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A new era for commodities Cheap resources underpinned economic growth for much of the 20th century. The 21st will be different. NOVEMBER 2011 * Richard Dobbs, Jeremy Oppenheim, and Fraser Thompson Source: McKinsey Global Institute, Sustainability & Resource Productivity Practice In This Article Exhibit: In little more than a decade, soaring commodity prices have erased a century of steady declines. About the authors Comments (2) Has the global economy entered an era of persistently high, volatile commodity prices? Our research shows that during the past eight years alone, they have undone the decline of the previous century, rising to levels not seen since the early 1900s (exhibit). In addition, volatility is now greater than at any time since the oil-shocked 1970s because commodity prices increasingly move in lockstep. Our analysis suggests that they will remain high and volatile for at least the next 20 years if current trends hold-barring a major macroeconomic shock-as global resource markets oscillate in response to surging global demand and inelastic supplies. Back to top Demand for energy, food, metals, and water should rise inexorably as three billion new middle-class consumers emerge in the next two decades.1 The global car fleet, for example, is expected almost to double, to 1.7 billion, by 2030. In India, we expect calorie intake per person to rise by 20 percent during that period, while per capita meat consumption in China could increase by 60 percent, to 80 kilograms (176 pounds) a year. Demand for urban infrastructure also will soar. China, for example, could annually add floor space totaling 2.5 times the entire residential and commercial square footage of the city of Chicago, while India could add floor space equal to another Chicago every year. Such dramatic growth in demand for commodities actually isn't unusual. Similar factors were at play throughout the 20th century as the planet's population tripled and demand for various resource

Nexans said it has been awarded contracts worth around €110 million ($113.2 million) by Libya's PEWCO (Public Electrical Works Company), to supply cables for projects to upgrade the country's power transmission and distribution infrastructure. The contracts involve the supply of over 1,000 km of high-voltage (HV) and low and medium-voltage (MV) cables. The transmission contract comprises 245 kV underground cables to be manufactured and supplied by Nexans, France and the 33 kV and 15 kV distribution cables and the optical fibre cables being supplied by Nexans Greece, with additional accessories being supplied by Nexans, Italy. Delivery and installation of the cable is expected to be complete by the end of 2013.

Finish copper fabricator Luvata intends to improve its supply chain with the prospect of economic recovery. The company anticipates that the market will recover by the end of Q1 2010 and recognises that it needs to prepare so as to regain market share. Senior Vice President of procurement Bob Kickham said that once the market starts to recover, copper prices may increase again. Given the ongoing fears of substitution toward aluminium, a more streamlined and efficient supply chain will provide considerable support to copper.

"Enercon to supply 57.5MW to Brazil wind farm Jonathan Tilley, Windpower Monthly, 28 February 2011, 10:59am BRAZIL: Enercon will supply wind turbines for a 57.5MW project in Brazil owned by Spanish developer Enerfin."

EDF Energies Nouvelles has signed an agreement with Clipper Windpower for the supply of 67.5 MW of wind turbines. Clipper Turbine Works, a subsidiary of Clipper Windpower, will supply 27 wind turbines, each with a 2.5 MW capacity, to build the first phase of the La Ventosa wind farm in Mexico.

According to NREL's Renewable Electricity Futures Study, the increased electric system flexibility needed to enable electricity supply-demand balance with high levels of renewable generation, can come from a portfolio of supply and demand side options, including: · Flexible conventional generation · Grid storage · New transmission · More responsive loads · Changes in power system operations

With the consumption increasing faster than production in the global market for zinc, market participants' anxiety about the global supply-demand imbalance of zinc is deepening. Zinc is used in brass.

"In this infographic, we examine long-term trends and the outlook for copper supply."

"Nexans supplies low voltage power cables, instrumentation and control cables and medium voltage power cables, essential for the operation of the cruise liners. Around 3,000 km of cables have been delivered for Anthem of the Seas and some 2,400 km will be supplied for Norwegian Escape."

A new approach to storing electrical energy can store more energy than gasoline in the same volume, and could help extend the range of electric vehicles. But some experts say other approaches are more practical. The biggest technological hurdle facing electric vehicles is their range. Even the best rechargeable batteries cannot match the density of energy stored in a fuel tank. Combining electric power with a combustion engine to make a hybrid electric vehicle sidesteps that problem. But a new take on electrical power storage that is part battery, part chemical fuel cell could ditch gasoline for good.The new design stores energy more densely than petrol, and was conceived by Stuart Licht of the University of Massachusetts, Boston, and colleagues. Batteries produce electricity from a closed chemical system that is eventually exhausted. Fuel cells use a constant supply of fuel, so they are continually topped up. Licht's cell has features of each. Its negative electrode, or anode, is made from vanadium boride, which serves double-duty as a fuel too. But unlike the flowing fuel of a fuel cell, the material is held internally, like the anode material of a battery. The vanadium boride reacts with a constant stream of oxygen, as in a fuel cell, provided by the positive electrode, or cathode. This brings in a supply of air from outside.

Dwarfed by any of the north African nations, it represents an area slightly smaller than Wales but scientists claimed yesterday it could one day generate enough solar energy to supply all of Europe with clean electricity. Speaking at the Euroscience Open Forum in Barcelona, Arnulf Jaeger-Walden of the European commission's Institute for Energy, said it would require the capture of just 0.3% The scientists are calling for the creation of a series of huge solar farms - producing electricity either through photovoltaic cells, or by concentrating the sun's heat to boil water and drive turbines - as part of a plan to share Europe's renewable energy resources across the continent. A new supergrid, transmitting electricity along high voltage direct current cables would allow countries such as the UK and Denmark ultimately to export wind energy at times of surplus supply, as well as import from other green sources such as geothermal power in Iceland. Energy losses on DC lines are far lower than on the traditional AC ones, which make transmission of energy over long distances uneconomic. The grid proposal, which has won political support from both Nicholas Sarkozy and Gordon Brown, answers the perennial criticism that renewable power will never be economic because the weather is not sufficiently predictable. Its supporters argue that even if the wind is not blowing hard enough in the North Sea, it will be blowing somewhere else in Europe, or the sun will be shining on a solar farm somewhere.

Industrial, mining and property investors were still in a state of confusion over power utility Eskom's approach to new electricity connections, but the corporation promised on Tuesday that the issue would be clarified with the imminent release of a comprehensive policy, possibly by as early as next week. CEO Jacob Maroga - currently in Europe on a road show to expose potential investors to its R150-billion capital-raising plan - said last week that the utility had not yet determined just how much power could be allocated to new projects. However, he indicated that a needs analysis was under way in a bid to align its stretched supply profile to the new demand. Maroga also stressed that supply security could be markedly improved and space created for new connections if greater savings were achieved. In fact, he displayed a graph showing that Eskom's reserve margin, which was currently running at a paltry 6%, could rise to well above 10% by 2009 should its savings targets be met. "If we follow the 10% savings path, there will be space for new connections. But we need information from potential customers, which will tell us what is, in fact, possible," he said.

Emcore Corporation announced that it has entered into two new supply agreements for solar cells and receivers with a combined total value of more than US $40 million. The larger of the two purchase contracts is a multi-year supply agreement for solar cells, to be delivered over four years. The product to be delivered will be incorporated into concentrating photovoltaics (CPV) systems developed for commercial rooftop installations as well as utility-scale solar farms. The customers placing these orders with Emcore are targeting CPV deployments in the United States with a particular focus on the California market, Emcore said. Production for these orders has already started and approximately US $1 million of product is expected to be shipped in the present quarter.

Batteries are becoming increasingly important to our lives. Not only to sustain our rapidly expanding wireless technology requirements, but also to support our need to travel about. With hybrids, plug in hybrids and fully electric vehicles beginning to provide us with more cost effective transport, we're bound to depend more and more on batteries. And at a larger scale, as we integrate more renewable sources of energy into our electricity grid, we'll need to manage supplies with more uncertainty. So, there is likely to be an increased need for energy storage solutions to help temper the ups and downs of power supply irregularity.

Although volatility in most assets is sharply lower than it was in November, oil price volatility has continued to climb. This rise in volatility, and resulting near $30-a-barrel oil price, is reflecting the same imbalances in the energy market that $147 oil did last summer: namely inadequate investment in basic infrastructure to produce, deliver, store and distribute energy. Last summer, attention focused on shortages in production capacity. However, present underlying shortages in storage and transportation are creating massive price distortions across the energy complex. Storage and transportation capacity provides the system with a buffer to supply-and-demand shocks by allowing it to run surpluses and deficits that smooth the normal cyclical swings in prices. As global storage capacity has failed to keep pace with growth in global demand over the past three decades, this buffer has shrunk relative to the size of the market, resulting in chronically higher than normal price volatility. Once infrastructure begins to constrain the ability of the market to run imbalances, prices have to create more of the adjustment process. Electricity markets are an extreme case of this. As power cannot be stored, supply must always equal demand, leaving price as the only mechanism to force the adjustment process. Accordingly, electricity is the most volatile of all assets. Due to inadequate infrastructure investment over the past several decades, oil is looking more like the electricity markets.

The road to grid parity for PV power generation will be difficult, needing five or more years to compete with utility power, unsubsidized, on a large scale, noted Mark Thirsk, managing partner at Linx Consulting, at a recent SEMI PV forecast luncheon (Sept. 18) in Santa Clara, CA Most input materials for PV production are in relative oversupply and will not constrain production, Thirsk pointed out - and for this reason manufacturers are conservative about capacity investment. In particular, his PV module production forecast (see Fig. 1, above) shows an overstep in demand in 2008. One reason for suppliers' reluctance to build capacity for entering the silicon supply chain is that it is an inefficient process. "Only about 15% of all the silicon going into the supply chain goes into the wafers, so it's a pretty wasteful and capital intensive process, so there is a lot of reluctance to build capacity," said Thirsk. Despite the efficiency challenges, Thirsk's forecast indicates that an oversupply may occur in 2009 Because >40% of PV grade silicon is lost at the wafering step, Thirsk believes this represents a significant opportunity for the right technology. Additionally, diamond wire is a potential replacement for slurry technology, but this technology is still immature. In the crystalline silicon (c-Si) value chain, Thirsk sees opportunities for optimizing mono-crystalline wafers with metal wrap technology and backside contacts; process optimization and material improvements would improve cell efficiency, and glass, wafer, backsheet, and grid improvements can enable more efficient light capture. Looking ahead, Thirsk told the audience that while thin-film technologies will enjoy strong growth "and may be more attractive to value-add materials and equipment suppliers, thin-film cell production will remain a minority share for the medium term." (see Fig. 3, below) He closed his presentation encouraging the creation of a Moore's Law type of roadmap for the PV