 2012, and is aiming to add 18.0GW of new capacity
in 2014. By comparison, China added roughly 3.0GW of solar
power in 2013, reaching 10.0GW of installed capacity. In 2013,
wind power contributed 137.1TWh of electricity generation, which
equates to just 2.5% of total power generation in China. Based
on 90GW of installed capacity at the end of the year and the average
wind farm in China operating for 2,000 hours in 2013, up from 1,900
hours in 2012, China’s installed wind capacity was operating at a
run rate of 180.0TWh of power generation.
While 15% is the near term renewable target, the potential of
wind in China is much greater. In 2009, researchers from
Harvard and Tsinghua University found China could generate all of
its power profitably from wind alone, making wind power an
attractive alternative to coal power, especially as the government
moves to reduce pollution. While the potential for 100% wind
power exists, there are a number of practical issues that must be
resolved first, including the country’s power grid. Roughly
15% to 20% of all of the country’s installed wind capacity is not
grid connected, due to the lack of transmission
Like other industries in China, the central government plays a key
role in the power industry, controlling the power grid and
electricity prices. The power grid in China is tightly
controlled by three State Owned Enterprises, led by the State Grid
Corporation of China, which provides power to 88% of China and is
the seventh largest company in the world, according to Forbes.
The other two grid companies in China are China Southern Power Grid
and Inner Mongolia Electric Power Transmission. Investment in
the Chinese power grid has grown 11.4% annually over the last five
years. This growth should accelerate as the State Grid
announced in January it plans to increase power grid construction by
nearly 20%, with investments that include constructing ultra-high
voltage transmission lines and cross-region grids, which should help
spur demand for wind energy and enable off-grid wind capacity to be
The role of the National Development and Reform Commission (NDRC) on
the power production industry is also favorable to wind power.
The NDRC not only sets power prices, but also has the role of
pushing for increases in renewable power production through measures
such as legally requiring the power grid to purchase all renewable
power and establishing a subsidy to spur investment in the
industry. Prices set by the NDRC are generally not based on
market dynamics, but rather set based on the greater good of the
country. The price of coal has been volatile in recent
years. This, coupled with the constant electricity purchase
price has led to large swings between profitability and losses for
these producers. On the other hand, wind is well suited to
thrive in this environment due to its lack of a commodity feedstock
and small ongoing operating expenses.
William Gregozeski, CFA is the Director of Research at Greenridge Global, a
provider of institutional-based sell-side services to
underfollowed Asian-based companies and special situation
stocks. The author of this article, Greenridge Global and
its affiliates do not have a beneficial ownership in the companies
mentioned herein or any other disclosable conflicts of interest.
According to the latest “Energy Infrastructure Update” report from the Federal Energy Regulatory Commission’s Office of Energy Projects, solar, wind, biomass, geothermal, and hydropower provided 55.7 percent of new installed U.S. electrical generating …