Solar land use: less than coal

Nevada Solar one is a better and smaller neighbor than a coal mine 80

solar thermal plantEvery now and then, one hears complaints about solar energy: "But it takes too much land!" "An entire Idaho!" "Three Californias!" MTR mining

Nevada Solar One takes up about 400 acres, mostly for mirrors and heat engines. You would have to mine about 5,300 acres to feed a coal-fired powered plant producing the same amount of electricity. Even acre for acre, I'll take Solar One's pleasant campus over a coal mine.

Math below the fold.

The 400-acre Nevada Solar One produces around 134,000,000 kWh per year. About three quarters of this is mirrors and heat engines, the rest support services and access.

This pencils out to 7.69 kWh per square foot per year, or slightly less than 154 kWh over the course of 20 years.

According to the EIA, one ton of coal produces about 2,000 kWh of electricity. Per acre yields for coal vary a lot, but in Appalachia it appears that mountaintop removal produces about 10,000 tons of coal per acre. So a coal plant produces around 11.5 kWh of electricity per square foot consumed in a single year. And then you need to consume a second square foot the next year. So producing the 154 kWh per square foot that Solar One produces over the course of 20 years would require mining 13.4 square feet.

Ignoring everything after the decimal point (this kind of calculation is not that precise, in any case), for coal to produce the same electricity Nevada Solar One will provide over the course of 20 years would require 13 times that 400 acres, or 5,300 acres.

Gar Lipow, a long time environmental activist and journalist with a strong technical background has spent years immersed in the subject of efficiency and renewable energy. He has written extensively on the economics of solving the global warming, and why pricing externalities (though important) cannot be the main driver of such solutions.

His on-line reference book compiling information on technology available today, “No Hair Shirt Solutions to Global Warming”, is available at http://www.nohairshirts.com.

His articles on the economics and politics of solving the climate crisis have been published in Z magazine and a number of small journals.

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  1. nattaylor Posted 6:33 pm
    25 May 2008

    Huh?I understand from the next paragraph that 7.69 kWh per year is meant to read 7.69 kWh per square foot?
  2. amazingdrx Posted 11:16 pm
    25 May 2008

    Interesting comparison GarNow let's hope they put the next one on a factory roof.  This would be a good way to compare coal with wind too.

    http://amazngdrx.blogharbor.com/blog
  3. Pompey Road Posted 11:29 pm
    25 May 2008

    Solar vs Mountain Top RemovalWhen a new or better technology comes along you can clean up a solar farm. Once you blow up, destroy two mountains and push the overburden into a valley covering up a fresh water stream it is gone forever.
    How so much uproar could be caused by an oil spill like the exxon valdez and this catastrophe made common place is beyond me. We had a sludge pond break and run all the way into the Ohio River that was 30 times larger than the Exxon Valdez and it hardly gets a line of print.
    This is criminal what they are doing down here and the people doing it should be held accountable. To me it is not just a matter of stopping the practice of MTR but also making sure no one every resarts this practice again when an administration changes in Washington.
    Most of the regulations that were loosened to allow this practice were at the administrative level. George Bush is the main culprit when considering who allowed this practice. In the 1977 law the coal companies had to put the land back on the original contour. Stripping of any kind is abhorrent to me but at least you just lost the mountainnn now you lose the mountain a valley and a fresh water stream.
    It boggles the mind when considering what we have already lost down here in appalachia. To know that this practice is going to continue on is devestating. They outlawed hydraulic mining over a hundred years ago and it just partially destroyed a mountain, how in gods name can in the year 2008 a practice like MTR still be allowed to continue.
    We are fast becoming the U.S. version of Chernobyl. Maybe Sixty Minutes will give us as much attention one of these days as they did 3 Mile Island. The nation as a whole has written off the state of Kentucky and W.Va. Nobody really gives a damn about what happens to dogpatch if that is what you have to destroy to keep your lights on.

    The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
  4. Cyranix Posted 12:07 am
    26 May 2008

    It's not just the math of power plants themselves.While it's excellent to know that solar power plants are more efficient than coal ones, the real value of solar energy (in my estimation) lies in the opportunity for decentralized power that it provides. Anyone who gets sunshine on their personal property can generate local energy, thereby reducing the strain on (and thus resources required by) a central power source. Whether solar allows one to go off-grid or just complements the grid, every step towards lightening the burden of centralized power is a positive one.
  5. racc Posted 12:48 am
    26 May 2008

    Don't Forget Life Cycle AnalysisI certainly don't support coal but you are forgetting that all the materials for a solar farm come from somewhere. There is mining involved in the production of these materials. It is always good to see life cycle resource use. Just judging from the picture in the article, there is probably a mountain top somewhere being removed.
    It is really important to consider this up front or we'll end up just jumping from one ethanol type mess to another.
    This is why conservation is so important.
  6. Tasermons Partner Posted 1:32 am
    26 May 2008

    Not to mention......unlike strip-coal mines, the solar plants can still support at least a limited wildlife population of insects, small amphibians and reptiles, and even small mammals...depednin' on the land type, maintenance, and whether or not it's fenced in.
    Point is, unlike coal-strip mines, which often take down forests and understory as well, solar plants (due to their sunny nature), usually aren't built in areas with large vegetative cover to begin with, so their impact is less destructive.
    Could a tortise live at a solar farm? Quite possible.  At a strip mine?  Probably not.
  7. Tasermons Partner Posted 1:36 am
    26 May 2008

    Recycling...I certainly don't support coal but you are forgetting that all the materials for a solar farm come from somewhere. There is mining involved in the production of these materials.
    True, but also remember that many of the base components for solar farms can be recycled and reused for other purposes (includin' newer solar farms), whereas the best you'll get from coal would be flyash for concrete (not really recycling).
  8. Gar Lipow's avatar

    Gar Lipow Posted 1:57 am
    26 May 2008

    LCAOf course all this is noodling on a napkin, not lifecycle analysis. I'm sure taking the metal and so forth in Solar One into account would substantially increase the area impacted even with recycling. But then you would have to consider the area impacted by contamination of water, and processing of coal, and disposal of processing waste, air pollution.
    Also to nattataylor who said "I understand from the next paragraph that 7.69 kWh per year is meant to read 7.69 kWh per square foot?" Yes. good catch. corrected.
  9. nedruod Posted 1:57 am
    26 May 2008

    TimingFor the purpose of calculations it would be more appropriate to use the timeline of land recovery for coal than the expected lifetime of the solar panels.
    Some might estimate that as low as 10 years, I'd probably say 20, if the right practices are followed.  From what I read they aren't, and when they aren't it might be more like a hundred years for recovery, maybe more.
  10. Gar Lipow's avatar

    Gar Lipow Posted 2:57 am
    26 May 2008

    Recovery"Recovery" is an exaggeration of what happens to mined land.  Tear up a mountain covered with old growth forest, leave in its place a toxic waste dump covered by a thin layer of grass and pine or other fast growing tree and brush. That is not "recovery" in any meaningful way.
  11. Gar Lipow's avatar

    Gar Lipow Posted 3:05 am
    26 May 2008

    Reclaimed land after mountaintop removal"reclaimed land"


    I Love Mountains: Anti-coal coalition
  12. Jonas Posted 3:07 am
    26 May 2008

    Baseload, peakload and energy storageIf you look at this from a practical point of view, one shouldn't underestimate the problem of solar's lack of base- and peak-load capacity.
    Molten sands are certainly interesting for energy storage but haven't been proven on a commercial scale.
    So unless a viable energy storage technology becomes available, such large solar plants remain dependent on fossil fuels for their baseloads and peakloads (or biomass).
    That's why its often difficult to compare these technologies from a practical point of view.
    One should look at how big a solar plant's minimal baseload/peakload requirement is (that is, its minimal reliance on coal, gas or biomass), add this to the equation, and then compare with pure coal, which does always deliver base and peakloads.
    Leaving this crucial context out of the equation, it does seem like solar-thermal plants like the one mentioned are quite efficient when it comes to the amount of space they take up. But is this really even an argument?
    It seems to me that stored energy sources (coal, oil, gas, biomass) have many other advantages that make them so attractive: they can be physically moved and traded. Solar power cannot. Can't ship concentrated solar power from one continent to another. You're stuck in a rather inflexible local context. But then that's probably the context many of us want to move to: one of more locally rooted energy self-reliance, instead of energy interdependence.
  13. sunflower's avatar

    sunflower Posted 3:11 am
    26 May 2008

    Sleeping with the enemyOften ignored are the machines that burn coal, and extract coal -- more materials intensive than solar machines.
    Coal removal is a one time event per location.  Solar locations can be retrofitted indefinitely if we survive.

     
  14. racc Posted 3:19 am
    26 May 2008

    Missed the PointThe point is that the analysis needs to be done. Before it is, you really can't compare the land use to coal or anything else.
    As well, the impact per farm will likely increase with each new plant as resources become more and more scarce.
    Now resources are required to build the coal plant and mine the coal. Maybe this requires more resources than building and operating a solar farm, but right now, we don't know or at least I don't.
    The era of cheap resources is over. Everyone seems to forget that.
  15. Tasermons Partner Posted 3:35 am
    26 May 2008

    Already some...So unless a viable energy storage technology becomes available,
    There are several, dependin' on the type of solar technology.  One I know of uses thermal exchange from water/steam to create energy (with turbines, of course), and even at night or when the solar panels aren't in operation, the temeprature differential is still great enough that energy is produced in mass quantities.
    I don't know if it qualifies as technically bein' "energy storage", so much as it is leftover potential energy which can run until new energy is produced, but the point is that it works.
  16. Gar Lipow's avatar

    Gar Lipow Posted 4:10 am
    26 May 2008

    LCAI'm going to try and get a LCA assessment in the next few days. In the mean time this UN summary on energy includes a paragraph saying that a CSP plant pays back its embedded energy within five months. Energy ROI is NOT the same as an LCA, but is at least somewhat indicative.
  17. bigTom Posted 9:59 am
    26 May 2008

    Solar thermal, short term storage?  At some not too large a cost, solar thermal can be combined with thermal storage, so as to keep generating for a few hours after the sun sets. This is probably sufficient for better matching the diurnal (day/night) demand. Long term thermal storage, to cover cloudy periods, and seasonal variation, which is roughly a factor of three in temperate latitudes would requite many times more thermal storage capacity and is therefor not likely to ever be economic.
      The other approach would be to use the solar, either in the form of heat electricity or light to manufacture fuel, for use during periods of low solar availability. The simplest "storage" is simply to use the solar input to displace natural gas consumption on the same grid.
  18. green8659 Posted 11:40 am
    26 May 2008

    Sounds rightSounds like we should screw coal!

    Green | Almighty Cleanse | Web Design Indiana
  19. Delay And Deny's avatar

    Delay And Deny Posted 2:18 pm
    26 May 2008

    Evil Solar Barons?

    Look, you've proven your case that yes, at today's high energy costs, solar is viable and even profitable.
    The only thing solar needs are a bunch of evil oligopolists to buy it all up and then force us to use it...

    Oil Is So Hot!

    http://oilismastery.blogspot.com

  20. Skeptico Posted 3:03 pm
    26 May 2008

    High costYou say this power station will put out 134 Million KWhr/year - that's a 15,000 kW plant.  For $260 Million?  That's over $17,000 per kW.
    15MW is about the power generated by a freight train with multiple locomotives.  So this plant is going to offset the equivalent energy of one big train.  For over a quarter of a billion dollars?  It's hard to see how this could make sense.

  21. Gar Lipow's avatar

    Gar Lipow Posted 3:14 pm
    26 May 2008

    No plant runs at 100% of capacityThis is a peaking plant -- meets peak needs because Nevada peak is from air conditioning. Plant is 60 MW.
    If you look at costs over 20 years and include interest and O&M that is a cost somewhere between 10 and 12 cents per kWh - not an unreasonable cost for peaking power.
  22. CFL CTA Matt Posted 10:49 pm
    26 May 2008

    solarSolar is a viable energy source, especially for little things like calculators & lights. It help the solar industry when you buy those. And there are 2 solar powered buildings in Chicago:
    The Field Museum 1400 S. Lake Shore Drive Chicago, IL 60605-2496
    Peggy Notebaert Nature Museum

    2430 N. Cannon Drive, Chicago, IL  60614
    And by buying solar lights & calculators and paying carbon credits for renewable energy, we can help even if we dont have panels on our roof!
  23. Pompey Road Posted 12:00 am
    27 May 2008

    EstheticsWindmill farms, solar neither have much eye appeal and the windmills are already being fought near some large family owned ranches.
    A reclaimed strip is much uglier to me and you have to know when you aggregate stone and mineral ladden rock you will multiply the leaching effect.
    The water runoff from these MTR's is ladden with heavy metals, some toxic. They will lay around and leach out heavy metal water for years. Even selium that is a good mineral in the soil has been shown to create birth defects in children when the mother takes in heavy concentrations in liquids.
    To be fair, if a land owner or farmer wants a dry valley to be leveled for a specific use, ranching or farming if the topsoil is set aside I really have no problem with it. The random strip mining of wilderness area's and just walking off and leaving it, now that's another thing altogether.
    They proclaim the need for flat land in appalachia for housing developments or industrial parks. They never have a developer or industrialist onboard, just create the flat land without regard for future development. We have had enough flat land created for us to meet the industrial requirements of China and enough created to put all the sub-prime mortgage default properties on.
    The price of oil has caused the price of coal to rise to the level of making it profitable to mine it underground again. Even though I dislike all mining and coal use until it can be proven you can burn it clean, I would prefer underground mining 10 to 1 over MTR.
    You seal a mine, remove a few buildings and clean up the stock pile area and you can reclaim around an underground mine after the coal has been depleated. There is no proper reclaimation with MTR. The mountain may subside or shorten the thickness of the coal seam when the mountains sits down when the coal is extracted but you will still have the mountain.

    The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.
  24. Sean Casten's avatar

    Sean Casten Posted 12:20 am
    27 May 2008

    Agree with the mathBut it's a bit of a low bar.  Coal is arguably the most land-intensive of all conventional power generation technologies, and as a practical matter, solar doesn't really compete with coal.  The former is a clean, peaking technology while the latter is a dirty, baseload technology.  Amongst other clean and/or peaking techs, the land comparison for solar is not as favorable.  Meanwhile, among other dirty and/or baseload technologies, most have lower land-intensivities than coal suggesting (if nothing else) that land-use alone doesn't explain why we deploy any given technology.
    I'm not for a second suggesting we shouldn't push solar or that we shouldn't try to shut down coal - simply that the suggestion that the success of one comes at the expense of the other isn't really accurate, and so land-use comparisons between them aren't that material.
  25. amazingdrx Posted 12:33 am
    27 May 2008

    Storage and backup powerThe really large loads on the grid come from heating/cooling.  Heat/cold are easily stored in building mass.
    Backup power can come from biogas employed in solid oxide fuel cell/turbine power plants distributed around the grid.  The ultimate backup source can be natural gas, decades of extra supply exist in the form of coal, oil sands, and oil shale that emits natural gas.  That natural gas conversion can be increased with human help.
    And solar is not as intermittent as it appears.  Thermal solar furnace powered factories that refine silicon or recycle glass or metal, for instance, can cogenerate power all night long from the heat of the products.
    Wind distributed widely around the continent, connected to a High voltage DC (HVDC) grid provides a stable baseload power source.
    A smart grid can store energy for high load uses in building mass, emergency power levels for communication and lights can be augmented with batteries for short term storage, 12 hours emergency power to get through brownout, black out and storm incidents.  
    Natural gas/biogas backup generation distributed in local areas on farms, landfills, and sewage processing plants would be enough to power the grid for longer emergencies.  
    The main cause of power emergenicies is not peak load, it is storms.  Storms growing ever worse seemingly related to GHG cklimate change.  More solar energy trapped in the atmospheric system, more and more severe storms.
    I think a different view of the grid as a self survivable system that manages demand as well as supply with renewable distributed generation and storage is necessary.  The old monolithic central generation grid is obsolete.  It is killing itself with GHG climate disaster.
    The more central power, the more GHG, the worse the storms, drought, and heat events that break it's back.  No way it can get more reliable.  It will only get worse.

    http://amazngdrx.blogharbor.com/blog
  26. Skeptico Posted 1:01 am
    27 May 2008

    $260 MillionGar Lipow:
    $260,000,000 / 134 Million KWhr/year /20 years = 10c per kWHr.  But that is before any maintenance and before interest.  The entire $250 million is paid up front.  At only 5% that increases costs by a factor of 2.65, and that's before maintenance.
    Come on - $260,000,000 for 15MW (not 60MW as you wrote).  That can't possibly make sense.
  27. Sean Casten's avatar

    Sean Casten Posted 1:05 am
    27 May 2008

    Dr. XYou wrote:
    The main cause of power emergenicies is not peak load, it is storms.
    This isn't quite true.  Power emergencies occur when demand exceeds supply at the point of power consumption.  Storms are but one way that this type of emergency can happen.  Peak load is another way.  Neither is universal.  You can see this most dramatically in New England, where there are actually two times a year when the system has blackout potential: really hot summer days and really cold winter days.  The former is a function of transmission constraints, when it is not possible to shunt more energy to users because the system is at full capacity.  The latter is a function of the gas-dominance of the New England power grid, and the fact that - when the natural gas system is tapped out - natural gas, by law, preferentially serves heating loads, and so there is a potential for generation to be fuel-starved.
    Your comment about storms relates more to the summer New England peak, but note that the issue here is really one of wires capacity, not storms per se.  If a hurricane knocks out a transmission section, it doesn't blackout the grid unless the grid cannot be served by another, unaffected transmission section.  A big part of the reason that we have seen increasing number and severity of blackouts in recent decades is because transmission investment slowed dramatically starting in the 1970s.  With more wires capacity per MW of demand, there was a greater statistical probability that weather events could be routed around.  As those margins have tightened, we have a greater chance of weather-induced blackouts.  (Or, indeed, other variables.  The 2003 Northeast blackout was blamed in part on a lack of tree-trimming in Ohio, which caused sagging transmission cables to short-out... but was only a problem because they could not be routed around.)
    To your other points, you are right that decentralized power (e.g., generation sited close to the load) alleviates these issues, by reducing the need for transmission per MW of load.  But it does not eliminate the basic truth that if demand exceeds supply, it will be dark.
  28. Sean Casten's avatar

    Sean Casten Posted 1:16 am
    27 May 2008

    Fianncing?Skeptico & Gar:
    This math seems off, but Skeptico's appears closer to reality.  If I want to build a $260 million power plant, I have to get that money from someone who wants to earn a return on that investment, with the return a function of the investment risk profile.  
    Let's assume for the sake of argument that one can get cheap money with a 20-year term.  Say 10% returns.  (e.g., well below what private equity demands, but above what you could get on low-interest bonds, reflecting a risk profile and a sufficient premium to attract capital away from other investments.)  Personally, I rather doubt you could get financing this cheap, but even these numbers are illustrative.
    Paying off that money requires a $30.5 million/year annuity.  On 134 million kWh, that equates to 23 cents/kWh, and is before including any maintenance or operating costs, or returns above capital recovery.  Drop the rate to 5% (e.g., absurdly low) and you're still looking at 16 cents/kWh.  Increase the rate to 15% (e.g., the low end of the private equity spectrum) and you'll need 31 cents.
    How do you get 10 - 12 cents from these numbers?
  29. Gar Lipow's avatar

    Gar Lipow Posted 1:21 am
    27 May 2008

    How do you get 10 - 12 cents from these numbers?Subsidies.  
  30. Gar Lipow's avatar

    Gar Lipow Posted 1:37 am
    27 May 2008

    Size and Land UseFirst of all it is 64 MW
    http://www.nevadasolarone.net/the-plant/how-it+-works
    Yes lower capacity, but as a peaking plant it does provide that (actually it has peak of 70MW but 64 MW is something is it is able to deliver in a sustained way for the whole peak period.)
    "and so land-use comparisons between them aren't that material.
    Secondly, people who oppose solar and wind make the land use argument all the time. It is a common talking point, and thus worth refuting. I'll drop the comparison if anti-renewable people will. Also, I think you will find that coal is not the conventional technology more land intensive than solar or wind. Hydroelectric is too.
    And I've seen fields where oil and gas are drilled. I'd be curious to know how many barrels of oil a one acre field produces over its lifetime. Like coal I suspect it varies a lot from field to field. Still I would be suprised if land requirements for oil and gas were non-trivial (or water pollution for offshore production).
  31. Sean Casten's avatar

    Sean Casten Posted 1:59 am
    27 May 2008

    GarI certainly appreciate that the land-use argument needs to be addressed for solar.  I'm simply making the logical point that I'm not aware of any decision with respect to power plant capital allocation that comes down to solar vs. coal and hinges on land-intensivity, whether at a business or policy level, except possibly by those who are just seeking to score rhetorical points.  (e.g., I can see a coal lobbyist making the comparison if they were trying to bash solar, but they would then warrant the same criticism.)
    But on the flip side, I think there are legitimate issues with respect to the land-intensivity of solar relative to other clean techs.  Someone who really wants to install a renewable power supply may be biased against solar if they don't have the real-estate available to meet their power needs.  (And note that this is also true of coal, even without getting into MTR, by virtue of all the fuel storage and handling needed for any solid-fueled power plant.  Biomass has the same challenge.  But coal and biomass that operate closer to baseload are typically not really in competition with solar, as they participate in such different markets.)  
    I'd be interested to see a comparison between those technologies that really do compete with solar on a land-use basis.
  32. sunflower's avatar

    sunflower Posted 2:02 am
    27 May 2008

    The art of solarIn a perfect world - coal is illegal and solar is used to save gas and oil.  
    The easy stuff will be solar displacing those valuable fuels used for low grade heat, like industrial process heat, or commercial heating and cooling.  Some hundreds of billion dollars later solar would find less profitable high-temperature applications, like making electricity, glass, concrete, and so on.  Billions later, high temperature storage will further expand solar markets.  
    Why do the most expensive stuff first?
    The value of solar is the cost of fuel displaced.  At scale, solar thermal should cost something like $100/m2 (2007$) and deliver the energy of 1 bbl of oil per year in Colorado climates (half that in Seattle or Boston).  Against the current price of gas that is a simple payback of 2 years.  
    The predicted return on investment depends on what you think the price of gas and oil will be over the lifetime of the installation, something like 30 years.
    Do not be discouraged by pretty solar pictures with ugly numbers.  We can do much better.
  33. Gar Lipow's avatar

    Gar Lipow Posted 2:44 am
    27 May 2008

    Sunflower: we need to everything fastI not only have never denied we need to emphasize efficiency and solar space heating.
    I wrote an entire book you may remember in which:
    Efficiency comes first and is dealt with in detail
    Energy sources come second are dealt with in summary form.
    Passive solar is given space in the efficiency section that probably exceeds the whole electricity section.
    But we will need electricity. And as biofuels look less and less viable probably a fair amount of electricity.  So we should institute efficiency and solar and wind electricty simultaneously. It looks like we need to drop our use 70%-90% in the next 20 years - front load the reductions. That has to include some source substitution as well as reduction in use.
    And it is a lot cheaper to store heat than electricity. Even NS1 has thirty minutes of thermal storage to increase reliablity.
  34. Jon Rynn's avatar

    Jon Rynn Posted 2:51 am
    27 May 2008

    Sean's calculations lead me to wonder......why should csp be investor-based?  Why not just government-owned?  Why does the expense of CSP need to be doubled so that investor's get their 15% return?  Just so we can say that the government didn't "pick" the technology?  
    Do we really have time to try and devise technologies that would mitigate climate change and make investors happy?  Shouldn't we just build it, particularly if investor participation makes it more expensive?
  35. Sean Casten's avatar

    Sean Casten Posted 3:03 am
    27 May 2008

    JonEven if you use gov't money, it's still investor based - we just add layers of confusion.  (Even gov'ts have to repay their loans.)  
    I think it's a dangerous line of questioning to assume that government money is free while only the private sector demands returns.  The relevant question has to be how to get the maximum CO2 reduction per dollar.  Everyone from governments to the homeless has a finite number of dollars, and so any deployment of those resources towards high cost CO2 reductions is implicitly limiting total reduction.  
    Ultimately, who provides that $ and the relevant interest rate are questions of policy.  But you ought not assume that any investor will tolerate interest rates <0%.
  36. Jon Rynn's avatar

    Jon Rynn Posted 3:22 am
    27 May 2008

    Sean, when there's a war......there is no return on investment required (er, there shouldn't be, but the military-industrial complex gets a huge one...but that's another story!).  
    Let's look at the military budget as a capital fund.  Then were should that trillion dollars per year be best invested for our national security?  I would say that most of it, going into things like chp and csp, would have a much higher return, for society as a whole, than more B1 bombers.
    But there are other capital funds that are slopping around our society as well...the huge health care administrative costs, the taxes not collected from the superwealthy and corporations, the subsidies...
    So the bottom line is, the government does have the capacity to create a certain amount of capital, if it so chooses -- and I'm arguing that this is a good place to so choose.
    Another good use of government money would be to mandate that all coal plants use CHP technology to get up to a certain level of efficiency, say 80%, from the now pathetic 30-odd percent, and provide loans to buy the equipment, etc.
  37. Sean Casten's avatar

    Sean Casten Posted 3:36 am
    27 May 2008

    Yeeees.... sort of.I'm not saying that people don't often make decisions as if government dollars were free.  I'm simply saying that's an irresponsible way to make decisions, no less true for energy issues than for military issues.  When we lament the deficits being passed on to the next generation to pay off, we are conceding as much.
    Could we argue that some portion of the military budget could be more appropriately spent elsewhere?  Absolutely - but to my way of thinking, that doesn't argue that we repeat the same mistakes with respect to delusional capital allocation.  Government is always prone to fiscal boondoggles.  Or, as de Tocqueville said, democracy fails once the citizens realize that they have the power of the purse.  The only way I know to minimize those boondoggles is to force policy to be technologically agnostic and clearly articulate goals.  Stipulating that Technology X should get cheap government money is antithetical to that goal-based approach.
  38. sunflower's avatar

    sunflower Posted 3:37 am
    27 May 2008

    slight driftNot slight Gar.  I like reading your writing.
    I live a most efficient lifestyle, in a passive solar home near Seattle. I was drifting off topic with economics, (and avoiding work).  
    By solar thermal I meant solar concentrating technologies, like those troughs pictured here.  My numbers actually apply to heliostats and dishes.
    High-temperature thermal storage was developed to solve the problems of thermal cycling and steam slugs from intermittent clouds interfering with turbines.  
    Base-load solar power is right-wing BS and totally irrelevant to the profitability of solar investors.
    Politics and business do not mix well.  
    My approach to this problem embraces the concept that technology is more powerful than politics.  My model is to teach thousands to build a million solar mirrors, followed millions to build a billion.  Viral growth of open source technology for rapid global scale up.
    BTW, one acre of spaced solar mirrors is worth about 900 barrels of oil per year in Colorado.
  39. GRLCowan's avatar

    GRLCowan Posted 4:08 am
    27 May 2008

    Governments that own a natgas revenue cancellerwill tend to avoid operating it, since with natgas prices now exceeding $80 per electrical MWh, each electrical MWh they allow the canceller to produce means ~$10 in lost royalties for them.
    You might like the idea that government should be made to guarantee the debt of private solar power plant developers. If, having been made to agree to this, they find ways of derailing the project, the natgas revenue they thus gain is offset by the money they lose paying the developers' debts.
    --- G.R.L. Cowan, H2 energy fan 'til ~1996

    http://www.eagle.ca/~gcowan/boron_blast.html

  40. Jon Rynn's avatar

    Jon Rynn Posted 5:39 am
    27 May 2008

    Sean, let's try Keynes......in the 1930s, the economy was stuck -- investors would not invest because they were afraid that the economic situation was too bad to make returns; and since they did not invest, the situation stayed bad.  So economists were so desperate to get out of the situation, that they threw aside their antipathy to government, and the policy tools of stimulus were born...
    Now, we have a similar situation.  Investors don't know much about that there solar and wind -- in fact, they are so "stuck", at least in the world of electricity, that anything that isn't about 50 years old seems to be too "new" for them.
    So, the government needs to step in and give the system a kick -- by building lots of different kinds of renewable systems, including CSP, PV, CHP, Wind of various sorts, CCAs, financing PV, etc. etc.
    It doesn't even have to "pick" a particular technology -- as long as the fuel is free - wind, solar, geothermal, tidal, you get the idea -- or the efficiencies are real, then go for it, we will provide you financing, because that huge, inefficient thing called the financial sector, which just probably blew trillions of dollars, can't get it's act together to build what we need to avoid catastrophe.
    As to whether, as you say, "Government is always prone to fiscal boondoggles", everybody is.  Another thing that DeTocqueville and Jefferson talked about -- you need an informed and participatory citizenry in order to create a more perfect republic, because, to paraphrase Ben Franklin, you get the republic you deserve.
  41. Sean Casten's avatar

    Sean Casten Posted 6:32 am
    27 May 2008

    I think that's a bit of a stretch, JonKeynesian pump-priming is perfectly appropriate when you're facing a massive collapse in liquidity, a la the Great Depression.  That's a far cry from today's market, which - recent headlines notwithstanding - is still awash in liquidity.  If you've got an idea, a team and a good business plan, you can get scads of money thrown at you to do it, from public and private sectors.
    The question that I think you're asking is why we don't see more clean tech getting built in that environment.  In some cases, it's clearly an R&D issue.  But in many, it's because of massive regulatory distortions that throw money at the worst technologies.  To my mind, this argues not for throwing counter-balancing subsidies at clean stuff, but rather for fixing the underlying regulatory flaws so that the flood of global liquidity chases better projects.  That's a heck of a lot cheaper, and while it may be politically hard, I'm not sure it's any harder than the alternative. (Witness all the recent fight to try and fund renewable tax credits.  If that fight didn't start from the perspective of diminishing federal coffers, it wouldn't be politically hard.)  If you didn't provide liability waivers for nuke, no one would invest in nuke.  If you don't provide rate-payer guarantees for coal, no one will build central-station coal.  That $ will then go looking for technologies that don't have liability issues and don't have massive pollution control costs.  I suspect you can probably think of a few! : )
    But the key is that we don't need more inefficient fiscal simuli, unless we really are in a deep depression (we aren't).  We do need to fix the regs, and the cleanest way to do that is to reframe them in terms of goals instead of sops to special interests.  Don't get me wrong, I like being on the receiving end of government largesse.  (Nice tax credit for CHP in the just-passed house bill, which I'm rooting for for entirely self-interested reasons, for example.)  But from a policy perspective, we'd be far better off fixing the underlying legislative failures.  No $ required: just a willingness to confront vested interests and (from the perspective of the legislator) admit a bit of culpability in creating/maintaining the current legislative status quo.
  42. Jon Rynn's avatar

    Jon Rynn Posted 7:42 am
    27 May 2008

    Sean, let me get this straight --The way I understand what you are saying, you think that there would be plenty of investment money around for clean technologies, if the regulatory environment were different.  Let's assume that there would be so much, that I could drop my idea that investors making their 15% wouldn't delay the implementation of these technologies because it would increase the cost of these projects.
    I'm still curious though, about what I was trying to get at (in a clumsy way) with my Keynes analogy -- the idea that investors -- as well as engineers and managers -- are so comfortable with sticking a big, inefficient coal plant somewhere, and not having to worry about anything else, that they are basically scared (and maybe a little lazy) about setting up things like CSP (or even CHP).
    I find it comforting that just the threat of a price on carbon has led much of Wall Street to stop backing much of coal construction, so maybe we are doing OK stopping things, but I'm still concerned about starting renewable projects.
    There's one more problem I wanted to bring up.  Since the governments of Germany, Denmark, Spain, and Japan are pushing their wind and solar industries, their wind and solar equipment industries are getting a head start.  So what may happen is that the equipment manufacturers may all come from outside the U.S., since the U.S. is not providing the same kind of support.
    Perhaps things like extending and deepening the tax credits would do much of the trick? (including regulatory changes, of course).
  43. Jon Rynn's avatar

    Jon Rynn Posted 8:48 am
    27 May 2008

    and one more thing.........about why clean tech is not being developed: the lack of financing for buildings.  As I tried to show , if buildings  could heat and cool themselves, you could shut down all coal plants.  But why is it that the city of Berkeley, not private banks, has to offer low-interest loans so that individuals and families can put PV on their roof?  Even if investors would go for centralized CSP, for instance, this indicates that the financing mechanisms are not in place for smaller, decentralized installations, where the problem is the up front cost.

  44. Sean Casten's avatar

    Sean Casten Posted 9:12 am
    27 May 2008

    JonI'm making a slightly different point.  Namely, that  as a guy deploying technologies in the field, I see two huge barriers to more rapid deployment of clean technology:


    The aforementioned regulatory barriers to clean, cheap power.
    Commercial immaturity of those in the clean, cheap power business.


    This is a bit of a vicious circle, I will admit.  Regulatory barriers keep entrepreneurs out which limits the ability of folks to learn how to build good, viable businesses, which limits the success stories out there to change the political environment and limits the credibility of us clean energy dudes when we go to the legislature which in turn slows the change in the regulation.  But those remain the underlying two obstacles.  Many technologies make plenty of economic sense today, but are not deployed because of a combination of those two barriers.  
    Adding incentives to increase the number of cost-effective projects may tip the scales slightly in favor, but doesn't fundamentally address those underlying issues.  Regulation cannot create viable business plans.  But it can get rid of regulatory barriers.  That, therefore, ought to be the priority of any regulatory reform.  Because with it, a clean energy subsidy is like giving a kid with a broken leg a carbon-fiber bike.  Will it make them faster than they would be on a steel bike?  Yes.  But it's far from the optimal way to make the kid ride as fast as possible.
    (Note that I don't think people build big, central coal because they're lazy, but rather because developers of big central coal plants have been able to present a better investment thesis than the many people seeking to deploy modular local power.  Modular local power is societally better, from both an economic and environmental perspective... but developers of those technologies have not made a sufficiently compelling case that those projects are  competitive investments.  That's starting to change, but it's got a long way to go.)
  45. Sean Casten's avatar

    Sean Casten Posted 9:22 am
    27 May 2008

    Re: buildingsIt's a good question, and one that really goes to the crux of the business model issue.
    In many cases, building developers are not building owners, and building owners don't pay the utility bills.  This creates a whole series of split incentives, whereby the party who must bear the additional cost for greater building efficiency has no economic gain from long-term energy savings.
    This can actually be even worse.  A colleague of mine briefly ran the energy operations for one of the major US commercial property operators.  They did a lot of innovative things in their buildings, most notably putting CHP in many of their NYC, SF and Chicago properties.  But perhaps the most innovative thing they did was in terms of corporate structuring.  As a Real Estate Investment Trust, they are required by law to pay out a portion of their profits every year to their investors.  This limited their ability to fund efficiency projects, because they couldn't trap those profits in the business to recycle into other activities.   They therefore created a separate company specifically to invest and own those assets, with energy costs treated as a fee from the REIT to the energy company, so that the energy company could trap those costs and reinvest in the portfolio.  Very clever, but purely a business issue - without which, you could not create an investment thesis in that particular company.  Those are the type of innovations I'm talking about when I say that the energy world is commercially immature.
    Another similar area arises with respect to any enterprise (buildings, hospitals, universities, pharmaceutical companies, etc.) where you have (a) great efficiency opportunities, which deliver good returns on investment, but (b) cost profiles wherein energy costs are insignificant.  The list chosen above was intentional, as they all have great EE potential, but little reason for the senior leadership of those organizations to focus on energy costs.  Again, this is a business issue, not a technical one - but the result is that unless you can solve that issue, you're stuck with lots of projects who's deployment is - by definition - contingent on a decision that must be made by someone who doesn't have what it takes to rise to a position of leadership in that organization.  That's a big barrier that has nothing to do with economic incentives and everything to do with commercial issues.
    Anyway, I could go on, but you asked... (and it's an excuse to elaborate on my prior, somewhat more cryptic post.)
  46. Jon Rynn's avatar

    Jon Rynn Posted 10:01 am
    27 May 2008

    That's why I asked!So I could pick your brain.  By the way, a while ago I wrote a post on community choice aggregation,(CCA) and I'm working on a follow-up, but the bottom line is that a municipality or municipalities combine to contract with a service provider to provide energy, or in the case of SF, negawatts, while the utility is still stuck with the wires.  To circle back around to my original salvo, there is a pdf which argues that public utilities provide rates that are 15-20% below investor-owned utilities.
    The way in which negawatts are incorporated, frankly, is not very clear to me, but could be one of the most important innovations of CCAs.  That way, the service provider takes an interest in efficiency, even if, as in your example, the university, etc. doesn't have much expertise or financial motivation to do so.  I believe that the way it works is, the provider contracts to provide "services", that is, lighting/heating/etc, for a certain price -- if they can reduce that with efficiency measures, it doesn't cost the customer any money, but the provider makes a profit.  I think.
  47. hapa's avatar

    hapa Posted 11:22 am
    27 May 2008

    CCAs and negawattsthis is a strong advantage of muni power -- cross-planning generation with transit, zoning, and building, to reduce supply costs -- especially if one assumes increasing electrical use in transportation.
    ugh, though, about the federal boondoggles. how many trillions were just blown away in the housing-credit fiasco? ah but that's not a boondoggle. that's youthful exuberance.
  48. Sean Casten's avatar

    Sean Casten Posted 11:51 am
    27 May 2008

    Jon - sort ofBut bear in mind that someone still has to front the capital.  The issue isn't that the university/etc. can't make money - after all, every kWh they save on their electric bill, or Btu on their gas bill saves them money.  The issue is that those savings may not be significant enough to get them to act.  Whether or not the utility pays a premium on that power is unlikely to change that calculus.  
    My best example of that is at Pfizer, where I worked on a project about 5 years ago that would have cost something like $1.5 MM and saved about $500K/year in energy costs.  Good returns, right?  Unfortunately, I think it's fairly easy to show that if Pfizer spent no money on energy next year, it wouldn't have a huge impact on their bottom line - their costs are dominated by other factors.  Needless to say, the project never got built. (Still there, if there are any Pfizer employees reading this!)
    Note though that this isn't necessarily a cause to throw in the towel - simply a suggestion that you ought to pick your battles.  It's why we now spend so much time working with commodity industries (steel, chemicals, etc.) where margins are slim and small savings in energy costs have big impacts on overall profits.  That's our business model, and it works for us - but there's money to be made for the person who figures out how to craft a business model that will also be able to deploy capital in less energy-intensive industries.
    When we teach new employees about capital budgeting, we show them a very simple, two axis plot.  Rate of return on one axis, dollars per year of savings on the other.  There is some threshold rate of return below which industrials won't spend money... but there is also a threshold dollar level.  And therefore, it is only those projects on the NE corner of this plot that ever get built - in spite of the fact that every single spot on this plot generates profitable GHG reductions.  This is a point that individuals know intuitively, but economic theorists miss.  Consider: which investment is more attractive for you personally?  A $5000 insulation upgrade that saves you $2000/year in energy costs or a $50 purchase that saves you $25/year in energy costs?  Assume all else equal, including the amount of fine print on the deal that you have to evaluate to figure out if they will deliver as promised.  
    The second is the higher return, but the first may well be more tempting because of the greater total dollars, and the fact that it's more worthy of your time to review the fine print.  This is fundamentally the same calculus that causes an industrial to invest $50 million in a $10 million/year savings before they invest $50,000 in a $25,000/year savings - and the bigger the company, the higher this threshold.  As a result, there are lots of good investments in companies that simply don't fit their capital budgeting model, regardless of whether or not the utility pays them a bit extra for the power.  And yet we frame economic & environmental policy as if there are no profitable opportunities to reduce fuel use!
    But there's gold in them thar hills if you can figure out how to put your money to work on those opportunities...
  49. Jon Rynn's avatar

    Jon Rynn Posted 12:04 pm
    27 May 2008

    Sean, that reminds me...... of the case study by Shoshana Zuboff, of the Harvard Business School, in which she claimed that a paper company preferred to wait until a boiler completely broke down, and they had to buy another boiler, instead of paying about 10% of the cost for preventive maintenance.  The upfront cost would have made the manager in charge look like his department was costing more, while a completely new boiler, I suppose, was somebody else's budget.
    Just to throw another curveball, the point of her book was basically that employees should have more decision-making power.  Perhaps if that were so -- employee ownership and operation would be the ideal -- the various departments would have more control over their budgets, feel more responsibility for their turf -- so a corporate governance issue, perhaps.
  50. Sean Casten's avatar

    Sean Casten Posted 12:46 pm
    27 May 2008

    Too academicInteresting theory, but I'm not sure it jibes with the real reason those decisions get made.  Well run companies encourage employees to preferentially focus on their core business.  If you're in health care, don't preferentially devote resources to cafeteria services.  If you're in auto manufacturing, don't preferentially devote time to developing in-house customized computer software.  And if you're in any business but the energy business, don't dedicate time to energy issues.  That, in a nutshell is why energy gets short shrift, and from a managerial perpsective, it's not such a bad thing - but it does mean that (like cafeterias in hospitals and software in manufacturers), we really need a vibrant energy outsourcing community to capture those opportunities.  A big part of the problem with our regulatory environment is that it is hostile to energy outsourcing.  In 13 states, it is illegal for anyone but the utility to sell a kilowatt-hour.  In 50 states, it is illegal for anyone but the utility to run a distribution wire across a public street.  Laws like that are not real conducive to developing the energy-equivalent of Sodexho hospital services or Microsoft - and they are precisely the type of laws that could be quickly and cheaply changed to unleash a flood of private capital.
    That said, your boiler example is odd.  In my experience, energy operators can get money for investments that boost energy plant reliability, since that facilitates more paper-making.  (And many industrials end up favoring reliability at the expense of efficiency as a result.)  Your example sounds more like bad management at one company than an extrapolateable point - but only because it's about reliability.  If it was about efficiency, I'd say it's ubiquitous, but for understandable reasons.
  51. Jon Rynn's avatar

    Jon Rynn Posted 1:41 pm
    27 May 2008

    Well, hopefully that was a bad exampleand certainly it should be possible to feed electricity to the grid and run wires if you're not a utility.
    But how much of that is a consequence of not have municipal utilities?  Would they be as jealous of their turf as investor-owned utilities(IOUs)?  Which brings me to a question that Paul Fenn raised, to what extent are utilities, municipal and IOU, driven by their huge debt, and in particular the debt on their transmission infrastructure?  One of the advantages of a CCA is that is doesn't have this debt and transmission lines, but that still begs the question of how to control T&D.
    Wouldn't the warped incentives that T&D debt brings -- to keep out non-utility generators and wires, to try to increase electricity consumption -- be ameliorated if the grid was nationalized or taken over by the states?  Generation could be private or locally owned, but the nightmare associated with the grid -- including the fact that it could start falling apart soon -- could be isolated and dealt with as the public monopoly it is. Whaddaya think? (assuming you need to sleep).
  52. amazingdrx Posted 4:18 pm
    27 May 2008

    Black outsI guess I was thinking of around here Sean.  Our only grid failures have been from storms.  And looking at the weather disasters lately around the country, I suspect that's now the major cause of power emergencies.  Taking the nationwide lead over demand created black outs?  Not sure where those stats might be.
    We had a slight local dip every night around 3 am about 10 years ago, but then the local utility put in superconducting electromagnetic energy storage.  It was a paper mill load that switched on that caused the dip, I didn't realize it until years later when I read about the storage system.  The first utility scale system of its kind.
    It eliminated the need for more reserve capacity to cure that persistent dip.  That's how storage and conservation work together.  Imagine the effect of storage as heat/cold in buildings, it would be huge.

    http://amazngdrx.blogharbor.com/blog
  53. Sean Casten's avatar

    Sean Casten Posted 10:12 pm
    27 May 2008

    JonThere's no getting around the fact that electricity generation is a capital-intensive business, nor that most capital-intensive businesses have, at some point in their lifecycle received some level of protection from the state on the argument that they are "too big to fail".  Think airlines, auto mfg, rail, etc.  While we may have gotten the details wrong, that general trend may not be bad.  We do need entrepreneurs to build businesses, and we need people to deploy lots of capital... and to some degree, we therefore need varying degrees of protection that we can get that capital back.  
    That is essentially how we got to today's electric regulation.  Entrepreneurs in the early 1900s (think Edison) convinced regulators that (a) a single electric grid was in the national interest and (b) they wouldn't build it without guaranteed returns on equity.  Both statements, were, at the time, largely correct.  Thus we got regulated monopolies, cost-plus rate making and all the other things that bedevil reform today.  Thus, while we probably did need the current regulatory system in order to electrify the country, we need a different regulatory system to greenify our electric grid.
    You are right that munis tend to be less conflicted, but at heart, they have many of the same challenges.  A small muni with one big industrial load in town will behave in ways that seem very anti-competitive to keep that industrial load, on the basis that - like all electric utilities - their costs are largely fixed while their revenues are largely variable.  In that model (like in airlines) losing a big chunk of their variable revenues = bankruptcy, and an inability to serve other customers.
    There are a couple ways this cat can be skinned though.  One, as you mention, is to nationalize all the wires.  This has a certain economic logic to it, in the sense that if you can compete, compete.  If you can't, nationalize.  But get rid of the for-profit monopolies in the middle that are protected from competition even while they get to put a tax (in the form of their profits) on service.  It has a certain logic, but is politically really hard - not least because of the sheer scale of the nationalization.  Remember, this is the biggest industry in the country at $650 billion/year in revenues.  Even if you could get past the lobbying pressure against nationalization, you still have a basic problem that such an approach would sail right into the American free-market psyche.  Hard to see how you'd sell that.
    The other approach (which we have been working on quite a bit lately) is to mandate that the utility (or some higher-jurisdiction entity) buy all the power that comes from a clean generator (defined as <50% of the fossil-intensivity of the US grid, but without any stipulation to technology).  This financial transaction can be made regardless of where the electrons go, such that even if you are generating 100% of your power for a "behind the fence" load, you still financially settle across the fence.  The muni or other utility keeps their load, doesn't have any financial pressure to fight you and the clean generator gets a long-term contract with a credit-worthy offtaker (just as the central, inefficient plant currently does with the state by virtue of our regulatory model.)  There are kinks to be worked out, but the advantage of this approach is that it doesn't compel anyone to lose or act against their own interest - nor does it stipulate an increase in rates.  (We have framed to require that the price for purchased power be 80% of that which would otherwise be paid for new generation, so that no one can argue that this isn't in the national economic interest.) I think it's got legs... and probably should do a post about it soon.
  54. amazingdrx Posted 12:40 am
    28 May 2008

    Free marketize?Rather than nationalize.  I think that's what you are getting at Sean?
    Regulate the grid so that GHG free energy can be traded freely amongst customer/generators.  With a small fee charged by the owners of the grid.  Like a highway tarrif or fuel tax, that supports the national highways.
    If the utility has to pay 80%, then the 20% constitutes the fee charged for using the grid.
    Would it help to have GHG free energy coops that allow members to buy and sell power to each other over the grid, with the grid operator getting the transport fee?
    This would create a pool of capital for low interest loans to install renewables and conservation.  And an organization to oversee and promote mass production/installation of the necessary systems, solar, wind, biogas, smart grid switching, storage, and backup.

    http://amazngdrx.blogharbor.com/blog
  55. Jon Rynn's avatar

    Jon Rynn Posted 1:10 am
    28 May 2008

    Sean --Thanks for the education.  I hope you do a post on it soon -- one question, what does "beyond the fence" mean?  And I guess the other question is -- and amazin', I was trying to figure out how do deal with this -- how does this help the grid, which seems to be in bad shape?  I think you've posted about how it makes more sense to generate locally, dollar for dollar, instead of beefing up the grid for long-distance generation, which I totally agree with.  In fact, the less grid used the better, but we still might want some long-distance stuff going on, CSP, wind farms, etc.   So someone has to have an incentive to upgrade the grid, and then not to try to stuff the upgraded grid up to its rated capacity with new plants.  So I can understand the political problem in nationalizing or state-izing the grid, but something has to be figured out.
    Amazin, the best local idea still seems to be a CCA, I believe that in SF, at least, they are putting about 160 MW of PV on buildings, so it must be fairly easy to put more electricity on the grid after that gets worked out, an interesting question.
  56. amazingdrx Posted 2:02 am
    28 May 2008

    How about this Jon?If the grid owner is only allowed to charge for the grid transport fee?  The generation fee would go to the producer.
    If they were the same company, as is the case now, the bill would separate those costs, as I think it actually does now, list those costs separately.
    In the case of a local renewable energy coop, members who generate power would get payed by members using the power.  Through the regular utility billing system.  The utility would be paid for billing services as well as their electric power transport charge, a small percentage of the generation cost.
    Is this at all feasible?  Given a smart grid that keeps track of each kwh and it's related billing this might get a lot easier.
    Just guessing here Sean.  We really need you to tell us what is possible in the real world of lights on/off and customers dependent on the grid.  And utilities at the mercy of fossil fuel traders.

    http://amazngdrx.blogharbor.com/blog
  57. Jon Rynn's avatar

    Jon Rynn Posted 2:52 am
    28 May 2008

    Well, with a CCAthe utility retains control of the transmission lines, while the CCA (actually the energy service provider, or ESP, yet more acronyms!) generates the power, so there must be some sort of cost separation, but I don't know what it is.  The CCA will also try for 107 negawatts, using demand management, and I believe some smart grid technologies.  But the problem still remains of figuring out how to maintain and upgrade the grid.
  58. Sean Casten's avatar

    Sean Casten Posted 2:56 am
    28 May 2008

    JonSorry for the jargon.  The "fence" is a term of art in the industry, referring to whether you are generating more or less than the local load.  Thus, a 5 MW generator sited at an industrial facility with a 20 MW load is said to be a "behind the fence" generator, in the sense that all of those electrons thus produced remain within the industrial facility.  A 25 MW generator at the same facility would - conceptually - export 5 MW "across the fence".
    The point to bear in mind is that the technical question as to where electricity flows is separable from how the generation is financially settled.  Since a watt-hour generated on site is one less watt-hour imported from the utility, one can conceivably have a financial settlement for that electricity either with the industrial (in which case they don't pay the utility as much for power as they used to) or with the utility (in which case the utility retains full revenue from the customer, and can then re-sell their suddenly-freed up electricity to someone else at full retail rates.)
    It seems an obvious point, but it's a relatively novel one.  To take the most glaring example, the reason why electricity is largely regulated by the states instead of federally is because courts have ruled that the feds only have jurisdiction when interstate commerce is involved.  To the best of m knowledge, electrons have no knowledge of where state borders lie - but financial settlements are most commonly between a utility and their customer, within a single state.  But the fact that we have a national grid means that one could conceivably have cross-border financial settlements, even for locally-sited generators.  (We do have such transactions on the high-voltage transmission system, which is why transmission transactions are federally regulated - but the fact that we don't have them on the low voltage side is only because people haven't quite thought to do it yet.)
  59. Sean Casten's avatar

    Sean Casten Posted 3:51 am
    28 May 2008

    Jon & ADXIt's helpful to conceptualize the grid as two almost wholly separate businesses: generation and transmission.  (Indeed, you can really think of it as 3, because the lower voltage, local distribution is pretty different from the high-voltage, long-distance transmision, but ignore that for the moment.)
    Both of those businesses are dominated by capital costs, but the generation side also has significant variable costs (fuel especially, but also a bit of labor & maintenance).  And of course, neither can survive without the other.  Thus, both are heavily exposed to variable sales (on a $/kWh basis) since their costs are all so heavily dominated by debt repayment.  The Regulatory Assistance Project has done some pretty neat - if a bit disheartening work - showing how very small reductions in kWh sales lead to massive collapses in equity recovery at utilities.  I forget the exact numbers, but they are in the range of a 5% reduction in sales leading to a 20% reduction in equity repayment.  As a result, those businesses have a very strong financial interest in maximizing energy sales - which is, of course, contrary to environmental objectives of conservation.
    So the real challenge becomes how to fix this.  We not only need the grid, but also need a way to attract the massive amounts of capital necessary to build and maintain that grid.  This historically has been done by quasi-socialist monopoly regulation.  The aforementioned Regulatory Assistance Project has done some interesting work on decoupling to try and figure out how to compensate utilities for their capital without linking that compensation to volumetric kWh sales, which is pretty interesting.
    On the generation side, things are a bit easier.  So long as we have a viable grid with fair access, generators have a way to get their product to market.  Think of generation as a banana farmer, and the grid as a banana truck.  If all farmers have access to the trucks, you've got a viable system.  But if one banana farmer owns all the trucks, you'll almost certainly find that other banana farmers can't get their product to market on fair terms.  This one-farmer-owns-the-trucks model is essentially what you get in a monopoly system, and it is one that various regulators (most notably FERC under Pat Wood) have been trying to break.  Generally speaking, the idea is similar to the one Dr. X proposes: charge a consistent fee for grid access and get out of the way.  Devilish details of course, but it is the basic model.  Note though that you really don't need that smart a grid to accomodate this structure - you just need the legal framework within which to separate financial settlements from electron movement, coupled with a transparent system for market access.
    Hope that helps.
  60. Jon Rynn's avatar

    Jon Rynn Posted 4:24 am
    28 May 2008

    Pretty amazing (no pun intended),that the equity return collapses if people stop using electricity!  That's quite a mess, and thanks again for the info, Sean.
  61. hapa's avatar

    hapa Posted 5:16 am
    28 May 2008

    mm very goodthis is one the best conversations i've seen about this.
    As a result, those businesses have a very strong financial interest in maximizing energy sales -- which is, of course, contrary to environmental objectives of conservation.
    not necessarily. it depends how quickly vehicles go to the grid. if the transmission people were competing with oil to power cars, buses, and trains, then, negawatts being all they have to sell to plug-in drivers, without building new wires, that's still a maximum sales model.
    Note though that you really don't need that smart a grid to accomodate this structure
    right but that's about wheeling electricity for the purpose of selling more as a peak-for-all-regions generator. if you're doing it to smooth solar-generated renewables all the way across the continent, then new long-distance transmission might reduce the local cost of going very green.
    i hear a lot of people talking about how this can't be done and they're all thinking about individual wind farms' strength and weaknesses, comparing them with individual thermoelectric plants, when where they get really strong is through networking, is what it sounds like to me.
  62. Jon Rynn's avatar

    Jon Rynn Posted 5:22 am
    28 May 2008

    hapa --You might want to check out the post called "The U.S. electric grid: will it be our undoing" by Gail the Actuary at oildrum.  If the grid isn't in good shape, it will be hard to transport all of that renewable energy.
  63. hapa's avatar

    hapa Posted 6:16 am
    28 May 2008

    no brainerwe have to rewire and we will rewire. the question is whether we'll treat dirty-and-direct generation with reverence or switch models. we're rapidly running out of time and options for supporting centralized/local generation. nobody's home solar installation will be charging their car or train.
  64. hapa's avatar

    hapa Posted 6:20 am
    28 May 2008

    *"next to nobody's"we will need every last economy of scale available.
  65. Gar Lipow's avatar

    Gar Lipow Posted 6:32 am
    28 May 2008

    HapaGood points Hapa. I'll do a post eventually with documentation, but in the meantime here are two factoids people can doublecheck themselves:


    Most of the capital cost of the grid (as opposed to generation) is distribution and local transmission, not long distance transmission. About two to one I think.
    HVDC transmission (which is what we would need for really long distance transmission of renewables) adds to grid stability rather than detracting. HVDC probably would reduce that two to one ratio a bit.


    Personal anecdote: In Washington State when we recently had an extended outage due to wind storms the long distance portion was repaired within hours. But it took nearly a week for the local legs to be fixed. So I wonder if maintenance and external grids costs are even more disproportionately weighted toward the local rather than long distance end.
  66. Sean Casten's avatar

    Sean Casten Posted 6:35 am
    28 May 2008

    Careful, hapaConservation of energy is good no matter what fuel you start with.  Stipulating that maybe its OK not to conserve electric because that might theoretically mean shifting to a PHEV transportation grid is one hell of a bet on technology that - even if it succeeds - is going to have a lot of unintended consequences.  Recall that the Atoms for Peace program has had some non-peaceful consequences  in spite of the best efforts of it's promoters a half-century ago.  
    Ultimately, whether one starts with coal, solar or some yet-to-be-named fuel and whether one uses it for transportation, television or air-conditioning it is always good to squeeze more value out of every Btu we use.  Ergo, any model with a vested interest in maximizing Btu consumption exists in some degree of conflict with larger energy goals.  It doesn't make them bad per se, but we ought not ignore the conflict - especially on the grounds that in some narrow set of technological futures it might not be quite so bad.
  67. Gar Lipow's avatar

    Gar Lipow Posted 6:49 am
    28 May 2008

    Did Hapa oppose conservation?If so, my "good point" was not meant to include that. But I think at the generation edge we will absolutely need the economies of scale of large wind farms and solar generators, and HVDC transmission lines. But we also need as much efficiency as we can get.
  68. hapa's avatar

    hapa Posted 7:27 am
    28 May 2008

    no, no, not against conserving, of course not.the question is how do we shift away from earth-damaging energy sources; you need demand reduction to do that affordably. the point is about shifting many things to the grid because of the efficiency of large generators, and that requires much more efficient and cleaner generation and application, both.
    population is growing. summer heat is growing. new (or shuttered) industrial capacity will come online to build new infrastructure and equipment. how much work the wires are enabling will undoubtedly increase much faster in the near future than it has in the recent past. at the same time, which equipment "wins" at scale will determine the size of the coming increase in overall electrical demand.
    i don't see any way the grid would be asked to provide less, unless we let it fail completely. congestion's another matter.
    (i don't get how electric transport and encouraging nuclear proliferation are connected. maybe a better example would be the overall environmental impact of the interstate highway system. the problem is that no matter how you look at it, nothing but electricity can move people peak oil's pushing away from airplanes and ICE cars.)
  69. Sean Casten's avatar

    Sean Casten Posted 8:30 am
    28 May 2008

    HapaI took you to be saying that more electric is good if it includes a shift to PHEVs.  And my point is simply that this is one valid technological path, but must be trumped by conservation.
    The nuke point was simply that every new technology looks sexier in front of us than in the rear-view mirror.  The nuke industry was built on claims of "too cheap to meter".  Consequences were a bit surprising.  The auto industry was initially seen as a huge environmental boon, primarily because it got rid of the piles of manure on city streets.  Again, there were other consequences we didn't expect.  
    This is not to knock new technology - simply that we need to be careful not to fall in love with any particular technology.  And the overarching theme  throughout must be conservation.  I'm actually not certain we couldn't get by with a lot less power on the grid.  Better lightbulbs, air conditioners, etc.  I may be wrong, but let's make sure that the regulatory environment doesn't stand in the way of that goal.  
    Apologies if I misunderstood your point.
  70. hapa's avatar

    hapa Posted 9:55 am
    28 May 2008

    no i think it's interestinghow the different tracks are running.
    i don't have the US numbers at hand but my understanding is that with aggressive efficiency measures, we'll have our work cut out to keep today's types of electrical demand flat overall. depending what happens.
    that basically counts only population growth as pressure upward. other pressures include switching away from hydrocarbon space heating, extended hotter summers, electric transport.
    (before, i should've said "nothing but electricity can move people and cargo," and i meant that to be talking about inside the next 15-20 years.)
  71. Sean Casten's avatar

    Sean Casten Posted 11:48 am
    28 May 2008

    HapaThere's actually some rather interesting research that Bob Ayres at INSEAD has done, looking at the conversion of fossil fuel into useful energy (actually exergy, if you're a thermo-wonk) in various countries.  The really interesting comparison is between the US and Denmark, where the Danes get about double our conversion efficiency.  We're currently sitting at about 12%.  Which may sound surprising, until you do the math.  Petroleum --> gasoline at the pump is about 80% conversion.  Gasoline to forward motion is about 20%.  80% x 20% = 16%.  Fossil fuel --> delivered electricity = 33%.  Delivered electricity to light = 10% or so.  33% x 10% = 3.3%.  
    Bottom line is that there are actually tremendous opportunities for improvement, both upstream (better conversion efficiency) and downstream (better appliances).  And if the best we can do is to tie the Danes, we'd cut our fossil fuel use in half without reducing our actual consumption of useful energy.  Pretty remarkable opportunities await.
  72. hapa's avatar

    hapa Posted 5:23 pm
    28 May 2008

    half, huh.i remember when the clinton-gore people were talking about a BTU tax. right about then, "half" would've made me really happy. i admired denmark and scandinavian energy approaches in general.
    now we're looking at needing to almost totally wipe out our CO2 output before 2030. stop poisoning the ocean and ruining the fresh water systems and forests. i think everybody really knew that was what we were looking at, just didn't want to face up to it.
    we need a clean break. what some people call the transitional period -- the next 25 years -- i think more are now realizing is actually the overhaul period -- the time that we apply all our best available technologies and methods to get out of the hole in best possible style.
    after 2030, when we have a much, much better picture of what the future holds, we'll also have many more tools at our disposal, i'd think, wouldn't you? design tools, very affordable and effective personal and industrial technologies, all that kind of stuff. and maybe then some of the things we have to do from now till then, will seem another unfortunate set of sunk costs, or maybe they won't, maybe they'll have been "enough" or maybe they'll have been "correct."
    we don't just have to get there, we have to make sure, when we get there, there's more road ahead of us. i don't think 50% is safe.
  73. Sean Casten's avatar

    Sean Casten Posted 12:06 pm
    29 May 2008

    HapaI don't think we disagree.  No one's suggesting that we stop at 50%.  Simply that the Danish example shows that we can massively cut CO2 emissions (and let's not kid ourselves: 50% may not be enough, but that doesn't mean it isn't massive) just with efficiency.  By all means, use every other tool in our disposal as well.  But let's not start from the perspective that we only ought to use the most expensive means of reduction.  After all, the great thing about efficiency is that it's economically painless in addition to being environmentally beneficial.  It's the place we ought to start, regardless of whether or not we finish somewhere else.
  74. hapa's avatar

    hapa Posted 6:29 pm
    29 May 2008

    we have an important nit to pick.which is this: i've already said that big efficiency commitments, for demand and supply, are needed to reduce the cost of building clean supply and new transmission, because i'm just another net-parrot, everybody says "efficiency," i've never read people saying elsewise who weren't selling fission plants or other BAU.
    but, if you're asking me, who'm of no consequence, to support fossil-powered cogeneration where biomass or biogas or geothermal or whatever would do the job, you're the one putting some technologies ahead of others. none of the fossil fuels are safe. extending the oil and gas's availability for their hard-to-replace aspects is as important to me as reducing CO2 in the atmosphere and ending the damage done to ecosystems by extraction -- and all of that means reduced fuel use is a near-term band-aid stop-gap until we can get rid of it all.
    we all know, i think, that there are applications for fossil heat and power we can't easily replace. that's where cogeneration should be focused -- by law -- because anybody who can go to zero emissions on a daily basis, should. we basically need to do an inventory of this or something like an inventory.
    so, from what i can tell, more-efficient central (or medium) fossil-fuel generation is a completely different and somewhat budget-incompatible strategy with building smart transmission for a very high solar/wind percentage of power, because the higher variability and periodiciticity of local-only wind and solar resources seems ok when you have lots of "cleaner" fossil peak capacity. and all of that wonderful cleaner investment is paid off over the period of when we need to be building for the future and this is during now when loans are not the easiest or getting easier.
    this is why i want supply efficiency applied with great care, on the understanding that it will absolutely not interfere with building local, regional, and continental wiring that will allow very high percentages of near-zero-footprint power in the next 20 years.
  75. amazingdrx Posted 12:30 am
    30 May 2008

    There's a way hapaBecause biogas and natural gas can run in the same very efficient, low cost distributed cogeneration device.  Namely solid oxide fuel cell/turbine generators.  They are scalable from backup for a home to powering a plugin hybrid to a 100 mw power plant.
    Providing distributed backup generation for a renewable smart grid at very high efficiency (75%) and allowing cogenerated waste heat to be used where it is needed.
    This allows a transition from natural gas to biogas as the grid goes renewable.  It also saves a lot on grid transmission capacity.  At first natural gas would be the main fuel, then as renewables and conservation start to take over, biogas supply would increase and natural gas could be mainly a backup fuel.
    The cogeneration would help the process along, instead of extending the life of fossil fueled power generation.
    The beauty of biogas from waste is it's offsetting characteristic.  Since the methane that constitutes the fuel part of biogas is 21 times worse as a GHG than CO2, if 5% of our energy came from biogas, that would offset the rest of our CO2 emissions.
    That methane would normally be released from manure run off, sewage, garbage, and crop waste biomass directly into the atmosphere.  If we can intercept it, with biodigestion,  and use it to generate clean kwh, reduction in total GHG effect could push our carbon footprint to zero.
    The power grid backed up by biogas could eventually be mainly renewable and we could actually go carbon negative, reversing the GHG effects of these industrial revolution and chemical farming decades.  
    Biogas is the key technology, luckily it is well understood and in wide, but so far sparse application.  With targeted subsidy a boom could get biogas/fuel cell power to 5% of our power generation within a decade.

    http://amazngdrx.blogharbor.com/blog
  76. Sean Casten's avatar

    Sean Casten Posted 12:59 am
    30 May 2008

    Be agnostic. Very agnosticHapa,
    We're mixing apples and oranges here.  Economically, it is a good thing to squeeze as much useful energy out of every Btu as possible.  Environmentally, it's a good thing to squeeze as much useful energy out of every Btu as possible.  That is true whether those Btus come from coal, landfill gas, solar energy or cow-farts.  (Consider: would you rather serve the full load of some area with 500 acres of solar panels or 100 acres of solar panels?  This isn't a hard question - but the latter implies greater energy efficiency).
    Framing the argument as efficiency vs. renewables misses the point, because efficiency enhances the value of every fuel source.   And after all every fuel source is finite.  There's only so much solar radiation that hits the earth, only so much water that flows down hills, only so much wind that blows and only so much biomass that can be sustainably harvested.  And only so many dollars available to deploy them.  As such, it is in our global interest to ensure that policies maximally reward and incentivize efficient energy conversion, regardless of what the upstream fuel is.  
    Do we need technological changes for some clean technologies?  Absolutely.  But we need regulatory reform for all clean technologies.  And so long as those regulatory barriers stand in the way of the lowest-cost GHG-reducing technologies,  it behooves us to fix those regs.  Or as Amory Lovins put it recently "If you're standing under a tree full of low-hanging fruit, shake the damned tree!"
  77. Gar Lipow's avatar

    Gar Lipow Posted 2:25 am
    30 May 2008

    Biogas/CHPDRX I'd be very careful about potential for biogas and waste gas. Yes in absolute terms you can get a lot from existing dumps and mines that linking, and another large amount from certain kinds of wastes. But that is just because we are such a large and wasteful society. As a percentage of current consumption, sustainable production of bio and waste gas is pretty tiny. Even after we reduce consumption I think that potential will be small. Sometimes in my optimistic moments I think we might be able to sustainably get 15% of greatly reduced U.S. consumption. But most of the time I think is being overoptimistic.
    HAPA, I think you and Sean both have a point. There is a dilemma here that neither of you are seeing because it is a case where the need for quick reductions conflicts a bit with the need for deep reductions.
    In a lot of cases, the cheapest fastest way to reduce emissions are various forms of cogeneration. In this scenario  we replace existing natural gas turbines with more efficient turbines which use the same natural gas, but produce more electricity, then use some of the waste heat to replace more natural gas and electricity use, and also use some of the electricity to drive heat pumps replacing still more. Then we use waste heat from industrial process either to produce still more electricity or in other industrial processes.  That alone might let us completely phase out coal.  And the point is it might let us get those reduction very very quickly, fast enough for the peak to come when Hansen and the head of the IPCC says we need it to by 2015.
    Hoever, we also need to phase out emissions deeply. Following this path and putting all other possible efficiency means in place won't be enough to reduce emissions by 80% to 95% we need to by 2030.  We are going to have to put as much  efficiency in place as possible, drive everything electrically we can, and then generate that electricty at least 80% from low carbon sources. If we put too much co-generation infrastructure in place, we are going to have replace most of it within 15 years or less. Now that is not out of the question. I think Sean will confirm that most recycled heat potential could pay for itself in a lot less time than that -typically five years or less. So we could take the natural gas we use now to generate some of our electricity, do much of our climate condition, and fuel many of our industrial processes, and by using recycling of heat continue to use them for these purpose but also massively increase the electricity we produce to the point where we could phase out coal (maybe: I'm not use the math quite works out for this). Then after these deployments have paid for themselves start phasing out some of them as more renewable electricity comes on-line
    But at the same time, it might make sense in terms of long term cost to deploy efficiency, and massive wind and solar development from the beginning. Earlier deployment of capital, but at least not deploying capital twice for the same purpose. And in terms of politics, a building a clean efficient infrastructure only to replace it because it is not clean enough could be very problematic.
     The science says we need two things, a peak or a small drop by 2015,   and  a massive reduction (80% to 95%) drop in emissions by 2030, followed by a slow phasing out of remaining emissions and conversion to negative emissions.
  78. amazingdrx Posted 3:39 am
    30 May 2008

    Hard to estimate GarI think one way would be to go, in estimating potential biogas totals,  would be to envision it as a portion of the solar energy stored by crops.
    Crops are fed to animals and humans, the whole waste stream working off of that.  Garbage added in, a lot of that from paper.
    What percentage of that original solar energy ends up in the biodigestable waste?  What percentage of that could be converted to biogas?  
    We only need to get to 5%.  With half of energy use curtailed through conservation, that would help a lot, cutting the amount of biogas needed in half.  A lot of weed overgrowth (from fertilizer and manure run off)is emitting a lot of methane already, that could be harvested for extra biogas production/GHG offset.

    http://amazngdrx.blogharbor.com/blog

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