Feb. 2021

It seems the wire and cable industry will be benefit from the current Stated Policies Scenario (STEPS) during the next two decades from the recently issued Global Energy Outlook 2020 by IEA. The global electricity network will double its growth length by 2040 compared to 2000 to 2019. What are the main drives to increase the electricity network expansion, and what sections of the wire and cable business will be boost from this growth? More volume of the wire cable will be observed in the wind power and solar farms, and associated interconnections. Those cables include 3C medium voltage cable, 1C low voltage cable, ACSR or its replacement, HVDC cable for transmission, control cable, etc.

The growth of electricity network expansion comes from the surging of green power generation of wind and solar. As you may notice in my previous post yesterday(24, Feb 2021), there is significant growth in wind and solar power generation in the chart of “Change in global electricity generation by source and scenario” from IEA Global Energy Outlook 2020. To reach the goal of CO2 emission limitation, more wind and solar farm will be built, though more wire and cable will be installed at the sites, including MV cable, LV cable, from the wind turbines or solar panels to the substations, and some control cable in the nacelle, MCC, and substation. There is no secret winning those businesses since most of the cables are commodity items. Low price strategy, operation excellent, and good customer relationship could help to win the bids.

Wind and solar power are not only for distributed power generation networks, considering most of them are deployed in remote areas. What we learn from the recent Texas power outage, and the low utilization rate of wind and solar power is to integrate the distributed green energy into the main grid. Then, more interconnections will be built to connect remote green wind and solar power to the grid, where we see the most electricity network extension come from. The demand for ACSR or its equivalent power transmission cable including HVDC cable will be increased in the next two decades, and some control cables installed in the interconnections and substations could also benefit from it. There are much fewer players in the power transmission cable market compared to the MV and LV cable market, and I see the engineering capability will be as one of the key factors to win the projects.

The above hypothesis varies based on the country’s energy mix and its commitment to the Paris Agreement. I believe more wire and cable demand will be increased along with the Sustainable Development Scenario (SDS), and Net Zero Emission by 2050 case. Again, one thing I am sure of is the commodity metal price, such as the copper price, will be driven up by the high demand for wire and cable in the next two decades.

Any comments?

Source: IEA world energy outlook 2020.

There is no doubt the crashing of electricity generated by coal, and rising of all kinds of green and low-carbon energy sources in the next two decades. But it seems gas power was impacted slightly in the next two decades and even consider growing its capacity at the Stated Policies Scenario (STEPS). It's because of the nature of lower(50%) CO2 emission compared to the coal power, low price, and efforts of CCS in the future.

Tomorrow, there will be an interpretation about the wire and cable industry from the IEA energy outlook 2020.

Source: IEA world energy outlook 2020.

Tesla is still facing challenges in improving its profit margin, considering high PP&E depreciation expenses of new facilities. Although its technology is about six years ahead of Toyota and VW, I still don’t get why its market cap is so high except for speculation. What do you think?

Source: The Economist Jan 2021, Ycharts.

Canada Deputy Prime Minister and Minister of Finance Chrystia Freeland says “…let’s focus on making Canada’s energy sector the cleanest green power supply cannot be easily increased in Canadaanest energy sector in the world.” during an interview last month when talking about the challenge on the further punitive measure for the US’s decision on the Keystone project. It’s not viable to increase the export of Green Power to cover the loss of the Keystone project in the short term, simply the green power supply cannot be easily increased in Canada.

Based on the current energy mix, Quebec and British Columbia cannot provide too much extra power supply to the US market since the majority of electric power is from Hydropower (around 90% of the power mix in QC and BC). There is no way to build more dams in few years. Nuclear power contributes almost 60% of total electric power generation in Ontario. It is risky to increase the power supply for those aged Nuclear Power Plants (NPP), and on top of that, those NPPs are in the refurbishment phase in the coming decade. Coal and Natural Gas are still two of the major energy sources in Alberta (around 90% of the power mix in Alberta), where is the most vulnerable to the impact of the Keystone project. I didn’t see it's feasible to dramatically increase green power output from Alberta in the coming two or three years.

I can see that Wind, and Solar, and Carbon Capture and Storage technologies might benefit from this change in the short run. The small modular reactors (SMRs), and infrastructure of Hydropower is bright in the long run.

Any thought?

The first green energy solution that came up to my mind is using hydrogen to generate power through fuel cell technology for the green aviation industry. The high energy density and relevant lightweight is a huge plus compared to lithium battery technology. The on-site H2 electrolysis technology can solve the H2 distribution issues with the power generated from low-cost wind or solar power in the long run. The medium-term solution could be either using blue hydrogen or even coal power equipped with efficient CCS technology to capture the CO2 emission. But the 2035 vision of hydrogen flight from Airbus is still floating in the air. I prefer to see more applications of using H2 in the drone market, which is more viable and can be commercialized in the short term.