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Comment by ezzaf | Hacker News Reader

It's currently very difficult to move equipment and expertise from where it is to where you need it for the project. So far the biggest problem for us has been getting panels and inverters from China to site, but it's now shifting to being more of an issue around continuing operations here as the virus escalates. It's highly likely this will delay solar and wind projects in the construction and planning phases.

The other interesting angle is what will happen to electricity emissions as demand drops, it should increase the market share of renewables as the highest cost generators drop out first.

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I don't disagree logistical challenges will present themselves, although if China can't move those products out of country, they will likely deploy locally to keep their economy running. I think we'll all agree, a metric ton of CO2 emissions avoided is a metric ton avoided.

Also, my hope is that low oil prices drive US frackers out of business (US shale needs ~$40-90/barrel to break even, current WTI price as of this comment is a bit below $30/barrel); this will cause the price of natural gas to spike, causing utility scale battery storage combined with renewables to become immediately cost effective against quite a bit of current natural gas fired generation. Battery storage is already replacing the most expensive "once through" peaking plants (these are essentially jet engines bolted to the ground), and as the economics become more marginal for more efficient combined cycle gas turbine (CCGT), battery uptake will increase. That firm capacity is permanently clean moving forward.

These are "one way ratchets" we need to find every opportunity to pull. I will concede that low oil prices do not help with efforts to electrify transportation; the fight continues for a carbon tax and outlawing combustion whenever possible.

https://en.wikipedia.org/wiki/Phase-out_of_fossil_fuel_vehic... (Jurisdictions with planned fossil-fuel vehicle bans)

https://www.lazard.com/perspective/lcoe2019 (Levelized Cost of Energy and Levelized Cost of Storage 2019)

https://spectrum.ieee.org/energywise/energy/renewables/what-... (How Inexpensive Must Energy Storage Be for Utilities to Switch to 100 Percent Renewables?)

https://www.theguardian.com/environment/2020/mar/12/wind-and... (Wind and solar plants will soon be cheaper than coal in all big markets around world, analysis finds)

https://pvbuzz.com/renewables-capacity-overwhelms-coal-gas-o... (United States: Over the next three years, renewables will add nearly 50,000-MW of new capacity and be more than a quarter of total, while gas, coal, oil, and nuclear will drop by 4,200-MW)

>this will cause the price of natural gas to spike

If you drive US frackers out of business, you'll also spike oil prices. Fracking has added so much supply to the world that it's turned the US into an oil exporter on occasion[0]. Removing that much supply from the markets would cause it to tighten, and by doing so would make fracking viable again.

[0] https://www.cnn.com/2019/03/08/business/us-oil-exports-saudi...

The lag time is all that's needed (spike, price plateau, drop in price). Utilities need stable prices due to rate setting policy between them and the PUC (although some jurisdictions are more friendly to floating fuel prices passed through to consumers than others), so you take advantage of the price volatility while the domestic O&G market is in turmoil, and producers and well developers are going bankrupt or otherwise having their operations disrupted by the macro environment. Doesn't matter if the price of nat gas declines again if you've already built the batteries and renewables.

> my hope is that low oil prices drive US frackers out of business

I dont understand this if the $30 price is driven by the saudis and russians. There was immediate talk of furloughs/layoffs and striking rigs. The rigs (and crews) can go up and down in a matter of weeks. The wells and equipment will persist and be mothballed, or acquired in a fire sale. Why wouldnt production start up as soon as the price goes back to $60?

I think all we're arguing is the latency between teardown and starting back up. Variables are going to be how long the Sauds and Russian can engage in a price war, how long until insolvency for producers and developers, and what it looks like when they arrive at insolvency, go through bankruptcy, what happens to the equipment, etc.

I argue this is going to go on for more than a few weeks. Saudi Arabia and Russia can hold out longer than most over leveraged US fracking orgs, especially with the US credit markets in turmoil. No one is going to be racing to extend further credit to frackers already in financial distress. Production won't start back up immediately because it'll take time to start back up.

Ok, Id buy that hypothesis. $30 persist for many months, over exposed outfits fold, better capitalized outfits (majors & secondary?) acquire assets, price recovers, it takes months to recover instead of weeks due to organizational/legal/logistic lag. The volatility is whats extending the time scale. But on a medium time horizon we still have lots of US production at $60 a barrel.

I agree with what both of you are saying, and if someone is willing to extend credit at ~$60 to the frackers again, it will happen. The question is who… banks aren't doing so well right now (else why the need for JPM at the discount window, more pomo, more frbny broker-dealer repo, and equity on major us banks testing 5 year lows, whos ficc revenue growth at ZLB will be pretty much non existent or even contracting more than it already has).

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