Big Global Energy Data

Big Global Energy Data, the June issue of TerraJoule.us, reviews the profound changes taking place in the global energy system. This year’s release of the BP Statistical Review showed that coal’s collapse was much broader, and deeper, than many anticipated. Coal production and consumption was hit very hard in nearly all domains, especially China. Meanwhile, some truly astonishing data continued to flow from the combined wind and solar sectors, as they truly dominated in a year when global growth of electricity production advanced by only 0.9%. Is it any wonder therefore that global CO2 emissions have flattened the past three years? Confirming data already released by IEA in Paris, BP also shows that emissions barely grew in 2015. On the other side of the ledger, natural gas adoption continued to find strength in the US, the EU, and China. The world is growing a new  dependency on natural gas—but the price does not reflect it—just yet. Finally, per previous speculations of TerraJoule.us, oil consumption in the OECD has bottomed. No blast off in OECD oil demand is imminent, but for the first time in 10 years, oil demand grew in the EU—by 1.5%. Newsflash: Europe is back from the dead.

In the second essay of this month’s issue, “Five Questions for Garvin Jabusch, of Green Alpha Advisors,” we consider the first round of losses already suffered by investors in fossil fuels, and speculate as to whether the next round of losses is near. While EV adoption remains slow, the learning rate of solar presses onward. To what extent are investors, even today, still not taking seriously the dislocations yet to come from quickly growing power generation from wind and solar?

In the continuously updating TerraJoule.us Global Grid Decarb Monitor, data for 2015 is radically revised to reflect the very slow growth in global power generation which was entirely dominated by new wind and new solar generation. The forecast for better overall growth in global power generation is maintained for 2016, and 2017.

Finally, The TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities, fell slightly to 99.67, having started the new year at a notional value of 100. The Index plays a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position. Industrial names in the index continue to perform well in 2016, while the basket of solar equities continues to underperform.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.

A Terawatt of Solar

A TeraWatt of Solar, the May issue of TerraJoule.us, reviews the falling costs and accelerated schedule now driving the buildout of global solar capacity. Because India is now very much in the solar game–and because the economics of coal have also quickly become unattractive–we speculate the world will achieve its first terawatt of solar sometime in the next 5-7 years. Relatedly, TerraJoule.us also makes a more complex projection in this month’s issue: that sometime before 2025, solar will compose 20% of total world power capacity. While capacity is not generation, of course, the figure is a testament to solar’s rapacious advance. Finally, we note the number of domains across the world where, surprisingly, solar generation is already producing surplus power. Indeed, many of the forecasts made just five years ago about solar’s costs, competitiveness, and generation, have been completely overtaken by the global solar buildout.

In the second essay of this month’s issue, “Oil Update–Shoulder Season or Worse?,” we consider the impact of oil’s recent price recovery on the enduring hope that the market will find balance. While US production has finally started to fall meaningfully, upward supply pressure across OPEC and Russia has continued to negate the much needed supply declines in Non-OPEC. The factor that would render these calculations moot, of course, would be a shift in demand. Even the slightest uptick in global demand would be enough to return prices back to a healthier level around $75/barrel. Alas, here too pockets of stronger demand are negated by weak demand growth elsewhere.

In the continuously updating TerraJoule.us Global Grid Decarb Monitor, projections for solar generation are slightly raised, both for 2016 and 2017. We are also slightly increasing the market share of new generation from combined wind and solar in 2016, owing to faster retirements of existing coal capacity, and, the more recent blunting of new coal capacity additions.

Finally, The TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities, stands at 101.34 as of April 30, 2016 having started the new year at a notional value of 100. The Index plays a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position. Industrial names in the index continue to perform well in 2016, while the basket of solar equities continues to underperform.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.

New Directions in Global Oil

New Directions in Global Oil, the April issue of TerraJoule.us, reviews the expanded supply capabilities created over the past five years by the global oil industry. Because North American oil supply growth, however, cannot be expected to continue during a low priced environment, we speculate OPEC will be successful in its quest to win back market share. More broadly, TerraJoule.us concludes that the forecast for global oil production over the next five years will essentially track global growth. If global GDP weakens, oil supply will guide downward. If global GDP strengthens, oil production will advance, and supply the global economy with oil at an affordable price. This new equation is made possible by the intersection of new production capacity with the phenomenon of energy transition, in which oil itself has lost market share every year since the start of the new millennium.

In the second essay of this month’s issue, “The Path We Are On“, we welcome back new writer and analyst Justin Ritchie, of the University of British Columbia. Mr. Ritchie’s essay focuses on the four main pathways of future GHG emissions, and asks questions–in light of slowing global economic growth–about the probabilities of future demand growth for fossil fuels. Again, given the energy transition already underway, Ritchie’s essay, along with this month’s issue, calls into question wildly high projections for future energy consumption. This is an important topic, that probes issues surrounding the tendency to extrapolate past growth into the future.

In the continuously updating TerraJoule.us Global Grid Decarb Monitor, projections for marginal growth from wind and solar are largely maintained for both 2016 and 2017. We maintain our view of better global growth next year. And one note of interest here: new generation from solar in 2016 is forecasted to exceed new generation from wind power.

Finally, The TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities, stands at 97.54 having started the new year at a notional value of 100. The Index plays a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position. Industrial names in the index continue to perform well in 2016, while the basket of solar equities continues to underperform.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.

Waiting for Growth in the Non-OECD

Waiting for Growth in the Non-OECD, the March issue of TerraJoule.us, discusses the compression of the growth spread, between developed and developing economies over the past three years. Higher rates of global growth, during a time of demographically-driven slow growth in the OECD, depend heavily on development and investment in the Non-OECD. Optimistically, TerraJoule.us concludes that 2017 will reveal the effects of universally cheap energy, as this form of thermodynamic-easing acts as a transmission mechanism in developing economies. We pay particular attention to India in this regard, as a potential driver for global demand and especially oil demand.

In the second essay of this month’s issue, “Portfolio Construction During Energy Transition“, we welcome new writer and analyst Garvin Jabusch of Green Alpha Advisors. Mr. Jabusch’s essay asks several important questions, but mainly explores issues around Modern Portfolio Theory’s applicability, as we head through energy transition into the next decade.

In the continuously updating TerraJoule.us Global Grid Decarb Monitor, projections for marginal growth from wind and solar are maintained for 2017. We recognize the 2017 forecast is rather aggressive, but we maintain our view of better global growth next year.

Finally, The TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities, stands at 91.75 having started the new year at a notional value of 100. The Index plays a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position. We note that several of the industrial names in the index were largely stable, during the market volatility seen in the first two months of this year.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.

Car Talk

Car Talk, the February issue of TerraJoule.us, discusses the plausible deployment rates of electric vehicles (EV) and autonomous vehicles (AV) in the context of a changing transportation market where the current dream is to detach automobiles from personal ownership. To counter some of the current excitement over an imminent revolution in transportation,  we show that existing solutions, like public rail transport, have been successful already in competing away marginal demand for automobiles, and oil. Overall, when we look at comparable infrastructure buildout rates for wind and solar technology, and the exceedingly slow rate so far of EV adoption, TerraJoule.us concludes that transition in mobility will run into familiar resistance points before the scaling process truly begins.

In the second essay of this month’s issue, “Oil’s New Problem”, we note the global oil market now is entirely dependent on demand changes in Non-OECD economies. And we wonder, if after 15 straight years of market share losses, whether energy transition has finally caught up to oil.  Conversely, with a flood of exceptionally cheap energy from all sources fanning out into the world—oil, coal, LNG, wind, and solar—it seems probable that this massive cost reduction will convert to stimulus by next year.

Relatedly, in the continuously updating TerraJoule.us Global Grid Decarb Monitor, projections for marginal growth from wind and solar are raised for 2017. A better economic outlook drives one part of this revision, but the normalizing effects of recent tax policy changes from the US will smooth both markets as we cross through next year, into the end of the decade. We also raise substantially the total growth rate of new power generation, from all sources, in the 2017 forecast.

Finally, The TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities, stands at 91.59 having started the new year at a notional value of 100. The Index plays a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.

Energy Constructors

The energy landscape in 2016 opens up on a pair of notably mismatching trends. One, is that global energy supply from all sources is once again poised to advance, past current levels of demand. While last year’s oversupply plagued the oil market, this year’s expansion will concentrate on the power sector, as a more globalized natural gas market gets underway, and as new wind and solar capacity soars–from a higher base.

Second, is that a new wall of capital is now forming to invest in low carbon assets, in the wake of COP21, and spurred on by the nascent divestment movement. But despite strong growth rates in renewables, the volume of capital both today and in the future looks to overwhelm available projects.

The newly expanded TerraJoule.us probes deeply into both trends.

Energy Constructors, the January issue, explains that energy transition is increasingly an infrastructure and technology event, in which both fossil fuel extraction but especially solar power are touched by the effects of innovation. A new feature, The TerraJoule.us Global Grid Decarb Monitor, indicates that once again, combined wind+solar will greatly impact global power markets, accounting for a full third of total new generation this year. Meanwhile, new writer Justin Ritchie explores the looming migration of capital, seeking to shed fossil fuel exposure, as prices fall and the policy complex whirs into action. Ritchie shows that just in the past year, the number of portfolios looking to adopt new climate-friendly criteria has jumped substantially.

Finally, in light of the TerraJoule.us view that the engineering and technology phase of energy transition is now ready to fly, we are launching a new TerraJoule.us Transition Index, composed of 70% ETFs and 30% individual equities. The Index will be rebalanced quarterly, after its start on January 1, 2016. Overall, the Index intends to play a favored super-theme of TerraJoule.us: that the global economy is transitioning away from liquid fossil fuels, to the powergrid. And, that the costs of fossil fuel extraction and combustion increasingly place the energy-capture technologies of wind and solar power in a favorable position.

–Gregor Macdonald, Editor of TerraJoule.us – A Journal of Energy Transition.

The Coal Question: December Issue of TerraJoule.us

Each issue of TerraJoule.us contains: a Main Essay, the Model Portfolio, the Data Brief, and a link to a Downloadable Podcast. Gregor Macdonald, Editor.

Readers may purchase each issue individually, through Ganxy.com: Purchase.

Podcast: This month’s podcast is open only to subscribers and purchasers of the issue.

Model Portfolio: There are no changes to the model portfolio this month.

“TerraJoule.us eBook – The Coal Question – December 2015” on Ganxy

Transition Rates: November Issue of TerraJoule.us

Each issue of TerraJoule.us contains: a Main Essay, the Model Portfolio, the Data Brief, and a link to a Downloadable Podcast. Gregor Macdonald, Editor.

Readers may purchase each issue individually, through Ganxy.com: Purchase.

Or, readers may also take a 12 month subscription through Gumroad.com: TerraJoule.us Monthly eBook  Annual Subscription.

Podcast: This month’s podcast is open only to subscribers and purchasers of the issue.

Model Portfolio: There are no changes to the model portfolio this month.

“TerraJoule.us eBook – Transition Rates – November 2015” by by Gregor Macdonald – Editor on Ganxy

Solar the Dangerous: October Issue of TerraJoule.us

Each issue of TerraJoule.us contains: a Main Essay, the Model Portfolio, the Data Brief, and a link to a Downloadable Podcast. Gregor Macdonald, Editor.

Readers may purchase each issue individually, through Ganxy.com: Purchase.

Or, readers may also take a 12 month subscription through Gumroad.com: TerraJoule.us Monthly eBook  Annual Subscription.

Podcast: This month’s podcast is open to the public. Listen freely here at SoundCloud.

Model Portfolio: There are no changes to the model portfolio this month.

“TerraJoule.us eBook – Solar the Dangerous – October 2015” by Gregor Macdonald – Editor on Ganxy

Slow Globe: September Issue of TerraJoule.us

Each issue of TerraJoule.us contains: a Main Essay, the Model Portfolio, the Data Brief, and a link to a Downloadable Podcast. Gregor Macdonald, Editor.

Readers may purchase each issue individually, through Ganxy.com: Purchase.

Or, readers may also take a 12 month subscription through Gumroad.com: TerraJoule.us Monthly eBook  Annual Subscription.

Podcast: This month’s podcast is for readers only.

Model Portfolio: There are no changes to the model portfolio this month.

From this month’s issue:

We know that GDP is a less than perfect measure of a country’s economic performance. We also know that GDP transforms over time, moving from capital intensive manufacturing to intellectual and digital goods. This is why energy consumption can both instruct, but also mislead, when hunting for clues in the economy. That said, global oil consumption in 2014 according to IEA Paris rose just 710 thousand barrels per day, or about 0.77%. BP Statistical Review Data concurs: global oil consumption grew just 0.76% last year. (It should be noted these growth rates are much lower than agency forecasts produced throughout 2014). Closer inspection reveals that US oil demand has never recovered—but has stabilized at lower levels—since the high consumption years of last decade. Despite this, the US has grown GDP roughly from 13 to 17 trillion over the past decade. It’s the position of TerraJoule.us that the best framework to understand this achievement is through the lens of energy transition. The US is using 1) less total energy, and 2) shifting to the powergrid, as part of a large and new pursuit of natural gas and wind and solar. And there’s at least some evidence that the US is being paid dividends for this transition. While the US will once again not come anywhere close to achieving the FED’s inflation target of 2%, job gains run at a steady pace, and there’s some early indication the labor market is starting to tighten. This may sound underwhelming, but vs. the world the US truly stands out.

“TerraJoule.us eBook – Slow Globe – September 2015” by by Gregor Macdonald – Editor on Ganxy