We’ve gone electric, and there’s no going back at this point. Lithium is our new fuel, but like fossil fuels, the reserves we’re currently tapping into are finite—and that’s what investors can take to the bank.
You may think lithium got too popular too fast. You may suspect electric vehicles are too much buzz and not enough real future. You may, in short, be a lithium skeptic, one of many. And yet, despite this skepticism, lithium demand is rising steadily and sharply, and indications that a shortage may be looming are very real.
It won’t be a shortage in terms of ‘peak lithium’; rather, it will be a game of catch-up with the electric car boom, with miners hustling to explore and tap into new reserves.
Consider the number of battery gigafactories that are being built around the world. We have all heard about Tesla’s (NYSE: TSLA) Nevada facility that will at full capacity produce enough batteries to power 500,000 electric cars per year by 2020.
This, as the carmaker proudly notes, is more than the global total lithium ion battery production for 2013. That’s a pretty impressive rate of demand growth over just three years—but this growth also represents the culmination of a sea change in the way we think.
Lithium is powering pretty much everything upon which our present depends on and our future is being built. It’s a viable alternative to petrol and in consumer electronics market segment alone, there is no sign of contraction—only expansion. Think the Internet of things, or smart houses, or smart cities, eventually. All these fascinating ideas are powered in some way by lithium.
But the real and present coup has been launched by electric vehicles. Forecasts from market research firms seem to be unanimous: EVs are on the rise, EVs are hot, and EVs will be increasingly in demand as people all over the world are eagerly encouraged to cut their carbon footprint. According to Lux Research, the EV market will grow to $ 10 billion within the next four years. Navigant Research forecasts EV sales will rise from 2.6 million last year to more than 6 million in 2024. So, whether we like it or not, EVs are coming—and in force.
Indeed, says Nevada Energy Metals (TSX-V:BFF) executive Malcolm Bell, “It may be time to start worrying about a shortage, but it’s not a question of whether we have enough lithium—it’s a question of tapping into new reserves. Those who don’t see the supply wall looming, will hit with a resounding thud. Those who start tapping into new reserves will be extremely well-positioned for the future.”
From where everyone is standing right now, it may seem that the world’s got a fair amount of lithium. According to global estimates by the U.S. Geological Survey, there is enough lithium in the world – 13.5 million metric tons of it – to last us over 350 years in batteries. Related: Iraq Needs Oil Companies to Drill More, But Can it Pay?
What’s missing from this prediction, however, is … the future, and indeed, the present. This calculation takes into account only the current rate of lithium ion battery usage. It does not account for the entrance of EVs into the mainstream. It does not account for Tesla, not to mention the growing ranks of Tesla rivals. And it most certainly doesn’t account for what is by all means a pending energy revolution that sees lithium as its leader.
Already, the present is clear: Demand is growing fast, faster than production, and for now this new demand is coming increasingly from the electric vehicle industry.
Tesla’s is by no means the only battery gigafactory out there. There are others being built around the world (at least 12, according to Benchmark Mineral Intelligence) and these gigafactories will raise the global demand for lithium batteries to some 122 GWh by 2020. That’s up from 35 GWh currently. It’s a phenomenal rise over a very short period of time.
In the U.S., there is already one gigafactory—Tesla’s, in Nevada—operating. A second gigafactory is in the works, courtesy of LG Chem. Brine-based lithium production in the country is concentrated in one place only, at least for now, and this place is Nevada. That’s because it is the only confirmed place with lithium deposits. The biggest actively mined area is the Clayton Valley, with presence from both mining majors like Albermarle (NYSE: ALB) and smaller, pure-play lithium miners such as Nevada Energy Metals. This makes Clayton Valley ground zero for the U.S. lithium rush and everyone wants to be there, but it’s the pure play miners who are set to explode onto this scene from an investors’ perspective.
Clayton Valley can hardly contain the lithium rush, and it is already time to look in the surrounding areas to secure future supply for soaring demand predictions. Those with enough foresight are diversifying their Nevada holdings and banking on geological clues that suggest there’s plenty more lithium in Tesla’s backyard, and whoever gets to it first will be far ahead of the game.
“When everyone starts paying attention to Nevada’s geology, we’ll see a land rush that makes the current one pale by comparison,” says Bell, who heads of acquisitions for Nevada Energy Metals, one of the pure play movers in this playing field that sees the wider lithium potential in Nevada.
“Nevada’s geothermal footprints are large and extend well beyond the Clayton Valley. If you put a mirror up to Clayton Valley, there is endless opportunity here. The real race here is to create the next U.S. lithium powerhouse,” says Bell.
How to Play Lithium
Look everywhere, and then look again. Securing an investment in Clayton Valley is a good place to start—but it’s also potentially only a flash in the pan. The best way to secure a foothold in lithium right now is to think outside the box and look for those companies who see the bigger picture but are also smart enough to keep one foot in the proven lithium hunting grounds. Related: Is Doomsday Inevitable For Venezuela?
But you also have to understand the supply and demand picture here.
Macquarie Research estimates that in 2015 demand for lithium already exceeded supply, while this year, lithium output will again fall short of demand.
In 2017, thanks to so much new production capacity the metal’s fundamentals will near an equilibrium, which will last for about a year before deficit rears its head once again—but this time the deficit will stick. Despite new efforts to ramp up supply, it will take a while before supply corresponds to the demand.
The future is pretty clear: We’re looking at a period of shortage, and shortage is where the savvy investors make real money. The lithium feeding frenzy has only just begun. Consumer electronics keeps it safe and steady, as always; the electric vehicle boom skews the demand picture dramatically, and the future’s energy storage and powerwall evolutions take it over the edge.
The reserves are there, and there’s geologists estimate there’s plenty of unproven reserves out there as well—it’s just a matter of who finds them first, and who starts extracting first.
Lithium has the purest of fundamentals of any ‘commodity’ out there, and the next oil barons look set to actually be lithium barons. In fact, in this respect, electric vehicles will likely be the cause of the next oil crisis. Demand and supply are simple and shockingly visible, and that means there’s a lot of new money floating around for lithium exploration. If you’re not a believer, the immediate future will sweep you off of your feet.
The post, Could A Lithium Shortage De-Rail The Electric Car Boom?, was first published on OilPrice.com.
Let’s block ads! (Why?)
Deepwater Wind has completed attaching blades to the last of five massive, 6 MWe peak capacity wind turbines that make up the 30 MWe Block Island Wind Farm. That is one of the final steps in the process of installing and commissioning the facility.
By the end of 2016, the developer expects that the project will enter commercial operation and begin providing the first electricity from offshore wind turbines to the US electricity grid. It is a development with far reaching implications and several lessons available to be learned.
Consistently Powerful Political Support Is A Key Component
This modest-sized installation has been in the works since 2008. In April of that year, Rhode Island issued a request for proposals. Eight organizations submitted bids. In September, a five person panel appointed by the Gov. Donald Carcieri Administration selected Deepwater Wind LLC, a then-new entity from New Jersey without prior wind installation experience, to be the project developer.
Initially, the public utility commission (PUC) rejected the project’s negotiated power purchase agreement (PPA) on the basis of excessive cost. In 2009, the state legislature passed a law supported by the Carcieri Administration tasking the PUC to prioritize project benefits like creating a new industry with local employees and producing clean power that are not strictly economic.
The final PPA starts with an electricity price of $ 244 per MWh. During the next 20 years, National Grid will purchase the full output of the facility at a price that increases by 3.5% every year. In year 20 of the agreement, the price paid for Block Island Wind Farm power will be $ 479/MWh.
In September 2010, Deepwater Wind hired Jeff Grybowski, Donald Carcieri’s former Chief of Staff as its chief administrative officer and senior Vice President for strategy and external affairs. Mr. Grybowski has since been promoted to to company CEO while developing a strong reputation in the offshore wind industry as a policy guru.
Here is a quote from promotional material published by his alma mater, Brown University, in advance of his giving an invited talk there in the fall of 2015.
Deepwater Wind is now installing the first offshore wind farm in the United States off the coast of Rhode Island, the Block Island Wind Farm. Moving this pioneering project forward has required overcoming unique and complex financial, environmental permitting, contractual, regulatory, and construction hurdles. Jeff Grybowski, Deepwater Wind’s CEO, will discuss this success and what it means for the development of clean energy in the United States.
Grybowski has been at the forefront of shaping the federal and state policies supporting offshore wind in the US, including playing key roles in the development of federal rules governing the leasing and permitting of offshore wind projects, federal tax policies supporting renewables, and policies at the state level throughout the northeast for offshore wind, transmission, and renewables.
The project has overcome a number of challenges and schedule modifications; in an October 2012 issue of North American Windpower it was described as a $ 205 million project with an expected completion date before December 31, 2012.
It will only miss the initial date by slightly less than four years. That’s not too bad for a first-of-a-kind project developed during trying times in the energy market.
The current tally for the complete project is $ 451 million, which includes $ 225 million for equipment, construction and installation, $ 118 million for design, legal and permitting, and $ 108 million for the undersea cable needed to connect the facility to the established mainland grid.
Though the project will qualify for the 30% of project cost investment tax credit (ITC) in lieu of the production tax credit (PTC), the developer has not yet made it clear how much of those costs will qualify for the credit.
The undersea cable is an integral part of the project’s operation and economics; though Block Island residents are the customers most often mentioned, the Island’s peak power demand during the height of tourist season is only 5 MWe.
Instead of supplying that small amount of power directly to Block Island, Deepwater Wind’s agreement is with National Grid. That large utility will mix its production with other wholesale power supplies and pass the PPA costs to all of the customers that it serves. Individual homeowners served by the utility will thus pay about $ 1.35 per month for the small amount of expensive power.
Avoiding NIMBYism With Substantial Local Benefits
One way that the project developers proactively dispelled local objections to the wind facility was to carefully design and package the system so that it provided substantial benefits for island occupants and visitors. It then worked diligently to ensure that people understood how the project would directly improve their lives.
Because the wind farm is only 3 miles off of the southeast coast of Block Island, the island is a good location for the required electrical substation to combine the output of the five turbines and send it to shore. After decades of discussion and dreaming, the island could be connected to the grid and no longer need to generate its electricity by burning high cost, high pollution diesel fuel in locally operated and maintained generators.
Electricity for both commercial and retail customers on the island has cost as much as $ 600 per MWh (60 cents per kWh) in recent years, with a fuel adjustment surcharge accounting for up to 75% of the total cost.
The new undersea cable allows Block Island Power Company to become a distribution-only utility. It will purchase its power from the New England grid at a much more affordable price than is possible when burning diesel fuel. The undersea cable is robust and fault tolerant; the backup power concept in the remote case of failure will become portable generators transported to the island by barge.
Another pleasant benefit for island residents and visitors will be vastly improved communications capability via the six strand fiber optic cable that was included in the package.
I spoke with Whitney Kneisley of the Storm Trysail Club, which hosts the annual Block Island Race Week. Ms. Kneisley told me that the club’s members — like most sailors — are strong supporters of clean energy projects. They are excited about the Block Island Wind Farm, especially since the five turbine installation does not interfere with the normal routes taken during the round the island race that they sponsor.
State Of The Art Turbines
The project’s wind turbines will be Haliade 150’s, a new design from GE’s recently acquired Alstom division. The nacelles are mounted on towers that are 100 m tall above the water; the height from water surface to the highest swept point is 180 m.
Deepwater Wind announced the contract signing for this cutting edge design in February 2014. The first unit of the new design had completed initial installation in November 2013; the design completed its final type certification in January 2015. (Details from 4Coffshore.com)
Clean Energy Jobs
Some parts of the towers were fabricated by 14 newly hired employees at Specialty Diving Services in a large hanger type building at the Quonset (Rhode Island) Business Park; the turbines and blades were manufactured by Alstom in France; the 20 mile long undersea cable was fabricated in South Korea; and the steel jacket foundations anchoring the towers to the seabed were manufactured in Louisiana by Gulf Island Fabrications, a company with experience building foundations for offshore oil and gas drilling rigs.
Approximately 330 temporary construction and electrical workers were involved in the actual tower, turbine and cable installation.
Once the wind farm is in operation, Deepwater Wind hopes to move on to additional projects, including one that is aiming to serve Long Island, another island with high electricity rates and a power supply system dependent on burning oil.
Note: A version of the above first appeared on Forbes.com under the headline of Is Offshore Wind Finally Ready To Serve U.S. Power Needs?`
The post First offshore wind farm in US completed. Details of FOAK costs & schedule appeared first on Atomic Insights.
Let’s block ads! (Why?)
The Clean Power Plan oral argument is coming up soon. On September 27, attorneys will present their arguments in front of the full U.S. Court of Appeals for the D.C. Circuit.
EPA and the many supporters of the Clean Power Plan have already filed their written arguments – and so has the coalition of coal companies and their allies that are challenging the rule. (You can read all their submissions here.) And just yesterday, the D.C. Circuit released the final order on the argument’s format and duration.
The Clean Power Plan is America’s first-ever nationwide program to reduce carbon pollution from power plants. It sets eminently achievable carbon emission targets that phase in gradually, in line with current power sector trends, while giving states and power companies tremendous flexibility to determine how best to meet these goals.
As we approach September 27, here are five key facts to keep in mind:
- The Clean Power Plan has supporters across the country.
Power companies and state and local officials in forty-one states are supporting the Clean Power Plan in court – either through their state attorney general, a local power company, or a municipality. And there are a lot more supporters as well.
The final submitted briefs reflect a wide array of important perspectives in our society. Supporters of the Clean Power Plan in court include:
- Leading businesses. Power companies that produce about 10 percent of our nation’s electricity as well as prominent, iconic businesses including Adobe, Amazon, Apple, Google, IKEA, Mars, and Microsoft
- States and municipalities. 18 states and 60 cities, including major cities in states that are litigating against these protections – like Houston, Grand Rapids, and Miami
- Consumers Union and other organizations addressing the economic benefits for consumers and low income ratepayers from expansive, low cost clean energy solutions
- 41 faith communities including the National Council of Churches and the Catholic Climate Covenant
- Numerous renewable energy companies that are members of the Advanced Energy Economy, American Wind Energy Association, and Solar Energy Industries Association, which together represent more than 3,000 companies in the advanced energy sector, a $ 200 billion industry in the United States
- 25 business associations including American Sustainable Business Council, U.S. Black Chambers, Inc., as well as state associations from West Virginia, Kentucky and Ohio, among others
- Current and former members of Congress, including 36 sitting Senators and 157 sitting members of the House
- Leading public health associations such as the American Medical Association and the American Academy of Pediatrics
- National security experts including former Secretary of State Madeleine Albright and former Secretary of Defense Leon Panetta
- The legal and technical foundation of the Clean Power Plan is rock solid.
The Supreme Court has affirmed EPA’s authority to regulate greenhouse gases under the Clean Air Act three times since 2007. In American Electric Power v. Connecticut (2011), the Supreme Court specifically held that section 111(d) of the Clean Air Act – the provision that underlies the Clean Power Plan – “speaks directly” to the regulation of carbon pollution from existing power plants.
EPA exhaustively analyzed the Clean Power Plan to ensure that it was based on the best available technical information and would not compromise the affordability or reliability of our electricity supply. EPA also reviewed millions of comments, received on every aspect of the proposed version.
A range of renowned experts have affirmed the robust legal and technical bases for the Clean Power Plan in amicus brief submissions to the D.C. Circuit, including:
- The Institute for Policy Integrity — represented by New York University Law Dean Emeritus Richard Revesz
- Former EPA Administrators William Ruckelshaus and William Reilly, who served under Presidents Nixon, Reagan and George H.W. Bush — represented by Harvard Law School’s Jody Freeman and Richard Lazarus
- Leon Billings and Tom Jorling — the principal drafters of the 1970 Clean Air Act
- Former state energy and environmental officials — including Larry Soward, Commissioner at the Texas Commission of Environmental Quality under Texas Governor Rick Perry
- Premier electric grid experts, who affirmed that EPA’s approach is fully in line with on-going power sector trends
- Top climate scientists, who articulated the latest research on observed and projected impacts from our changing climate
- The tremendous pace of clean energy development further reinforces the Clean Power Plan’s reasonableness.
The cost of renewable energy is falling at an extraordinary rate, spurring dramatic expansion in its use. The costof new wind power has dropped 60 percent — and the cost of new solar by 80 percent — since just 2009.
Renewable energy is anticipated to make up approximately 63 percent of new capacity additions in 2016. In fact, the amount of new renewable energy capacity developed in the first three months of 2016 exceeded new natural gas by a factor of more than seventy to one. Almost 100 gigawatts of additional new renewable energy resources are now projected in the United States by 2020, and annual investment in energy efficiency has quadrupled in the last decade.
America’s powerful clean energy trends further buttress the feasibility of the Clean Power Plan’s targets. But you don’t have to take our word for it — because power companies have said so themselves.
In their Clean Power Plan filing, major power producers emphasized their strong support for the Clean Power Plan, highlighting that it “harnesses existing trends within the electricity sector” and was set “with ample margin and attention to what is practically attainable.”
As the companies noted, both they and the power sector in general have “have successfully reduced emissions within their generation portfolios without compromising reliability and will continue to do so” under the Clean Power Plan.
Dominion Resources, an owner of several large coal-fired power plants in the Mid-Atlantic, affirmed the feasibility of compliance in a lengthy amicus brief submitted in support of the Clean Power Plan.
- States and power companies are charging ahead.
On February 9, 2016, the Supreme Court stayed enforcement of the Clean Power Plan in an unprecedented order. Nonetheless, states and power companies are voluntarily moving ahead, in recognition of the tremendous value in following the Clean Power Plan’s flexible, sensible approach to achieving emissions reductions.
More than half of states are continuing to assess planning options under the Clean Power Plan. 14 states across the country have explicitly requested that EPA continue providing information and guidance to help them make informed decisions about potential Clean Power Plan obligations as they continue moving forward. Californiadeveloped its proposed Clean Power Plan state plan in a year and released it for public comment earlier this month. State officials across the country have voiced support for sensible continued planning — as one Wyoming state legislator put it, “Wyoming should be prepared.” (See a full compilation of state statements on the Clean Power Plan here.)
Power companies across the country have expressed similar sentiments. A representative from Mid-American Energy highlighted that they “wish” the stay hadn’t happened, because of the resulting uncertainty. American Electric Power, a major producer of coal-fired electricity, said that the Supreme Court stay “doesn’t change our focus on the diversification of our generation fleet,” and those diversification plans include more gas and renewables. Power companies are already investing in clean energy in response to the market and their customers — for these companies, any delay in planning creates needless risk and uncertainty.
- This record-breaking summer highlights just how urgently we need sensible climate protections.
It’s challenging to encapsulate all the extreme weather we’ve witnessed in 2016. Just in the U.S., we’ve experienced a series of dangerous heat waves, deadly floods, and extreme storms. This week’s flooding in Louisiana is just the latest heart-rending example — with lives tragically lost and upended across the state. Yesterday, NASA announced that July 2016 was the warmest month ever in 136 years of modern record-keeping. According to the World Meteorological Organization, 2016 is firmly on track to be the warmest year yet. The Weather Channel noted all of these wild weather events from the first six months of 2016 together here, in a website on 2016’s “Weirdest Weather.” All these events are fully in line with the hotter, more extreme weather that’s predicted under a changing climate.
Meanwhile, new research only underscores the human health costs of climate change. Mitigating the human health impacts of climate change will add to the Clean Power Plan’s substantial health benefits from reducing soot and smog pollutants. EPA estimates that once the Clean Power Plan is fully implemented, these reductions will — every year — avoid 3,600 premature deaths, 1,700 heart attacks, 90,000 asthma attacks, and 300,000 missed workdays and schooldays.
These climate risks and essential health benefits highlight the importance of having a mandatory framework to ensure emissions reductions. Clean energy trends are already charging ahead, but investors need the certainty that the Clean Power Plan provides — and all Americans’ health and well-being are depending on it.
By Martha Roberts, Attorney, U.S. Climate Legal and Regulatory Program
This post originally appeared on EDF blog, Climate 411.
Let’s block ads! (Why?)