I've argued before that electricity cost comparisons are, in Walt Patterson's memorable phrase, "an artifact of prior decisions otherwise concealed" -- i.e., based on unstated moral, social, and economic assumptions. Most of those assumptions, for reasons of habit, custom, and occasionally pecuniary interest, are weighted toward the traditional way of doing things: a hub-and-spoke electricity grid driven by massive coal, gas, nuclear, and hydro plants. (To take just one example: the costs of grid transmission and distribution are not counted against central plants, even though small-scale distributed generation substantially reduces those costs.)
In my moderately informed but widely broadcast opinion, if cost comparisons were done with a more defensible set of assumptions -- defensible given what we know about trends in climate change, information technology, fossil fuel prices, federal regulation, freshwater availability, you name it -- renewable sources like solar thermal and wind would already come out ahead. And of course efficiency already comes out ahead.
This is all by way of introducing a piece in today's NYT. It tries to show what price on carbon would be necessary to make renewables competitive with coal. It is based on conventional cost comparisons from EPRI. (For some bashing of EPRI assumptions, see this post from Sean.)
The result: based on EPRI's cost comparisons, a price on carbon of $50 per metric ton of CO2 equivalent would catapult wind and natural gas ahead of coal. Given how deeply skewed those assumptions are, and how rapidly renewable costs are falling, I'm guessing the needed price is much, much lower.
Lesson: regulatory reform can cause enormous shifts in the electricity industry, even absent futuristic new pony technology.
The graphic from the NYT story is below the fold:
How much CO2 do our nation’s coal and gas plants actually produce?
Comments
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apsmith Posted 6:21 am
07 Nov 2007
Which costs does the market take care of?
The costs of grid transmission and distribution are not paid free by the government, they are included in retail electric rates. So if the question is what price on coal makes other alternatives competitive in the retail electric market, the costs of grid transmission are already included. Similarly, if the risks of a coal-fired generator are becoming higher from climate-related changes, that should make coal less competitive because of the higher bank rate plants need to pay, or higher insurance rates.
The one thing that's not included in the current market system is the cost to the world of the CO2 emissions themselves. So we're talking about a carbon tax scenario to levelize that concern, and it sounds like the EPRI study has done just the right things to make a comparison in that scenario. I don't see the justification for your more optimistic estimates here.
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sunflower Posted 6:25 am
07 Nov 2007
vulnerable to "carbon criticism."
Renewables can not scale quick enough to manipulate the coal market. Natural gas can kill coal, quickly. This is an important message.
Solar is well positioned to replace natural gas after the dawn of visionary leadership. EPRI loves nuclear.
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Laurence Aurbach Posted 6:42 am
07 Nov 2007
Cost of solar thermal is dropping
EPRI estimates the cost of solar thermal at 12¢/kWh. That's based on a conservative interpretation of studies like NREL's Assessment of Parabolic Trough and Power Tower Solar Technology Cost and Performance Forecasts (2003). But NREL also found that solar thermal costs have the potential to go as low as 5-6¢/kWh after several gigawatts of capacity have been constructed and economies of scale kick in, along with certain technological developments.
Meanwhile, Ausra has announced a 177 megawatt solar thermal plant backed by a purchasing agreement from PG&E. Ausra projects a cost of 10¢/kWh at the 100-200 megawatt plant scale, dropping to below 8¢/kWh for delivery at 500-1000 megawatt plant scale.
If the most optimistic long term projections for solar thermal pan out, it could be competitive with coal without a CO2 charge. At 8¢/kWh the CO2 charge would need to be $15-$30/ton to make solar thermal competitive with coal (according to EPRI's chart).
Another advantage of the newer solar thermal designs is suitability for high-speed mass manufacturing and modular construction. From signing the purchasing agreement to generating electricity is expected to take 3 years, which compares favorably with offshore wind power.
Ped Shed Blog
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Sean Casten Posted 7:11 am
07 Nov 2007
AP response
AP:
Allow me to respond to your question. If I am a utility and I build a central coal plant, I need only convince the local commission that the plant is "prudent" at which point I get guaranteed equity returns. This cost - plus the cost of all the wires that were, in all likelihood, approved in a separate rate case - are indeed bundled into retail rates as you point out. (Although, to be fair, these costs are typically spread across the entire rate base rather than to the specific customers who impose the costs, which is a really big deal when it comes to T&D, since the present structure provides no preferential to conserve electricity at those nodes that are most congested. But that is another issue.)
T&D, on average costs $1300/kW of capacity. We lose 10% of all the power we put into the system in distribution losses, so that's more like $1430/kW of delivered T&D capacity. Add to that the fact that our central model builds about 20% reserve margin into the system (spare generation that we must have access to, but is greater than peak system demand to account for unplanned outages, all of which must also be connected to the load through wires that are - in most cases - not needed) and you're up to about $1700/kW just for the wires. Beaucoup bucks. Throw in another $1500 - 3000 for the central generation, and you get to one huge amount of cost per kW for big central power plants. Economies of scale, my butt.
Now look from the other vantage point and suppose that I am a business or unregulated power generator who wants to build a power plant at/near the load. I am downstream of the wires, so I don't need them, except for a bit of backup capacity. And in all likelihood, my plant is both way cheaper (because I don't need the wires) and way more efficient (for a variety of technical reasons, but mostly because since I don't have utility commissions guaranteeing my equity returns, I tend to be much more fiscally responsible, lest I lose my equity.) If, God forbid, I have the capability to export some of that power out onto the grid, the utility will offer me a rate that is set by their upstream power plants, under old PURPA rules that effectively presume that the power is free. And so the wires don't factor into my economic calculus, and commonly drive me away from investing marginal capital in a bigger plant because that marginal investment has such a crummy return. Now suppose that I don't have any to export. Odds are that my utility has got a sweetheart deal with the utility commission where they've approved a "standby rate" that essentially reimburses them at least for the wires cost, justified on the basis that they had to build the wire anyway, so my decision to self-generate must cause me to shift to a new rate where I "keep the utility whole". Which effectively means that all bets are off in terms of retail prices, because the price for the next kWh I purchase is so much higher than the value I get for the next kWh I conserve. I cannot overstate the degree to which these massive regulatory failures have caused a misallocation of capital. But their net result is - as David noted - to substantially subsidize the cost of the wires such that from a generation siting perspective, they look free (or nearly so). And since the generation that gets blocked is the cheaper, less-carbon intensive stuff, these rules have the direct result of charging us too much for power so that we can emit too much carbon. None of which is ever factored into the garbage that passes for analysis out of EPRI and their ilk.
(Note that there are slight differences in various markets with respect to the above in terms of the rate structures and PURPA rates allowed by utility commissions and the ability to bypass these rules through ISO/RTO processes. But the differences are only of degree.)
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trock Posted 9:25 am
07 Nov 2007
2 different prices for carbon
What price carbon? There should be 2 prices. One price would be the consumption carbon price, the other the import/export business price.
The consumption carbon price would be fossil fuel energy use by individuals, like a sales tax is now, but only this would be a fossil fuel sales tax. Then we can reduce other taxes, like property, sales and income taxes as more of this tax is collected. This would also be a tax paid by restaurants, stores and other businesses that don't compete internationally.
The import/export business price would be that charged to companies that would have to compete in the world market place with their product. This would include industries like steel making, manufacturing, etc.
The reason for this is a large part of the complaint about carbon taxing is our competitors in world trade would have an advantage if we increased our the prices of our products because we taxed carbon. If we taxed only the carbon that is used as consumption, it wouldn't affect our trade competition with other countries, like china which may not tax for carbon energy usage.
I don't think this would be any more of a paperwork type of problem than all the other considerations that are in our tax code and other law.
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Ron Steenblik Posted 3:35 pm
07 Nov 2007
Careful with terminology, please
I know it's a bore, but in the text of your post, David, you say "a price on carbon of $50 a ton would catapult wind and natural gas ahead of coal." When I look at the chart, however, EPRI are talking about $50 per (metric) ton of carbon-dioxide equivalent (CO2-eq.), which is equivalent to $183 per ton of carbon. Fifty dollars per ton of carbon would translate into a tax of just $13.65 per ton of CO2-eq.
You are not alone in mixing these things up. On 31 October, I attended a meeting of the UNFCC, in Bonn, and people would generally speak of a price of carbon. Most of the experts in the room seemed to know (or think they knew) when their colleagues were really talking about carbon and when they really meant CO2-eq (as in, "the market price of carbon is"), but when I asked one speaker to clarify which he meant, I learned that even the experts were split in their thinking as to which price he was referring to.
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David Roberts Posted 4:56 pm
07 Nov 2007
Thanks Ron
Good point; corrected accordingly.
grist.org
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apsmith Posted 12:31 am
08 Nov 2007
$1700/kW for the wires?
That seems like a rather high estimate - numbers I've seen are more like about $500/kW, but of course it depends on transmission distance too (I think 200 km is typical for the distance between generator and producer).
You need wires whenever local power generation capacity is larger or smaller than local consumption needs. In very fortuitous circumstances you could do without the grid - or else if the capital costs of generation were very low you could just throw out that extra capacity you don't need.
But in almost all circumstances it's better, even with the 10% loss from transmission, to sell that extra capacity rather than let it be idle. Or, if local generation is too low to meet needs, it's better to bring in power than to shut down. So we need the grid.
And intermittent, distributed sources like wind and solar need even more grid capacity - unless you're really lucky, it's hard to get a much higher capacity factor out of the wires than you get out of your power generators themselves, so the issue is that much worse for the renewable options.
Plus the best solar and wind locations tend to be pretty remote from population centers - so you have extra expense for T&D in comparison.
So I think at least in this sense the EPRI report was being quite fair.
And the argument that the present electric power system is "centralized" is a bit of a red herring - we have thousands of independent producers around the country now. Would things really be that much better with tens of thousands, millions? I don't see it.
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Sean Casten Posted 1:06 am
08 Nov 2007
AP
The source on the $1300/kW value is a pretty exhaustive review of FERC Form 1 filings that was done by my colleagues at Arthur D. Little about 10 years ago. (I have heard, but not participated in follow ups that found no substantial difference.) The math is straightforward though - you look at how much utilities are reported to have spent on transmission & distribution, look at how much reported capacity was added and divide. The breakdown as I recall was about 60/40 between transmission and distribution, and I suspect that your $500 figure was just looking at one of those elements. I will also add that this is an average that belies a VERY broad range. I had folks in Tuscon tell me that the number was crazy, because they can build new T&D for under $300/kW. I also had folks in NYC tell me the number was crazy because they were looking at closer to $10,000/kW. Such is the way of averages. It is worth noting though that if you follow utility filings in various rate cases, you will find that the $1300 is about right. (And also worth noting that you may have better things to do with your time!)
Do note however that so long as the model is that we build remote generation and lots of wires to connect to load you have to add in additional capacity to account for line losses and reserve margin: building 1 kW of wires to account for 1 kW of load is a recipe for blackouts, and while the specific line loss value and reserve margin will vary from region to region, the ~10%/20% values are pretty good national averages, and again consistent with rate filings by utilities. As a backcheck on the figure, you can also look at how much you need to amortize $1700/kW over 20 years at 10% - rough utility return figures - and you end up about a little more than 3 cents, which is pretty close to the difference between wholesale and retail prices - as one would expect given location-specific considerations.
Couple other responses:
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apsmith Posted 1:38 am
08 Nov 2007
Central vs. local
I don't know about your house, but my house uses most of its energy after dark (for lighting, cooking, electronic devices), not the middle of the day. Solar panels on a residential property are not well matched to local demand. Exact matches between generation and demand seem generally unlikely on a local scale; even if they match at one given point in time, demand changes far faster than generating capacity can, and seasonal changes in demand are unlikely to be well-matched to the variations in renewables supply in particular. That's why distribution over a regional scale makes sense, because the averaging on both supply and demand sides makes a match easier to achieve. That lowers capital costs for generation, which more than makes up for increased T&D costs. Despite being regulated monopolies, utility companies are in business to make money, not to waste it.
And I think you are painting an incorrect picture of what "centralized" means now. New York City already has generating capacity of around 80% of its peak electric needs within the city limits. Long Island, where I live, has capacity close to 100% of peak, so we're not importing huge fractions of our power from up-state or elsewhere over long distances. The only reason long-distance power transmission is used is where you have very localized generation for a reason - Niagara Falls for example can't be moved, that's where the power is. So people build large T&D for it - but that's typical of renewables, it's not where the people are, and makes David's arguments all the more suspect...
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amazingdrx Posted 1:46 am
08 Nov 2007
1/10nth the wires!
On a distributed renewable generation and storage powered grid? Very good Sean! That means the current grid will not need upgrading as far as capacity, just internet enabled switching ability.
Internet over the power grid works fine and could carry all phone, wireless, and cable tv signals as well over broadband wireless using the grid as a backbone and an antennae. it would allow for switching of everything from your home freezer up to mall cooling/heating systems to store power.
As far as needing a centralized grid? it is better to envision the home power system as a stable stand alone source that supplies the grid, next a local area grid of these home and businesses interconnected, that is a net power exporter. Next a region. And that organic design all interconnecting into a stable national and even international grid. join Canada in great plains wind power, as we do now by buying their hydropower kwh.
Make it so Hillary. How to get this vision to the party leadership though? We all need to become our own best lobbyists. go to fundraisers in business attire and lobby your legislators.
http://amazngdrx.blogharbor.com/blog
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Biodiversivist Posted 2:20 am
08 Nov 2007
My question is
how did the central model develop? Was it the result of government intervention in the market or the result of the market?
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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Sean Casten Posted 2:24 am
08 Nov 2007
AP response
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Biodiversivist Posted 2:41 am
08 Nov 2007
Great stuff, Sean
You certainly answered my particular question.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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Sean Casten Posted 2:42 am
08 Nov 2007
Biod
Great question - here's the short answer.
When the electric industry got started (in Manhattan, coincidentally enough to this thread), every plant served a single business or neighborhood, making both highly dependent on the other. If the factory dropped a shift, the power plant lost a customer. If the power plant had a maintenance glitch, the factory shut down. Meanwhile, different generators produced power at different voltages & frequencies (and indeed, Tesla and Edison were fighting over AC and DC, making things all the more complicated). Clearly a grid was needed to aggregate load and generation, and to standardize the system. Equally clearly, that grid needed to serve all customers. (One of the fascinating lessons from the period was that electrification enabled greater literacy, because people could suddenly have good light at night to read by.) But the generators had a free-rider problem - they knew the grid was needed, but also knew it was really expensive and weren't willing to put up the capital to build it if others could then piggyback on their system.
What eventually emerged was a realization by utility managers (Samuel Insull, a protege of Edison's leading the way) that regulation could be a really good thing since they could essentially lock in profits and drastically reduce their risk. (I am glossing over some pretty significant market manipulations that led to the Public Utility Holding Company Act - and that looked an awful lot like some recent shenanigans in the industry.) The end result though was an agreement between government and industry that we would establish a regulatory compact, whereby the utilities got exclusive franchises to monopoly territories, in exchange for (a) an obligation to serve every customer in that territory and (b) ceding the responsibility to set price to the relevant regulatory agency.
It's worth bearing in mind that the time frame during which this was done was an era when socialism and central planning had an awful lot more respect than it does today. This was the era of the studio system in Hollywood, of the New Deal in Washington and of folks like Einstein saying that the problems of the world were far too complicated to be left up to markets. At the same time, it was an era when the excesses of the Gilded Age were becoming apparent and before the excesses of central planning (e.g, Stalin) were known. And so we built the system I outlined in my earlier post that is, at core, founded on the presumption that a few smart central planners will do a better job than a thousand dumb actors. And in so doing imposed a massive penalty on society in terms of economic and environmental efficiency that we have not yet even begun to fix.
When you recognize that (a) the electric industry is responsible for about 40% of all our GHG emissions in this country and (b) at $650 billion, is the single biggest industry in the country, I think one can conclude without any hyperbole that reforming this system is the single most important thing we can do for the health of the economy and the environment. Clearly, we needed the system built in the 20s to electrify the country - but we pay a deep price in terms of energy costs and over-emission of CO2 as a direct result of the perpetual monopolies we granted on utilities.
As one final note, one can compare this to our patent system to see a better way. We recognize that pharmaceuticals won't create new drugs without an exclusive franchise to sell, but also don't grant them those rights in perpetuity. Try to imagine what our health care system would look like if there were no generics - from aspirin to insulin, imagine if only one company had the rights to sell at a price that was set by a single regulatory agency (that the pharmaceutical industry had a very strong incentive to control.) That is essentially what we have in the electric sector.
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WWAGD?! Posted 3:29 am
08 Nov 2007
Your Neighborhood Fuel Cell
It's soon to the point where every neighborhood can have it's own Fuel Energy Systems (FCEL) type fuel cell for local generation, tied to a grid. Their cells can run on natural gas (or waste gas or hydrogen).
I agree that part of the electricity problem is "big" and "centralized". Getting base load production down to the neighborhood will reduce waste, and improve the resiliency of the system.
John Bailo
Sutext:
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apsmith Posted 4:20 am
08 Nov 2007
regulatory incentives for high capital costs?
Sean, I appreciate you spending the time to explain this stuff, it really is very informative.
However, what you've just said about the regulatory incentives doesn't make sense to me, so maybe I'm still missing something.
You said:
"Raising capital costs is the holy grail though. So utility managers respond rationally and chase big, expensive stuff. The net impact is that we have created a model where the rational pursuit of profits leads to higher energy costs."
This doesn't make sense to me because the dominant issue with non-fossil power sources (hydro, nuclear, wind and solar) is their high capital costs. Renewables have zero fuel costs and nuclear is close to zero, so their O&M is low, but their capital costs are double or triple or more, per kW-hr, that of fossil fuel plants.
So if what you were saying were correct, regulated utilities would be rushing into non-fossil generation. But they are demonstrably not, instead building more and more coal plants, gas turbines, etc. Why the disconnect?
I know your focus is on co-generation and related localizable concepts, and that's fine on an improving-efficiency level. But what David Roberts is talking about in the article here is not co-gen, but "if cost comparisons were done with a more defensible set of assumptions [...] renewable sources like solar thermal and wind would already come out ahead". And on the transmission-and-distribution level at least, that statement seems blatantly contrary to the facts.
Fact 1: the most energy-efficient arrangement of human residential and commercial activity is urban, not suburban or rural, with electrified transportation, short travel distances for most needs, and large buildings of relatively low surface area to maintain steady living temperatures. I.e. people concentrated in small areas is the way to go for efficiency.
Fact 2: essentially all renewable sources are either of low energy density, requiring capture over large regions of Earth's surface, or concentrated in specific locations that are not close to where people live (most hydro-power).
Fact 3: renewables have generally lower capacity factors (30-40%, or 60% perhaps for hydro, rather than 80-90%) relative to typical fossil or nuclear stations. In addition to whatever backup power storage or generation that might require, that means all capital costs must be multiplied by the inverse of the capacity factor (a factor of 2-3 in many cases) to get an equivalent per-kWh number.
From the facts it seems pretty clear to me that transmission costs are a much worse problem for renewables in general than for fossil or nuclear power.
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Kristina & Jason Makansi Posted 4:56 am
08 Nov 2007
history of regulated markets (and shameless plug)
For a good explanation of the history of the power industry and how the market came to look like it does today, check out Lights Out: The Electricity Crisis, the Global Economy, and What It Means to You.
The book takes a hard look at the state of the grid today, the advantages of distributed generation, microgrids, and smart grids; the energy, environmental, and economic trade-offs of coal, nuclear, LNG, wind, and solar; the importance of energy storage and demand-side management; and it offers a roadmap for getting outselves out of the mess we're in. In fact, there's something in it for everyone to agree (or disagree) with!
Pearl Street::Jason and Kristina Makansi Read Lights Out reviews
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Sean Casten Posted 4:57 am
08 Nov 2007
AP Answers
You wrote:
"So if what you were saying were correct, regulated utilities would be rushing into non-fossil generation. But they are demonstrably not, instead building more and more coal plants, gas turbines, etc. Why the disconnect?"
Couple reasons. One, recognize that utilities don't have a blank checkbook - they have to get their checks approved by utility commissioners. Those commissioners aren't perfect, but they aren't idiots either. So there is a balancing act between that which is expensive (good for utility shareholders) and that which commissioners will approve. (Indeed, the mandate before utility commissioners is to balance the interests of shareholders and consumers. In my experience, they do a much better job with the first group, for the simple reason that the latter group is so poorly represented in rate cases. But they are not ignored.) So trying to convince a regulator that they should invest in something that is expensive and intermittent to serve load is a hard sell. Convincing them, on the other hand that they should invest in stuff that is expensive but really reliable is rather easier.
Another part of the story is simply one of scale. A utility, like any other business, cannot afford to spend it's time chasing lots of small projects. There is a cost associated with designing power plants which is largely independent of size, and that - plus the large size of many utilities - biases them towards bigger scale. Solar may be expensive, but you simply can't afford to chase rate approvals for every 30 kW installation. Nuclear on the other hand is expensive and big. Ditto for coal & gas.
Finally, there's the wires issue. Regulated utilities own lots in their territory, but the transmission is increasingly trans-regional. Putting generation on the downstream end of the wire (especially in restructured states) effectively puts it out of the regulated zone - thus pushing them to central plants, regardless of costs.
What's interesting on all of these is that there is one renewable source that meets all these tests - relatively expensive, big and central: wind. Not surprisingly, lots of regulated utilities are investing in wind farms.
With respect to your other facts, I don't fundamentally disagree, but would point out again that you're really making a point about central vs. local. There are lots of industrial facilities that were sited decades ago near run-of-the-river hydro who accept the intermittency in exchange for much cheaper energy when the river flows. Those plants typically take <100% of their power from the hydro facility even when it is running at full strength, and therefore don't have a transmission problem. On the other hand, if you take that same location and take the industrial way, you do need lots of wires to connect it to the load and you do need to add proportionally more wire than you would for baseloaded generation. But - to my earlier point - the bigger variable is the remote nature of the facility which adds in the T&D cost in the first place.
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Sean Casten Posted 5:20 am
08 Nov 2007
AP - one other thing
I take your point that the thread here is getting away from David's initial post (don't they all?) but forgot to address.
Generally speaking - and this is true for any established industry - there are massive subsidies to the status quo that are not reflected in variable pricing but are saved when something else comes on line. However, the new stuff doesn't get credit. Couple examples:
- The health costs of coal fired power have been estimated to be between 6 - 10 c/kWh, but they are all paid out of income tax. Saying that coal is cheap without including that cost is like saying that cigarettes are a cheaper diet plan than joining a gym. But cleaner stuff (renewables and otherwise) doesn't get paid for creating those benefits and so we frame the question exactly the wrong way, complaining about subsidies to renewables instead of cheering the subsidies they would eliminate to coal.
- The Clean Air Act grandfathered old, dirty plants, effectively raising the cost to build new cleaner ones. Thus, old dirty coal essentially got a free right to pollute and the failure to charge them for that right made their power cheaper even than the cleaner stuff which would displace it (since that new stuff has to get a permit).
- Think of the amount of effort that has gone into evaluating the impact of Cape Wind on birds, fisheries and tourism losses. Compare that to how much review went into our considerations in the early days of the coal & nuke industry as to what we would do with nuclear waste, inconvenient mountaintops, etc. We pay all those costs, but we pay them out of other pockets, a la point 1.
- Finally, stealing a page from Jim Woolsey, how much of our defense budget goes to protect foreign fossil fuels through income taxes thus making it harder for cleaner domestic alternatives to come on line? This is admittedly more a transportation than electricity issue, but still a good example.
We've done analyses trying to factor all this in and found that if you look over the past few decades, the electric sector has consistently failed to deploy the lowest cost generation, in part because of regulatory flaws, but also because the true cost of those sources is paid out of other pockets. With the exception of solar PV, a case can be made that just about every renewable and other clean source is more competitive on a truly level playing field. Ergo, rather than talking about subsidies for clean stuff, we should be talking about leveling the playing field and removing the subsidies to the dirty stuff.Permalink
Kristina & Jason Makansi Posted 5:59 am
08 Nov 2007
"cradle to grave" economics
The economics of energy production change completely when all fuel life-cycle externalities are taken into consideration!
One of the key problems, however, goes back to one of your (Sean's) earlier posts regarding communicating to the public--getting the energy/environmental/economic message out there to John and Jane Q. Public. In a society that looks no further ahead than the next quarter's earning reports, it's hard to talk about 50-100 year infrastructure planning and investment or long-term environmental impacts. Those of us who believe there must be a convergence of ideas (and a commitment to action)between "environmentalists" and "industry" focused on addressing those 50-100 year issues, must do a better job of telling our story to the public.
Pearl Street::Jason and Kristina Makansi Read Lights Out reviews
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Biodiversivist Posted 6:30 am
08 Nov 2007
Sean, your analogies were excellent
and help clarify what this reader thought you said, but would not have bet his first born on. A good analogy is worth a thousand words. We should all use more of them.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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Laurence Aurbach Posted 7:16 am
08 Nov 2007
Reducing intermittency at competitive cost
apsmith wrote:
"renewables have generally lower capacity factors (30-40%, or 60% perhaps for hydro, rather than 80-90%) relative to typical fossil or nuclear stations. In addition to whatever backup power storage or generation that might require, that means all capital costs must be multiplied by the inverse of the capacity factor (a factor of 2-3 in many cases) to get an equivalent per-kWh number."
The 177 megawatt Ausra solar thermal plant I mentioned above will include a water-based thermal storage system (most likely with 16-hour capacity) to enable electricity generation any time of the day or night. The Ausra report Solar Thermal Power as the Plausible Basis of Grid Supply says:
Even more intriguing, the report asserts solar thermal costs are lower than IGCC costs even before sequestration is accounted for.
The report Lower Temperature Approach for Very Large Solar Power Plants presents more detailed information about several thermal storage technologies for solar generating plants.
Ped Shed Blog
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apsmith Posted 1:56 pm
08 Nov 2007
Leveling the playing field
Sean - absolutely, we should be talking about leveling the playing field. To my mind that's exactly what the talk about a carbon or coal tax is for. How else would you attach the externalities of health and environment costs to coal? There's no market-based mechanism to do that without government enforcing it through taxation.
And $50/ton of CO2, the highest level in the EPRI graph, is nothing. It would have negligible economic downside. The studies I've looked at on long-term large-scale CO2 reductions, the ones that do have some economic downside as we fight against global warming, see costs of over $1000/ton. My guess is we'll be able to eliminate CO2 to the extent we need well below that number, but $50/ton is probably not quite high enough.
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amazingdrx Posted 11:43 pm
08 Nov 2007
Green army
http://www.msnbc.msn.com/id/12597581
Hybrid vehicles for the military. From oshkosh, wi.
http://amazngdrx.blogharbor.com/blog
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Sean Casten Posted 11:46 pm
08 Nov 2007
AP - I agree
But the remarkable thing is that the leveling could cause fiscal shifts even without a $50/ton carbon tax (and would probably be bigger). Consider only that no one who has to put their own equity at risk builds coal plants. So why do utilities? Because they get their risk underwritten by rate payers, enabling vastly cheaper debt and artificially lowering their risk profile - and thereby driving them to build things that a responsible actor would never build.
(My favorite statistic: there are over 85 GW of cogen in this country, spread across more than 3000 installations. Of that total, just 72 are owned by utilities. 75 are owned by laundromats. The difference between the two groups is that when a laundromat wants to invest in a power plant, they make damn sure it's going to save them money. A utility makes damn sure that the commission blesses it - those are very different processes & incentives.)
If you look at the hundreds of millions of capital currently being recovered through utility rates, and took away the 2 - 3% reduction in interest payments that are an artifact of our regulatory model (either by driving up utiltiy costs-of-capital, or providing a comparable backstop to those unregulated actors putting their own money to work), you would get an impact as big or greater than the carbon tax.
Or consider the health costs: coal-fired power plants release about 1 ton/MWh of power generation. Which means that if we just forced them to pay the the 6+ cents/kWh health costs calculated by Ontario & others, that alone is worth $60+/ton of GHG.
Bottom line is that while I agree with you, the numbers being thrown out for carbon pricing still leave an awful lot of room for additional leveling.
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