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California gasoline prices hit a record high
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Alex Kimani is a senior financial writer, investor, engineer and researcher at Safehaven.com.
The energy transition is in full swing. Electric vehicles are replacing high fuel consumption and solar panels, and wind turbines are replacing coal and oil as the world's leading energy source. Scientists warn that raising the temperature to 1.5C requires reducing global emissions by 45% by 2030 and reducing total emissions to zero by the middle of this century. At the ongoing COP26 climate summit, countries pledged to end deforestation, curb carbon dioxide and methane emissions, and stop public investment in coal power.
The energy transition is driving the next commodity super cycle, and technology manufacturers, energy traders and investors have a bright future. In fact, BloombergNEF, a new energy research provider, estimates that the global transformation in the next three decades will require approximately US$173 trillion in energy supply and infrastructure investment. It is estimated that by 2050, renewable energy will meet 85% of our energy needs.
But there is no brighter future than the metal industry.
Clean energy technologies require more metals than fossil fuel-based technologies. According to a recent analysis by the Eurasian Review, under the net zero emission scenario, the prices of copper, nickel, cobalt, and lithium may reach historical peaks in an unprecedented duration, and their total output value will increase more than four times. In 2021-2040, it can even be comparable to the gross value of crude oil production.
The fossil fuel industry has a large negative impact-BNEF predicts that by 2050, electric vehicles and fuel cell vehicles will replace 21 million barrels of oil demand per day.
In the net-zero emission scenario, the boom in metal demand may cause the value of metal production to increase more than four times-these four metals alone will add up to 13 trillion US dollars in the next two decades. This may be comparable to the estimated value of oil production in the net zero emission scenario for the same period, making these four metals macro-relevant to inflation, trade and output, and bringing considerable windfalls to commodity producers.
Estimated cumulative real income from global production of transition metals for specific energy sources from 2021-40 (billions of dollars in 2020)
The following is BNEF's long-term outlook for major commodities and clean energy industries.
Main metals and materials: steel, aluminum, polysilicon, copper, silver
TOP ETF: Invesco Solar Portfolio ETF (NYSEARCA: TAN)
BNEF estimates that 10,252 tons of aluminum, 3,380 tons of polysilicon and 18.5 tons of silver are required to produce solar panels with a capacity of 1GW. By 2025, global solar installed capacity is expected to double, and by 2030 it will quadruple to 3,000 GW. The solar industry is expected to become an important consumer of these commodities in the next ten years.
As the Biden government and China renewed their carbon emission commitments, the demand for solar panels has unexpectedly increased from the end of 2020, causing the price of polysilicon to soar and disrupting the decade-long decline in the cost of solar installations. According to a new report from the Solar Energy Industry Association and Wood Mackenzie, supply chain bottlenecks and rising raw material costs have hit the US solar industry, as solar prices in each segment of the US have seen a month-on-month and year-on-year increase in the second quarter. This marks the first time since Wood Mackenzie started tracking prices in 2014 that residential, commercial and utility solar costs have risen simultaneously. The most significant cost pressure comes from rising raw material prices, including steel and aluminum.
Several new polysilicon plants are currently under development, mainly in China, and are expected to fill some of the supply gap. However, the current shortage is a clear signal that more work needs to be done as the process of decarbonization and electrification accelerates.
Fortunately, BNEF analyst Yali Jiang said that the shortage of polysilicon fundamentals is unlikely to become a long-term problem, because prices will always drive more capacity. BNEF said that it is more concerned about the use of other auxiliary materials such as silver, aluminum and steel in the production and installation of solar panels, because these metals are affected by the wider commodity world.
Key metals and materials: concrete, steel, glass fiber reinforced plastics, electronic scrap, copper, aluminum, carbon fiber reinforced polymers
TOP ETF: First Trust Global Wind Energy ETF (NYSEARCA: FAN)
According to BNEF estimates, approximately 154,352 tons of steel, 2,866 tons of copper and 387 tons of aluminum are required to build wind turbines and infrastructure with 1 GW of power capacity. The Global Wind Energy Outlook (GWEO) predicts that the installed wind power capacity will reach 2,110GW by 2030, an increase of 185% during this period.
According to the Global Wind Energy Council, just like the solar industry, rising cost pressures are beginning to have a negative impact on the launch of wind energy projects. Coupled with the expiration of key Chinese subsidies, it is expected to lead to a record drop in new installed capacity.
In fact, Denmark’s Vestas Wind Systems (OTCPK: VWDRY) is one of the world’s largest turbine manufacturers, accounting for 31% of the global market. It recently lowered its outlook for the rest of 2021, citing raw material prices. Rise and on the supply chain. In August, Vestas lowered its full-year revenue guidance from the previously predicted 16B-17B Euro to 15.5B-16.5B Euro, and lowered its EBIT margin from the previous 6%-8% forecast to 5%-7 %.
A large part of the cost increase can be attributed to steel. Steel prices in the United States have risen this year, and steel prices in China and Europe have also risen.
But here, the long-term outlook is bullish again. BNEF stated that by 2030, the newly installed capacity will recover and reach the level of 129 GW per year.
"Commodity inflation is here. In the next 12 months, now is to see the project can and will be completed, and the price?" Vestas Wind Power CEO Henrik Andersen (Henrik Andersen) said Out of posture.
Key metals and materials: copper, aluminum, lithium (LCE), nickel, cobalt, manganese
TOP ETF: Global X Lithium & Battery Tech ETF (NYSEARCA: LIT)
The prospects of the lithium-ion battery industry may be the most optimistic.
The reason for this is that as battery costs continue to drop across the board, the rapid spread of electric vehicles, and utility companies’ use of utility-scale battery storage units (1 megawatt (MW) or greater power capacity) Investment doubled. A recent survey by the Pew Research Center found that 7% of American adults currently own an electric or hybrid car, and 39% say they are "very likely" or "somewhat likely" to seriously consider buying a car next time electric car.
The price of lithium-ion battery packs has fallen by 89% from 2010 to 2020, and the volume-weighted average price has reached US$137/kWh-US$100/kWh is considered the holy grail of achieving cost parity between electric vehicles and internal combustion engines.
In 2019, NextEra Energy (NYSE: NEE) announced plans to build a 409 MW energy storage project in Florida that will be powered by utility-scale solar energy.
Xcel Energy (NASDAQ: XEL) plans to invest US$2.5 billion in renewable energy and battery storage in the state, including 707 MW solar photovoltaic, 1,131 megawatt (MW) wind energy and 275 MW battery storage to replace Its Comanche coal unit Colorado.
Duke Energy (NYSE: DUK) announced plans to build an energy storage project at the Anderson Civic Center in North Carolina, including an investment of US$500 million in a battery energy storage project with a generating capacity of 300 megawatts.
According to EIA data, from 2014 (214 MW) to March 2019 (899 MW), the storage capacity of U.S. operating utility-scale batteries has more than quadrupled. The organization predicts that by 2023, utility-scale battery storage capacity may exceed 2,500 MW, or an increase of 180%, assuming that the current planned increase has been completed and the current operating capacity is not decommissioned.
UBS estimates that the US energy storage market may grow to US$426 billion in the next ten years.
Many energy experts, including UBS, Bloomberg New Energy Finance, Standard & Poor’s Market Intelligence, and Wood Mackenzie, are very optimistic about the prospects of the battery storage industry—both in the short-term and long-term—because clean energy drives the huge revenue momentum.
BNEF estimates that 1,731 tons of copper, 1,202 tons of aluminum and 729 tons of lithium are required to manufacture 1GWh of lithium-ion batteries.
BNEF stated in its June report that as demand in the battery industry increases, lithium supply may remain tight by 2022. But unlike the major shortages of solar and wind energy that are expected to be more short-lived in nature, BNEF stated that lithium hydroxide (a chemical used in high-quality lithium-ion batteries) may be in short supply in 2027.
To make matters worse, the limited supply of other battery materials has threatened the battery industry’s ability to keep up with the electric vehicle boom. Lithium chemicals and copper foil are particularly worrying, and since mid-2020, the prices of all major battery metals have soared.
BNEF Metals and Mining Director Kwasi Ampofo said that due to the lack of the ability to process these metals into specialized chemicals, battery components nickel and manganese may experience some of the most serious shortages later in the decade.
Zhang Lei, CEO of Envision Group, said that the battery supply chain, especially in terms of raw materials, requires more investment, including new lithium and nickel mines.
Price fluctuations are a major problem in the battery industry, as higher costs may have a negative impact on the adoption of electric vehicles.
Main metal and material: copper
TOP ETF: Global X Autonomous Driving and Electric Vehicle ETF (NYSEARCA: DRIV)
The growth of the entire electric vehicle charging station market mainly depends on the following factors: the growing demand for electric vehicle fast charging infrastructure, the government's initiatives to promote the adoption of electric vehicles and related infrastructure, and the increasing deployment of electric vehicles by shared travel operators And the growing popularity of electric vehicles. Scope anxiety.
According to Bloomberg New Energy Finance estimates, a fast public electric car charger usually requires 25 kilograms of copper, while a small charger used at home requires about 2 kilograms of copper. This may not seem like much, but when you consider that global charging points are expected to increase from 1.3 million in 2020 to 30.8 million in 2027, it may be important, with a compound annual growth rate of close to 50%.
US President Biden has pledged to launch 500,000 new charging stations in the country by 2030. China-which has the world's largest share of public connectors-is adding chargers at an extremely fast rate, and companies such as Tesla Inc. (NASDAQTSLA), BP Plc (NYSE: BP) have made major commitments.
Last year, the installation of public chargers along highways, fleet parking lots and grocery store parking lots jumped by more than one-third, bringing the global total to 1.36 million units. BNEF predicts that the number of charger installations will rapidly increase, reaching 309 million connectors by 2040, and the industry's annual investment will exceed 590 billion US dollars by then.
Australia-based Tritium, the world's second largest manufacturer of fast charging equipment, said that charging stations are already facing price pressures in certain areas, such as rising copper prices.
Electric vehicle charging infrastructure is extremely vulnerable to shortages of raw materials, and rising material costs may affect the launch.
Written by Alex Kimani for Oilprice.com
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