2015: The Year For the Downside of Solar Energy and the Upside of Banking

Solar Concentrator

Photographer: Chris Sattlberger/Getty Images

Downside of Solar? Yes, downside.  The side where you slide down and things get easier and more efficient, and lower priced, and better, and people want more of it. That’s what is happening with solar power.  Look at this slope for US energy pricing:

Solar Price Falling

Source: EIA, CIA, World Bank, Bernstein analysis

(Henry Hug, is natural gas, Brent is crude oil, LNG is liquefied natural gas)

This solar slope is definitely a diamond double black run.  (Yes I love skiing).

Notice how the other energy sources are climbing.  That’s cross country skiing and really, a lot of work. The scenery is great though.

So what’s been happening in solar that is different in the other energy sectors: technical advances are improving output, reducing costs. As more people want it, they leave established alternatives and make it main stream.

I’m saying that that is what has happened to solar recently.  I’m just choosing the start of 2015, since, well, its the start of 2015. I’m also suggesting that oil prices may not return to previous highs.  Has the down side been seen yet, no I don’t think so, but it is getting close.

Oil prices may rise again, but not for very long.

Demand for electric vehicles is expected to rise rapidly from 2017.

Nafeez Ahmed and Tony Seba explain why here How Solar Power Could Slay the Fossil Fuel Empire by 2030.

Said in June 2000, by Sheikh Zaki Yamani, former Oil Minister of Saudi Arabia (1962–86), “Thirty years from now there will be a huge amount of oil—and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the Oil Age will come to an end not because we have a lack of oil.”

Are we are  getting to about that time the Sheikh mentioned?

See that 44.1% blue pie piece below?  That’s all burnt in passenger cars.

Crude Oil

From Renewable Energy World.

The falling solar prices will lead to distributed energy generation and this will break the hegemony of centralized energy production and reticulation.  This the heart of the world financial system presently. A good example is Africa. It cannot be tamed primarily because it doesn’t have centralized energy infrastructure.  This may appear a little complicated, but stay with me.

This is what I mean by the upside of banking.

The financial system is having it’s own problems and seems on the brink of collapse, as James Quiin, Executive Business Editor of the Telegraph elegantly put it two days ago.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11321497/Why-2015-could-spell-the-end-for-the-hegemony-of-the-big-banks.html

He covers it well, though I would add that fractional reserve banking is the core of profit generation for the modern banking system, coupled with excessive derivative trading. These two systems are under heavy strain presently.

Changing direction a little further to discuss the upside of banking, I see that the people of China and Russia have a great deal of contiguous history, both recent and ancient: Russia, 1,000 years and China, 5,000 years. This means lots of lessons learnt from the mistakes of their ancestors. For instance in the early 1,000’s and for 500 years China tried and failed with paper money systems 5 times before the people ignored the government and switched to silver for their medium of exchange.  Each successive Chinese government had tried to print their way out of debt. China also has recent living memory failures, similar to Russia.  So I see that they are acting as a group of interested people, as a collective, rather then the haves and havenots system of a monarchical, plutocratic system common in the west presently. For instance, China has a history of executing bankers caught defrauding customers and investors and Vladimir Putin has an approval rating of almost 90%.  So, ostensibly Russia and China are for working for their people and will adopt technologies and social systems that benefit everyone.  So I foresee solar and new financial systems quickly being adopted in these countries.

Moving on…

2015 is also good year to start on the down slope of oil demand, so a new currency won’t be petrodollars.  It will be remain  commodity based, however more likely onto gold and silver. Meanwhile, Russia, Iran and China are active in forging closer ties.  It’s not about competing with the USA business model. These alliances form natural blocks for US companies accessing resources.  For instance Afghanistan has over $1T in gold and lithium deposits…  This is part of the reason why Russia was interested back in the 80’s.

Tom Randle over at Bloomberg made this interesting article about 8 weeks ago:

Every time fossil fuels get cheaper, people lose interest in solar deployment. That may be about to change.

After years of struggling against cheap natural gas prices and variable subsidies, solar electricity is on track to be as cheap or cheaper than average electricity-bill prices in 47 U.S. states — in 2016, according to a Deutsche Bank report published this week. That’s assuming the U.S. maintains its 30 percent tax credit on system costs, which is set to expire that same year.

Even if the tax credit drops to 10 percent, solar will soon reach price parity with conventional electricity in well over half the nation: 36 states. Gone are the days when solar panels were an exotic plaything of Earth-loving rich people. Solar is becoming mainstream, and prices will continue to drop as the technology improves and financing becomes more affordable, according to the report.

The chart below shows how far solar will come out ahead in each state in 2016, assuming a worst-case scenario of lower tax credits. The blue bars show the anticipated cost of solar energy (assuming a conservative 20-year lifespan for the panels) minus average electricity prices. Positive numbers indicate the savings for every kilowatt hour of electricity.

Grid Parity to Reach 36 States in 2016

US Solar Price Parity Chart

Source: Deutsche Bank, EIA. Graph shows LCOE minus average electricity price

Solar has already reached grid parity in 10 states that are responsible for 90 percent of U.S. solar electricity production. In those states alone, installed capacity growth will increase as much as sixfold over the next three to four years, Deutsche Bank analyst Vishal Shah wrote in the Oct. 26 report.

The reason solar-power generation will increasingly dominate: it’s a technology, not a fuel. As such, efficiency increases and prices fall as time goes on. The price of Earth’s limited fossil fuels tends to go the other direction. Michael Park, an analyst at Sanford Bernstein, has a term for the staggering price relationship between solar and fossil fuels: the Terrordome. I’m not sure exactly what that means, but it doesn’t sound very forgiving.

The price of solar will soon undercut even the cheapest fossil fuels in many regions of the planet, including poorer nations where billion-dollar coal plants aren’t always practical.

Solar will be the world’s biggest single source of electricity by 2050, according to a recent estimate by the International Energy Agency. Currently, it’s responsible for just a fraction of one percent.

Because of solar’s small market share today, no matter how quickly capacity expands, it won’t have much immediate impact on the price of other forms of energy. But soon, for the first time, the reverse may also be true: Gas and coal prices will lose their sway over the solar industry.

http://www.bloomberg.com/news/2014-10-29/while-you-were-getting-worked-up-over-oil-prices-this-just-happened-to-solar.html

So, there you have a few changes on the world stage, conveniently coming together at about the same time: the fall of oil, the rise of solar, and the shakeup of the financial system. A good time to plan new investment and business strategies for yourself and your family.

Jeremiah Josey

Meci-Group

Advertisements

Seasons Greetings and Financial Events for 2015

Hello!

As we close the chapter on 2014 and turn our attention to what lies ahead for 2015, I think I can safely say that 2014 has been like no other.

I’ve been studying the financial markets for several years and the signs are approaching quickly now that indicate it is important to consider new investment strategies and different attitudes as we move into 2015 and the longer term.

Events like:

– Drop in oil price

– Sanctions against Russia

– US economy no longer able to maintain the look good image

– Trouble in the EU

– Impending collapse of world financial system

This video captures key events coming up:

Watch “Signs US Economy in Trouble, Russian Bear Not Wou…” on YouTube –

http://youtu.be/fAGksbTWdwo

This is scary news however there is a plan that can be followed:

This is what I recommend for 2015.

– Get as much excess cash and equity into silver and gold as you can.  75% silver. 25% gold.

– Focus on maintaining your income and reducing expenses.

– Expect deflation in the short term.  Very low interest rates.  A few months.

– There time enough to get organised.

– Borrow against your availabile equity and buy gold and silver.

– Then hyperinflation will kick in.  Slowly then very fast.  Everywhere.

– Property values will fall in real terms but the hyperinflation will hide it.

– Then sell some of the newly valued gold and silver to pay off the debt.  Because that amount of debt won’t change.

– Then wait for the right time to convert the gold and silver back into cash flow producing assets.

That will be in about 2 or 3 years as long as there is no war with Russia.

Otherwise 10 years…

The video above captures the key events coming up in the next few months:

– Weapons to Ukraine.

– Expected depression in the US xmas spending figures.

– A bankrupt EU.

The signs are indicating that it is time to change investment strategies.

I wish you the best for 2015 and let’s remember that good investors are making money when the markets are up and making much more when markets go down.

Best regards,

Jeremiah Josey
Meci-Group.com

We are the Russians – Here We Come!

Ever wonder about the psychology of the Russian people?

Let’s look at where they come from.

What are some headlines about Russia as a country?  (Just a few, because there are many):

Russia

Russia

  • Largest landmass on earth, and by population density, one of the least populated  – only 8 people per square kilometer.   Singapore has over 7,500 people per square kilometer.
  • With these large unpopulated spaces very generous reserves of gold, oil, coal, gas, iron, nickel, tungsten and so on, where most other countries have piles of dirt.
  • A great agricultural base – both in land and farming techniques – for production of organic food  😀

So lots of space for people, lots of space for food for the people and lots of resources for the people to work with.

And what about the people? (Also just a few points, because there are many):

  • Never conquered in over 1,000 years, with a contiguous culture throughout that time, layered with incredible fortitude built from a primarily serfdom society.
  • A recent memory war that took away 26,500,000 people concurrent with an equally recent memory regime that removed another 20,000,000 souls from the earth.  Remember that present day Russian population is only 143,000,000.
  • Within the most recent generation an entire society literally thrown onto the street as they moved from one economic system and were thrust into another.

And what is the net result. In one word: Survivors – practical, pragmatic survivors. With a whole lot of resources to apply themselves to.

One can see this in this Inglehart Value Map below.   There’s Russia: high on the upper left: High Survival values and high in Secular-Rational values: “what will it/you/they do for me now, today, not tomorrow or after?”

Inglehart Values Map

Inglehart Values Map

 Having a very high “Secular-Rational Value” means the people are very practical, very pragmatic.  They are not prone to superstition (or faith without action), though many have deep devout faiths.  Compare this to the USA, where a call to align with “traditional values” by any politician, Republican or Democratic – calling for God, or labour or liberalist idealism – will be swept into power with a rambunctious swearing of allegiances and oaths to serve – and die for no reason in strange far off lands – for God and country.  In Russia it’s simple: “show me”.

Considering the history of the Russian people, on Survival Values they rank very high also.  This makes for tenacity, perseverance, industriousness.  No room for BS please.

Lots of good potential in this combination. Driven, dedicated, results focused. A little bit of entrepreneurial training and away they will go.

Have you ever heard of Maslow and the “Hierarchy of Needs”. That helps explain what is behind the Values Map. The idea is as you sort out your base, you can rise up the pyramid to, eventually, self actualisation.

That’s a country for you – on the launch pad.

Maslows Hierarchy of Needs

Maslows Hierarchy of Needs

Jeremiah Josey

A Letter to President Obama

This is a letter I sent to US President Barack Obama today.

I had just watched a couple of his weekly radio address, in particular the one from 28th February 2009 where he is about to release the US federal budget, containing two key elements: health care reform, and support for the green energy industry.

This budget puts him in direct conflict with two of the largest industries (and the billions they spend on protecting their businesses) health insurance companies, and the oil companies.

My message to him: he needs to stop using a teleprompter – it kills the passion in his message.

Dear President Obama,

I just watched your one of February 28, 2009 weekly speech on Youtube.

My advice: Stop using the teleprompter. You loose all the power of your message.

You may have the brightest minds around you, logically telling you that a perfect speech is a perfect result.

It is not.

There’s no soul, there’s no heart.

This was the message in which you said “…I know they’re gearing up for a fight as we speak. My message to them is this: So am I.”

Great words, and exactly the position I know you are taking and what needs to be taken in a time like now. A time when it appears that most sensible people have taken to the sidelines to merely watch the increasing parody and charade of greed and gluttony devour the world around us.

But you said these words, especially “So Am I” without any depth. There was no passion. There was no soul.

Stop using a teleprompter – it takes the passion out of you. Have paper notes in front of you… Become real again. (Move from being in your head to being in your body, if that makes sense to you).

Become real in a world where plastic news readers read plastic lines to an audience which is becoming increasing more and more short term focused, more plastic?

Keep using the teleprompter and you’ll become like a news reader: plastic. And you will loose credibility as a man who can take action; as one who can make things happen.

You are championing long range, long term strategies. Real strategies that live long past last week’s Dow movement or the weekend’s baseball results. Strategies that live into the coming decades. In fact strategies that I believe will mark your term in office as the turning point for the America, and as a result the rest of the world. You need to come across as a person who is real and can carry out these strategies.

This is what I watched.

May you have the best success imaginable.

Warm regards

by Jeremiah Josey, September 2009

Blog of Jeremiah Josey

The surge of US troops in Afghanistan is fundamentally flawed

Why? Because the strategy is short term focused, and forgets about what is really going on: a nation of disgruntled people with not much else to do, except wait for an exceptionally bleak future to roll over them. This disgruntled state is giving birth to the violent factions we now endeavor to “remove”.

Sending in brute force to quell the institute tribes of northern Pakistan and Afghanistan is akin to the invasion of Vietnam by the US in the 60’s and 70’s. That particular war failed because the local embedded defence forces knew what they wanted: to defend their home lands from invaders, to win at all costs. To fail was to loose not only their lives, but the identity of their people, their nation, everything they stood for. Their lives were secondary in this battle. The Taliban – and Al Qaeda – will do the same. Suicide bombers, bombings of public places like bars and accommodation units occurred in Vietnam as well – a dear friend of mine still has pieces of a grenade coming out of his body from one such attack by a child. These acts weren’t called “terrorist activities”.

The second much more fundamental reason for the failure that will become Afghanistan is the ancient knowledge that like-begets-like: bring in severe force against a group will only instil more retaliatory brute force in kind.

Additonally, local support from non-violent groups will tend to favour the local tribes, rather than the “invading” occupying forces and as the war drags on, this support will increase.

The World’s Fight Against Terror (it should be termed the “fright against terror”) means nothing to the people of Afghanistan. Food, basic shelter, education and a future to look forward to are their concerns.

So what is the answer? Again an ancient saying: “turn the other cheek”. Some 2,000 years old in some texts. Now I don’t mean walk away. Far from it.

Here is what will work: the US forces become a security force, an advanced form of police that enters the country with a specific task, not of attacking Taliban tribal groups (like Al Qaeda), but tasked with the defence of social and welfare infrastructure. This social welfare infrastructure is built in parallel – a Grand Master Plan – and defended by the defence initiative. This defence force will also protect the personal and private assets of individuals, thus allowing entrepreneurialism to flourish – a vital component of the establishment of a long term viable solution for the people of the region.

US money, UN money, world money, is spent to raise the standard of living for the Afghan people: to build and run schools, hospitals, sanitation, water supplies. Establish enterprises to grow and supply food, training, materials, trade, training. In short a future. Doing this will improve the living standard and the outlook for a people who presently have very little to look forward to, and will endear these people to those protecting them and this future.

I’m talking about rebuilding an entire social environment, building a nation, something that will be sustainable for the next 1,000 years! (Why not? We know what works and what doesn’t).  (Sustaining the culture and lifestyle is an important element of this process).

What will happen if this is done? Well the Taliban’s key strategy now: suicide bombings will dwindle and become defunct. Why? Because prospect recruits will have an alternative: a future, something to drive them to live, not to die. Right now they have a bleak future, and with the oncoming escalation of war, of violence, even less to look forward to. Thus, with my proposed alternative strategy, the Taliban, and Al Qaeda will shrink: 1) because they will use up their resources (by blowing themselves up), 2) because recruiting will become harder and harder, there is a better alternative, and 3) because their like will defect, because of the better lives they can see growing up around them. Ultimately the need for them existing as an extremist group will cease to have any purpose.

Going in now with the intent to “crush the Taliban” will simply not work.

US President, Barak Obama, yesterday or even today stated “we have a clear goal to disrupt, dismantle and defeat Al Qaeda in Pakistan and Afghanistan, and prevent their return to either country in the future”. This is a futile and near sighted goal for the reasons I have outlined above.

OK, so let’s answer another question: what about the financial benefits of waging war outside your homeland. I go into this in detail at this post: The Business of War.  The argument is that, in the short term, war makes is good financially for a nation.  Not in the long term.

What is the main resistance to the build and defend strategy I have outlined? It is the status quo, inertia and simply human practice.

Nation building is the newest and boldest of human strategies that we may – or may not – be ready for.

Think of the increase in national GDP if public services were provided in foreign lands rather than the destruction, death and disarray brought by the mightiest defence force on the planet? (The US Navy is larger than the next 13 largest navies combined, and 11 of these are allies or partners).

Will it be hard to stay focused? Yes. Will it be hard not to ignore the innocent deaths that occur whilst the building commences? (There will civilian companies engaged in the infrastructure building. Yes it will be. But in the long term the solution will be far superior.

In Iraq right now (2 hours from where I sit), 1 in 3 people live without access to municipal water and only 1 in 5 have access to a sanitation service (sewage). Universities and schools are closed most days, doctors and teachers receive death threats telling them to leave the country, which most have. What is left? Now that the US are pulling out (yes they are – I see it most days on the roads here), what is being left behind? A victory? Bitter sweet indeed.

Yet, a new goal: Afghanistan?

Like the issues with Global Warming facing us, helping a disgruntled and deprived people, and building a nation for them – in their likeness, not ours – is a job for all of us and a challenge for our global society to shake from the shackle of brute force and isolated non-unifying solutions.

Jeremiah Josey