As the U.S. and global oil industry continues to disintegrate under the weight increased debt and the Falling EROI – Energy Returned On Investment, analysts are still suggesting that solar and wind power are the solution to our energy problems. While there are many good reasons solar and wind can’t provide us with the necessary energy needs in the future, the most import one is that it takes the burning of a massive amount of coal, natural gas, and oil to manufacture renewable energy sources.
Thus, solar and wind power are nothing more than fossil fuel derivatives. However, if you are an individual that does not believe in the fossil fuel terminology, then we can substitute it by saying solar, and wind power are nothing more than coal-natgas-oil derivatives. Either way, you get the point.
Without the burning of one hell of a lot of coal, natural gas and oil, solar PV panels and wind turbines could not exist. Furthermore, it takes approximately 2,000 pounds of rare earth minerals to manufacture a 3-megawatt wind turbine. Not only do these rare earth minerals have to be extracted from the earth, processed and refined, then they have to be transported to the manufacturing plants that make up the parts for the wind turbine.
Because most of the rare earth minerals come from China, few people realize the tremendous amount of pollution that comes as a result of the mining and processing of these metals. You can search “China Rare Earth Mineral Pollution” and find all sorts of horror stories. While the U.S. utility companies can slap themselves on the back by showing how GREEN they are by putting up Wind Power, just remember, a lot of poor slobs around the world only get to enjoy the pollution…. out of sight, out of mind.
So, without the burning of a lot of coal, natural gas, and oil, along with a great deal of pollution, solar and wind would not be possible. Once we understand that simple principle, it should be easy to understand the ENERGY 1 +1 = 2. And that its, if oil production is in big trouble, so will be solar and wind. It’s really that simple.
The U.S. Still Installs One Heck Of A Lot More Natural Gas Power Plants Than Solar & Wind
If we forget for a moment that Solar and Wind are not really green energy sources and look at the data on proposed U.S. electric generating plants for 2018, the market still favors natural gas generation, TWO to ONE over solar and wind:
According to the EIA, U.S. Energy Information Agency’s Annual Electric Generator Report, new proposed electric generating plants for 2018 are two-thirds natural gas and one-third wind and solar. The U.S. plans to add 65,000 megawatts (MW) of natural gas utility generation, 21,000 MW of wind power and 11,000 MW of solar this year.
Here is a map showing the proposed placement of the various electric generating plants for 2018:
You will notice a lot more RED DOTS. That’s because they represent new natural gas generating plants, while new wind plants are GREEN and solar is in YELLOW. The reason for the addition of so many new natural gas generating plants is due to the incredibly cheap natgas price. While the market may believe that technology has made the production of Shale Gas inexpensive, let’s take a look at the free cash flow table from the third largest natural gas producer in the United States:
(Chart courtesy of GuruFocus.com, figures in $millions)
If we scan across the table (provided by Gurufocus.com) on the Free Cash Flow from Chesapeake Energy, you will notice a SEA OF RED. Yes, that’s correct, your eyes aren’t playing games on you. For the past 15 years, Chesapeake Energy hasn’t made a NICKEL drilling and producing shale gas. Now, remember, Chesapeake was the United States second largest natural gas producer right behind ExxonMobil, but with the recent merger of EGT and Rice energy (2017), it is now the third largest producer.
Regardless, the notion that technology has allowed the production of cheap shale gas doesn’t seem to show up on the financials in the third largest shale gas producer in the country. Okay, so you are wondering, what about EGT Energy? First, let’s look at the chart that shows the top 10 natural gas producers in the United States:
Alright, there’s the proof. EQT-Rice Energy now produces the most natural gas in the U.S., surpassing even the giant, ExxonMobil. Well, if Chesapeake can’t make money in the number three spot producing shale gas, then what about the largest company? Of course, economies of scale allows the bigger company to build more widgets and at a lower price, so EQT should be making money… RIGHT?
WRONG… LOL. Here is the same Free Cash Flow table for EQT Energy:
(Chart courtesy of GuruFocus.com, figures in $millions)
EQT’s Free Cash Flow is not quite the entire SEA OF RED as was Chesapeake Energy because in 2006 it made $215 million in positive free cash flow. However, it doesn’t look as if the merger helped bring on more profits for EQT as its free cash flow was a negative $1.1 billion in 2017. In the past four years, EQT Energy enjoyed $5 billion in negative free cash flow. For some reason, technology did not provide profits for the largest shale gas producer in the country.
By merging with Rice Energy, EQT’s debt ballooned to $7.3 billion last year up from $3.3 billion in 2016. With the total debt for Chesapeake and EQT Energy of $17.3 billion, the combined interest expense for these two companies in 2017 was $630 million (Chesapeake, $427 million / EQT, $203 million).
If we can separate ourselves from the nonsense and lousy information regurgitated about the wonders of shale oil and gas by the mainstream media, then common sense analysis suggests that we are in serious trouble.
U.S. Solar PV Installation Growth Is Slowing Down
The growth rate of U.S. Solar PV installations will slow down considerably in 2018 compared to the previous years. Solar PV installations in the U.S. was increasing by an average of nearly 30% per year from 2013 to 2015. Then it doubled from 7,500 MW in 2015 to 15,128 MW in 2016. However, Solar PV installations declined 30% in 2017:
The forecast for Solar PV growth in 2018 is only 3%. This is certainly bad news for the solar industry because the United States would need to grow its solar PV installations by at least 250,000 MW a year for several decades to make a dent in coal and natural gas electric generation.
Please do not count on wind and solar to solve our energy predicament. There is no PLAN B. The only real option is one of managed DE-GROWTH. However, there is no way this would work because there are too many individuals, parties and corporations only focused on making the almighty Dollar. Which means… we will continue to press the accelerator down to the floor right up until the wheels fall off and the car careens over the cliff.
For those few who still don’t understand that solar and wind are not viable future energy solutions, please look at the final chart in this report:
I apologize for not updating the chart for 2017, but the data didn’t change all that much. You will notice the RED and ORANGE smudges on the right-hand side of the graph represent the percentage of solar and geothermal energy consumption by the United States in 2016. With coal, natural gas, oil, nuclear and biomass energy sources accounting for 95% of U.S. energy consumption, don’t count on wind and solar scaling up anytime soon to make a difference.
And, as U.S. shale oil production heads into the crapper, along with huge market downturn, don’t expect solar or wind power installations to increase in the future. Once U.S. and global oil production head south for good, so will the production of solar and wind power installations.
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