Wednesday, November 23, 2011

The Wind Biz at Turkey Time, 2011


This is a very strange time in the wind turbine business/wind power industry. Technologically, great strides have recently been made in tapping the polar opposites of the wind energy spectrum - offshore wind (uses FAST winds to overcome the high installation cost). Meanwhile, the sales of Low Wind Speed Turbines (LWST) in the US as well as the use of taller wind turbine towers (100 meters, for example) are on a roll. For example, Vestas recently announced another project using 33 of their V100 x 1.8 MW units in Michigan (http://www.vestas.com/en/media/news/news-display.aspx?action=3&NewsID=2892) ,while RE Power announced the sale of turbines in SW Pennsylvania using "medium" speed turbines but using 100 meter towers (http://www.repower.de/en/presse/press-releases/detail-press/?tx_ttnews%5Btt_news%5D=3558&cHash=f1811f56217a469104fc35ba401242a7). These are both ways to produce more electricity from a given site which happens to be reasonably close to large load centers (Detroit and Pittsburgh, respectively). GE now has over $500 million in confirmed sales of their LWST, the GE 1.6 MW x 100 meter rotor, and only a few of them have been installed to date. Vestas also announced 1000 MW of their V112 - a 112 rotor diameter x 3 MW rating - (now closer to 1.5 GW), worth about $4.5 billion in new sales, just for the turbines.

In the U.S., almost all of the wind turbines that are likely to be installed for the next several years have now been ordered, and construction is underway so that they can qualify for the Section 1603 grants (where 30% of the cost of the project is paid to the owner instead of them using the Production Tax Credit (PTC)). Perhaps 10 GW or more worth of turbines will get installed next year, and it looks like close to 8 GW could get installed this year. Unfortunately, on December 31, 2012, all of the incentives (mostly tax avoidance schemes available to only ultra wealthy people and corporations) will disappear, as so far the new crop of Republicans in Congress show no willingness to extend them. This will not mean that coal or gas fired units will replace them - and no new nukes are on the Horizon except for the twins in SE Georgia (Vogtle). It's just that without the net 3 to 5 c/kw-hr subsidies, new projects (which make electricity for between 8 to 13 c/kw-hr on a completely unsubsidized basis) cannot compete with electricity from old coal plants selling for 4 c/kw-hr or less. Instead, old coal plants will continue to be used. So, the wind turbine industry, and with it about 80,000 jobs, goes into hibernation until the equivalent of a Feed-In Law, mandated Power Purchase Agreements or new subsidies gets authorized.

One nifty example of the recent dash for installations might be near Sacremento, where the Sacremento Municipal Utility District (SMUD) is adding 128 MW of new wind capacity - 24 x 3 V90 MW units (fast winds) and 31 x 1.8 MW V100 units (slow winds). SMUD is a governmental utility (get the hint, Jamestown, NY?), and this will double their capacity to produce electricity from wind (http://www.vestas.com/en/media/news/news-display.aspx?action=3&NewsID=2418). Well, good for them, and phooey on Jamestown, NY, who are still lusting for a 50 MW coal burner to supply an average of about 5 MW of their electricity not supplied by NYPA. SMUD will take advantage of the REPI incentive, worth about $9 million per year for the next 10 years...

Meanwhile, one of North America's largest proposed offshore wind projects - the NaiKun project in British Columbia - still keeps on going. The market for this electricity - from the extremely windy Hecate Strait (about halfway between the Washington-BC border and the Alaska-BC border) in British Columbia - would probably be California. See this for details (warning, a 60 page report): http://www.haidanation.ca/Pages/Splash/Documents/Independent%20Evaluation_Tom%20Gunton_August172011.pdf. And there is this wind map of the region: http://www.offshorewind.biz/2011/11/23/naikun-updates-information-on-wind-project-relocates-office-canada/. Average winds look to be around 9.25 m/s at hub heights or more.... and will have twice the energy of the winds in the Cleveland, Ohio offshore project (about 7.5 m/s for this 20 MW pilot project). Of course, there are actually nearby customers for the Lake Erie project, while the NaiKun project might need at least 500 miles of new transmission lines...

Worldwide, the European banking system looks like it is headed for collapse, and mostly because of Germany's outrageous success, no less. Germany has become a major exporter, and especially with renewable energy systems, despite or because of the high wages workers get paid. It keeps racking up balance of payments and budgetary surpluses, because other countries in Europe keep buying their stuff. Of course, if these other countries DON'T keep buying German stuff, the German economy will also go down the tubes really fast, but that fact keeps getting ignored. One country's surplus is another country's deficit, after all. So what has happened to all of the surplus money? German banks went and bought up a lot of the debts of other European countries (Sovereign bonds), and in the case of Greece, Italy and Spain, their value is going away fast. And unless some means of recycling this money is arranged, real fast, things will seize up fast, especially in the investment banking (and that's what finances wind projects) sector. It affects America significantly (some of our banks are also in deep trouble with Sovereign bonds) because most American big banks no longer "do" project finance - in this country, that task is mostly done by European banks. "Oops" is not just for Rick Perry these days...

The last area of growth in Europe largely untouched by the man-made Eurodebt crisis seems to be offshore wind projects. There is something like $US 30 billion under construction, and a tremendous amount of the construction infrastructure has been built. And now that Germany is dumping its nukes, offshore wind is one way that hope to close the gap. Rumor has it, Korea and japan will soon be following suit - dumping nukes in favor of offshore wind. Anyway, to get an idea of the scale of this, check out this story of how an existing 300 MW wind farm in England is getting refinanced with long term, low risk money: http://www.offshorewind.biz/2011/11/23/eib-funds-thanet-offshore-wind-farm-uk/.

Note: there is a big opportunity for a quality underwater electric transmission line manufacture - European companies can't keep up with the demand. So, any American companies want some extra business? Voltage ratings in the 35 kv and 150 kv range, power in the 50 MW to 150 MW range...

Finally, on the money front, check out this article recommended by Paul Krugman: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.4.165. It recommends a top marginal tax rate (on the really really rich/high income types) of 70% - this will push more money into things like wind turbine investments and less into useless gambling on Wall Street. That is the estimated top tax rate on rich people that will maximize economic growth for our country, and also maximize governmental tax revenues (so we don't have to feed old folks catfood in lieu of decent Social Security checks that would allow them to buy decent human food). After all, we would not like this future to come about:

from http://my.firedoglake.com/somethingthedogsaid/2011/07/19/conrad-coburn-and-cat-food-ii-oh-my/

One synergistic effect with the old, soon-to-be extinct US wind subsidy system is that a 70% marginal tax rate means that you can avoid a lot more taxes for the same wind turbine investment - especially via the MACRS arrangement. And thus, high income tax rates on the super rich means more jobs for those making and installing wind turbines, as well as faster returns on invested capital for wind turbine project investors.

Who knew.... So, maybe you can write your representatives between now and Christmas...?

Images from Vestas (http://www.vestas.com)

DB

Monday, November 21, 2011

Living on Booze Power


from the You-Tube http://www.youtube.com/watch?v=Xsc40niu9Uk&noredirect=1

Introduction
First off, apologies for this cringing pun - Eric Clapton's version "Living on Blues Power" is a great song. But, we're talking Ethanol here - and the worst drug that Mr. Clapton ever tried to kick was EtOH - for him, it was worse than heroin. But then he had affluence problems - he did not have to worry about whether he could afford his booze for a long time. And combine an addictive personality, lots of friends who also loved to imbibe, a yearning for the fun that booze can bring about (as well as rumored looseness in some women) and an unlimited bank account - that can make for a whole lot of ugly, over time.

Actually, with regards to liquid fuels, the USA shares a lot in common with Eric's permanent alcoholism problem. It was fun before it became a serious problem, and the signs that we should be looking for other ways to get around (and/or have fun) have been around for some time. And both addiction to liquid fuels and alcoholism (and lots of other "ism's") are dopamine based behaviors that get reinforced over time, morphing into a situation where continued use merely puts off the pain of not indulging in EtOH usage. They (intoxication/maintenance of the buzz and fuel usage) have a lot in common, including the disturbing tendency to do ANYTHING to keep on getting that fix, and to keep using even when the consequences can be very negative (Global Climate Change for the CO2 pollution associated with oil combustion, and the huge money/income/wealth transfer from most Americans to the fuel suppliers (= pushers, dealers)).

But, apparently Mr. Clapton kicked the EtOH "monkey" off his back a while ago, though it was not easy. Meanwhile, our country is just as firmly in denial (the mighty wide river called "De Nile) about liquid fuels - most of which are fossil based - as ever, and in this case, Ethanol is not the villain. Actually, it has bought us some breathing room, lessened our export of money for imports of oil, mitigated what is effectively a massive, regressive sales tax BY CORPORATIONS AND SOME FOREIGN COUNTRIES on the public and on governments (Federal, State, local) which are (and on occasion, they actually behave that way) supposed to behave as representatives of the general public, and not just the really wealthy fraction of the public.

So, right now there is a convoluted subsidy paid to those who produce EtOH made from biomass (in the US case, mostly corn) and indirectly to those who grow these crops that provide the sugars that the EtOH is made from of about $6 billion a year. The savings to the public are rather large - about $55 billion per year in fewer oil imports, and about $208 billion/yr not "donated" to companies that sell gasoline/oil in the US. Or more... And also on the plus side, the equivalent of about 70 million TONS/yr of sugar is removed from American diets (that gets made into EtOH and CO2) while 35 million tons/yr of high protein (DDGS) food product is co-produced. The high ammonia usage of corn gets converted into protein - it's how the "amino" gets put into "amino acids", and protein is a very valuable part of foods.

Discussion
So, spending $6 billion/yr of taxpayer money to avoid having the general public spend an extra $55 billion on imported oil at an average price of $100/bbl - why is this even the least bit controversial? And also, why is this a mystery to most, including a lot of Grade A Certified Environmentalists? Maybe it's all in how it is phrased, as well as the general ignorance of the American public when it comes to even simple aspects of the chemistry of food... like the big difference between protein and sugars, or the small difference between sugars and low molecular weight starches (like those in corn). Of the 13 billion bushels/yr of corn we harvest, about 5 billion bushels/yr are used to make a combination of EtOH, CO2 and DDGS.

Here's how it works. Right now, we produce a bit more than 900,000 bbls/day of EtOH, and this is added to about 8.6 million bbls/day of petroleum derived gasoline to make about 9.5 millions bbls/day of car fuel (see http://ethanolrfa.org/pages/weekly-ethanol-feed-production). That 0.9 million bbls/day (mbd) of EtOH is equivalent in energy content to close to 0.6 mbd of gasoline (all petroleum derived). EtOH also adds octane (pure EtOH has an octane rating of 113) and allows the hydrocarbons in the car fuel mixture to burn cooler and with less air pollution, but let's concentrate on the energy for now. In order to make 0.6 mbd of gasoline, a lot more crude oil would be needed. Various crudes yield differing amounts of gasoline; "light sweet crude" (Gulf of Mexico, or GOMEX derived, for example) can deliver about 22 gallons of gasoline per bbl of crude, while Tar Sands sludge, even the "upgraded" Syncrude, only can provide about 10 gallons per 42 gallon bbl, while California, Saudi Arabian and Venezuela "heavy crudes" can deliver around 15 gallons/bbl. The percentage of the crappier grades (heavy crudes, tar sand sludge) is increasing in the national "mix"; these tend to be cheaper, too, than the high quality light crude oils (see http://www.nrcan.gc.ca/energy/sources/petroleum-products-market/1519 for an explanation of this in more detail). On average about 2.5 bbls of crude are needed for each bbl of gasoline (40% yield). The US tends to be a net importer of gasoline and a net exporter of diesel due to our ability to refine "from the bottom of the barrel" feedstocks. And then there is that big petroleum secret - done correctly, the volume of products from a refinery often exceeds the volume of inputs - oil is sold by volume, not necessarily by mass. Cracking big molecules like asphaltenes into gasoline increases their volume/lowers the density, especially when the extra hydrogen needed to do this is provided by the reaction of petroleum coke and water. But it's a secret, so... mum's the word, OK?

In summary, getting the energy equivalent of 0.6 mbd of gasoline would need a crude oil input of 1.5 mbd. And at $100/bbl, that's a cool $150 million/day of avoided imports, or close to $55 billion/yr.

There is another aspect to this, also good. The US now consumes about 19.5 mbd of crude oil, which is about 25% of all the oil extracted worldwide. However, we now import around 11.2 mbd of crudes - see (or switch to monthly mode) http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm, which means we now supply about 8 mbd (see http://www.eia.gov/dnav/pet/pet_sum_snd_d_nus_mbblpd_m_cur.htm). If we had to buy an additional 1.5 mbd of crude oil off of the international market (in other words, import it), this would mean that either the world would have to come up with another 1.5 mbd on top of the 74 mbd now extracted, or more importantly, the US would have to compete with the other importing countries for some share of the approximately 42.6 mbd that is exported - see http://www.graphoilogy.com/2011/10/daniel-yergin-massively-reduced-his.html#more. More likely, the latter would take place by outbidding those with either less money or less credit, and in turn the price of exported oil would shift upwards. Each shortage of ~ 1 mbd (or increase in demand) raises the price of oil about $20/bbl, so an increase in demand of 1.5 mbd would crank up the world oil price by $30/bbl.

Another way to view it is via "price elasticity" - alias PE - see http://blahla.wordpress.com/2007/10/29/price-elasticity-in-the-real-world-oil-prices/. In this article, PE for oil , defined as the ratio of the change in supply to the change in price is about 0.1. So, changing the supply by 1.5 mbd is changing it by 3.5%. In turn, this would raise the price of oil by 35% (from roughly $95/bbl to near $128/bbl. These two estimates are pretty close. In the long run, this price spike would result in less petroleum usage by the US - we are down from 21.6 mbd in mid 2008 to around 19.5 mbd, which is good, but it takes a while for this to happen, and that is not good. Of course, this would probably trash our fragile economy in the process.... as occurred in 2008, where the high price of oil became, in effect, the final sack of cement loaded on the proverbial camel, and the one that broke the proverbial camel's back...

Anyway, raising the total crude price for oil by $30/bbl would be a $585 million/day defacto tax by US oil corporations and the countries/companies who supply that oil on both American consumers and American governmental entities, such as all governments, school districts, transit authorities, etc. This adds up to real dollars - about $214 billion/yr, and it would up out money exported from $420 billion/yr (11.5 mbd * $100/bbl) to $617 billion (13 mbd * $130/bbl), or $197 billion MORE than the already obscene $420 billion/yr. You can thus end up exporting $197 billion/yr more than we presently are exporting for oil by importing another 1.5 mbd of crude oil - and not the good stuff (light sweet crude) but probably "Saudi sour heavy crude", which the KSA cannot presently sell because most oil refineries in the world are not presently set up to handle. If you feed sour heavy crude into an oil refinery designed for light sweet grades, that $20 billion refinery will get trashed and made inoperable in just a few months...

The US EtOH industry is supported by about $6 billion/yr in taxpayer subsidies; all this allows the price of EtOH sold into the market to be $6 billion/yr less than it would normally be. However, this is definitely "small potatoes" compared with what would happen otherwise. The demand for corn to make EtOH is about 5 billion bushels/yr, and at an average yield of 175 bushels/acre, this means that without this demand for corn, 28.5 million acres less of corn, worth $32.5 billion, would not have been planted (about 90 million acres/yr is planted for corn in the U.S.). Of course, that would completely tank the price of corn (now $6.50/bushel, or about 11.6 cents/lb), and the most immediate victim would be.... third and fourth world farmers, who would be put out of business when the US decided to dump excess corn onto the world market at $2.80/bushel (5 c/lb) - this actually happened in 2001-2003, wreaking havoc on Mexico's farmers. However, this also would effectively tank the US rural economy, followed by tanking wheat, soy, and milk prices, but with the ultimate consumer experiencing essentially no benefit. And after a year or two of negligible farm production, serious price spikes for food would result until various economic equilibria are more or less re-established. After all, you can't go without food production for too long before lots of people notice there is little or no food available at any price...

According to this report (http://www.ethanolrfa.org/news/entry/university-report-ethanol-reduced-gas-prices-0.89-in-2010/), US consumers saved an average of 89 cents/gallon for their gasoline via all this homegrown EtOH. And according to this report, about 500,000 jobs have been created in the US farm-EtOH-equipment complex: http://awakeatthewheel.net/2009/12/10/500000-jobs-created-by-u-s-ethanol-industry/. However, maybe you think we don't have enough unemployment, or that those 500,000 people would actually have other viable means of employment. In that case, can I interest you in Enron bonds, which are generally considered worthless? But hey, if you believe those employed in the EtOH to fuel business have other means of economic viability, you'll probably believe anything...

Conclusion
As it turns out, it is unlikely we can grow sufficient crops to make an additional 13 mbd of EtOH. And while various people deride all the effort to grow crops and then extract the sugar and starch and convert it into fuel (EtOH), while the proteins, fats, vitamins, mineral and complex food items (fiber, enzymes, DNA, RNA, etc) get extracted as DDGS, what's the alternative? Aside from bankruptcy, and eliminating 1/3 of all farmers in the country (and there are far too few), for starts. After all, when rural times get tough, farms consolidate and get even bigger, as the remaining surviving farmers try to cut costs while they also cut output in the hopes that prices will eventually recover.

At our present gluttonous levels of gasoline consumption, we can never self supply. But let's say we employ a touch of magic, say from this cutie:


from http://sjrlc.lib.overdrive.com/312ACD2C-9CD7-42E5-B655-DE8E61E7DDAE/10/420/en/ContentDetails.htm?ID={FC341246-2BD2-4C1C-AE25-8A08FB334BAE}

Let's pay her those exorbitant union wages, and wish for a car fleet that get an average of 42 mpg, like the ones that exist already in Europe and Japan. And presto! That would cut our gasoline consumption to roughly 5.0 mbd, and we would only need to use roughly 4.1 mbd of gasoline, this effectively gets rid of the need for most imports of crude oil, and would up the biofuel content of gasoline to roughly 18% from the present 10%. And with the higher octane fuel, we could actually increase the compression ratio of the engines, resulting in still better fuel economy...

Next, lets say that we travel only half the number of vehicle miles in fuel driven cars as we presently do. So however this gets done - more electric mass transit, more ride sharing, more electric or plug-in hybrid cars, more examples of sensibly locating residence near the workplace, or at least near a transit line, that would drop our automobile fuel consumption to near 2.5 mbd, and with an EtOH content of near 36%, 100 octane or better fuel should be available. And higher octane leads to higher compression ratios, which means that you can get more work from a given gallon of fuel. The Scania high compression all EtOH engines (see http://www.scania.com/Images/P07X03EN%20New%20ethanol%20engine_tcm10-178705_81054.pdf) get about 42% of the fuel energy out as mechanical energy, versus maybe 26% for an all gasoline low compression engine. See also http://www.epa.gov/otaq/presentations/sae-2002-01-2743-v2.pdf for details on a small EtOH engine (a modified 1.9 liter VW diesel engine) running at a 19.5:1 compression ratio. Cool, with over 40% thermal efficiency possible (versus 26% for a low compression gasoline powered one). See also http://www.americanenergyindependence.com/alcoholengines.aspx and http://www.caddet-re.org/assets/no91.pdf.

And when we actually use about 2.5 mbd of liquid fuels to get around, funny things happen. But good things, too. We could actually make that much renewable fuel (probably a mix of ethanol and hydrocarbons derived from syngas derived from biomass). We do know that about 1 mbd of EtOH will still be supplied from crops, as it is and probably always will be cheaper than making EtOH from cellulose. But, no more need to waste $200 billion/yr in military protection/enforcement for overseas oil fields/oil countries. And all that money now exported (and what about 5 years from now when the price for oil on world markets is more like $200/bbl, as it doubles every 5 years..) could remain in country, doing good things for our economy.

And yes, there's even a place for wind turbines in this, as well as the replacement of all the natural gas used in boilers to distill EtOH and also to dry the wet distillers grains and convert that clay like mess into storable DDGS using corn stover as the fuel. All those EtOH facilities are also a great electricity customers. And making the ammonia to grow the crops can also be done with electricity from wind turbines (nationwide, we'd need about 69 GW of wind turbine capacity to make 18 million tons/yr of renewable energy sourced ammonia). After all, over half of the protein Americans consume is synthetic ammonia derived. And providing hydrogen to reduce the CO2 by-product from the crop to EtOH as add-ons to existing EtOH facilities also would be a great market for renewable electricity (electricity from wind turbines plus water gives hydrogen and oxygen). This would increase EtOH production by 50% using exactly the same amount of biomass grown.

Of course, if we keep pouring our money down the drain by spending it on imported petroleum, well, we won't have much left of a country, let alone sovereignty. Instead, we will get a financial coup d'etat, and somebody from Goldman Sachs will get appointed as our real leader (Italy, Greece, for starts), and the next stage of ravaging our poor and middle class can then commence. After all, any sins committed in the name of financial austerity really are good for us, and should probably be redefined to get any semblance of morality out of the discussion. Just ask the people of Greece and Italy...

Anyway, any comments?

DB

Saturday, November 12, 2011

Renewable Energy Pricing Systems Presentation

Introduction
I was given the opportunity to give a presentation to the Engineers for a Sustainable World meeting in Buffalo, NY this fall, held and sponsored by SUNY Buffalo. The file for the presentation can be seen here: http://www.4shared.com/document/NheZ7t5W/REPricingSystems1c.html; odds are, you'll have to wait a whole 20 seconds before the download starts. Anyway, this is the Powerpoint version (but in.pdf format) - in other words, a highly summarized version with pictures (generally nice to have those...). Below is an explanation of this summary.

Many thanks to the students who attended this session of the conference. The room was packed, and they seemed to have a lot of interest in this subject. And much thanks to Dr. Jensen and the many UB engineering and science students who made this a really great meeting! Of course, one of the reasons there were so many people there is because there were lots of great speakers and presenters, including a hour long super-informative one from Gary Stottler of GM with regards to the guts of electric cars - the battery systems, and how fuel cells and car battery powered cars have a lot of things in common.

BTW, the title page of this presentation is a picture of the Samso offshore wind farm in Denmark, which consists of 10 x 2.3 MW Bonus (now Siemens) units installed in about 10 to 14 meters of water. It is owned by the municipality of Samso Island and some private investors, so it is a community owned offshore wind turbine array. How cool is that? These displace about 23,000 tonnes of CO2 per year and complement the 11 x 1 MW turbines that are on the island. The offshore turbines are installed about 3.8 km (about 2.2 miles) offshore and YES, the ARE seen by island residents - in fact, the touristy aspect of these turbines was one of the minor reasons they were placed where they are now installed. See http://www.4coffshore.com/windfarms/samsoe-palludans-flak-denmark-dk01.html and http://www.appropedia.org/Sams%C3%B8_renewable_energy. The island now bills itself as "140% renewable", though perhaps that claim should be taken with a grain of salt. But, it probably is a net exporter of renewable electricity...

Discussion
If you want to find out information about U.S. electricity consumption and production, the Energy Information Agency is totally where it's at. Here can be found a humongous trove of data, but let's keep it simple with a summary of the last decade or so:
http://www.eia.gov/electricity/annual/pdf/tablees1.pdf . In 2010 (with 8760 hours in it), our country produced 4,127,648 MW-hrs of electricity (averaging 471 Gigawatts (GW)), but we only sold/accounted for 3,889,047 MW-hr/yr (444 GW average), including 15.3 GW of on-site usage (never went over the grid; mostly at large industrial customers). So right off, about 9.4% of that generated never got billed to customers. This quantity of electrical energy made annually has been fairly consistent for the last 6 years, though varying by 3 to 5% depending on weather or economic conditions.

Of that, wind provided 10.8 GW, or 2.3% of the total electricity Made in the USA, and this came from 39.1 GW of capacity (installed by end of 2009); output was about 27.6% of the rated capacity. However, between 5% to 10% greater outputs (usage rates going to between 29% to 30.4%) could have been observed if not for a phenomena called "economic curtailment", where wind turbine output is cut off whenever the price of electricity collapses due to the combination of too much wind and too little electricity demand. In a society that actually values renewable energy, economic curtailment of wind turbine output would probably not happen.... For example, in 2010, about 9% of Texas wind turbine output was restrained in such a manner...

Anyway, that's the long lead up to the premise of this presentation, which is sort of set up like a detective trying to solve a crime. The crime is that we have a such a small quantity of wind derived electricity being produced compared to what we COULD produce. Of course, the ~ 40 GW installed by the end of 2009/operating throughout 2010 represents an investment by (mostly) private investors/industry of roughly $80 billion, and some would not consider that to be small. But, this is all relative, and to make lots of electricity via ANY means, some major investments are going to have to be undertaken. For example, replacing all of the old existing nuke fleet with new ones at a going rate of about $10.8 billion per GW of capacity would mean someone has to come up with close to $1.1 trillion, and that is to make less than one fifth of our electricity (not all energy, just electrical energy). So, it's big bucks in this league, and $80 billion is barely chump change compared to what is needed. And because inquiring minds might want to know, the EIA estimates all that generated electricity was sold for about $369 billion in 2010, and that's when prices were really depressed..

At the end of 2011, we might be making up to 3% of our electricity via wind turbines. But, we could make up to 30 TIMES our present electricity production using already identified wind resources and using already in existence wind turbines. So that's operating at less than 0.1% (one thousandth) of our potential. And tapping that resource at such a tiny fraction of what we have available is hardly a stellar effort, especially given the urgent need to job creation (making wind turbines creates lots of jobs, assuming you actually have a viable market for the electricity made by these wind turbines, something that also does not exist at the present time) and the need to do something about electricity production that does not befoul our planet with either radioisotope poisoning (think Chernobyl, Fukushima) or CO2 pollution from fossil fuel combustion.

Of course, you only need to make the electricity that is being used - making an excess serves no purpose, and that IS the purpose of making electricity - of doing stuff with this energy. So we really only need to replace the pollution-sourced part of US electricity production - such as nukes, coal, oil and natural gas derived electricity (these add up to 421.4 GW in 2010). Next would come the need to replace the fossil fuel used to make heat (mostly natural gas) and for transportation (mostly oil) - equal to about 360 GW worth of electricity. After that, unless you want to convert water into hydrogen (to make ammonia or reduce CO2 into liquid fuels, for example), that's electricity we don't need to use.

Piece of cake, right? So, on to page 4...

So, why aren't we proceeding down this more logical path, one that would make for a more viable planet and one with a lot more employment, too? Is it because of a lack of money? NO! Is it because wind turbines are that unpopular? NO! How about the fact that US industry is just too busy at the present time churning out manufactured items? Yeah, right.... Is it because we can't afford the real price of wind derived electricity? NO! Although, who wants to pay even a few pennies (2.56 to be exact) more per kw-hr to non-pollution sourced electricity? Evidently, only about 70,000 of NY's more than 9 million electricity customers, and this after a decade of being given the opportunity to do so.

Or how about the fact that making mass quantities of wind turbines also makes mass quantities of jobs... is that a problem? Some ACTUALLY MIGHT think that is is a problem, but I'm guessing that most people would say the lack of jobs IS the problem, and making lots of jobs to make lots of wind turbines would be just fine....

So, onto page 5. For this crime puzzle, how about a bad renewable energy pricing system as being the culprit, or at least one of the main varmits in this ongoing tragedy? I guess you never saw that one coming... So here is my big presumption - if we had a renewable energy pricing system in NY like either Quebec (second best option) or (best option) Ontario (and because Canada and the US have differing laws about lots of things, this requires a touch of specific Federal Legislation - the insertion of Section 102 of the failed Waxman-Markey ACES law (2009-2010) - all 132 words - into Section 210 of the 1978 PURPA law), we would actually have significant growth and especially significant job growth in manufacturing sectors connected with the wind biz. (This "Section 102 Approach" is shown at the end of this post - it's a no cost, no need to tax anyone or anything provision). More importantly, we would be on a steady and rapid path to eliminate the natural gas psuedo-parasite from our NY economy, where more of the money goes out of NY State, and where prices paid by NY consumers act like an ultra-regressive sales tax (imposed by some private corporations, on consumers, some of who are also corporations - oh, the irony!) that is not even levied by the government! What a racket, eh?

Anyway, the rest of the presentation is pretty self-explanatory, I hope....

So, what follows is a brief explanation of how tax subsidy, quota and Feed-In Tariff pricing systems work. Oh, this could get wicked complicated in a NY nanosecond, so save your questions for later.... And I even got noted religious heroine Church Lady on my side to drive home a point on how unfair some of the existing arrangements are in our U.S. renewable electrical energy pricing arrangements are, though they ARE better than nothing....

And, for those who like them, some references are on page 13. And to wrap it up a nice picture of the brand new and now up and running Ormonde offshore wind farm, located offshore of the UK between England and Ireland. This one uses 30 x 5 MW RE Power turbines (remember, ones these size ARE COMMERCIAL these days and have been for some time - if you have around $10 million, you can buy one), and which will produce an average of 60 MW of clean sourced electricity. This wind turbine array will displace of about 4 billion cubic feet of natural gas per year (which the UK apparently no longer has and must import since they also have encountered "Peak Natural Gas") which the UK would have otherwise burned to make electricity and 0.367 megaton/yr of CO2 pollution. Nothing like ending on a note of hope....

So, any comments?


"The Section 102 Approach"

111TH CONGRESS
1ST SESSION H. R. 2454 AN ACT
To create clean energy jobs, achieve energy independence,
reduce global warming pollution and transition to a clean
energy economy.
1 Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,

2
1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
2 (a) SHORT TITLE.—This Act may be cited as the
3 ‘‘American Clean Energy and Security Act of 2009’’.
4 (b) TABLE OF CONTENTS.—The table of contents for
5 this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. International participation.
TITLE I—CLEAN ENERGY
Subtitle A—Combined Efficiency and Renewable Electricity Standard
Sec. 101. Combined efficiency and renewable electricity standard.
‘‘Sec. 610. Combined efficiency and renewable electricity standard.
Sec. 102. Clarifying State authority to adopt renewable energy incentives.
Sec. 103. Federal renewable energy purchases.
Subtitle B—Carbon Capture and Sequestration

53
8 SEC. 102. CLARIFYING STATE AUTHORITY TO ADOPT RE-
NEWABLE ENERGY INCENTIVES.
10 Section 210 of the Public Utility Regulatory Policies
11 Act of 1978 is amended by adding at the end thereof:
12 ‘‘(o) CLARIFICATION OF STATE AUTHORITY TO
13 ADOPT RENEWABLE ENERGY INCENTIVES.—Notwith
14 standing any other provision of this Act or the Federal
15 Power Act, a State legislature or regulatory authority may
16 set the rates for a sale of electric energy by a facility gen
17 erating electric energy from renewable energy sources pur
18 suant to a State-approved production incentive program
19 under which the facility voluntarily sells electric energy.
20 For purposes of this subsection, ‘State-approved produc
21 tion incentive program’ means a requirement imposed pur
22 suant to State law, or by a State regulatory authority act
23 ing within its authority under State law, that an electric
24 utility purchase renewable energy (as defined in section
25 609 of this Act) at a specified rate.’’.

DB

Thursday, November 3, 2011

The Cure for Fracking Gas in Western NY is Wind Turbines

The picture (from http://www.ci.lackawanna.ny.us/windfarm.html), is used by permission of Lackawanna Mayor Norm Polanski; much thanks!

Note: This was written to be a feature article, but so far it has not made it that far. So, here goes....

Whether or not the Marcellus and Utica tight shale gas gets tapped in NY State is really a choice of how we want to generate electricity. For all practical purposes, methane (natural gas, alias Ngas) in our state is used primarily for space heating. And space heating is a stable to shrinking market in NY State. This is a consequence of a stable population, less industry, better insulation in homes and businesses, more efficient operations, lower temperature set-points in home and commercial settings. The direct use of methane as a fuel for transportation is very small and will likely remain negligible. Any increase in energy usage for transportation purposes probably will come from increased usage of electricity to charge electric vehicles. In general, any growth in Ngas consumption in NY (and also much of this country) is only likely through its use to make electricity (see http://www.eia.gov/dnav/ng/hist/n3045ny2a.htm for reference data).

Fracking sourced gas is more expensive than “conventional” natural gas. The price needed to cover all production and waste disposal costs plus provide the profits needed for such investments is now far greater than the is the current Henry Hub spot market price, as well as the listed NYMEX “futures prices” for the next 5 years. Investors in such wells/projects would lose massive quantities of money and wealth at present natural gas prices. However, those supplying the tools of the trade (drilling rigs, pumps, trucks, drilling muds, diesel oil for diesel gen-sets, fracking chemicals, etc.) will do just fine, once the problem of the massive losses by the gas field developers and Ngas producers is overcome. If by some chance the price for this fracked methane hits the targets recommended by bankers who finance such efforts (such as Credit Suisse), then another squeeze will occur. At such Ngas prices, it is becomes less expensive to produce electricity using commercial scale wind turbines that are “tuned” for NY State winds, even if there are NO or minimal Federal wind energy subsidies involved.

Because of the way that electricity is priced in NY State, the “extra” profits (and sometimes the “regular” profits) of companies using old nukes and old coal burners to generate electricity are dependent on having at least some natural gas sourced generation “in the mix”. Even at the present highly depressed Ngas prices with very efficient combined cycle generation systems, Ngas is the more expensive option to make electricity, with a production cost almost twice that for large coal burners or any of NY’s six nukes (and all of these pollution based approaches – coal, Ngas, nukes - have huge subsidies associated with them, notably no CO2 pollution cost or the Price-Anderson Act that limits liability in the event of a nuclear accident). When no Ngas sourced electricity is “in the mix”, electricity prices tend to fall to “minimal profit” status, which is a bad state of affairs to their corporate owners (they are in it for the money, after all). When wind turbine sourced electricity is added to our regional grid, Ngas sourced electricity is displaced first (as it is the more expensive electricity bid in for a given hour), and this drops the electricity spot market price. In Europe, electricity prices can go negative during major wind events, where pollution sourced electricity producers temporarily actually have to pay someone to take their electricity. This process is known as the Merit Order Effect.

So, if you want your natural gas based heating costs to remain low, use less Ngas. Less Ngas consumption also leads to lower Ngas prices, because the price for Ngas is very sensitive to the supply-demand balance. Nationwide wellhead prices in 2009 were less than half of those in 2008, yet demand in 2009 was not quite 2% less than in 2008 – that should give you an idea how “touchy” Ngas prices can be. Longer term, the best solution is to get rid of the Ngas based heat, using solar hot water, passive solar, active solar thermal and/or electricity (resistance or heat pump) systems. This will keep the demand for Ngas dropping over time, which also could match or exceed the decline in our North American methane reserves. And the other way to keep Ngas prices low is to use less of it to make electricity. This strategy is working, too, at least in WNY. Last year, Ngas only provided 2.6% of the electricity that was sold in NYISO Zone A, while wind turbines provided 4.8% of our electricity. A couple more wind farms in our part of NY will mean that Ngas no longer will be required to make electricity in NYISO Zone A, and at that point, any additional electricity from wind turbines will start to displace coal sourced electricity.

This is not to advocate for the use of coal or nukes to make electricity. In NY State, wind can be the prime energy source needed to replace such pollution based approaches at a reasonable price. The by-product of such an approach would be a massive increase in real wealth creating manufacturing jobs, as well as the required installation jobs and associated support/service jobs. And who would argue against the equivalent of another auto and steel industry (circa 1970) in our neck of the woods? The intermittency issue (of wind, resulting in a temporary mis-match of the variable supply and variable demand of electricity) is easily dealt with via pumped hydroelectric storage, stored biomass fuels plus interconnections with Quebec, Ontario and New England. Installation of more pumped storage systems (there are three of them within 100 miles of Buffalo) is also a great Keynesian stimulus, too; these provide a significant increase grid stability and dependability, at a minimal price.

Let’s use the medical analogy for a bit, where fracking for Ngas and associated hydrocarbons (natural gas liquids, gas condensates, crude oil) is considered an addiction. Fracking involves going after the dregs of hydrocarbon supplies – you only do this when the easy to get, formerly more plentiful “conventional” supplies of buried methane (natural gas) are used up or in the process of being used up. Far from tapping the “mother lode”, this fracking is an admission that you are going after the tail end of supplies. After all, what existed before 1800, when we began tapping them in earnest, was finite, not infinite, even though it appeared to be infinite back then. As far as oil goes, by 2006 we had burned through over half of the “conventional” supplies. Ditto for conventional methane supplies in North America, although that peak happened around 2000.

Making methane at current usage rates requires a lot of effort and our homemade “fracked” stuff is not cheap to make..., but it is cheaper than hydrogenating CO2, or converting cellulose and lignin into methane via "bio-syngas" approaches...

Clearly this is not a sustainable path; instead, it is a downward spiral. But life as we know it in NY State is one based on energy, and of three major forms, too – for transportation (oil), heat (mostly natural gas) and electricity. The electricity portion can be made at reasonable cost in NY in only a few ways – hydroelectrically, with nukes, burning coal or Ngas, burning biomass and biogas, wind turbines or near Long Island, via tidal and ocean wave energy. These forms of energy are somewhat interchangeable – for example, electricity can provide some transportation energy and all heat, but that heat tends to be pricier than when the heat is sourced from natural gas. As for 5 or 10 years from now, who knows what the price of natural gas might be – or exactly what the damage to our planet’s climate control system will bring out with weather disasters for that year.

Here’s the bottom line. Electricity is the only domestic growth market for Ngas in NY, but any new electricity demand can easily be displaced by a combination of wind turbines and pumped hydroelectric energy storage. Next, any “old” demand for electricity made by gas can also be replaced by wind turbines and pumped hydro, as can coal and nuke sourced electricity. And finally, the use of Ngas for space heating can also be replaced via existing, known means. All these alternatives to burning natural gas create a huge demand for new products and labor, something that is vitally important these days. Our hydrocarbon reserves will not last forever.

Fracking is a route to a very insecure and financially disastrous future. After all, spikes in Ngas prices can be quite ruinous for most, while benefiting only a few. But if you want such a future, with a few years of cheap Ngas prices achieved through socially and environmentally short-sighted policies, use more Ngas to make electricity now. If you want to destroy the motivation to frack in NY State, use less Ngas, and keep shrinking the quantity used in NY’s electrical mix. Since fracking will require higher prices for the methane than we are presently paying, and the only way to keep Ngas prices low is to use less Ngas, use less Ngas! And don’t buy the line about Ngas replacing coal or nukes for electricity production. Nobody will build new nukes or new coal burners – electricity prices north of 15c/kw-hr (coal) to 20 c/kw-hr (nukes) will be needed, and that assumes existing subsidies for these polluting approaches are continued.

Yeah, wind energy has a big drawback – you can see how your electricity is made. And to do wind on a large scale in the most cost-efficient way, we will need to use either a Ontario-like (Feed-In Law) and/or Quebec style (where NYPA signs up lots of long term Power Purchase Agreements) renewable energy pricing systems. The existing renewable energy pricing system in NY is obsolete, and continued adherence to it will maximize the probably we get fracked big time. And for good measure, a large scale renewable effort also will create a lot of manufacturing jobs in NY.

Oh well, I could live with seeing how my electricity gets made, and seeing my neighbors actually able to get viably employed. How about you?


Dave Bradley and (awesome editing by) Derek Bateman




Tuesday, November 1, 2011

Halloween Special - Energy Payback and Bats


From http://www.nakedcapitalism.com/wp-content/uploads/2011/10/Screen-shot-2011-10-31-at-4.38.15-AM.png

Introduction
One way to measure the effect of adding various types of renewable energy is to do a Life Cycle Analysis (LCA) on the product. These add up all of the energy (some or a lot of which involves CO2 pollution) that goes into making the product, as well as doing other evaluations (how much water gets consumed, does it contribute to Ozone depletion, water pollution, are there toxicity issues associated with the manufacture of the product as well as the intermediate parts/components used to make the product). Many of these can become a very long and involved analysis.

One example of an LCA for a commercial scale wind turbine is one done for the Vestas V112 x 3 MW product - see http://www.vestas.com/Files/Filer/EN/Sustainability/LCA/LCA_V112_Study_Report_2011.pdf, which is an 84 page (and summarized one at that, too) paper on the product. In their example, a wind farm with 99 MW capacity in a windy location (average wind speed is 8 m/s) with an average net output of around 43.3% would have an 8 month energy payback, while one operating in a slower wind speed region (7 m/s, with a net output of 34%) at 84 meters above the ground would have a payback time of 10 months. This is about as good as it gets for renewable energy these days, and almost an order of magnitude better than photovoltaic panels (around 6 years for them to hit "payback").

Summary
A payback of 8 months for a turbine lasting 20 years means that one unit of pollution sourced energy (mostly for steel and concrete manufacture) would provide 30 units of renewable electricity over that 20 year period. If the turbine lasts for 24 years (quite likely), the payback is 36:1. With the lower wind speed region examined, the paybacks become 24:1 and 28.8:1. Many of these turbines should be able to outlast reasonably modern wind turbines, and certainly outlast the very primitive ones installed in the early 1980's.

Another important aspect in the life of a wind turbine is recycling. Up to 80% of the V112 x 84 meter tower can be recycled - especially the steel, copper and aluminum. Most of the plastics (paint, wire insulation, nacelle enclosure and especially blades) would need to be incinerated. The concrete foundation can also be recycled as road or roadbed. The greater the amounts that can be recycled, the better the LCA becomes, and the quicker the energy payback becomes for a given wind resource.

The V112 is an example of the latest "medium speed" wind turbine generation. The 56 meter rotor gives a swept rotor to generator capacity ratio (power ratio) of 3.28m m^2/kw, so this is not designed for low wind speed regions (wind speed less than 7 m/s). With an 84 meter tower, the tip of the wind turbine blade is at most 140 meters above the ground (and at minimum 28 meters); this is about as big a single piece blade (54.6 meters) as can be transported by rail and truck. Taller towers (95 and 119 meters, the latter being a hybrid with a lower concrete and an upper steel section) can also be used, which allow faster winds (and produce greater power production) to be tapped. Due to the slow rotation rate that comes with a larger turbine, this unit comes with a four speed gear reducer, and a choice of permanent magnet or traditional doubly fed induction style generator.

Over 1 GW of wind turbine capacity of the V112 for onshore uses (334 wind turbines) has been ordered to date; the first ones to be installed were recently shipped from Denmark to Australia. This turbine also was designed for "moderate" offshore winds - not the blazing gales in much of the North Sea, for example, where turbines with a power ratio of less than 2.5 m^2/kw are used). Very recently, 89 of these (267 MW) in total were ordered for a pair of wind farms in Sweden and Great Britain - see http://www.offshorewind.biz/2011/10/28/vestas-shares-up-after-offshore-wind-turbine-order-announcement-denmark/. These would have been ideal for the Great Lakes, and in which case they would have been made in Colorado.

Bat Development (announced near Halloween, too):
A competitor of Vestas is Nordex, which also has a manufacturing facility in the U.S. - in this case, Arkansas. Nordex recently announced development a software system that minimizes bat mortality near wind turbines - they claim up to an 80% reduction in bat injuries can be obtained. The system uses knowledge of local weather, time of day and other local factors to calculate when the greatest probability of bats coming near wind turbines is likely to take place. Bats can get injured from damage to lungs via the air pressure variations/pressure waves that develop near moving wind turbine blades and unless they are feeding they don't sense the proximity of the blades via their sonar (which is only "on" when feeding on insects). When a certain high probability level for nearby bats is calculated, the turbine gets shut down and then gets restarted when the bats "retire" and/or wind speeds speed up. Bats are unlikely to be feeding when winds exceed 6.5 m/s - too hard to track down food. The developer of the product, Biotope, claims that power production is only likely to be affected by about 0.2 % - see http://www.nordex-online.com/fileadmin/MEDIA/Kundenzeitschrift/EN/Nordex_WPU_33_en.pdf.

Conclusion
So, a less scary world for bats, and a less scary world with respect to Greenhouse Gas pollution, all on Halloween. The only really scary thing is that NY does not really have a sane electricity pricing system - see here for some of the 2008 numbers, when, for example, the owners of the Dunkirk and Huntley coal burners got an 81% return on their investment: http://www.scribd.com/doc/22323398/New-York-State-Electricity-Plants’-Profitability-Results. So not only can pollution based energy producers "chow down" on their consumers ignorance of the complexity of the NYISO system, we also can't afford to install wind turbines without really significant "incentives". For example, the 74 MW Hardscrabble wind farm, NY's newest, could use up to $160 million in Federal grants (Section 1603) and tax deductions (MACRS, interest paid on loans), and it could also be the beneficiary of $42 million in NY's RPS (Renewable Portfolio Standard) awards form NY State, meaning that the Iberdola Corporation might get the wind farm for free, after a convoluted 10 year process.

Bottom line: essentially no wind turbine manufacturing so far in NY State despite 1349 MW of installations, representing an investment of roughly $2.7 billion. Obviously, that leaves a lot of room for improvement. And it is roughly 10% cheaper to make them and install them nearby, as long distance transportation can add 10% onto the installed cost. That's worth close to 1 c/kw-hr....

To me, that's scarier than what the candy-searchers are dressed up to be.

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