Monday assorted links

1. “Watson, who lives with his wife by the sea, says he is still facing charges under a 1935 law that states no one can possess more than 120 packs of cards at one time.”  The polity that is Thailand.

2. Productivity growth during the Great Depression.

3. Solar + storage.

4. How Hollywood’s favorite juice bar owner eats every day.  For real, not a joke, and parasitic on “Markets in Everything.”  Recommended.

5. Can you learn some skills twice as fast?

6. Evidence on candidate electability from prediction markets.

Comments

2. It seems that every day we learn something new about the many benefits of a precipitous drop in inequality, in this case productivity growth (a precipitous drop in wealth inequality not income inequality, the latter remaining high in the Great Depression). I suppose owners of capital stopped selling (deflated) assets to each other and started investing in productive capital instead.

Nothing motivates the mind better than the prospect of starvation and soup kitchens. Think of how many people lost a lot of unnecessary pounds as a result of the Great Depression!

If you look at the USA heading into the 1930s you would be very optimistic. So optimistic that you'd load up on debt and price in the advancements.

Like you did in 2007, buying assets on credit to own the assets with debt liability when the prices of the assets cratered?

In 1929, real assets could be bought on credit for 50% down, or once owned, the debt could refinanced for 5 years up to a maximum of 50% of the real asset price.

The bank crisis was banks refusing to refi existing debt when the debt would be 55%, 60%, maybe 70% of the market price. The government takeover of mortgage finance circa 1935 allowed debt refinance up to 80% of market price for a 30 year term with regular payments of interest and portions of principle, changing the method of debt repayment.

Bank "innovation" returned to the previous method of all principle due at a set time unless refinanced, EXCEPT the principle could be 90%, 100%, 110% of asset market price when originated. Thus in 2009-2011, refi required debt principle of 130% to 150% of market price, before fees, penalties.

Only after the 80s was asset price inflation considered an iron law of economics, because everything changed in the 70s to forever dictate asset price inflation forever.

Just my observation growing up in the 50s and 60s with prices generally rising, but with all adults convinced the price of everything would fall significantly as soon as you bought it, especially if you bought on credit. That mindset has stuck with me my entire life, so that buying anything on credit is very risky. The behavior of coworkers and of bankers after the mid-80s seemed increasingly insane.

The article states quite clearly that capital deepening was only responsible for 0.1 percent per annum TFP growth from 1929-41 (less than the 0.3 percent from 1919-29).

Also, the small increase in average TFP from 1.7 percent (1919-1929) to 1.9 percent (1929-1941) is not due to increased productivity of capital or labor, but rather due to the factor productivity quotient that economists cannot accurately ascribe to capital or labor.

Possibly E. Harding is right. I tried to find the paper from a few months ago that argued TFP (a residual prone to error) really took off not in the 1930s but after 1945. And TFP has slowed since the early 1970s. Seems these papers are full of statistical errors that make them hard to interpret.

The authors: "The US still had a significant unemployment problem in the late 1930s, but it surely would not have faced long-term secular stagnation in the absence of WWII. As Kevin O’Rourke (2015) has recently emphasised, based largely on rapid TFP growth, the ‘natural rate of growth’ was high in the US at this time and this would have underpinned high levels of investment to allow capital stock growth to keep up." Another shout-out to the economic historian Kevin O'Rourke, who I cited yesterday for his findings attributing the diminished inequality of the last century to immigration restrictions adopted in the 1920s.

6. Speaking of prediction markets, has Cowen paid his gambling debt for his faulty prediction?

LOL, I had to find out about this from Krugman's blog today. Maybe Tyler was too ashamed to post this link: http://econlog.econlib.org/archives/2016/02/i_win_my_long-t.html

I read #3 earlier, strongly disagreed with the thrust. My engineering analysis is that moderate sized and up solar installations provide highest ROI, and that it is an emotional mistake to prefer small scale.

Something that fits on retail or manufacturing and nicely dovetails with demand does not need storage or legislated buy-back. It just works.

Residential solar does not match consumption patterns, and so must be forced through credits. This will be true through the foreseeable future.

5 seems an example of a mini-trend to examine assumptions. Bravo. As much as we are a "scientific" society, there are a lot of things we do just the way we always have. The RCT push-back was overrated.

Solar fans (heliophiles?) are always so optimistic.

There's profit there boys, go get it and get off my subsidy lawn

On 3 (solar and storage): It seems odd to me that in this article that:

1) The cost of solar are dropping rapidly, which means that storage + solar are becoming a better option
2) The costs of the power utility are increasing over time, which also makes home storage + solar a better option

If solar is getting very very cheap, why wouldn't the power utilities switch over to solar for generation decreasing their costs as well?

"If solar is getting very very cheap, why wouldn’t the power utilities switch over to solar for generation decreasing their costs as well?"

Obviously they would do so. The fact that they haven't tells you that it's not economical for them to do so. Home solar power is heavily subsidized whereas commercial and industrial solar power is only moderately subsidized. The current cost advantage for solar is purely a nature of tax subsidies.

You'll know when solar has achieved grid level parity when power companies are building large scale power plants without massive subsidies.

I imagine that solar does not have the scale economies that other types of energy have (because is, by nature, a descentralized power source)

Solar has no real need to be decentralized. It's more efficient and safer for workers at scale.

It can be decentralized if you are using it because you are off-grid, but by definition you don't talk about grid tie-ins then.

I think solar needs to be relatively decentralized because solar energy is dispersed by all (or almost all) surface of the earth, meaning you can't concentrate the production of solar power in a few points (like in nuclear power)

The primary scale economy it has is simply geography, you'll see it in sunny regions of the country. The other point is that solar is not very compact-- it takes a lot of space, so you will also see it in places where real estate costs are low.

Even in suburbs, you won't see it on the roof of every house, simply because of optimal orientation angles. Solar really works best when you can rotate your panels to keep them oriented to the sun.

Finally, solar panels are pretty fragile, and need regular checkout and replacement, which will also make returns to scale significantly higher.

"Finally, solar panels are pretty fragile, and need regular checkout and replacement, which will also make returns to scale significantly higher."

LOL, WUT? That makes *zero* sense. You should think about what you are parroting.

You apparently aren't very familiar with actual solar panels. They can break. They get hot, and that can cause significant issues, and can cause reductions in power output. They need to be cleaned. Wind and rain can cause physical damage and/or corrosion. More importantly, for optimal performance, they need to be placed on a moving platform to adjust their orientation, and that can cause even more problems. Wiring issues also arise, and cause reductions in performance. If you have panels installed on a roof, there are serious concerns about leaks or other damage to the roof developing.

I don't know if a single solar panel company that doesn't stress regular monitoring of the output personal panels, as issues can and do occur. Regardless of solar booster's affirmations, these things aren't magic.

There are many reasons why power companies don't do as many large scale solar installations. The biggest is simply it's a PITA to find enough land in a good location that meets the regulatory hurdles. It's easy to stick a couple of panels on a rooftop at your house, but much more difficult to site and get approval for a multi-million dollar solar hub that can likely be seen from space. Wind is more likely to ramp up large scale than solar.
Additionally, solar is still spikey enough that it can't replace baseline power which is the bread and butter of large utilities. Basically, solar is the small SaaS players that make up the majority of software but can't replace the 2-3 enterprise companies in a sector. Pointing out that you can make alot of high margin income in that business doesn't mean it makes sense for Oracle or MS to drop everything and get into making websites for small companies.

"Obviously they would do so. The fact that they haven’t tells you that it’s not economical for them to do so."

The indicator to look for would be a reduction in new plant construction. Once a plant has been built, that's a huge portion of its cost already committed. It will remain economically necessary to run until it crumbles, even if the amortized price of natural gas or coal vastly exceeds the arbitraged price of solar and even if the price drops so low that the initial cost will never be recouped.

You ask a very good question. One component of an answer is probably liquidity. Power companies are sitting on huge piles of already-built infrastructure, but would need billions and billions (say 10 billion) in fresh cash to build solar farms big enough to meet their customer's demands. If they can only raise 9 billion dollars, nothing gets built. In contrast if thousands or millions of individual consumers spend 9 billion collectively on solar installations, lots of solar gets built.

"If they can only raise 9 billion dollars, nothing gets built."

Solar plants aren't like nuclear plants. You can quite easily build a fractional solar plant and add capacity to it as you need it.

Solar farms are growing, but as I say they have less emotional appeal than residential, despite higher large scale ROI.

2015 saw a great development in battery storage http://www.prnewswire.com/news-releases/invenergy-announces-start-of-commercial-operation-of-315-mw-grand-ridge-energy-storage-project-in-illinois-300083758.html

Some other companies promise larger facilities for 2016.

That story says the storage is 31.5 MW. That's pretty tiny and is probably designed to allow the local wind energy to provide a 15 - 30 minute notification window of rapidly dropping supply.

For reference: The Batch County pumped hydro facility in West VA was completed in 1985 and has 3,003 MW of capacity. So, over 95 times more capacity.

Sorry, that should have been Bath County.

https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Station

>If solar is getting very very cheap, why wouldn’t the power utilities switch over to solar for generation decreasing their costs as well?

Came here to say this. Utility scale solar costs ~60% what rooftop solar costs. Economy of scales doesn't go away even if we switch from natural gas to solar+batteries. Solar+batter energy would need to get so cheap that the cost of transporting the energy from the grid becomes greater than the benefits of economy of scales.

Is storage like airplanes (or automobiles) or computers?

It depends on the job to be done. Coal is baseload, solar PV is a marginal generator. India has 'announced/permitted' around 200 GW of coal generation because they need lots of new baseload power. It wouldn't matter if solar was virtually free. Solar works works for households because of legacy infrastructure and particular tariffs.

#4....that's not from the Onion?

Must go eat Doritios and chocolate milk to help balance out the universe now

She's just plain nuts. But evidently sells enough "juice" to keep herself completely self absorbed.

I sense a rich husband somewhere in the background

The Big Google machine says not the case - single mom. Out of NYC with a culinary background.

Seems to be that peculiar species of person who somehow "has money" but no one is quite sure where it comes from

Divorce? :D

Inheritance?

Or maybe she, you know, earned her money? Perhaps the demand for high-end specialty juices in Hollywood is high enough, and she knows the market?

Where are the activated almonds tho

If you think of this article as an advertisement for her business rather than an actual list of things that she eats every day it makes more sense.

She sounds like she would be a pain in the a*s on a date. And she is too skinny to be attractive (to me anyway).

Another girl whose diet is featured in Elle, http://www.elle.com/beauty/health-fitness/a30624/kayla-itsines-food-diary/, eats delicious food and looks like a million bucks. She's a fitness model, which means that she goes through some calories. Bully for her.

#4: Her last name is Bacon. There is something going on here.

"3. Solar + storage."

Number 3 was one of the better VOX articles I've ever read. That being said, when it got to the comment about looking at value over price, I knew the article had gone into pitch mode instead of analysis mode.

"When people think about solar+storage, their first question tends to be how much it costs. But the focus on cost — a single "levelized cost of energy" from solar+storage, in the jargon — can be very misleading ...Appreciating the value of solar+storage, the many different value streams it produces, will help us understand why the cost of solar+storage varies so much from place to place."

That's marketing speak not engineering speak. It's also pretty similar to the most recent discussion I had with a salesman at a Funeral Home. As soon as you hear someone start talking about "value" over "price", be prepared for a very high price.

Here's a better phrase - avoided cost. Assets that generate power during peak demand periods are more valuable than average base load assets since they can replace peakers which only operate a fraction of the time and hence are expensive assets. To make sense of this type of integrated generation system you really need time of day pricing for electricity,.

That's not marketing speak. I think you're willfully failing to understand. All the author is saying is that the relative value of the energy produced is different than the installation cost per watt depending on the market you're in. It's a relatively trite observation - your priors are showing.

"your priors are showing."

LOL, I'm a solar/wind power advocate. Authors that write stories that are based upon their wishes rather than the facts on the ground are what I object too.

Your assumption of economic viability is a prior, and your assumption that solar cases are made on the basis of ethical values is also a prior.

It doesn't seem like you actually read the article.

"Your assumption of economic viability is a prior,"

Did you read the article? Because if you had, you would realize that even the author realized that this isn't a prior but the current state of the technology.

Here's the very first line of the article: "...by doing so they are only accelerating the development of solar+storage, which may prove to be an even bigger threat."

To be fair, let me address his valuation arguments:

1) Price arbitrage (aka buy low, sell high)
"Importantly, this does not work under net metering," That's just stupidly wrong. What he probably meant was that the policy doesn't work unless the utility is using "time of use"/"time of day" pricing. "Time of use" pricing and net metering are not the same thing.

https://en.wikipedia.org/wiki/Time-based_pricing VS https://en.wikipedia.org/wiki/Net_energy_metering

2) Some people like the idea of being independent of the grid entirely.
3) Backup power
4) Consuming more clean energy

These are edge cases that aren't going to significantly effect the grid electrical supply. And that's what the author says.
"(This doesn't make much sense, honestly, but people are funny.)"

5) Demand management/Virtual power plant/Load Leveling/Voltage regulation and spinning reserves

These are closely correlated so I'll address them together. This section is a terrible argument. Batteries are expensive and their primary cost is related to how many times you can charge/discharge them. Their duty cycle. If it was economical to use batteries in this capacity then utilities would be doing it. And indeed, some utilities do actually use batteries for rapid load leveling and voltage regulation. However, every scheme I've seen that proposed using Home batteries in place of some utility owned and operated battery storage falls apart when you look at the depreciation of the capital costs and maintenance.

Essentially, if the technology is cost effective the Utility owners will deploy it themselves. If it's not, they why would it make sense of the homeowner to do it? (Ignoring tax subsidies, of course).

6) Lower transmission and distribution (T&D) costs

Grid transmission and distribution doesn't cost much. So, any savings are necessarily minor.

Also, it's amusing that the author ended his list of solar evaluations with " That was a pretty long and technical list, so I think we all deserve to pause and enjoy a puppy." and then he shows a picture of a puppy. I'm an engineer. Showing me a picture of a puppy, will not convince me that your logical argument is better.

I find it interesting that people discuss the idea of dispatch-able micro-grids and then toss in lower distribution costs. How do they expect to build a new technology relying on two way power flow on distribution systems with load and generation control without spending more money on distribution? If anything the smart grid projects of the last 8 trying to deploy volt-var optimization, distributed load control and automatic restoration switching show that we would need to spend more money to support distributed generation, not less.

Essentially, if the technology is cost effective the Utility owners will deploy it themselves. If it’s not, they why would it make sense of the homeowner to do it?

Bolding because it really comes down to this.

"Grid transmission and distribution doesn’t cost much"

As a rough guide, 10% of total electricity costs are transmission and 30% distribution. Depends on were you are.

"Number 3 was one of the better VOX articles I’ve ever read."

Agreed, it was one of their best.

It was also, completely bullshit. As many, have noted: "Essentially, if the technology is cost effective the Utility owners will deploy it themselves.".

But this shit was the best Vox perhaps ever.

Re #3. The article suggest says:

"Australia (to take one example) is a perfect incubator for solar+storage. According to Morgan Stanley, if home batteries to store solar power reach about a $10,000, 10-year-payback price range, the market could expand to 2.4 million households — half of all households in the country."

This implies Australia has 4.8 million households. In reality Australia probably had about 9 million households in 2015 (for a population of 23.1 million).

So while the article is great, they clearly haven't fact checked everything.

#6

"The data indicate that there is a high degree of variability in the electability of candidates."

translation: our method for assessing electability is worthless.

(but we published some general guesses anyway)

Concur. My bets at this point are pretty much the opposite of their predictions. Time will tell, and somebody will crow.

Okay, if you don't believe in the betting markets then bet against them.

Where? I placed small bets on PredictIt.org (are Dems. really 64% favorites to win WH?), that market is very thin. UK bookies are more liquid, but the web sites are horribly designed, you have to know the jargon, and you are charged currency transaction fees by the credit card.

And the US government deems it illegal with potentially high penalties.

The Vox story is interesting but doesn't really understand projections, forecasts, and their history. Some excerpts:

But it's not a wacky projection. It just shows what will happen if what's been happening keeps happening.

Exponential growth never lasts forever. "Change" is the only constant. History is full of things that happened and then quit happening. I don't think the authors know what "wacky projection" means.

virtually every past projection of solar costs has underestimated how quickly they will fall

This seems extremely unlikely. What was Amory Lovins saying in the 1970s about solar costs? Vaclav Smil has devoted entire chapters in his books the complete inaccuracies of nearly all energy use and energy supply forecasts. I don't remember him saying that solar was a peculiar exception that everyone always got right...

"The Vox story is interesting but doesn’t really understand projections, forecasts, and their history."

Particularly regarding large scale Li-Ion batteries. For this purpose, they used EV batteries, which is probably the best available metric. But they then use a 5 year trend to make a 35 year prediction. There's no objective person that would find that projection credible.

#3 the author notes: "Natural gas electricity costs around 7 cents per kWh. Let's say that by drawing some power demand away from peaker plants, solar and storage make it more expensive, around 10 cents."

This is neither consistent with upward sloping supply curves nor peaker plants, the most expensive source of electricity on the grid. Taking demand away from peak periods will significantly decrease the cost of grid power and the potential savings from solar.

Tyler,

It is not just solar, but wind has also been dropping sharply in cost. If this trend continues for both (and also if we get a breakthrough on fusion that many are now predicting), what does this do to your secular stagnation argument? Cannot a sharp decline in energy costs lead to a rise in productivity and economic growth rates?

I have commented on this at http://econospeak.blogspot.com/2016/02/why-secular-stagnationists-may-be-wrong.html .

There have been people trying to argue that low energy costs can also cause a recession. Which I find really implausible unless you are relying on energy exports to run your economy.

"Cannot a sharp decline in energy costs lead to a rise in productivity and economic growth rates?"

I think this is an interesting question. Energy is a substantial component to both manufactured goods and services. Of course, given the current structure in the energy market, it's dependent on the specific parameters. Cheap electrical power will drive down the costs of transportation fuels, but a premium will remain.

Barkley, as an aside, if we get the breakthrough in fusion, then the drops in wind and solar are probably irrelevant.

#5

OMG muscle confusion

#3 Here in Florida most of what we use electricity for is heat and cooling, perhaps it would be better to store the cool of heat. That is cool or heat water. Water is much cheaper than batteries.

Ice slurry is used as an economical energy storage mechanism for large facilities. Often it's less about the direct savings in energy than it is capital cost avoidance. IE, I've got 4 chillers, but my peak load during hot days is 4.5 chillers. So, I freeze water at night when the loading is 3.5 chillers and used the stored Ice to handle the peak. There will be a net loss but this is mitigated by the lower cost of utility power at night. And since chillers can cost $1 million each, the avoided cost of capital is a net win.

http://www.icesynergy.com/L3-8-PDFlibrary/Ice%20Crystal%20Slurry%20Tes%20System%20Using%20The%20Orbital%20Rod%20Evaporator.pdf

Large chiller plants (including chiller $250/ton, cooling tower $50/ton, controls (oh gawd), pumps $25/ton, plumbing (all over the place) and space) go for ~$350-$600/ton. Even a monster chiller plant isn't that expensive.

The main benefit occurs when a utility has a high day/night demand charge differential (more than $15/KW).

These were 250 ton units. So, the cost was much higher than $600 per ton, but it probably included the 28 deg Glycol heat exchanger loops as well, which weren't necessary using the Ice Slurry. The Ice Slurry is a Glycol mix.

These units were used for high speed, bulk material cooling, not for normal HVAC demands.

"The main benefit occurs when a utility has a high day/night demand charge differential (more than $15/KW)."

That's what I originally thought, but the project justification was capital avoidance. I never saw the finance numbers and it's probable that both arbitrage and capital avoidance were significant factors.

#4

I remember seeing a video clip where Tyler was talking to Peter Singer and Tyler said two of the best things in life were probably food and sex... I bet you on both counts that Moon Juice lady is probably feeling pretty good... that's a lot of MACA

You call that food? And sex drive goes way down with nutrient deprivation.

Apparently all these herbs and exotic sounding ingredients carry a risk of increased mortality.

See, for instance this [paper](http://www.ncbi.nlm.nih.gov/pubmed/19164871) on increased mortality amongst Taiwan herbalists

#5 So there is a term for what I did, "reconsolidation"

"existing memories are recalled and modified with new knowledge (from time filtered Google search)" on things other people and I found interesting.

MIE: cell phones controlled IKEA hot pot, cooking temp dependent on the number of cell phones surrendered.

http://shanghaiist.com/2016/02/08/ikea_taiwan_cell_phone_hot_pot.php

Cell phones controlled projectors for professors ??

Interesting that the laissez-faire AEI finds that the most AEI-compatible candidates are also the most electable. Bernie Sanders is considered very unelectable, in spite of the fact that he polls even better than Hillary against all Republicans. We already know a democrat is probably going to win--the only question is will it be Clinton or Sanders. I'm hoping it will be Sanders as he opposes TPP and is highly critical of big business.

http://www.politifact.com/truth-o-meter/statements/2016/jan/26/bernie-s/bernie-sanders-says-he-polls-better-against-gop-ca/

While this is a couple weeks old now, the claim that Sanders beats Republicans better than Clinton has been a shaky claim for a while.

Well RealClearPolitics shows Clinton losing to both Cruz and Rubio (and winning vs Trump), whereas, it shows Sanders winning to Cruz and Trump(and losing to Rubio). So, Sanders has a point, that he's polling better than Clinton versus the likely nominee.

"We already know a democrat is probably going to win–the only question is will it be Clinton or Sanders. "

However, that comment is more aspirational than accurate.

3. Australia is likely to be the only place at the moment where using batteries to store electricity from rooftop solar during the day for use in the evening will pay for itself. And even then only under the right circumstances. But as costs decrease, the number of households and businesses that can benefit from energy storage will increase. As will the number of countries where it pays for itself.

The reasons why energy storage can pay for itself in Australia are simple. Firstly, we have the lowest cost of distributed solar in the developed world. Before tax or subsidy we pay an average of about $1.30 US a watt, which is less than half the average paid for rooftop solar in the US. We have high retail electricity rates with a marginal cost averaging around 20 US cents a kilowatt-hour, though some people can pay around 35 US cents for peak electricity in the late afternoon and evening. And feed-in tariffs for electricity sent into the grid from new rooftop solar are very low and are only about 4 US cents a kilowatt-hour. In addition, Australia has an electricity market which allows people with home energy storage to buy and sell electricity at prices based on the current wholesale price, which can provide a small but still significant source of revenue. This revenue will of course decrease as more storage is installed, but as costs are very likely to come down that's not likely to stop its spread.

Because of lower retail electricity prices in the US, higher rooftop solar costs, and generally higher payments for rooftop solar electricity exported to the grid, the US may be one of the last developed countries where home energy storage takes off. Or if prices don't drop far enough it may not take off at all. Currently small scale energy storage seems most likely to be used by businesses in certain areas in the US seeking to reduce the demand charge portion of their electricity bills, and there are companies doing this now.

But at least the US has a large portion of its population living in areas with plenty of sunshine. Los Angeles, Phoenix, Honolulu and probably many other major cities receive more sunshine than any Australian state capital.

We should all order 120 packs of cards online and have them shipped to various police and government offices in Thailand.

Here you can get 12 decks for $15 so 120 decks would only be $150 - http://www.amazon.com/Decks-Wide-Size-Regular-Playing-Brybelly/dp/B002XO760I/ref=sr_1_3?s=toys-and-games&ie=UTF8&qid=1455084747&sr=1-3

This was just a very quick search - I'm sure you could find them even cheaper in greater bulk.

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