Overview
Part 2 of a 4 part series discussing key takeaways from the J.P. Morgan Eye On the Market 2022 Annual Energy Paper.
Part 2 focuses on electrification – EV adoption by gasoline super-users and building new transmission, which “may be the single largest roadblock in the entire renewable energy transition.”
Electrification
Over the last 20 years – share of electricity as % of total energy use has risen just 2-3% in most countries (very slow rate of change)
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- Large & mid-sized countries – use electricity for 15-20% of overall primary energy consumption
- Only countries like Iceland, Norway, Sweden, Switzerland are above this, and these countries have abundant hydro and geothermal power
- They are not representative
Transmission
Enormous gap between the amount of transmission capacity we have (measured as gigawatt miles) and what the decarbonization plans require
Very hard to build new transmission
- In the U.S. – transmission capacity has grown only 2% per year since 1978, only 1% over past 5 year
- Nowhere near robust grid needed to support electrification of energy use
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States rights, eminent domain issues are real world obstacles to deeper decarbonization
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- Transmission projects blocked all across the country by landowners, conservation groups
- Eminent domain not being used for transmission
- Ex. Northern pass from Quebec to Mass
- Would have replaced natural gas with cheaper and cleaner Canadian hydro power
- Rejected by NH and Maine
- Ex. Northern pass from Quebec to Mass
Interconnection Queues – line up and apply to be added to grid
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- Even once transmission projects get go-ahead, they need to connect to the grid itself
- Used to be simple when developers were adding large nuclear and natural gas plants
- Now with hundreds of smaller scale renewable projects its longer
- Can take up to 4 years for approval
- Amount of wind/solar capacity in queues now is many multiples existing wind/solar capacity
Transmission issue – may be the single largest road block in entire renewable energy transition
Electric Vehicles
Sales gathering steam, growing as % of a given year sales
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- Still a small % of overall vehicles
Gasoline super users: top 10% of drivers burn 1/3 of all gasoline, more than gasoline burned by bottom 60% of all drivers (In the U.S.)
Policy idea – pay people for gallon of displaced gasoline
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- Problem with current system – someone who barely drives gets same EV rebate as someone who drives a ton
- Incentive to switch is not being maximized
Metals Prices
Rising metal prices have implication for lithium ion EV battery costs
Batteries are not the same
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- 3 main types, some use a lot of Nickel and Cobalt, and some don’t
EV battery supply chain could see shortages that resemble current semiconductor shortages in the long run
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- 90% of supply chain people are envisioning by 2030 does not exist yet
This may slow EV adoption in next 3-5 years
