Thursday, February 23, 2017
Wednesday, February 22, 2017
Monday, February 20, 2017
“Having big money come in is the first step to widespread deployment,” Brad Meikle, a San Francisco-based analyst for Craig-Hallum Capital Group LLC, said in an interview.
That’s a shift from many of the storage projects we’ve seen to date as expensive components and unproven revenue potential made commercial lenders leery. Developers typically have financed systems from their own balance sheets, cobbling together revenue from short-term utility contracts or wholesale electricity markets.
Saturday, February 18, 2017
Capital markets have experienced a shift in sentiment over the course of the past couple of months. Fears over secular stagnation and deflation have dissipated and investors have been willing to embrace risk assets again. Many economists have revised upwards their estimates of global economic growth, starting first with the US where the fiscal reigns are expected to be loosened in order to meet some of President Donald Trump’s election promises to voters. While there is clear short-term momentum in economies like the US and UK, where unemployment rates are low and consumption is robust, there remain secular themes that investors should be aware of when they formulate long-term investment decisions. One of these themes is a shift in the focus of economic policy, driven by demographics. Unlike economic variables, demographic trends are predictable and greatly impact on all of us. The global economy has now passed an important tipping point. For the first time in recorded history, children under the age of five no longer outnumber those aged 65 and above. We have arrived at “peak child”. The United Nations has estimated that the global population will continue to age and, by 2050, more than 15 per cent of the global population will be aged over 65. Economists often point to the challenges that Japan faces as the population ages; by 2050, most of the G7 will have a similar demographic profile as Japan does today, as will China, Brazil and Russia. Longevity risk — the risk that people live longer than expected — could put huge pressure on our current retirement systems. Research from Bank of America Merrill Lynch suggests that age-related spending accounts for 40 per cent of government spending in developed markets and as high as 55 per cent for the US. In order to meet the challenges presented by an ageing society, we will need to work longer and think about policies and initiatives that incentivise people to work past the traditional retirement age. If these issues aren’t addressed, increasing old-age dependency ratios could have wide-ranging impacts on government finances, productivity rates and inequality. In a world where immigration policy reform is increasingly dominating political agendas, policymakers should recognise that gross domestic product largely reflects a demographic profile where more workers enter the workforce, who (if everything goes to plan) will then produce, earn and consume more than the previous quarter. Naturally, as the workforce shrinks due to ageing, the reverse will be true. However, it does not necessarily mean that an economy is underperforming if the trend rate of growth is falling to reflect a smaller workforce. The changing demographic trend that the developed and parts of the emerging world are now experiencing will increasingly act as a headwind to global GDP. China in particular, which has driven global growth post-crisis, will probably slow markedly in coming years from historic growth rates. In the future, it will be important for policymakers to look beyond GDP as a measure of economic success, in favour of alternative measures which look at economic wellbeing. While it is easy to focus on near-term tactical shifts in markets, it is increasingly important to focus on long-term secular trends that are reshaping the economies that we live in. Higher rates of GDP are not necessarily the answer to face the challenge of an ageing population. Individuals, companies and governments will have to adapt to these challenges, and we may find that in the future we see a greater focus on intergenerational fairness and living standards than has historically been the case. Of course, the effects of ageing will have far-reaching impacts on financial markets. Ageing societies will usher in an era of saving, which should provide a tailwind for companies that help people plan, invest and save for retirement. Fixed income and dividend-paying equities will probably benefit in this environment given both asset classes provide a regular income for retirees to use. Additionally, the structural demand for longer-dated bonds from insurers and pension funds may limit the extent to which bond yields can rise in the future.
India is phasing out the daily track inspections conducted by an army of 125,000 engineers across its vast colonial-era railway network, as ministers attempt to put an end to the blight of deadly derailments. The plan to bring in electronic sensors on tens of thousands of kilometres of track is part of a wider programme to improve railway safety, to which finance minister Arun Jaitley allocated $15bn in last week’s Budget, and follows three serious derailments in the past three months. “We will be using wheel-based sensors and fixed monitors at certain positions on the track to measure whether they are fractured,” said Hanish Yadav, an adviser to rail minister Suresh Prabhu. He added that the sensors would take several years to install throughout the broad-gauge network. India’s rail system is one of the largest in the world, carrying 20m passengers a day, and is the country’s largest employer, with about 1.3m staff. But it is also in need of modernisation, with many parts of its infrastructure more than 100 years old.
Indian Railways by numbers
90,803km of track . . . . . .
125,000 track inspectors (current)
$14.9bn Budget 2017-18
Source: Indian Railways and Arun Jaitley’s Budget speech; figures refer to 2014-15 unless stated otherwise
Even where improvements are being made, the technology updates often lag well behind those in western countries. The Linke-Hofmann-Busch coaches being rolled out to replace older trains, for example, were designed in the 1990s. The problems with the system have been highlighted in recent months after a series of serious accidents in which dozens of people have died. The most recent, last month, involved a passenger train coming off the rails near the border between Andhra Pradesh and Odisha in eastern India, killing 41 people. Sabotage has not been ruled out for any of the accidents. However, local officials have said there is no evidence of deliberate attacks and civil servants blame decades of under-investment for the state of the system, in which tracks regularly fracture. “In over 65 years [since independence] there was no money to be spent on new technology,” said Mr Yadav. “With the money they had, the best they could do was simply to maintain their assets.” Mr Prabhu has pledged $137bn until 2020 to overhaul the system, as part of a plan that includes attracting private sector money and foreign investment to help rebuild stations and build new services. Two years in, however, the results of that scheme are mixed. Of the 400 stations across the country that are due to be upgraded, only a handful have been approved. Of these, only one is designed by a private company, a model the government hopes to encourage. Another idea, to tap foreign markets for funds using “masala bonds” issued in London, has fallen by the wayside. “We were not able to get better rates than we could domestically,” said Mr Yadav. The ministry's plans to electrify and broaden thousands of kilometres of track appear to be behind schedule. According to an internal strategy document seen by the Financial Times, about 5,000km of track is overdue for renewal. Meanwhile, an eye-catching project to build a $15bn high-speed link between Mumbai and Ahmedabad has been signed off by the Japanese and Indian governments but New Delhi is yet to allocate its $2.7bn portion of the funds needed to build it. “Unfortunately the current government is focusing more on megaprojects like the bullet train rather than upgrading the current infrastructure,” said Sandeep Upadhyay, chief executive of Mumbai-based Centrum Infrastructure Advisory. However, he added that passengers would start seeing improvements more quickly over the next few years. “The root cause of all our problems has been that there was not enough money to invest in capital infrastructure,” he said. “But now, for the first time, the money is being made available to do that. Now we have to get on with spending it.”
Since the early 2000s, the cost of sequencing a human genome — determining the precise order of nucleotides within DNA molecules that defines who we are — has dropped sharply. A genome that cost $100m to sequence in 2001 can today be sequenced for roughly $1,000. Sample the FT’s top stories for a week You select the topic, we deliver the news. Select topic Enter email addressInvalid
2. Artificial intelligence
Artificial intelligence is not science fiction: it is already embedded in products we use every day. Apple’s Siri assistant, Amazon’s book recommendations, Facebook’s news feed and Spotify’s music discovery playlist are all examples of services driven by machine learning algorithms. This decades-old science is enjoying a renaissance today because of the deluge of data created by smartphones and sensors, and the supercomputing power that is available to crunch that data. According to technology research firm Tractica, the AI market will grow from $643.7m in 2016 to $36.8bn by 2025. Techniques such as deep learning and neural networks supposedly mimic the human brain: they spot broad patterns in enormous data sets in order to label images, recognise voices and make decisions. The next step is artificial general intelligence: an algorithm that will not have to be taught a specific skill such as a game of chess or a new language, but will acquire it through trial and error, just as a child does. Companies such as London-based DeepMind, owned by Google, and others are working to make this a reality.
3. Renewable energy
World leaders last year ratified the Paris Agreement on climate change. This aims to keep the global average temperature from rising more than 2C above pre-industrial levels and to attempt to keep the increase under 1.5C. Keeping this promise will require more renewable energy research over the next decade. In energy, researchers are trying to build a nuclear fusion reactor that would tap the same process that causes the sun to give off light and heat to create a source of clean energy. An intergovernmental partnership is building a $19bn fusion reactor, ITER, in France. Other innovations include artificial photosynthesis to make hydrocarbons in laboratories to power cars, and high-altitude wind power that involves kites and hot-air balloons acting as aerial wind turbines. Iceland is investing in geothermal technology, drilling for heat energy underground. Thirty years ago it started by using geothermal resources to heat towns and cities. Now, the entire country’s electricity and heating systems are powered almost fully by renewable energy, including geothermal and hydropower.
WiFi — a household staple that modern children take for granted — turned 25 last September. As more objects connect to the “internet of things” — an estimated 50bn of them by 2020, according to estimates from technology company Cisco — the future of WiFi lies in reducing the power it drains from internet-enabled devices. One innovation, invented by students at the University of Washington in Seattle, is known as “passive WiFi” which its inventors say consumes 10,000 times less power. It is currently slower than regular home broadband, but would work well for applications such as smart thermostats or lightbulbs. The WiFi community is also looking to develop higher-frequency bands that would be used over a limited range, such as in a house or car. Ultimately, WiFi itself could be replaced by a new superfast alternative called Li-Fi, which uses light to beam information through the air, instead of radio waves. Lightbulbs would act as routers for this technology. A pilot study earlier this year found that a Li-Fi prototype could send data 100 times faster than WiFi, allowing dozens of movies to be downloaded in minutes.
5. Smart appliances
Almost two-thirds of the human population is connected to the internet via smartphones, but these devices are not the only portal to the web. In 2016 there were 6.4bn connected things — excluding PCs, phones and tablets — in use worldwide, up 30 per cent from the previous year, according to technology analyst Gartner. The internet of things, as it is known, is this universe of objects — everything from cars to printers, lightbulbs to thermostats — that are no longer “dumb”, static things: they can learn your habits and be controlled remotely using an app. The stereotypical smart appliance is the self-stocking refrigerator that replenishes your milk automatically. This innovation will replace a lot more than the sniff test. Cars are now computers, running more lines of code than the Apollo 11 spaceship on its way to the moon. As these computers become more intelligent, cars will drive themselves, potentially reducing traffic-related fatalities. Smart sensors can also transform industry, for instance by monitoring goods during transport, helping utility companies to measure energy usage and logistics companies to track vehicles over long distances.