Category Archives: Electricity

New Energy Economy: An Exercise in Magic Thinking: Part 4 Ensuring Energy Availability and Grid Parity


This part is a little longer than the previous posting but I think believe it conveys the message.

 

 

Continuing the serialization of Mark Mills’ report New Energy Economy: An Exercise in Magic Thinking. 

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The high cost of ensuring  energy availability

Availability is the single most critical feature of any energy infrastructure, followed by price, followed by the eternal search for decreasing costs without affecting availability. Until the modern energy era, economic and social progress had been hobbled by the episodic nature of energy availability. That’s why, so far, more than 90% of America’s electricity, and 99% of the power used in transportation, comes from sources that can easily supply energy any time on demand.18

 In our data-centric, increasingly electrified, society, always-available power is vital. But, as with all things, physics constrains the technologies and the costs for supplying availability.19 For hydrocarbon-based systems, availability is dominated by the cost of equipment that can convert fuel-to-power continuously for at least 8,000 hours a year, for decades. Meanwhile, it’s inherently easy to store the associated fuel to meet expected or unexpected surges in demand, or delivery failures in the supply chain caused by weather or accidents.

It costs less than $1 a barrel to store oil or natural gas (in oil-energy equivalent terms) for a couple of months.20 Storing coal is even cheaper. Thus, unsurprisingly, the U.S., on average, has about one to two months’ worth of national demand in storage for each kind of hydrocarbon at any given time.21

Meanwhile, with batteries, it costs roughly $200 to store the energy equivalent to one barrel of oil.22 Thus, instead of months, barely two hours of national electricity demand can be stored in the combined total of all the utility-scale batteries on the grid plus all the batteries in the 1 million electric cars that exist today in America.23

For wind/solar, the features that dominate cost of availability are inverted, compared with hydrocarbons. While solar arrays and wind turbines do wear out and require maintenance as well, the physics and thus additional costs of that wear-and-tear are less challenging than with combustion turbines. But the complex and comparatively unstable electrochemistry of batteries makes for an inherently more expensive and less efficient way to store energy and ensure its availability.

Since hydrocarbons are so easily stored, idle conventional power plants can be dispatched—ramped up and down—to follow cyclical demand for electricity. Wind turbines and solar arrays cannot be dispatched when there’s no wind or sun. As a matter of geophysics, both wind-powered and sunlight-energized machines produce energy, averaged over a year, about 25%–30% of the time, often less.24 Conventional power plants, however, have very high “availability,” in the 80%–95% range, and often higher.25

 A wind/solar grid would need to be sized to meet both peak demand and to have enough extra capacity beyond peak needs in order to produce and store additional electricity when sun and wind are available. This means, on average, that a pure wind/solar system would necessarily have to be about threefold the capacity of a hydrocarbon grid: i.e., one needs to build 3 kW of wind/solar equipment for every 1 kW of combustion equipment eliminated. That directly translates into a threefold cost disadvantage, even if the per-kW costs were all the same.26

Even this necessary extra capacity would not suffice. Meteorological and operating data show that average monthly wind and solar electricity output can drop as much as twofold during each source’s respective “low” season.27

The myth of grid parity  

How do these capacity and cost disadvantages square with claims that wind and solar are already at or near “grid parity” with conventional sources of electricity? The U.S. Energy Information Agency (EIA) and other similar analyses report a “levelized cost of energy” (LCOE) for all types of electric power technologies. In the EIA’s LCOE calculations, electricity from a wind turbine or solar array is calculated as 36% and 46%, respectively, more expensive than from a natural-gas turbine—i.e., approaching parity.28 But in a critical and rarely noted caveat, EIA states: “The LCOE values for dispatchable and non-dispatchable technologies are listed separately in the tables because comparing them must be done carefully”29 (emphasis added). Put differently, the LCOE calculations do not take into account the array of real, if hidden, costs needed to operate a reliable 24/7 and 365-day-per-year energy infrastructure—or, in particular, a grid that used only wind/solar.

 The LCOE considers the hardware in isolation while ignoring real-world system costs essential to supply 24/7 power. Equally misleading, an LCOE calculation, despite its illusion of precision, relies on a variety of assumptions and guesses subject to dispute, if not bias.

 For example, an LCOE assumes that the future cost of competing fuels—notably, natural gas—will rise significantly. But that means that the LCOE is more of a forecast than a calculation. This is important because a “levelized cost” uses such a forecast to calculate a purported average cost over a long period. The assumption that gas prices will go up is at variance with the fact that they have decreased over the past decade and the evidence that low prices are the new normal for the foreseeable future.30 Adjusting the LCOE calculation to reflect a future where gas prices don’t rise radically increases the LCOE cost advantage of natural gas over wind/solar.

 An LCOE incorporates an even more subjective feature, called the “discount rate,” which is a way of comparing the value of money today versus the future. A low discount rate has the effect of tilting an outcome to make it more appealing to spend precious capital today to solve a future (theoretical) problem. Advocates of using low discount rates are essentially assuming slow economic growth.31

A high discount rate effectively assumes that a future society will be far richer than today (not to mention have better technology).32 Economist William Nordhaus’s work in this field, wherein he advocates using a high discount rate, earned him a 2018 Nobel Prize.

An LCOE also requires an assumption about average multi-decade capacity factors, the share of time the equipment actually operates (i.e., the real, not theoretical, amount of time the sun shines and wind blows). EIA assumes, for example, 41% and 29% capacity factors, respectively, for wind and solar. But data collected from operating wind and solar farms reveal actual median capacity factors of 33% and 22%.33 The difference between assuming a 40% but experiencing a 30% capacity factor means that, over the 20-year life of a 2-MW wind turbine, $3 million of energy production assumed in the financial models won’t exist—and that’s for a turbine with an initial capital cost of about $3 million.

U.S. wind-farm capacity factors have been getting better but at a slow rate of about 0.7% per year over the past two decades.34 Notably, this gain was achieved mainly by reducing the number of turbines per acre trying to scavenge moving air—resulting in average land used per unit of wind energy increasing by some 50%.

 LCOE calculations do reasonably include costs for such things as taxes, the cost of borrowing, and maintenance. But here, too, mathematical outcomes give the appearance of precision while hiding assumptions. For example, assumptions about maintenance costs and performance of wind turbines over the long term may be overly optimistic. Data from the U.K., which is further down the wind-favored path than the U.S., point to far faster degradation (less electricity per turbine) than originally forecast.35

 To address at least one issue with using LCOE as a tool, the International Energy Agency (IEA) recently proposed the idea of a “value-adjusted” LCOE, or VALCOE, to include the elements of flexibility and incorporate the economic implications of dispatchability. IEA calculations using a VALCOE method yielded coal power, for example, far cheaper than solar, with a cost penalty widening as a grid’s share of solar generation rises.36

One would expect that, long before a grid is 100% wind/solar, the kinds of real costs outlined above should already be visible. As it happens, regardless of putative LCOEs, we do have evidence of the economic impact that arises from increasing the use of wind and solar energy.

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Part 5 will be The Hidden Costs of a “Green” Grid.

cbdakota

New Energy Economy:An Exercise in Magic Thinking–Part 3 The Physics-Driven Cost Realities of Wind and Solar


Continuing with the serialization of Mark Mills report titled New Energy Economy: An Exercise in Magic Thinking.

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The Physics-Driven Cost Realities of Wind and Solar   Part 3

The technologies that frame the new energy economy vision distill to just three things: windmills, solar panels, and batteries.10 While batteries don’t produce energy, they are crucial for ensuring that episodic wind and solar power is available for use in homes, businesses, and transportation.

Yet windmills and solar power are themselves not “new” sources of energy. The modern wind turbine appeared 50 years ago and was made possible by new materials, especially hydrocarbon-based fiberglass. The first commercially viable solar tech also dates back a half-century, as did the invention of the lithium battery (by an Exxon researcher).11

Over the decades, all three technologies have greatly improved and become roughly 10-fold cheaper.12 Subsidies aside, that fact explains why, in recent decades, the use of wind/solar has expanded so much from a base of essentially zero.

Nonetheless, wind, solar, and battery tech will continue to become better, within limits. Those limits matter a great deal—about which, more later—because of the overwhelming demand for power in the modern world and the realities of energy sources on offer from Mother Nature.

With today’s technology, $1 million worth of utility-scale solar panels will produce about 40 million kilowatt-hours (kWh) over a 30-year operating period (Figure 2). A similar metric is true for wind: $1 million worth of a modern wind turbine produces 55 million kWh over the same 30 years.13 Meanwhile, $1 million worth of hardware for a shale rig will produce enough natural gas over 30 years to generate over 300 million kWh.14    That constitutes about 600% more electricity for the same capital spent on primary energy-producing hardware.15

The fundamental differences between these energy resources can also be illustrated in terms of individual equipment. For the cost to drill a single shale well, one can build two 500-foot-high, 2-megawatt (MW) wind turbines. Those two wind turbines produce a combined output averaging over the years to the energy equivalent of 0.7 barrels of oil per hour. The same money spent on a single shale rig produces 10 barrels of oil, per hour, or its energy equivalent in natural gas, averaged over the decades.16

The huge disparity in output arises from the inherent differences in energy densities that are features of nature immune to public aspiration or government subsidy. The high energy density of the physical chemistry of hydrocarbons is unique and well understood, as is the science underlying the low energy density inherent in surface sunlight, wind volumes, and velocity.17 Regardless of what governments dictate that utilities pay for that output, the quantity of energy produced is determined by how much sunlight or wind is available over any period of time and the physics of the conversion efficiencies of photovoltaic cells or wind turbines.

These kinds of comparisons between wind, solar, and natural gas illustrate the starting point in making a raw energy resource useful. But for any form of energy to become a primary source of power, additional technology is required. For gas, one necessarily spends money on a turbo-generator to convert the fuel into grid electricity. For wind/solar, spending is required for some form of storage to convert episodic electricity into utility-grade, 24/7 power.

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Coming up next is  Part 4   The High Cost of Ensuring Energy Availability

cbdakota

New Energy Economy: An Exercise in Magical Thinking—Part 2 Moonshot Policies and the Challenge of Scale


Continuing the serialization of the Mark Mills report, “New Energy Economy: An Exercise in Magical Thinking.

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Moonshot Policies and the Challenge of Scale

The universe is awash in energy. For humanity, the challenge has always been to deliver energy in a useful way that is both tolerable and available when it is needed, not when nature or luck offers it. Whether it be wind or water on the surface, sunlight from above, or hydrocarbons buried deep in the earth, converting an energy source into useful power always requires capital-intensive hardware.

Considering the world’s population and the size of modern economies, scale matters. In physics, when attempting to change any system, one has to deal with inertia and various forces of resistance; it’s far harder to turn or stop a Boeing than it is a bumblebee. In a social system, it’s far more difficult to change the direction of a country than it is a local community.

Today’s reality: hydrocarbons—oil, natural gas, and coal—supply 84% of global energy, a share that has decreased only modestly from 87% two decades ago (Figure 1).[3] Over those two decades, total world energy use rose by 50%, an amount equal to adding two entire United States’ worth of demand.[4]

The small percentage-point decline in the hydrocarbon share of world energy use required over $2 trillion in cumulative global spending on alternatives over that period.[5] Popular visuals of fields festooned with windmills and rooftops laden with solar cells don’t change the fact that these two energy sources today provide less than 2% of the global energy supply and 3% of the U.S. energy supply.

The scale challenge for any energy resource transformation begins with a description. Today, the world’s economies require an annual production of 35 billion barrels of petroleum, plus the energy equivalent of another 30 billion barrels of oil from natural gas, plus the energy equivalent of yet another 28 billion barrels of oil from coal. In visual terms: if all that fuel were in the form of oil, the barrels would form a line from Washington, D.C., to Los Angeles, and that entire line would increase in height by one Washington Monument every week.

To completely replace hydrocarbons over the next 20 years, global renewable energy production would have to increase by at least 90-fold.[6] For context: it took a half-century for global oil and gas production to expand by 10-fold.[7] It is a fantasy to think, costs aside, that any new form of energy infrastructure could now expand nine times more than that in under half the time.

If the initial goal were more modest—say, to replace hydrocarbons only in the U.S. and only those used in electricity generation—the project would require an industrial effort greater than a World War II–level of mobilization.[8] A transition to 100% non-hydrocarbon electricity by 2050 would require a U.S. grid construction program 14-fold bigger than the grid build-out rate that has taken place over the past half-century.[9] Then, to finish the transformation, this Promethean effort would need to be more than doubled to tackle nonelectric sectors, where 70% of U.S. hydrocarbons are consumed. And all that would affect a mere 16% of world energy use, America’s share.

This daunting challenge elicits a common response: “If we can put a man on the moon, surely we can [fill in the blank with any aspirational goal].” But transforming the energy economy is not like putting a few people on the moon a few times. It is like putting all of humanity on the moon—permanently.

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I like that last paragraph.    Next up is The Physics-Driven Cost Realities of Wind and Solar.  Part 3.

cbdakota

New Energy Economy: An Exercise in Magical Thinking–Part 1— Introduction


INTRO  MAGIC

This posting will provide the Introduction to Mark Mills report titled “New Energy Economy: An Exercise in Magical Thinking”.

Mills is a scientist.  Most of the reports that say it is possible to eliminate fossil fuel’s use and replace them with wind and solar, seem to be written by economists.  I have nothing against economists as my daughter and son are economists.  It is just that I fear that the authors accept the alarmists visions then hang some economic words on that skeleton.  Let’s look at Mills’ VC:

Mark P. Mills is a senior fellow at the Manhattan Institute and a faculty fellow at Northwestern University’s McCormick School of Engineering and Applied Science, where he co-directs an Institute on Manufacturing Science and Innovation. He is also a strategic partner with Cottonwood Venture Partners (an energy-tech venture fund). Previously, Mills cofounded Digital Power Capital, a boutique venture fund, and was chairman and CTO of ICx Technologies, helping take it public in 2007. Mills is a regular contributor to Forbes.com and is author of Work in the Age of Robots (2018). He is also coauthor of The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy (2005). His articles have been published in the Wall Street Journal, USA Today, and Real Clear. Mills has appeared as a guest on CNN, Fox, NBC, PBS, and The Daily Show with Jon Stewart. In 2016, Mills was named “Energy Writer of the Year” by the American Energy Society.

Earlier, Mills was a technology advisor for Bank of America Securities and coauthor of the Huber-Mills Digital Power Report, a tech investment newsletter. He has testified before Congress and briefed numerous state public-service commissions and legislators. Mills served in the White House Science Office under President Reagan and subsequently provided science and technology policy counsel to numerous private-sector firms, the Department of Energy, and U.S. research laboratories.

Early in his career, Mills was an experimental physicist and development engineer at Bell Northern Research (Canada’s Bell Labs) and at the RCA David Sarnoff Research Center on microprocessors, fiber optics, missile guidance, earning several patents for his work. He holds a degree in physics from Queen’s University in Ontario, Canada.

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INTRODUCTION

A growing chorus of voices is exhorting the public, as well as government policymakers, to embrace the necessity— indeed, the inevitability—of society’s transition to a “new energy economy.” Advocates claim that rapid technological changes are becoming so disruptive and renewable energy is becoming so cheap and so fast that there is no economic risk in accelerating the move to—or even mandating—a post-hydrocarbon world that no longer needs to use much, if any, oil, natural gas,  or coal. Central to that worldview is the proposition that the energy sector is undergoing the same kind of technology disruptions that Silicon Valley tech has brought to so many other markets. Indeed, “old economy” energy companies are a poor choice for investors, according to proponents of the new energy economy, because the assets of hydrocarbon companies will soon become worthless, or “stranded.”1 Betting on hydrocarbon companies today is like betting on Sears instead of Amazon a decade ago. “Mission Possible,” a 2018 report by an international Energy Transitions Commission, crystallized this growing body of opinion on both sides of the Atlantic.2 To “decarbonize” energy use, the report calls for the world to engage in three “complementary” actions: aggressively deploy renewables or so-called clean tech, improve energy efficiency, and limit energy demand. This prescription should sound familiar, as it is identical to a nearly universal energy-policy consensus that coalesced following the 1973–74 Arab oil embargo that shocked the world. But while the past half-century’s energy policies were animated by fears of resource depletion, the fear now is that burning the world’s abundant hydrocarbons releases dangerous amounts of carbon dioxide into the atmosphere. To be sure, history shows that grand energy transitions are possible. The key question today is whether the world is on the cusp of another. The short answer is no. There are two core flaws with the thesis that the world can soon abandon hydrocarbons. The first: physics realities do not allow energy domains to undergo the kind of revolutionary change experienced on the digital frontiers. The second: no fundamentally new energy technology has been discovered or invented in nearly a century—certainly, nothing analogous to the invention of the transistor or the Internet. Before these flaws are explained, it is best to understand the contours of today’s hydrocarbon-based energy economy and why replacing it would be a monumental, if not an impossible, undertaking.

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The next installment of Mills’ report will be “Moonshot Policies and the Challenge of Scale”. That will be followed by “The Physics—Driven Cost Realities of Wind and Solar.

The numbers that appear at the end of some sentences  are references.  I will publish all those at the end of serialized report.

cbdakota

Green Energy Train To Energy Poverty


The Claim: Europe and Australia are benefiting from their green energy policies. We should follow their example.

The Facts: The Ice Cap blog refutes that claim in a posting titled:“Green Energy Train To Energy  Poverty”.

Joseph D’Aleo shows that green energy is pricing the Europeans out of a number of markets and is wreaking real damage on their poorer citizens.

Two of the many  charts that  D”Aleo uses to make his case are as follows:

 

 

And the following chart equates the amount of installed wind and solar renewable energy with the cost of electricity:

 

Read D’Aleo’s full posting by clicking here:

cbdakota

An Inconvenient Truth: Al Gore’s Nashville House Electric Use Per Year Is 21 Times The Average American’s Use.


Over the years, Al Gore’s Nashville house has been a topic of discussion because of the enormous amount of electricity it uses. Frequently it is mentioned as evidence when calling Mr. Gore a hypocrite. According to a posting on TheLid.com titled “How Al Gore Fooled The World Into Paying For His Giant Carbon Footprint” new data shows little has changed over the years.

The new data about his Nashville house includes:

  • The past year, Gore’s home energy use averaged 19,241 kilowatt hours (kWh) every month, compared to the U.S. household average of 901 kWh per month.
  • Gore guzzles more electricity in one year than the average American family uses in 21 years.
  • In September of 2016, Gore’s home consumed 30,993 kWh in just one month – as much energy as a typical American family burns in 34 months.
  • During the last 12 months, Gore devoured 66,159 kWh of electricity just heating his pool. That is enough energy to power six average U.S. households for a year.
  • From August 2016 through July 2017, Gore spent almost $22,000 on electricity bills.

For appearance’s sake, the former VP with an unreleased chakra paid an estimated $60,000 to install 33 solar panels. Those solar panels produce an average of 1,092 kWh per month, only 5.7% of Gore’s typical monthly energy consumption. So, Gore is using tons of fossil fuels–by himself.

 Al Gore owned 4 homes but since his divorce, one of them may now belong to his ex-wife. 

The posting on TheLid.com goes on to discuss how much money Gore has amassed since his term as the Veep was over. 

Gore and all the Hollywood types that tell us how to live in order to save the planet, have a motto, “do as I say, not as I do”.

cbdakota

Why Did ExxonMobil Lobby To Stay In The Paris Agreement?


ExxonMobil lobbied President Trump to stay in the Paris Agreement. Can you figure out why that company would wish to do so?

Here are some pickings from the most recent ExxonMobil global energy forecast:

·         Total energy demand by 2040 will be 25% higher than in 2015.

·         Global energy supply in 2040 will be 55% from oil and natural gas. Wind, solar and biofuels will supply only 4% in 2040.

·         Coal use will decline but will still be the third largest supplier of global energy.

·         Global electrical energy demand for transportation will only be 2% of the total global energy demand in 2040.

·         Wind and solar electricity supplies will approach 15% of total electrical energy supply by 2040

·         Although utilization improves over time, intermittency limits worldwide wind and solar capacity utilization to 30% and 20% respectively.

·         By 2040 US and Europe combined CO2 emissions will be about 8 billion tonnes.  The total global emissions in 2040 will be about 36 billion tonnes,

·         Electric cars are a very high-cost option, at about $700/tonne of CO2 avoided.

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