Daily Energy Standup Episode #291 – Evolving Energy Landscape: Renewables Bubble Burst, California Solar Woes, and the Chilling Impact on Net Zero Goals

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2023 – The Year The Renewables Bubble Burst

January 20, 2024 Stu Turley

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

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Michael Tanner: [00:00:15] What’s going on, everybody? Welcome in to the Monday, January 22nd, 2024 edition of the Daily Energy News Beat standup. Here are today’s top headlines. First up 2023, the year the renewables bubble burst. Next up, California industry faces cash crunch amid policy change. Next up on the menu energy bills must rise to pay for net zero, according to Siemens Energy Board. Oh, yeah. Next up. This one’s frigid. Or cold. I mean, scores dead as frigid conditions ravage the United States. This is a CBS article. Um, then I will take over and cover a little bit of the oil and gas finance, quickly talking about what happened to oil prices on Friday, and then quickly cover rig counts and a look ahead to the coming week. But before we do that, guys, as always, thank you for joining us here on this gorgeous Monday. I’m Michael Tanner. This is Stuart Turley I’m going to go ahead and let you kick it off Stu. [00:01:12][56.9]

Stuart Turley: [00:01:12] All right. Hey let’s start off with our first article here dude. Uh, 2023, the year the renewables bubble burst. Michael. It’s been I’ve never seen this much animosity towards renewable. Uh, coming up, I mean, in a renewables are not available. But let’s go ahead and take a look at this article is pretty crazy. Why did energy clean energy take the biggest hit? Uh, wind and solar are more exposed to cost of capital in interest rates. Oh, well. [00:01:45][32.5]

Michael Tanner: [00:01:45] First off, why is that? Is you got to take out debt to use it. [00:01:48][3.3]

Stuart Turley: [00:01:49] Oh yeah. Oops. And cash flow. Oops. And here’s the other thing. Are characterized upfront by capital expenditure with low operating costs. Hogwash. This one I disagree with. Solar PV costs jumped at 23% from 2022 to 2023. Wow. There was also a slowdown in the secondary market, a 71% drop in transactions between investors and developers. Part of this was due to the horrific backlog, uh, regulatory problem. [00:02:27][38.0]

Michael Tanner: [00:02:28] What’s interesting is I think let’s let’s stick on this secondary market. Why is this important? Why is the secondary market important? Well, because the secondary market is where people like I mean, not me and you, Stu, but businesses who aren’t necessarily in the development space and now have an opportunity to invest. Basically, let’s say, Stu, you and I have a company meaning me, and you sell shares directly to one of our friends, family or fools. Okay? They give us some money. [00:02:59][30.9]

Stuart Turley: [00:02:59] If they say. [00:03:00][0.8]

Michael Tanner: [00:03:01] They are fools. Okay, then they have a stock certificate, quote unquote, a secondary transaction. Is them taking the fools, taking that that stock bought or, you know, stock certificate and selling it to somebody else. That’s called the secondary market, which is what is that? That’s the free market valuing that stock certificate. Think about me. And you convinced somebody to give us 100 grand. We give them 10,000 shares. That’s us really selling them. It’s why we joke the friends, family and fools around when you raise money. Um, who? Who invests in small businesses, friends, family, fools. But the secondary market is much more indicative of what I would call the free market optimization of finding an optimal price for something, aka pricing securities correctly. Primary markets. There can be arbitrage opportunity. So when you see secondary markets collapse, what does that mean. There’s no market for anything. The original primary transaction was so overpriced that now there’s not even a secondary market for people like, you know, for example, who uh, uh, the Carolina Panthers, uh, owner David Tepper. Where did he make all his money? Junk bonds. What are junk bonds? Secondary market transactions, buying up debt of certain companies that was issued to others, that was issued by banks and are now being traded on the open market. Those guys see arbitrage opportunities to come in and purchase. There’s none of that going on here. I, I don’t mean to harp on it, but I thought this was the most interesting part. Uh, and analysis in this article. [00:04:35][93.3]

Stuart Turley: [00:04:35] I love what you’re saying because I missed right over that. I mean, I just went right over both of my ears. Uh. Great job. Uh, did you just get another score on the game? [00:04:45][9.4]

Michael Tanner: [00:04:45] No, I was just signifying that every. [00:04:47][1.7]

Stuart Turley: [00:04:47] Oh, yeah. [00:04:48][0.3]

Michael Tanner: [00:04:48] Right over your head. [00:04:48][0.6]

Stuart Turley: [00:04:49] Uh, you can’t even see it. Okay, let’s go to the next part. [00:04:52][3.0]

Michael Tanner: [00:04:52] Oh, no. I think it’s important because they also talk about what’s on the horizon for 2024. In this article. [00:04:57][4.7]

Stuart Turley: [00:04:57] That was where I was going. And when you talk about this, uh, through although the investment sediment has changed in fossil fuels in the meantime have become somewhat fashionable again as energy security has been reprioritize the energy transition and in. Investment in the clean energy has not slowed down. I disagree, it’s about to take a hammer in the back of the head. U.S. 1.7 trillion was invested into clean energy in 2023, 65% more than into fossil fuels. Uh, Wood Mackenzie expects 710GW, uh, of new wind and solar capacity to be built across Europe by 2020 2030. I disagree with that totally. I think that as we come back around the end of this, people are done and they have got to get some more affordable, uh, energy. Here’s my prediction, Michael. Um, hydrogen and energy storage. I believe that hydrogen is going to be the next big carbon capture, and hydrogen is going to push, uh, solar and wind up on the side. Solar and wind are now being documented. Everybody is running away from it. Everybody’s going to be running to hydrogen, even though I don’t think it’s ready for prime time yet. The carbon capture and carbon taxes is where wealth distribution is going to be big in 2024. [00:06:26][88.6]

Michael Tanner: [00:06:27] Yeah. No, absolutely. I mean it’s cleared the renewables. Uh, and but I think what I like about this article is it shows specifically why the renewables bubble burst. What happened in 2023? The fed stopped 0% interest rates. The era of no more. Much like the er the. [00:06:48][21.1]

Stuart Turley: [00:06:48] Those zero with no $0 for you. [00:06:51][2.6]

Michael Tanner: [00:06:52] But it’s true. I mean, I can tell you firsthand examples of people who I know in the real estate business who had a strategy that was based upon 0% interest rates. Well, when you can’t go out and refinance your property, whether you’re a real estate investor or whether you’re a huge capital developer, well guess what? You’re you’re in big trouble. It’s it’s an interesting reason. One of the reasons why the shale boom and bust was so different was because, sure, there was a a decent amount of debt that was lost because there was a bunch of debt raised money, uh, drilled into these unproductive wells. But there’s a lot of equity. There was a lot more equity destroyed in the oil and gas business. We’re in the renewables business. It’s all debt. There’s no real equity being put into this because it’s so easy to get financing for renewable energies. Every bank wants to go out and finance an offshore wind farm or right now, offshore wind is probably holding up the best comparative to on onshore solar and onshore wind. Those two have taken a huge hit in terms of, um, right at equity or excuse me, debt implosion. So it really the story for renewables that is that it’s not the technology necessarily that’s failing. It is. But really what’s happening is the financing behind it has collapsed because it’s not profitable. [00:08:07][75.2]

Stuart Turley: [00:08:08] Right. And plus there’s about 19 other things on there. But hey let’s roll to the next one. Uh, California solar industry faces cash crunch amid policy change. Listen to this, Michael. 63% of solar installer members in California are facing cash flow issues following a new policy that reduced homeowner incentives. Holy smokes. Part of this is because of the new incentives, but also because the grid and how it’s being paid, the, uh, balancing and who’s pay and what. Rooftop solar system sales have plummeted by 85% compared to the previous year. Uh, the downturn in the green energy sector is expected to persist well beyond into 2024. Um, the new policy. Reduce the incentives. Let’s come down here. We’re worried a lot about the next two months. We think a lot more fallout may be coming. Yes. Thank you. [00:09:11][63.1]

Michael Tanner: [00:09:11] 63% of of 400 solar installers have cash flow issues. Yeah, that’s not good. That’s an underlying market problem. And they point out again consumer demand. [00:09:22][11.2]

Stuart Turley: [00:09:23] And it’s because the consumers and how they’re going to be refunded or saving money. It’s a whole nother big issue coming around the corner. [00:09:33][9.5]

Michael Tanner: [00:09:33] Hey Miss Producer, can you quickly throw up this this chart the iShares Global Clean Energy ETF. Look I look at this stew you’re talking at the beginning of 2020 after we we we see the Covid drop, right. You see that early Covid drop as you roll in from 2019 to 2020. Then all of a sudden throughout 2020, you saw I mean really it quadrupled in in value over a really a year period y 0% interest rates, huge amount of government spending. Everybody was all about trying to spend, you know, we got to pump money to the pump money. The economy since 2021, the ETF has now fallen back to it’s a. Original, almost pre-COVID levels. Wow, does that tell you? It means if things aren’t working properly, the markets are not operating efficiently. It’s the clearest sign of this stuff. You you know, we have all this antidote, all evidence. You know, Stu and I talk about wind farms don’t work. He drives by a solar farms. They’re not working. That’s all anecdotal. What these last two articles are showing us is market data. The free market is telling us this isn’t working. [00:10:40][66.9]

Stuart Turley: [00:10:40] Oops. Runaway, runaway. Okay, this one is a little bit different. Michael, when you take a look at the tidal energy, bills must rise to pay for net zero, says Siemens Energy Board. And I’m like, like they haven’t risen enough. You can guess who added that one. But here, let’s go through this. Siemens lost billions on offshore wind. They have. But he is saying something different here. Joe Kaeser, chairman of the Siemens Energy, suggested higher energy bills were inevitable as turbine makers grapple with huge losses, forcing them to pass their costs on the consumer. Um, I believe that for a while customers need to accept higher pricing, and then there might be innovation about the weight of the blades and other efficiency methods. But the point is, if there’s no profit pool in an industry, why should that industry innovate? [00:11:41][60.9]

Michael Tanner: [00:11:42] Oh, again, the market at work, who’s gonna innovate if there’s no profits? [00:11:47][4.7]

Stuart Turley: [00:11:48] There is. And and so the the world part of this, Michael, is the world is busted. Broke. We are broke. We have been printing money and until it’s now no longer capable, the ink is now gone. So listen to this. Inflation has also led to the cancellation of many offshore wind projects. 15 gigawatt worth of projects were canceled or postponed last year. Uh which provided and electricity more than 12 million home wow is. [00:12:23][35.4]

Michael Tanner: [00:12:24] Yeah. I mean for needing customers to accept higher pricing. That’s a tough ask and that it can be ask. It’s not that you can’t ask and raise your prices that, you know, industries have done that before. The problem is, when it comes to something as basic as energy, people start asking the question, well, wait a second here. Why is why is my next door neighbor paying less? Well, he’s using natural gas. [00:12:50][25.6]

Stuart Turley: [00:12:50] Here’s this one’s critical. I think the net zero targets are realistic, but they come at a cost. Mr. Kaiser says you need to stick by the facts at some point, even though facts sometimes may not be lying. He also added there is a governed by a Trag, uh, triangle of reliability, affordability and sustainability. But sustainable and affordability may conflict well. You cannot call on wind and solar sustainable without printing money. In this energy thread we’re talking about displays it all. [00:13:30][39.5]

Michael Tanner: [00:13:31] Absolutely. You have to remember, guys, Mr.. Uh, the chairman Kaiser or Mr. Kaeser, he’s a Siemens lifer, joined the company in 1980, was also the CEO from 2013 to 2021. He’s got his hand in all of he’s got his hand in this. So what’s funny is now that he’s the chairman, he’s not in the big top dog anymore. He’s in the you know, the chairman is the top dog, but he’s also not really the top dog. You can get moved around. Oh, now there’s a problem with renewables. Where was that the last eight years? It’s hilarious. He’s the guy that put him in this situation I know. [00:14:03][31.1]

Stuart Turley: [00:14:03] And and so. [00:14:04][0.5]

Michael Tanner: [00:14:04] That government money was coming in. All that debt was being finite. But they had their money and money. Please. Money, please. [00:14:09][4.9]

Stuart Turley: [00:14:10] But I think this is coming around because I had been on the podcast and I believe it was Ben that I was interviewing in 2022. And I said, there is going to be a great awakening in 2023. I said it, I’ve got the tape now. I’m sitting here going, how come we’re in 2024? And I was wrong. Well, no. One 2023 was really the year it was coming around and everything else. Let’s talk about the realistic last article here. Scores dead as frigid conditions ravage the US. This is from CBS, so we know it has to be true. If it’s from CBS, uh, 89 people have died in weather related incidents across the U.S. in the last few days. Wow. Tens of millions, tens of millions across the U.S again, bitterly cold. Um. How cold? Uh, Chicago, -30. Um, Texas. Alabama, 20 degrees. Uh, where is it? Deaths have been reported in Illinois and Pennsylvania. Mississippi, Washington. When you sit back and take a look. People can print money. Coal kills. There’s so much more death from cold weather than there is hot weather anyway. So if you keep printing money, people are going to die. [00:15:29][79.4]

Michael Tanner: [00:15:30] Well, and the big issue with the cold, we know, is the EVs. They want to move us all to an electric vehicle. Everybody’s got to have an electric vehicle. You know, not because it’s saving the environment, but because there’s a chip in it that’ll it’ll drive you to the gas at the police station when you’re, you know, when your social credit score drops to low. It’ll just drive. [00:15:49][19.0]

Stuart Turley: [00:15:49] You. You put something on Twitter, you know, and says, hey, uh, did Joe Biden just say this. [00:15:54][4.3]

Michael Tanner: [00:15:55] Winter will be fine? It’s everywhere. It’s, uh, threads is where you don’t want to be posted on Facebook threads. Oh, okay. Uh, but don’t worry if you’re posted on threads. Nobody’s seeing it, so you’re good. If you’re actually posting on threads, you have absolutely nothing to worry about. But I saw multiple articles. Charging stations stop working. You know, nobody knows how to operate. You know, these EVs in the cold. You know, part of what these manufacturers have done is kind of they make you kind of like, I was reading the article where nobody knows that you need to kind of like it’s almost like half turn your key into an EV to, like, warm it up. You have to do that for ten minutes before you can actually turn the car on. Oh, yeah. There’s like these. Well, cause they’ve got these batteries that are they’re encased in. If you, if you got almost like turn it on to warm it up and then once it’s there, then you can so imagine having to wait ten, 20 minutes just to do from the time you quote, turn your car on until you can actually turn your car on. But nobody’s going to do that because we live in a world where you can just stick your key in a gas car, fire it up. [00:16:52][56.9]

Stuart Turley: [00:16:52] It sounds like my wife. [00:16:53][0.7]

Michael Tanner: [00:16:54] Hey, she was. [00:16:56][1.5]

Stuart Turley: [00:16:57] Bit. Yeah. You better take me to dinner for that. [00:17:00][3.2]

Michael Tanner: [00:17:03] But no, it’s it’s it’s pretty crazy. And, you know, they, you know, again, they had 45,000 people left without power’s result of these storms. And it’s places like Tennessee where they’re not used to this type of weather where you saw most of the fatalities. [00:17:17][13.7]

Stuart Turley: [00:17:18] Oh, yeah. I mean, the whole thing is the grid. And I get to talk to Meredith Angwin today. So this is really a cool thing. Again, I just love, uh, talking grid with all these great people. So, anyway, after you do. That was a lot of fun. [00:17:35][17.1]

Michael Tanner: [00:17:35] Yeah. And, uh, before we dive into finance, guys, we’ll go ahead and pay the bills here. All the news, as always, the news and analysis, um, that you hear is brought to you by the world’s greatest website, www.Energy News beat.com. You can go ahead and hit the description below for all of the timestamps, all of the links, uh, to the articles, stupid. The team do a tremendous job making sure that website stays up to speed with everything you need to know to be at the tip of the spear when it comes to the energy and the oil and gas business. Check us out. Dashboard.energy news.com for our data news combo product. Uh, really pushing that hard. Um, here in the net here this quarter and and Q2. So we’re really excited about things there. You can email the show questions@EnergyNewsbeat.com and as www.EnergyNewsBeat.Com. [00:18:17][41.3]

Michael Tanner: [00:18:20] As far as you know overall markets on on Friday stew we saw you know Nasdaq. You know we saw S&P 500 actually up about 1.2 percentage points. Um Nasdaq uh up about 1.5 percentage points. Um us uh US 30 year yields down about a quarter of a percentage point. Ten year yield down about half a percentage. Uh point. Dollar index stays fairly flat. We saw crude oil down about a full percentage point, or about $0.70 currently. Check. Uh, currently settling 73, 25. We saw Brant Oil down about a quarter of a or three quarters of a percentage point 79 zero. Sick. Um, couldn’t quite finish up below that 80 mark. We saw about, uh, $0.17 drop off natural gas, which is about 6.6 percentage points, all the way back down at $2.55. You know, in the natural to stay on the natural gas trend, that’s mainly due to, uh, warmer weather that’s expected later this week. Throughout all of those places that we talked about to kind of go back to what that article that CBS talked about, it is to note that as the freeze happened and rapid warming then happens, there’s an increased chance of floods. So be careful out there. But, um, that’s part of the reason why, again, we’ve seen natural gas prices, uh, continue to stumble here. We did see the IEA lift its demand growth forecast. Um, they do expect a well-supplied market or the reason why we probably will see oil. We probably will see oil prices up a little bit is mainly due to, um, that cold weather that flew last week, I expect kind of a Monday, Tuesday, a little bit of a support because we saw about 30%, um, of North Dakota oil output dropped, mainly due to that coal, that 280, 300,000 barrels a day. So we’ll probably see a small tick there. But, you know, good to see a weekly gain. Um, we also did see rig counts. Do we saw rig counts up, um, in the United States, plus one to uh, 200, uh, 620, but that’s still down about 151 from the prior year. Canada saw an increase of ten rig. Internationally, they continued to shed rigs 955. That’s down 23 from the week over week. So you know rig counts are you know, mainly hanging out, uh, you know at that. Six 2625 low. It’s going to be interesting to see where things go from here. Um, you know, as we look ahead to this week’s do I think, you know, from an oil price perspective, you know, all it takes is something in the Middle East and for things to go haywire. You know, I think with these, you know, with the things that the, you know, our, our favorite friends over at, you know, favorite analysts over at the IEA, you know, they continue to, you know, push, you know, Well-supplied market, well-supplied market. We will see how that data continues to roll out. What are you watching for next week specifically? [00:20:57][156.5]

Stuart Turley: [00:20:58] Well, uh, a couple of things. Uh, Iran has started, a few things, uh, even without having to go through the Judys and the Blowfish. Uh, so they’re even, uh, just pushing their, uh, delegates, uh, aside and doing it. So I got I got a call with Lindsey Graham here in a little bit to just see how bad he is, but just kidding. [00:21:20][22.7]

Michael Tanner: [00:21:21] Uh, yeah. He’s lobotomized. Has gone. [00:21:22][1.6]

Stuart Turley: [00:21:23] Oh, man, I hope so. Yeah, that is one squirrel. But, you know, when you sit back and think, you know, uh, there is so much and you and I have always been saying, why is oil $200 a year right now? I mean, I don’t get it. I can’t even begin to. [00:21:38][15.3]

Michael Tanner: [00:21:39] I know why oil is not $200. I know you’re wondering because you thought it would be. [00:21:42][3.6]

Stuart Turley: [00:21:43] No, I never said 201. [00:21:45][1.7]

Michael Tanner: [00:21:47] Sorry. One 5150 so. [00:21:48][1.5]

Stuart Turley: [00:21:49] 99. But. [00:21:52][2.9]

Michael Tanner: [00:21:52] Uh, I’d also be failed to promise that we are. We’re getting geared up for nape. Um, if any of you oil and gas folks are headed down to nape. Um, February 7th through the ninth, come check us out. Booth 1957. We’ll get that, um, in the comments below. Booth 1957. We’re going to be doing podcast. We’re going to be doing all sorts of stuff, some live deal evaluations with some of our sponsors, uh, specifically. Well, database, John Farrell, their CEO. We’re going to be sitting down, breaking down live deals. Um, we’ll, we’ll we’ll figure out kind of how that all works. Actually. Got to get some stuff ready for that tonight. So, um, really looking forward to that. But check us out. Go ahead and email us. Um, questions@energynewsbeat.com or nape@sandstone-group.com. It’ll all be in the description below if you guys want to get hooked up. But we’re really looking forward to that. That’ll be yeah it’s going to be really fun. [00:22:39][46.4]

Stuart Turley: [00:22:39] That’ll be a big time. I’m looking forward to got lots of great things coming around the corner. [00:22:43][3.8]

Michael Tanner: [00:22:43] Yeah absolutely guys. But with that we’ll let you get out of here. Start your week. We hopefully there’s only, you know 1 or 2 meetings you know you know hopefully it’s not too bad. Hopefully you know you got your reports ready to go. You’re ready to get just blasted by whatever happened over the weekend. Because we know you know you know something happened over the weekend. So stay strong guys. We’ll see you through the end of the week. Uh, you’ll stay with us. Energy news beat Stuart Turley I’m Michael Tanner. We’ll see you tomorrow, folks. [00:22:43][0.0][1309.5]