07.23.13

Renewables in the next 5 years – A Best Case scenario

Posted in Uncategorized at 5:31 am by Administrator

I was recently reading some predictions about what the electrical generation industry would look like in 10 years.  There are many widely divergent opinions reflecting a large amount of uncertainty in future developments.  I decided that I would write two blog postings which express my worst fears and best hopes for the renewable energy sector over the next 5 years (my already “iffy”clairvoyance gets really fuzzy after 5 years).  This is the Best Case Scenario.

I actually found this posting to be difficult to write.  There are so many different accomplishments and milestones that I could imagine as part of a “Best Case Scenario” that it was hard to know where to start and impossible to even get close to an end.  But I have described some of the things that I believe would represent significant events and would make it clear that the success of renewables is inevitable.  I have also tried to list things that have at least a chance of actually happening.

I have focused on the United States, Canada, and Europe because I some idea of what could be accomplished in those jurisdictions.  In many other parts of the world similar accomplishments are possible and may even take place more quickly.

2013: The Federal governments in both the U.S. and Canada enact building code changes that require Geoexchange systems to be installed rather than traditional HVAC for all residential developments of 20 houses or more and all commercial/industrial buildings of 5000 sf or more.  Geoexchange systems provide heating and cooling using half of the energy of traditional HVAC and effectively clip demand on cold winter nights and hot summer days.

A North American car-pooling initiative is kicked off with extensive advertising regarding the financial and environmental benefits of reducing single-occupancy-vehicle trips.

HELCO in the State of Hawaii confirms the development of an additional 50 MW of Geothermal development and calls for bids to develop another 100 MW as soon as possible.

An agreement is reached between the Kentucky Utilities Company, the U.S. Army Corp of Engineers and Free Flow Power to develop 250 MW of Hydro-Kinetic power as part of the Olmsted project.

2014: At least 2 GW of Concentrated Solar Power projects which incorporate Thermal Energy Storage and extensive Photo-Voltaic (solar panel) components are approved for California, Arizona, New Mexico, and Hawaii.  The PV components will be used from morning through late afternoon with the CSP ramping up in late afternoon and into the evening and night making the generation from these plants reliable and dispatchable.  The facility on Maui will allow for the decommissioning of three oil-fired plants and will provide enough electricity to power a sizable desalination plant.

The Production Tax Credit is eliminated for wind development in the U.S.  This will slow down development dramatically which is desirable in the short term. A new tax credit of approximately the same value is put in place for energy storage development.

A Federal mandate is issued which prevents Independent System Operators from charging a tariff on electricity extracted from the grid for energy storage.

An International consortium is formed to advance research into energy storage solutions.  Initial funding is set at $30 billion over 5 years.

Oklahoma Gas & Electric exceeds the goals for its innovative Demand Response program by signing up a total of 200,000 customers, shaving almost 350 MW (5%) from peak demand.  Utilities in many other states start implementing similar programs which emphasize public education and customer engagement in addition to promoting potential cost savings.

2015:  A North American wide public education program is launched which focuses on electricity usage in general and the financial and environmental consequences of peak demand in particular.  Electricity peak targets are set by major urban area and state and real-time information is provided through “weather report style” media segments, billboards and interactive displays in public areas.  New public service cable channels in both Canada and the U.S. provide real-time information about energy use and conservation tips. The model for the campaign is the program instituted in post-Fukushima Japan.

A North American electricity sharing agreement is signed which implements long-term price reciprocity between all jurisdictions so that electricity generation assets can be optimized across the continent.  For example, wind generated electricity from the U.S. Mid-West and the Canadian Prairies and Hydro from Northern Saskatchewan and Manitoba could flow across borders at predetermined wholesale rates.

A continental transmission upgrade plan is created which emphasizes east-west connectors to support “follow-the-sun” generation.  Initial funding for this expanded grid is set at $50 billion over 10 years with financial support from tax revenues and ratepayers.  An expedited environmental review and approval process is agreed upon.

A demonstration project using flow batteries to store 100 MW-hours of electricity from a wind farm is built for a cost of $250 million.  Two new installations of Beacon Power flywheel storage systems demonstrate the feasibility of storing electricity for up to 6 hours at a cost of $5/watt-hour.  A combination electrolysis + fuel cell facility is built which can store excess electricity generated at night as compressed hydrogen gas with a full cycle efficiency of 25% and a cost of $5/watt-hour.

2016: Realizing that in the short term pumped storage is the most cost effective energy storage mechanism the governments of the U.S. and Canada reach an agreement to construct the largest pumped storage facility in the world using Lake Erie as the upper reservoir and Lake Ontario as the lower (hats off to Len Gould for this proposal which sounds a bit preposterous but actually has a lot of merit).

The plan would involve the construction of a 60 meter wide canal from the Morgan’s Point Conservation area to a man-made reservoir on the heights above Grimsby. From there 10 penstocks 6 meters in diameter would be tunneled the 3 km to Lake Ontario, dropping some 100 meters. These penstocks would each be equipped with an 800 MW turbine so that the facillity would have a total generating capacity of 8 GW. At night or in periods when the wind was blowing strongly the turbines could be reversed to pump water back up to Lake Erie.

If the cost of this project was $100 billion for 96 GW-hours of storage (assuming that the facility generated electricity 12 hours a day and pumped water up to Lake Erie 12 hours a day) that works out to just over $1.0/watt-hour, about 1/4 the cost of current battery technology as well as being much more scalable and reliable over the long term (the $100 billion is a SWAG based upon the 10 km Niagara tunnel completed in May, 2013 which cost $1.5 Billion to add 150 MW of capacity as well as the new channels and locks for the Panama canal which are estimated to cost $6.2 Billion + a lot of contingency).

The public education program is starting to show very positive results with peak demand regularly being cut 5-10% on a voluntary basis. An accelerated shift in consumer preferences results in purchase of energy efficient appliances resulting in an overall drop in electricity demand of 2% despite a strengthening economy and growing adoption of electric vehicles.

In Europe the North Seas Countries’ Offshore Grid Initiatiative begins construction of the interconnections required to effectively use Norwegian and Scottish reservoirs as energy storage for northern European wind generation.  A complex funding model and parity pricing regulations are included in the plan.

After more than 2 years of successful operation the Solana CSP plant has demonstrated that solar power can be a dispatchable generation source.  As a result California, Arizona, and New Mexico commit to the development of a further 5 GW of combined PV/CSP solar generation by providing loan guarantees to developers.

Major utilities begin to implement Availability of Supply (AOS) pricing models to replace Time of Use (TOU) based upon the growing penetration of renewables.  So, for example, at noon on windy days electricity prices are lowered because even though that is a relatively high demand part of the day the available supply is also high.  This approach encourages energy intensive activities to take place when inexpensive (from an operating cost perspective) renewable generation is available.

2017: The first large CSP/TES project funded by the Climate Investment Funds consortium is completed in North Africa and begins to produce reliable and renewable electricity for the region. An associated desalination plant allows for expansion of irrigation and agricultural development. Agreement is reached to develop an interconnection between North Africa and Southern Spain with the goal of incorporating more solar power into the European grid.

Very high capacity interconnections between the major wind generation regions of the U.S. Mid-West, Manitoba and Saskatchewan are completed allowing for some balancing of variability in wind generation using hydro from the Canadian provinces.  This configuration allows for the decommissioning of several large coal-fired plants in both the U.S. and Canada.

A large compressed hydrogen gas + fuel cell facility is commissioned in New England in order to store energy produced by a large (191 MW nameplate) offshore wind farm.  Total storage capacity is 500 MW-hours allowing this facility to provide 100 MW of dispatchable electricity 85% of the time (only several consecutive very calm days would cause generation to fall below 100 MW).  The cost of the storage facility is $1.5 billion.

As a result of the car-pooling promotion program single-occupancy-vehicle trips have declined across North America from 85% to 75% resulting in a significant and measurable decrease in fuel consumption and road maintenance costs in major urban areas.

Major manufacturers begin to mass produce energy intensive appliances such as clothes dryers, air conditioners and plug-in electric vehicle chargers that can monitor available electricity quantities and prices by checking information on public service internet sites.  These appliances and vehicle chargers could then automatically turn on and off in order to optimize operational costs.

2018: By the end of 2018 renewable energy sources in Europe and North America represent 25% of total electricity generation and almost half of that amount is truly dispatchable through the use of storage or renewable hydro backup.  A number of storage technologies including CSP Thermal Energy Storage, flywheel, flow batteries, and compressed hydrogen gas + fuel cells have been successfully deployed at scale with an aggregate storage capacity of 50 GW-hours worldwide.

Major interconnection projects in North America, Europe and North Africa are proceeding rapidly with most of the regulatory and pricing issues resolved through inter-governmental agreements.

In the United States it has become possible to efficiently utilize Mid-West wind generation backed by hydro or other storage technologies in the load centers on the eastern seaboard.  In order to enhance this capability and support time-shifting of demand the New England states, with 15 million residents are moved into the Atlantic time zone.

Although much work still needs to be done it is clear that renewables can provide 100% of electricity generation needs by 2050.

My Sustainable Energy Manifesto is obsolete. I can shut down the Black Swan Blog and take up needlepoint or beekeeping or …

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07.13.13

Renewables in the next 5 years – A Worst Case Scenario

Posted in Uncategorized at 10:58 pm by Administrator

I was recently reading some predictions about what the electrical generation industry would look like in 10 years.  There are many widely divergent opinions reflecting a large amount of uncertainty in future developments.  I decided that I would write two blog postings which express my worst fears and best hopes for the renewable energy sector over the next 5 years (my already “iffy”clairvoyance gets really fuzzy after 5 years).  This is the worst case scenario.

Unfortunately, in my opinion this is also the most likely scenario.

2013: A major grid failure/blackout will take place in Texas after a storm front cuts wind production across the state by more than 10 GW in less than an hour.  Texas reserves are already low and problems at any large thermal plants would leave ERCOT unable to deal with such a large change in wind production.  This will make a lot of people in Texas question the continued development of wind projects but no firm policy change will take place.

2014: After fall 2013 elections in which Angela Merkel is ousted as German leader there will be significant reductions in support for solar panel installations and wind development.  The impact on the “green” energy industry across Europe will be severe.

Spain will close down a number of large electricity generation facilities due to over-capacity and will terminate financial support for their large CSP plants leading to several closures.  This will send a very negative signal to CSP developers worldwide who will suddenly find it very difficult to get financing for new projects.

Up to 15 large coal-fired plants in the United States will close in order to meet MACT emissions regulations.  Reserves in several states will drop below historical averages but it will be impossible to get new plants financed because of a lack of firm revenue projections due to preferential grid access given to renewables.

2015: At least one of the Hawaiian Islands will place a moratorium on new solar panel installations after mid-day penetration of solar energy reaches 25%.  The grid operator will be unable to deal with the variability of this distributed generation and will successfully lobby the legislature to dramatically slow down the development of solar power throughout the state.  There will be a significant down-sizing of the solar panel installation industry in Hawaii.

In the mainland U.S. a further 15-20 large coal-fired plants will be shut down because of MACT.  Reserves in many states will effectively drop to zero as the economy strengthens and electricity demand starts to rise for the first time in a decade.

Regional “brown-outs” will become common and a serious debate will begin about the near-term future development of renewables.  Utilities will still find it very difficult if not impossible to get the long-term financing required to build new generation including gas-fired plants because of lack of revenue certainty.

Grid operators in Arizona and California will report significant issues trying to deal with distributed generation as solar-panel electricity production reaches 25% mid-day in both states.

Texas will put a moratorium on further development of wind resources.

Consolidation in the large utility sector will gain momentum as utilities continue to absorb the costs of decommissioning coal-fired plants with little or no increase in revenues.

2016: There will be at least one severe regional blackout as grid operators are unable to deal with the variability of distributed generation and rapid changes in wind energy.

States that had formerly been able to stabilize the grid such as Arizona with nuclear and Washington and Oregon with hydro will now find their own reserves insufficient to backstop renewables in California and Texas.  The transmission inter-connections between these states will be working at full capacity and even that will not be enough to address the issues.  Environmental groups will continue to oppose development of new high-voltage transmission facilities through protests and law suits.

By the end of the year a number of states will declare a moratorium on the further development of wind and PV solar until a national strategy as been developed including a comprehensive intergovernmental co-operation framework for sharing costs and resources across states and with Canada.  Everyone involved agrees that this effort will take a number of years to put in place.

In the fall elections the Republicans will win both the Presidency and both houses of Congress.  All subsidies to renewable energy generators will immediately come under review.

2017: Global surface temperatures will continue to be flat, falling significantly below the 5% probability projections of existing climate models.  In addition, the arctic ice pack will expand reaching extents not seen since the 1980’s

(Please note: I am NOT a climate change denier.  But as someone with scientific training and a lot of experience with complex computer models I am willing to acknowledge the scientific possibility that these models may not accurately predict climatic changes over short periods of time – i.e. 10-20 years. And this is my Worst Case scenario for renewables)

Climate change scientists will be forced to acknowledge an incomplete understanding of how the earth’s atmosphere and oceans are reacting to increased levels of CO2.  The level of skepticism amongst the general public will rise as will complaints about the costs of supporting the installed base of solar panel and wind generation.  Financial support for renewables will suffer further cuts.

Without any significant additions to the generation fleet the North American grid will continue to experience brown-outs and regional blackouts as a large amount of intermittent renewable generation continues to get preferential access to the grid.

Most states will now have enacted moratoriums on the development of wind energy resources.  The wind energy development and solar panel installation industry in North America will largely collapse impacting 10’s of thousands of workers.  Investors will shun the industry for at least 5-10 years.

2018: The largest incumbent utilities will propose that renewables must enter the Merit Order Market whereby they must guarantee delivery of a specified amount of electricity at fixed prices, putting them on a truly level playing field with traditional thermal generators.

These utilities and their financial backers also pledge rapid construction of new Combined Cycle Gas Turbine (CCGT) electricity generation plants which they claim would actually reduce CO2 emissions more effectively than the further development of renewables.  As a precondition they demand an end to all explicit subsidies for renewables and the elimination of all Renewable Portfolio Standards.

Facing a public that has grown tired of the constant instability in the power supply and rising electricity rates the conditions set by the major utilities are accepted.

Wind energy producers very quickly find that they are unable to meet the requirements of the Merit Order Market with the result that they can only rarely get access to the grid when the winds blow steadily for many hours at a time, and even then for only a portion of their production.  Many smaller wind generators are bankrupt by the end of the year.

Because of the variability of Photo-Voltaic solar only a portion of electricity generated from utility-scale solar plants can be marketed.  Extensive implementation of Time-Of-Use pricing reduces the value of electricity generation between 10:00 am and 2:00 pm to almost nothing because of the glut of PV Solar in that time period.  Residential installations of solar panels no longer provide any significant financial benefit to homeowners.  Utilities start to add a grid access fee for these installations which will cause some homeowners to simply disconnect older solar panels.

By the end of the year the utility industry in North America looks very much like it did in 2000.  Wholesale prices, although they remain deregulated in some states, will be controlled by very large utility companies through the Merit Order Market.  Retail prices for electricity will actually start going down as new CCGT plants are added to the generation fleet.


For many supporters of renewables, myself included, this would be a very disappointing outcome.  For readers that may dismiss this as an outlandish and impossible prediction of what could happen I will offer up two examples that illustrate that such changes in the energy generation and distribution environment have happened in the past.

Up until the 1930’s most people lived on farms and had no electricity.  For irrigation and water pumping purposes most farms had windmills which actually worked quite well much of the time and had minimal operating costs.  But when rural electricification spread throughout the U.S. as part of the “New Deal” farmers quickly stopped using windmills even for the purposes that they were quite good at in favour of electric pumps.  This change took place despite the fact that electricity was quite expensive compared to the “free” availability of wind energy.  The main reason for this change was the unreliability of windmills.

In the 1980’s the largest utility-scale solar power installation in the world was constructed in California.  Despite the fact that the facility incorporated never-before-tested technology the SEGS plants have delivered reliable electricity to the California grid for more than two decades.

So what is my point?

Shortly after the last plant came on-line the company that constructed the plants went bankrupt because certain tax credits originally provided to support the project were cancelled.

This experience sent a global chill throughout the solar power industry and it was more than 15 years before another similar plant was constructed in Spain.  And that despite the fact that Concentrated Solar Power plants can be equipped with Thermal Energy Storage so that they can run 7x24x365.

As I have stated in many other blog posts I believe that we need to change the focus of renewable energy development if we are to avoid this “Worst Case Scenario”.  Continued develop of PV Solar and Wind will not allow us to transition to a sustainable energy environment.  A much more complex and multi-faceted approach is required, as outlined in my Sustainable Energy Manifesto.

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07.06.13

Roof-top Solar Panels – Who Pays? Who Saves?

Posted in Uncategorized at 2:20 am by Administrator

Many jurisdictions around the world are encouraging the installation of roof-top solar panels by providing a number of financial and regulatory support mechanisms. These include direct grants to reduce the cost of installation, guaranteed prices for solar power sold back into the grid, and “net metering” whereby only the net flow of electricity from the grid to the residence can be charged for by the utility company.

We need to move to a renewable energy base. Most people would agree with that.

But when it comes to roof-top solar panels there are some inequities that need to be considered.

Consider the two residential settings shown in the pictures.

The amount of rooftop solar real estate available to the owners of the single-family houses is more than 10 x that available for the seniors living in the apartment complex. In fact, it would be quite possible for the single-family homes to generate as much electricity as they consume so that the local utility company would actually derive no revenue from these homes because of “net metering”.

In the case of the apartment building this is simply not possible.

In the late afternoon and into the night both the single family residences and the apartments will require electricity from the utility grid. But who pays for the generation capacity required to supply this electricity? The only people paying utility bills are the residents of the seniors apartment.

But the situation is actually quite a bit worse than that.

The single-family homes will generate the most electricity between 10:00 am and 2:00 pm. This is not a “peak” period for electricity demand so that much of this electricity will flow back into the grid. The local utility company will have to provide additional equipment to handle the two-way flow of electricity to and from these houses. Other equipment will be required to make sure that the “back flow” does not damage transformers and meters that may be a considerable distance from the houses. Finally, the utility company will have to implement additional procedures to deal with the intermittent nature of the electricity generated from the solar panels. For example, a passing cloud can reduce solar power generation by 60% or more in a minute or less.  So the utility company will have to be able to ramp up or cut back production at some of it’s thermal generation facilities on very short notice resulting in less efficient operation of those plants and increased costs.

Who will pay for this extra equipment and the maintenance of a significantly more complicated electrical distribution system? The only ones paying utility bills will be the residents of the seniors apartment.

Now it could be argued that the owners of the single-family houses paid a lot of money for the installation of the solar panels and should reap the benefits in order to get a return on that investment.  That would be a very defensible position to take if there were not so many subsidies associated with the whole process.

Construction grants and incentives and tax write-offs are paid for by all tax-payers, regardless of whether or not they have the abillity to deploy solar panels where they live.  For example, what about all of the people renting their accomodation?

Feed-in-tariffs guarantee a fixed price for the electricity generated from a solar panel regardless of whether or not there is any actual need for that electricity at the time it is generated.  So while the owners of these single-family houses are on vacation and not using electricity all rate-payers have to compensate them for the power generated by their solar panels whether it is needed or not.  That could be a very nice revenue stream for a family that had equipped a vacation home with solar panels.

And what about the good folks living in the Mid-West, Ohio, Michigan, Indiana, Vermont, New York, Maine and especially Canada?  Solar panels don’t work too well when they are covered by snow!

When you combine these inequities with the problems that roof-top solar introduces into the regional grid and the negative impact on the operational efficiency of the system as a whole you have to ask yourself “what is the real benefit here?”

Roof-top solar panels will never allow us to actually shut down a coal-fired or natural gas-fired or nuclear generation plant. Why? Because we have high electricity demands in the late afternoon and into the night as well as on very overcast days.  So we have to effectively maintain double the generation capacity actually needed.  Does that really make sense?

Personally I think there is a case to be made for requiring roof-top solar installations to be equipped with a significant amount of battery storage which would make it possible to time-shift the electricity generation to better match demand.  The problem with that approach would be that it would triple the cost of the installation which would make it very hard to justify for a home-owner (which is why I have argued previously that these kinds of residential generation and storage facilities should be owned by the local utility).

Another complimentary approach would be to provide subsidies for the construction of Concentrated Solar Power plants with Thermal Energy Storage that could be run starting in the late afternoon.

All things considered the continued focus on rolling out roof-top solar without storage is misguided in my opinion.  A more holistic approach which would allow us to actually decommission thermal generation facilities would be more appropriate.  I have outlined a number of components of such an approach in my Sustainable Energy Manifesto.


Update: after doing a bit of research I found that utilities are starting to recognize the inequities in supporting roof-top solar.  The Arizona Public Service Company is proposing a service charge of $50-100/month to help offset the cost of supporting roof-top solar. In Australia similar measures are being considered. The bottom line is simple and predictable. As roof-top solar starts to become a significant part of the electricity generation mix the problems it creates are greater than the benefits. I discussed this in a previous post.

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07.04.13

What if “Climate Change” is the next “Y2K”?

Posted in Uncategorized at 12:36 am by Administrator

There is a growing debate about whether or not mother earth has pressed the “pause” button on global warming.  Reputable publications such as The Economist are raising the possibility that maybe, just maybe, the climate scientists haven’t got it quite right.  The main exhibit in this trial by fire is the following combination of cause and (lack of) effect: between 2000-2010 about 25% of all the CO2 ever generated by human activity was injected into the atmosphere and yet the average surface temperatures did not rise at all.

There are, of course, retro-active explanations – deep-sea energy storage being the flavour of the month.  But the fact remains that none of the extremely sophisticated (read filled with complex mathematical calculations based upon many assumptions and sparse data) climate models predicted this outcome.

It reminds me of the models that were run at the turn of the century which predicted economic ruin.  Y2K computer bugs would surely lead to nuclear plant shut-downs, major disruptions in global trade and untold other negative impacts.  Literally billions of dollars were spent on consultants hired to prevent the cataclysm.

At the time I was running a 5 year old computer with the Windows ’95 operating system.  I dutifully downloaded a piece of software that told me that I would absolutely have to upgrade my BIOS and do other software upgrades to the point where maybe I should just buy a new computer.  I ignored that advice, got up on January 1st, 2000, reset my computer’s clock (which had reverted to some date in the 1970’s) and that was it.  No other actions were required.  That computer still runs just fine 13 years later.

So here is the thing.  What if the arctic ice sheet starts growing again? What if cool springs in Europe and North America become the norm?  What if it becomes harder and harder for the public to be able to see any impact on the weather other than it is becoming even more impossible to predict? (And by the way, the weather prediction models we use are much more sophisticated and incorporate many more actual data points than climate change models).

The phenomenon formerly known as “Global Warming” has been rebranded as “Climate Change”.  But let’s get real here.  The scientific community has been uniformly claiming that CO2 added to the atmosphere will increase the “greenhouse effect” which will inevitably lead to warming of the atmosphere.  That added energy can lead to other side effects like increases in variability, changes in precipitation patterns, and more extreme weather events.  But in the end more retained heat has to result in higher temperatures.  There is no getting around that.  So what the last decade is probably telling us is that we really don’t have a solid understanding about what is going on with this incredibly complex planet.

If the public begins to doubt the reality of “Climate Change” or that it is caused by human activity the backlash could be pretty intense.  In a thousand ways taxpayers and ratepayers have been footing a large bill to reduce the burning of hydro-carbons and they may not feel inclined to keep paying such a heavy price.

As far as I am concerned that would be a real shame.

Oil and gas will run out.  Probably not while I am still breathing but quite likely during my children’s lifetimes.  So we need to kick the hydro-carbon habit.

Although we are making good progress on developing affordable and renewable energy technologies we do need to alter course somewhat.  Renewables without energy storage are, quite frankly, useless unless we are prepared to do without electricity on calm nights.  It is time to redirect a large portion of the subsidies currently going to solar panels and wind turbines to energy storage research and a number of other measures and technologies that will help us move to a sustainable energy environment.  I have listed many of these in my Sustainable Energy Manifesto.

We don’t need to drag out the “Climate Crisis” Powerpoint deck in order to justify building a sustainable world.  We just need to honestly admit that the way we are powering our prosperity at the moment won’t work over the long term.  No drama required. Just a bit of consideration for future generations.  Let’s leave them with a planet and a way of living that are even better than what we have had the good fortune to enjoy.

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