CAISO Data Highlights Critical Flaws In The Evolving Renewables Plus Storage Mythology

May 06, 2019 12:53 PM ETGE, TSLA216 Comments
John Petersen profile picture
John Petersen


  • Thomas Edison spoke a great truth in 1883 when he said, “The storage battery is one of those peculiar things which appeal to the imagination."
  • When advocates, politicians, dreamers, and promoters think about battery innovations, their imaginations kick into overdrive, and they make quantum mental leaps from the possible to the absurd.
  • In the last few years, utility-scale energy storage has experienced robust growth, and several companies offer behind-the-meter storage products for homes and businesses.
  • Evolving mythology holds that a combination of renewables plus storage will soon replace fossil fuels and relegate conventional power systems to the ash heap of history.
  • Data from CAISO’s Renewables Watch website highlights critical flaws in that mythology and shows why renewables plus storage can never replace fossil fuels.


I’ve been writing about grid-scale energy storage since August 2008 when I published a Seeking Alpha article titled “Grid-Based Energy Storage: Birth of a Giant,” a simple primer on energy storage for the grid that’s surprisingly relevant today. A subsequent Seeking Alpha article from February 2010 titled “Grid-Based Energy Storage Represents A $200 Billion Opportunity” was my first attempt to estimate the market value of various grid-scale energy storage applications. The key takeaway from both of these early articles remains unchanged: A few high-value applications offer very attractive economics for battery-based systems but a host of low-value applications can’t offer decent returns under any circumstances.

While this article mentions Tesla (TSLA), the poster child for magical thinking in the renewable energy sector, it’s not about any particular company or subsector. My conclusions are bullish for traditional energy producers as a group and bearish for renewable energy promoters as a group. For some diversified companies like General Electric (GE), they’re bearish for one business unit, like wind turbines, and bullish for another business unit, like gas turbines. In the final analysis, this article is a thematic piece where each investor will need to decide how my conclusions should impact his personal investment strategy.

The fundamental problem of renewable power is intermittency.

I’ve always been amazed at a strange mental disconnect that’s common among renewable power advocates. On one hand, they freely acknowledge that industrial societies can’t function without stable power grids to supply electricity on demand, 24 hours a day, seven days a week, 365 days a year, and with 99.999% reliability. On the other hand, they insist that we have a moral duty to use non-dispatchable, intermittent, and generally unreliable power from renewables despite the fact that intermittency is the mortal enemy of a stable electric grid. The electrons from wind turbines and solar panels may be green and squeaky clean, but

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John Petersen profile picture
I'm a lawyer and accountant who's devoted the last four decades to advising entrepreneurs on corporate finance, SEC registration and reporting, and corporate governance matters. All of my client projects have involved high levels of uncertainty, compressed timelines, and urgent financial needs that demanded unparalleled responsiveness. I know how to get major projects completed on time and within budget. I'm a 1979 graduate of the Notre Dame Law School and a 1976 graduate of the W.P. Carey School of Business at Arizona State University. I was admitted to the State Bar of Texas in 1980 and subsequently licensed to practice as a CPA in 1981. While I don't hold myself out as a practicing accountant, I regularly use my in-depth knowledge of accounting methods, processes, and procedures to offer nuts and bolts counsel to clients who need integrated advice on finance-driven legal matters.As general counsel for the C Change Group, I'm involved in all of that company's domestic and international initiatives.

Disclosure: I am/we are short TSLA TROUGH LONG DATED PUT OPTIONS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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