One trend that cannot be stopped

I hope you’re having a lovely start to your bank holiday weekend. This one is as well-deserved as they come.

While lovely, there are tough elements too though. It’s Easter but we can’t see our families or friends. It’s sunny outside but we daren’t linger. Markets are closed, but our investments remain a concern. (Almost all global markets are closed on Friday, but most will re-open on Monday, though not the FTSE.)

And while the novelty has worn off, the virus continues to cause grief and destruction across the country. Although it is now growing at a slower rate here in the UK, I still want to wish everyone the utmost health and safety, including our prime minister and I’m sure you’ll all join me in that.

Here where I am, I can confirm that Haruki Murakami’s A Wild Sheep Chase has started beautifully, as always. Of the new PS4 games, Batman: Arkham Knight is the pick of the bunch so far. The Predators Top Trumps pack is still fun after a 15-year stint in the cupboard, and playing a game of “the floor is a vector” can keep children occupied for hours, moving from chair to stool to table to fridge. Oh, and adults too, if there’s electric lemonade involved (RISK WARNING! Your limbs can lose mobility as well as gaining it).

Anyway, as I won’t be writing to you like normal on either bank holiday, I have pre-prepared a special two-part series for you.

I have been writing about the exponential curve quite a bit – because it’s what the virus tracked in its early stages (pre-lockdowns, it doubled every few days).

A single case doubling every three days gets you only 1,000 cases after a month, but 500,000 after two months and 500 million by the end of the third. Because the result gets doubled each time.

That’s the negative side of the exponential curve, but it demonstrates its power more clearly than anything. Now though, I want to turn that negativity on its head, and show you a positive example of exponential growth.

I want to spend today and Monday delving into my favourite investment sector – energy.

And what better time to be talking about it than right now, with oil price volatility at record highs. A 60% fall, a 50% gain, renewables coming over the horizon and emissions falling to multi-decade lows.

What I want to focus on though, is the energy transition.

Everyone is kind of aware of it, in a variety of ways. You probably know that a few houses have solar panels on them. Maybe you’ve driven past a wind farm, or perhaps you were disrupted by Extinction Rebellion, and have seen the odd Tesla driving around. There are a few new renewable utilities too – I’m with one of those.

But perhaps you don’t know that globally, fully three quarters of all new electricity production capacity built in 2019 was for renewable sources.

Source: Irena via The Guardian

In the UK, nearly 40% of our electricity was produced by clean sources (solar, wind, nuclear, and hydro).

That figure was only 6.5% in 2010, well short of the government’s 10% target.

Globally, the cost of producing solar and wind power has fallen by 85% and 50% respectively. Energy storage, which can store power for use at night or when winds are calm, is also seeing rapid cost declines.

And the thing is, no one, not even the most optimistic forecasters, saw this coming.

They were all operating on linear scales. But the costs for these technologies are falling exponentially. By something like 10% or 20% a year, depending on where you look.

Things like scale, efficiency, technological improvements, supply chain, size and international cooperation have all intertwined to bring prices down year after year.

That’s why renewables now produce cheaper electricity than coal in over half of the world.

In fact, solar power with energy storage was recently bought for the cheapest cost-per-kilowatt of any electricity ever. Of any technology, at any time, anywhere.

Renewables are no longer some hazy, pricey moral obligation that governments or lairy protestors need to force down our throats.

They are now an economic imperative.

But what about all the fossil fuel jobs?

Well, according to Forbes, 3.3 million Americans work in clean energy, outnumbering fossil fuel workers three to one.

Coal plants are no longer economically viable in the US, and despite Donald Trump’s attitude, he will go down as the president who closed more coal plants than any others, while renewables have boomed under his objecting gaze.

But won’t the lower oil price make fossil fuels cheaper and more competitive?

You might think so, but in fact, since the middle of 2018, the performance of shares in renewables companies has unhitched from the oil price. Previous lows in oil pulled all clean energy stocks down with it, but recent falls (until the corona-crash of course) were almost uniformly ignored, as the new economic advantages of renewables overpowered that argument.

The political and social impetus behind the move to cleaner energy sources is now more powerful than ever before.

What about electric vehicles (EVs) then?

EVs of all shapes and sizes are breaking up traditional relationship in the energy industry.

Because they need electricity rather than oil, their motors can be powered by solar and wind, while there was no fuel substitute for petrol cars. Hydrogen may also have a role to play in powering our future mobility, in certain sub-sectors.

The rapid adoption of EVs is also following an exponential growth curve, growing not by a number of vehicles each year, but by a percentage amount.

Source: CleanTechnica

That chart records 58% annual growth in EV sales since 2013. It’s a truly remarkable feat, given the impressive range, power and functionality of modern vehicles.

The effort to get any new technology into the auto market successfully cannot be underestimated. With such established players, brands and technologies which performed so well for what people needed, to forcefully carve out a niche, shows that the technology EVs are offering must be truly preferable for the consumer.

The first 5% is harder than the next 50%, according to most specialists in the field of technology adoption, which explains the famed S-Curve in which a slow build-up is followed by an explosion of growth.

Source: Mckinsey

The oil and corona-crashes make the case for renewables more compelling in my eyes.

A few key arguments appeal to me.

Firstly, as the head of the International Energy Agency said, when rebuilding the world economy in a low interest rate environment, what better pursuit than building clean energy infrastructure? It ticks environmental boxes, helps the construction industry, brings new and valuable skills to people, and creates jobs and growth away from cities – ie, London.

Secondly, the ability of governments to resort to fiscal stimulus in the face of a crisis is a new and powerful precedent, and I would be in no way surprised to see similar powers directed at the climate crisis once the current health crisis has been dealt with.

Finally, resilience. The carnage caused by the oil industry with its cartels, unprofitable businesses and international imbalances is now clear for all to see. In the last 12 months we’ve seen tensions reach extreme highs in the Strait of Hormuz, the US contemplate war with Iran, and Russia and Saudi Arabia distorting global energy and financial markets. Also, cities are now without pollution for the first time in decades, if not centuries, and it’s rather nice!

This whole thing has highlighted that we don’t just need renewables from a global environmental perspective, we need them from a geopolitical, financial and physical perspective too.

With rapidly falling costs, unprecedented social and political support, a plethora of incredible new technologies, and EVs ready to fill the auto market vacuum left by coronavirus, here is one trend which will skip over the corona-hurdle, forging ahead on its unstoppable path.

On Monday, I’ll share with you a special interview that I recorded with one of the leading voices of the energy transition, Gregor Macdonald.

Author of the prescient book Oil Fall (2018), Gregor has been well ahead of this particular curve for well over a decade. I spoke to him about the oil crash, the pandemic, the end of oil and the impact on renewables, so keep an eye out for that hitting your inboxes on Monday.

Until then, have a truly wonderful weekend.

All the best,

Kit Winder
Investment Research Analyst, UK Uncensored

  1. vurtilopmer 2 years ago

    Nice read, I just passed this onto a friend who was doing some research on that. And he just bought me lunch since I found it for him smile So let me rephrase that: Thanks for lunch!

  2. land for sale 2 years ago

    Just what I was searching for, thanks for putting up.

  3. Need Help 2 years ago

    Pretty! This was a really wonderful post. Thank you for your provided information.

  4. student support 2 years ago

    I would like to show thanks to you for bailing me out of this type of setting. As a result of surfing throughout the the net and obtaining notions which were not pleasant, I thought my entire life was done. Living without the presence of strategies to the issues you have solved by way of the site is a serious case, as well as the kind which could have badly damaged my entire career if I had not noticed your web page. That knowledge and kindness in taking care of a lot of things was useful. I don’t know what I would’ve done if I had not encountered such a thing like this. I can also at this point relish my future. Thank you so much for this expert and result oriented help. I will not be reluctant to refer your site to anybody who desires care on this subject.

  5. Some really nice and useful information on this site, likewise I conceive the design has got wonderful features.

  6. Market Timing 2 years ago

    Would love to forever get updated outstanding blog! .

  7. I’ll immediately grab your rss feed as I can’t find your e-mail subscription link or newsletter service. Do you have any? Please let me know in order that I could subscribe. Thanks.

  8. smore traiolit 2 years ago

    I like what you guys are up too. Such smart work and reporting! Carry on the excellent works guys I have incorporated you guys to my blogroll. I think it’ll improve the value of my web site 🙂

  9. Debora 2 years ago

    A wonderful article that I have shared. How did I make my child love to read:

  10. groups 2 years ago

    Hello, i think that i saw you visited my website so i came to “return the favor”.I’m trying to find things to improve my site!I suppose its ok to use a few of your ideas!!

  11. HoVidos 2 years ago

    Hi mates, how is all, and what you wish for to say on the topic of this article, in my view its genuinely awesome for me.

  12. Everything is very open and very clear explanation of issues. was truly information. Your website is very useful. Thanks for sharing.

  13. Hi there, You’ve performed an incredible job. I will definitely digg it and individually recommend to my friends. I’m confident they’ll be benefited from this web site.

  14. paving block 2 years ago

    Someone essentially help to make seriously posts I would state. This is the very first time I frequented your website page and thus far? I surprised with the research you made to make this particular publish incredible. Fantastic job!

  15. this link 2 years ago

    Good day! Would you mind if I share your blog with my facebook group? There’s a lot of folks that I think would really enjoy your content. Please let me know. Thank you

  16. perdre du poids sport 2 years ago

    Pour perdre du poids rapidement, il s’agit évidemment de revoir dans un premier temps ses habitudes alimentaires.

  17. Instagram Views 2 years ago

    Glad to be one of several visitants on this awe inspiring web site : D.

  18. Tik Tok Fans 2 years ago

    After study a few of the blog posts on your website now, and I truly like your way of blogging. I bookmarked it to my bookmark website list and will be checking back soon. Pls check out my web site as well and let me know what you think.

  19. Escort in Toronto 2 years ago

    You could definitely see your expertise in the work you write. The sector hopes for more passionate writers such as you who aren’t afraid to say how they believe. At all times follow your heart.

  20. cheap dvds 2 years ago

    It’s in point of fact a great and helpful piece of information. I’m glad that you simply shared this helpful info with us. Please keep us up to date like this. Thanks for sharing.

  21. low quality backlinks 2 years ago

    I was looking at some of your blog posts on this site and I conceive this web site is really instructive! Retain posting.

  22. Healthy Recipes 2 years ago

    Some really interesting points you have written.Aided me a lot, just what I was looking for : D.

  23. Hi! Quick question that’s totally off topic. Do you know how to make your site mobile friendly? My weblog looks weird when browsing from my iphone 4. I’m trying to find a theme or plugin that might be able to fix this problem. If you have any recommendations, please share. Thanks!

  24. I beloved up to you’ll receive carried out proper here. The caricature is attractive, your authored subject matter stylish. however, you command get bought an nervousness over that you wish be handing over the following. unwell certainly come further earlier again since exactly the similar nearly very incessantly inside of case you shield this increase.

  25. clavon 2 years ago

    What’s Taking place i am new to this, I stumbled upon this I’ve found It positively helpful and it has aided me out loads. I am hoping to give a contribution & help other users like its helped me. Great job.

  26. read full report 2 years ago

    I conceive you have noted some very interesting details , appreciate it for the post.

Comments are closed.

You may like

In the news
Load More