In my previous post on Strategic Planning, I noted that “disruptive technologies may face … resistance due to all the vested interests and sunk costs in old technologies, organizations, and institutions. For example, some analysts predict that electric utilities may face a so-called “death spiral” as roof top solar and wind energy displace 100% of the electricity generated from conventional sources, at least during daytime hours. This in turn, will have serious implications for the financial viability of conventional utilities and the investors who financed them.”
This phenomenon has been dubbed “stranded assets” -- a catch all phrase that is being used with increasing frequency to denote two, closely-related concepts. The first relates to existing assets – e.g., North Dakota oil fields, Australian and Kentucky coal mines, and various power plants – that soon may no longer be economically viable or environmentally feasible to operate. These assets can become stranded either as a result of competition from lower-cost, environmentally cleaner assets such as roof-top solar and wind farms or because climate change agreements will generate massive reserves of “unburnable carbon.” The second refers to the financial losses that may be looming on the horizon for investors who are financing these long-lived assets that may never generate the long-term revenues that investors expect. The Bank of England, for example, recently announced that it is “deepening and widening” its inquiry into the “financial stability risks” posed by excessive investments in stranded assets.
The recent sharp decline in crude oil prices coupled with the even sharper decline in the price of wind and solar power, technological breakthroughs in energy storage and distributed energy generation, and the rapid deployment of renewable energy technologies has generated a recent spate of articles about stranded assets in the energy sector. These phenomena have also given rise to political efforts in the US and elsewhere to gut renewable energy standards. If technological change is giving rise to stranded assets, the conservative forces supporting the status quo hope to use the power of government to hold back or slow the rising tide of stranded assets.
The following is a very short list of recent articles that explore the technological, political and financial dimensions of the stranded asset phenomenon:
A regulator’s climate nightmare: carbon bubbles and market crashes
Big Oil aims to kill clean energy target in western US states
Clues show how green electricity may be in US by 2050
Wind energy tops new US power generation – coal nowhere to be seen
Grantham: Wind, solar to replace fossil fuels within decades
Why US fracking is biggest red-herring in history of oil
An Airbnb or Uber for the Electricity Grid?
$100B in Wind or Solar Will Now Produce More Energy Than the Same Investment in Oil
The greatest business opportunity of our time
GOP Kills Florida Solar, Takes the Sun out of Sunshine State
Next legislative session could be end for Kansas’ renewable energy standard
As Coal Crashes, US Governors Push Wind Energy
Cleantech disruption to reduce annual utility revenues by up to $123 billion
Arizona Solar: So Much Potential...Under Threat
Ohio To Wind Power: Drop Dead
When Reality Smacks You In The Face: More Renewable Energy For US Navy
This phenomenon has been dubbed “stranded assets” -- a catch all phrase that is being used with increasing frequency to denote two, closely-related concepts. The first relates to existing assets – e.g., North Dakota oil fields, Australian and Kentucky coal mines, and various power plants – that soon may no longer be economically viable or environmentally feasible to operate. These assets can become stranded either as a result of competition from lower-cost, environmentally cleaner assets such as roof-top solar and wind farms or because climate change agreements will generate massive reserves of “unburnable carbon.” The second refers to the financial losses that may be looming on the horizon for investors who are financing these long-lived assets that may never generate the long-term revenues that investors expect. The Bank of England, for example, recently announced that it is “deepening and widening” its inquiry into the “financial stability risks” posed by excessive investments in stranded assets.
The recent sharp decline in crude oil prices coupled with the even sharper decline in the price of wind and solar power, technological breakthroughs in energy storage and distributed energy generation, and the rapid deployment of renewable energy technologies has generated a recent spate of articles about stranded assets in the energy sector. These phenomena have also given rise to political efforts in the US and elsewhere to gut renewable energy standards. If technological change is giving rise to stranded assets, the conservative forces supporting the status quo hope to use the power of government to hold back or slow the rising tide of stranded assets.
The following is a very short list of recent articles that explore the technological, political and financial dimensions of the stranded asset phenomenon:
A regulator’s climate nightmare: carbon bubbles and market crashes
Big Oil aims to kill clean energy target in western US states
Clues show how green electricity may be in US by 2050
Wind energy tops new US power generation – coal nowhere to be seen
Grantham: Wind, solar to replace fossil fuels within decades
Why US fracking is biggest red-herring in history of oil
An Airbnb or Uber for the Electricity Grid?
$100B in Wind or Solar Will Now Produce More Energy Than the Same Investment in Oil
The greatest business opportunity of our time
GOP Kills Florida Solar, Takes the Sun out of Sunshine State
Next legislative session could be end for Kansas’ renewable energy standard
As Coal Crashes, US Governors Push Wind Energy
Cleantech disruption to reduce annual utility revenues by up to $123 billion
Arizona Solar: So Much Potential...Under Threat
Ohio To Wind Power: Drop Dead
When Reality Smacks You In The Face: More Renewable Energy For US Navy
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