Saturday, April 28, 2012

Mocking Donald Trump in Scotland





from http://www.aberdeenrenewables.com/key-projects/eowdc/ and also a great summary of what this battle (in Scotland) really is all about. There is a massive offshore efforts going on in the waters around the British Isles these days, one that could dwarf the already massive oil and gas industry. Something well in excess of $US 100 billion in the next decade will be invested in making electricity from there, and the neat thing about wind is that it will never deplete,  at least as long as humans are on this planet....

The talking hairpiece known as Donald Trump has had a storied career - rich brat with an inherited fortune, gambling purveyor, real estate developer, a "bankruptee" several times over, and now a TV star of a really cheesy and dreadfully BORING psuedo-reality show. Oh, and he is host to a ego several times the size of his various prowesses (such as it is, and such as obtaining money), and topped by that bizarre hairpiece as part of the "Donald suit" that provides a cover for the alien entity that is that ego. Heck, he even ruminated about running for President, and conned a bunch of gullible media types (something that really does seem to come naturally for him) into that bit of "psuedo-entertainment". Personally, I think they should have just kept him bankrupt, stashed away in a trailer court outside Atlantic City, hanging out where some gambling parlor serfs reside and survive in anything but a style The Donald (as the ego-entity is known as) feels entitled to. Just ask him - he'll tell you he deserves at least all the wealth and fame accorded to him to date, and more....

Anyway, he got it into the tiny portion of his brain where cognitive processing supposedly occurs (maybe the alien ego-entity left a while ago, just occasionally phones it in, and normally lets auto-pilot take the helm) that he needed to have a huge golf course in Scotland rivaling his gambling parlors in magnificence (well, it is sort of in the eye of the beholder). He claimed it would cost over 1 billion Pounds Sterling (about $US 1.7 billion) for this vacation paradise/ode to his Scottish ancestors (mother), so by golly, if you want a piece of this dream (money-wise), you'd better be nice to The Donald, really really nice. And thus, armed with a dream and also gobs of some other rich goober's money (he does not really have that much of his own, which is why he needs the TV gig), or at least promises of access to it, he sets off on this new conquest of Scotland, or at least a part of it. Once this golfing emporium gets laid down, why, all the fancy and beautiful people will want to come and play and PAY the mighty bucks that this exclusive imitation of royalty will grant to the holder of those almighty bucks. Think of the TV royalties coming from the "Trump Open". Oh, and did the ocean side location for the golf course get mentioned (well actually that vile (with respect to weather) piece of water known as the North Sea)? Yes, waterfront golfing in the northern British Isles is where it's at, and that appears to be a key item to the economic viability of this golfing emporium.  Somehow, it's like colleges and their semi-pro football teams - it's just supposed to magically whisk dollars from customers (or from alumni in the case of combative contests like college football). That is, on the approximately 25% of the days in a year or less when it is fit for either man or beast to play golf on this piece of Scotland. That weather on that piece of land is not for the weak or precipitation intolerant....

But wait - there is an offshore wind farm planned for that bit of ocean, and not one far off in the distance, but one with humongous wind turbines - even by today's standards, where 5 to 6 MW rated wind turbines are not unusual -  located between 2.5 to 4 km (1.5 to 2.5 miles) offshore. With towers at least 100 meters off of the surface, and blades perhaps topping out near 180 to 200 meters above the waters, why, the closest might seem like they are 3" high sticking above the water, as viewed from land. Gak! This is to be the Aberdeen Offshore Wind Test Center, partially funded by Vattenfall (a giant company 100% owned by the government of Sweden, and a major owner of European (and especially German) generation and transmission facilities), partly by the European Commission and partly by the City of Aberdeen, Scotland. In particular, Scotland understands that the North Sea oil and natural gas reserves are getting tapped out (peak production was around 2000) and that most of the 40 billion barrels of oil in the North Sea that can be extracted HAVE BEEN EXTRACTED. Time to move on. The oil and gas industry has been a major economic driver for Scotland - tens of thousands of jobs in offshore oil and gas maintenance/operations, still more in the construction and installation of these facilities and all the boats/services needed for them, as well as oil and gas production/extraction/pipeline related manufacture/installation. Scotland and Norway are two of the leading offshore oil and gas platform technology leaders in the world, with lots of marine construction experience in these very dangerous waters and they aim to transition those skills into the offshore wind business. After all, much of the fastest winds/shallow water  combinations in Europe are near Britain and Ireland. The estimates of offshore wind facilities by 2020 in these areas start at $US 100 billion, with over 100,000 employed just in the British Isles, and most of that making foundations for these turbines (often German and Danish manufactured) or installing the wind farm system.

In comparison, the Trump golfing pipe-dream (and probably gambling joints needed to provide the income to justify the resorts, which will, of course, negatively impact the Scottish economy, though gambling is not specifically mentioned) are pretty puny, in every sense of the word, compared to both oil and gas of the present but especially the future - offshore wind. Plus, offshore wind is real wealth creation - and almost by definition, anything that The Donald fronts is wealth extraction. Geez, I wonder which one of these contestants - The Donald or offshore wind - will prevail?

The Aberdeen and European Offshore Wind Test Center is tentatively proposed to have 11 wind turbines and a capacity of 100 MW. It would be an investment of nearly $500 million, and also serve as a place where new techniques in maintenance and repair can be tried in the relative safety of 2.5 to 4 km from shore, where rapid rescue is possible. To date, the biggest rated turbine in operation in the world is Enercon's E-126, rated at 7.5 MW, but Enercon does not do offshore any more. The biggest offshore unit installed to date in terms of rated capacity is RE Power's 6.15 MW x 126 meter rotor diameter. Vestas has proposed a 7 MW unit with 80 meter long blades (V164) which will be installed near Denmark later this year, but actually, this one seems rated for MODERATE wind speeds (power ratio is 3.02 m^2/kw). This could actually be uprated to 10 MW (new power ratio of 2.11 m^2/kw), producing a turbine suited for FAST North Sea winds. For example, at the Alpha Ventus site  116 meter rotor x 5 MW turbines (Areva Multibrid) were installed and achieved greater than 51% net outputs, which is pretty remarkable, and which would be the same power rating as a 10 MW V164. But that would not interest The Donald in the least... he just wants the skim on a $US 1.7 billion dollar golf/hotel complex with his name on it for reasons mostly dealing with greed and ego. No doubt he/it (the ego that rules him, or at least the "Donald suit" - as in shades of Men In Black and the Edgar Suit) expects significant tax breaks from the Scottish government and City of Aberdeen to help "incentivize" he and his monied backers, too.

Jon Stewart's Daily Show summed it up best (they often do) when they referred to Trump as the "Hairlander" - a play on "Highlander". But they actually missed something really humorous. Trump has been flailing about and emanating nonsense such as "offshore wind turbines will destroy the Scottish economy" (especially ones close to a certain proposed golf course), because it would "destroy" Scotland (and not just tourism at the proposed golf links). And how does he know that? Because Trump is an expert in tourism (did he mention that he owns a gambling parlor or parlors in Atlantic City, NJ), and because he is The Donald. When he made that claim in the Scottish Parliament, the laughter coming from the members of Parliament was very loud, and very long. The Donald was being mocked! Oh my stars! Check out http://www.dailykos.com/story/2012/04/25/1086358/-Scottish-Parliament-laughs-at-Donald-Trump

Here's some links to the proposed Test Center, which got a big boost from the ego entity who shall be forever memorialized as "The Hairlander", so it is sure to be approved:
http://www.aberdeenrenewables.com/key-projects/eowdc/
http://www.vattenfall.co.uk/en/file/EOWDC-consent-vol1.pdf_18476566.pdf

And from "The Daily Show" (http://www.thedailyshow.com/watch/thu-april-26-2012/hairlander) comes the question of "I wonder what he's (Trump, alias the psuedo-humanoid hairpiece) building over there (instead of wind turbines)":

 

DB

Sunday, April 22, 2012

Carbon (Dioxide Pollution) Pricing - A Fast Road to Nowhere

One of the winners in this year's European Wind Energy Association (EWEA) photo-contest. The EWEA 2012 annual conference was just held in Copenhagen, Denmark, and was a big success by most accounts. This picture is from http://www.ewea.org/index.php?id=917 - a nifty melding of how wind energy can look cool AND displace oil for transportation energy, since that is an electric train... For more on the EWEA conference, check out http://events.ewea.org/annual2012/ . By the way, at the conference, a hot topic of conversation was the projected 520,000 people to be working in the wind biz in Europe by 2020. Why can't we do that in the U.S? After all, we are the ones with the awesome wind resource, and on land, no less....

Introduction
It's Earth Day, and sure enough, here comes mention of "Carbon Pricing" (actually, putting a price on the Caron Dioxide pollution that results from burning fossil fuels) as a key "Big Idea" needed to cure us from our ecologically evil and downright nasty ways with respect to climate sanity. After all, it's basic economics - if you put a high enough price on bad behavior - such as cigarettes and booze - less consumption of cigarettes and booze is going to go down, and there will be less of the associated damage costs to society from these vices, such as cirrhosis of the liver, the rapings, maimings and killings that wickedly torqued out people do on occasion, or lung cancer. And that's a good thing, right? So this demand destruction does work, sort of, and it is better than doing nothing, or so the theory goes. And besides, with all the money that comes into various governmental coffers, these "sin taxes" help fund essential things, like schools and hospitals.

Ah, but at what price? And who pays this, in effect, climate sin tax? Well, according to the Stern Review (http://en.wikipedia.org/wiki/Stern_Review) the social cost of carbon would be $85/tonne of CO2 (2006 dollars), which was $77/ton back then - see page 16 of the Executive Summary (http://www.hm-treasury.gov.uk/d/Executive_Summary.pdf) - and is now near $85/ton (2012). So what does this mean, except that consumers of natural gas, gasoline, diesel, and coal (via electricity) would have to pay more. About how much more? Try this on for size:

Natural Gas adds $4.91/MBtu ($5.20/thousand standard cubic feet) = $35/MW-hr (50% thermal efficiency)
Gasoline adds $0.80/gallon (no EtOH added)
Diesel adds $0.90/gallon
Coal (Wyoming lignite) $170/ton = $82/MW-hr (40% thermal efficiency)
Coal (West Virgnia sub-bituminous) $217/ton = $74/MW-hr (40% thermal efficiency)

Now quick, raise your hand if you suddenly want to pay another 80 cents/gal for gasoline, 3.5 cents/kw-hr more for electricity made from natural gas or up to 8 cents/kw-hr for electricity made from coal. Yeah right, I thought so, not too many want to step forth and volunteer to fork over some extra bucks for what you now pay less for. In general, that would be about as popular as bringing a skunk, fully charged and with a bad attitude, to a big fancy wedding reception. For almost any politician to propose such a course of action (higher prices for fuels or skunk with attitude brought to wedding reception), well, they may as well just resign right now and get the pain over and done with fast. Because, in general, there would be immediate pain at the polls.

                            

from http://upload.wikimedia.org/wikipedia/en/d/d9/Pepe_Le_Pew.jpg

For the AVERAGE American, whose real income has dropped in the last 20 years (in 2009, 93% of all economic gains went to the top 1% of the income distribution - a case of the scum on the pond pigging out at the trough...), such energy taxes would not be welcome at all, even if they mostly got used for worthwhile things, like job creation and energy efficiency measures. As for the caviar and coke set (the lucky 1%), they would not notice such price rises though they would surely instigate all kinds of popular indignation (they mostly own/control/dominate our corporate media, after all). Even if these price rises are stretched out over 5 to 10 years, such a course of action seems like a "no sale" proposition..

Another way to look at this is via the "voluntary" market for RECs (Renewable Energy Credits) in NY State. As of 2009, and an seven year campaign, all of 60,000 customers have signed up to pay a bit extra (1 to 2.5 c/kw-hr) for their electricity and to help commercialize commercial scale wind in NY State. On average, they pay around $10 million/yr to help get 45 MW (delivered basis) or about 180 MW of installed turbines operational. This is about 0.2% of NY's electricity supply, and is approximately zero percent of total supply/demand. While every little bit helps, on a macro basis, this is just not adequate (see http://www.nysenergyplan.com/final/Renewable_Energy_Assessment.pdf).

Keep in mind that only adding a small fraction of the $85/ton (say, 30%, bring the total to $25/ton of CO2) will result in essentially NO pollution sourced energy being replaced with renewable energy. That's because adding only $25/ton of CO2 onto coal will only raise electricity production costs by around 2.3 c/kw-hr, and coal based electricity would still be cheaper than most subsidized wind sourced electricity (and ALL PV sourced electricity) even with the existing renewable energy subsidies. And if you think that the renewable energy subsidies will be around if even modest CO2 pollutant pricing gets approved, you really need to see a doctor about getting your benzodiazepam prescription refilled (these are also called anti-psychotics...).

So why would liberals and environmentalists who are also supposed to be in sync with the average American, or at least those in the bottom 90% of the income and wealth pyramid, be so tone deaf? Are these folks ALSO members of the upper crust on the pond, so to speak? Maybe, but most often this is viewed as a morality thing - not paying the external costs is immoral, even if you have to rent the kids and pets out for medical experiments in order to pay the higher fuel and electricity costs.... because wages will certainly not be going up, even to keep up with oil price inflation..... Insisting on meaningful CO2 pollution prices would virtually GUARANTEE conservative ascendancy for enough time to make the damage done by George "Evil Shrub" Bu$h look like just the warm-up act to human caused Armageddon. Just what we need - violent video games come to life, all brought to us care of the best of intentions...

A Better Way
One thing to remember is that coal often is the lower price way to make electricity compared to natural gas. If the price of coal based electricity goes up by 8 cents/kw-hr, ALL electricity prices (and not just the portion made by coal) will also rise by that much. This would be a de-facto tax of close to $326 BILLION/yr put down in a most regressive manner. There are proposals to rebate that back to consumers, but where is the logic in this, as no demand destruction would occur? And in most cases, this is STILL not enough price added to coal to make wind turbines, biomass, biogas, tidal and especially photovoltaic less costly than this higher priced (due to CO2 pollution pricing) coal and gas. Now there are those who think that recession is a proven way to lower energy consumption - and it really is one way to do this. But recessions are also really cruel, and inducing them when they are not needed is just plain sadistic.

So perhaps a better way can be suggested, at least for the electricity sector? After all, oil prices are going up 15%/yr, alias doubling every 5 years, and that 80 to 90 cents/gallon is soon to be chump change with regards to transport fuel pricing. But where we reside these days, electricity generators are presently being paid 2 c/kw-hr for their electricity, and bumping the price from 2 to 10 c/kw-hr would be not good for most people. And where would the incentive be to switch from something bad - the use of natural gas for heat - to groundwater based heat pumps powered up by electricity?

That better way is embodied in the renewable energy Feed-In Tariffs. In return for a fixed price for the energy made based on the ACTUAL COST to make it plus a socially determined average profit rate, renewable generators get priority access to the grid. And it is the priority access to the grid that is the mechanism to both cream off the extraordinary (alias rip-off) profits that arise from "competitive" systems and "Uniform Clearance Pricing" systems to pollution based providers, followed by the eventual replacement of ALL pollution sourced electricity - coal, natural gas AND nukes.

Since we tend to start out with relatively low amounts of renewables added to our grid systems each year, initially price rises are barely noticed, and these often get more than compensated by the Merit Order Effect, where those extraordinary profits get trimmed down to more reasonable levels. And if you want to modify corporate behavior, one way to do it is via profits. When those awesome "beat the band profits" like those accrued in 2005 in Western New York in the summer/fall/winter of 2005 (cost to make = 2 c/kw-hr, price obtained = 10 c/kw-hr) are no longer to be raked in, what's the motivation to continue? Do you think that the executives go to the Boards of Directors promising AVERAGE rate of returns? People have been tortured and murdered for lesser heresies, and given the high unemployment levels, there's plenty of takers for those "disciplinary employment opportunities" these days...

But seriously, take away those legendary profit possibilities in the pollution sourced electricity generation business and you're a good part of the way to getting the pollution out of the electricity biz. Odds are, the wind turbine business is about as low cost as it ever will be - they will be doing good just to keep costs from rising as labor and raw materials prices keep rising. However, this business could and should easily be employing over a million people by 2020 in this country if we just get some sane pricing systems not dependent on bribing rich people via tax avoidance possibilities for renewables. Time to grow up and get beyond the subsidies which the Repubs are now going to use for another round of legislative hostage taking, anyway.

Oh well, my thoughts for the day we dedicate to all the living things on the planet, and not just the really, really rich humans......

DB

Sunday, April 15, 2012

Progress - Getting Efficient with Low Wind Speed Turbines

The very photogenic Hardscrabble Wind Farm, near Norway (and Herkimer), NY - featuring Gamesa G90 wind turbines on 100 meter tall towers. Photo from http://static.panoramio.com/photos/original/42223389.jpg. These are among the tallest wind turbine towers installed anywhere in North America, but less than average for much of Germany these days. After all, taller towers tap faster winds at a given location...

This week, another major wind turbine manufacturer - Gamesa - announced its entry into the Low Wind Speed Turbine (LWST) market. Their entry is the G114-2.0 MW, and it will be manufactured in Pennsylvania, where they make blades, nacelles and towers. The units is designed for "Class IIIA" wind conditions - in the range of 6 m/s to 7.5 m/s hub height wind speeds, wind ranges that have been traditionally ignored in favor of high productivity (alias really, really windy) sites. Their new product will feature the largest ratio of swept area to generator capacity (5.1 m^2/kw) of any major wind turbine manufacturer pretty much in the world. In their brochure, Gamesa claims that this will get 20% more energy production per year than a 2 MW wind turbine with a 97 meter rotor (38% greater swept rotor area gives 20% more energy per year).

LWST are now the hot item in the wind industry - not as flashy as offshore wind turbines, but both LWST and offshore ones have one thing in common - they can be located close to population centers. The U.S. has awesome wind resources in the Great Plains, but the cost to run a 4 GW transmission line for 1500 miles can be well over $3 billion. The 4 GW of wind turbine electricity (delivered basis, fast wind speed turbines) would require an investment of around $20 billion, but there is the loss of income associated when a region exports huge sums of money to buy what they could provide at home. In fact, it is the homegrown aspect that can really sell LWST systems; about $25 billion would be needed for an equivalent amount of LWST units to deliver the same average 4 GW (plus storage, and the storage potential does not readily exist in the Great Plains (the flat land is why they have the great wind resource).

To pay for somebody elses electricity from $20 billion worth of turbines, about $2 billion per year has to be exported from buying region to whoever owns the turbines (and the owners are unlikely to reside in the Great Plains). However, when this money, or at least a considerable portion of it can be recycled locally via locally installed LWST, the buyers are far better off buying locally produced wind turbine electricity, even if it costs slightly more because more expensive turbines (such as LWST) must be used to provide similar net yields (35% to 40% of the turbine rating). Recycling the money will create more local economic benefits than shipping them off to other parts of this country. LWST units allow electricity to be produced from moderate wind speeds at very reasonable prices, and when the benefits of local investment are added in, it's a winner....

There are advantages to having some wind power externally sourced, because in places far away, the probability that winds will not be blowing when local winds are also not blowing sufficiently is remote. Using multiple distant locations in conjunction with local pumped hydroelectric energy storage also means that there will essentially be no interruption of electricity sourcing from wind turbines, with resultant need for fossil fuel (or stored renewable liquid fuels) backup.

The new Gamesa turbine was examined at a 6.5 m/s hub height average wind speed and compared to the G97 (essentially the same nacelle/generator, but smaller blades). The percentage difference becomes extremely pronounced at even lower wind speeds, such as 5.5 m/s (25% greater) versus faster wind speeds (only a 16% benefit at 7.5 m/s). Since the G114 costs more money to buy and install, at these faster speeds there is not much incentive to install the LWST.

In fact, in the eastern U.S, there are relatively few onshore locations where the wind speeds average more than 6.5 m/s at 80 meters above the ground. Nationwide, only 13% of the land area has wind speeds at 80 meter heights averaging more than 6.9 m/s, and very few of these are near highly populated regions. However, more than 50% of the country has wind speeds averaging more than 6 m/s at 80 meters above the ground, and a lot of that is within a couple hundred miles of highly populated regions like NY, Cleveland, Chicago, Detroit and even Atlanta.

Of course, the other approach that can be taken is to put in a taller tower. The G114 comes with a standard 93 meter tall tower (that leaves the tip of the blade always higher that 38 meters, or 124 feet) above the ground), but it also comes with 120 and 140 meter hybrid towers - a lower concrete section, and an upper steel one. For typical eastern US conditions (nearby trees, hills and/or buildings), a 120 meter tower would give 6.5% faster hub height wind speeds (about 21% more annual energy output), while the 140 meter one would tap 10% faster winds than at 93 meters, or produce 35% more energy per year. The taller towers do cost more, but that also means that they require more workers to make the towers/more investment and more business opportunities to manufacture them.

The Gamesa new product introduction is also timed for some major wind turbine expositions/trade shows/annual conferences, particularly the European one in May (Copenhagen) and the AWEA one in Atlanta in about a month. They now join the following companies with LWST products for sale:

Vestas (V100 x 1.8 MW; 80, 95 and 119 meter tower options)
GE (GE 1.6-100; 80 and 100 meter tower options)
RE Power (1.8 MW x 100 meter rotors; 80 and now 100 meter tower options)
Nordex (2.4 MW x 117 meter rotor diameter; 91, 120 and 140 meter tower height options) - see http://www.nordex-online.com/en/news-press/news-detail.html?tx_ttnews[tt_news]=2280&tx_ttnews[backPid]=1&cHash=05e179e3c2
Siemens (SWT113 x 2.3 MW; 99.5 meter tower or taller)

No doubt others will soon come out with their own LWSTs. There are also a number of models that are "near LWST" such as the some 3 MW units with 120 meter rotor diameters (Fuhrlaender, WinWinD), as well as models by Vestas (V112 x 3 MW), Acconia (3 MW x 116 meter rotor) and several 2.5 MW unis with 100 meter rotor diameters.


So, if we ever get some form of sensible pricing system for wind turbine owners in NY State in the near future, expect to see more of these bigger and QUIETER turbines. After all, when the nacelle and hub get situated further from the ground, the inverse square law kicks in and the result is less sound perceived at ground level compared to units with shorter towers. And another benefit is that more energy per turbine gets produced, which displaces more pollution sourced electricity, and that is a good thing, right?

In a related item, the subsidiary of Florida Power and Light known as NextEra announced they will be installing 288 of GE's LWST, the 1.6 MW x 100 meter rotor diameter units, in 6 wind farms this year and next year (entering operation in 2013 and 2014). And they will be doing this in..... Ontario. This is another example of how the FIT (Feed-In Tariff) system rules, and the U.S. and NY incentives, even when operational, drool. The 460.8 MW worth of capacity will be installed and receive 20 year power purchase agreements with Ontario Hydro (transmission grid operator) at the slightly lower new rates than they would have gotten last year, but those rates are still sufficient to justify this roughly $1.15 BILLION investment. GE will also have to obtain the blades, towers and nacelles from Ontario to comply with the 60% domestic content provisions (though the nacelles might be made in GE's existing nacelle factory in Quebec). See http://www.windtech-international.com/project-and-contracts/ge-will-supply-288-wind-turbines-for-6-canadian-projects.

Anyway, that's how being smart can tap moderate winds and keep the resulting price for electricity still in the reasonable range. What could be more "Earth Day" friendly, anyway... well, lots of people have opinions on that, but, it's a big world....

DB

Sunday, April 8, 2012

French Lesson


The first 6 MW Haliade wind turbine installed on the French coastline by Alstom - photo via http://planetark.org/images/wefull/64971.jpg. This is designed to simulate offshore conditions - note the "jacket foundation" that the tower rests on - and the French coastline should be seeing a lot of these installed offshore pretty soon. The hub height is 92 meters, and the rotor radius is 75 meters or about 246 feet. It will retail for around a mere $27 million a pop, installed. Oh yes, this one is not easy to hide, but the neighbors don't seem to mind... And it requires the use of one of the biggest crawler cranes in the world to put this one together (a Terex 1600 ton unit), but hey, if you're not serious, don't bother getting on the Harley...


A bit over a year ago, NYPA cancelled its Great Lakes Offshore Wind effort, and effectively killed off a potential $1.25 billion in economic development for WNY. It also ended any credibility it had with respect to offshore wind projects, and maybe that was the message. After all, why bother fracking to make Ngas to make electricity when that electricity could be supplied pollution free and dependably via offshore wind? This would have made about 200 MW on an average basis to NY state, but more importantly, it would have been a start on a serious effort to provide pollution free electricity to NY, and to free us from a dire and perilous addiction to Ngas sourced electricity. Oh well, NYPA wimped out. So what’s new? Good to know as Earth Day 2012 comes around…. sort of.


On April 6, the winning bids for 4 of the 5 proposed offshore windfarms for France were announced - see http://www.offshorewind.biz/2012/04/06/france-edf-alstom-win-tenders-for-3-offshore-wind-sites/. The fifth set only had one bidder – a GDF Suez/Siemens partnership, and was canceled as non-competitive. Of the 3 GW capacity initially proposed in this first round, 1.94 GW was selected. These will deliver between 800 to 1000 MW of electricity based on the recent Alpha Ventus results… And France really needs the electricity, as they are currently importing electricity from Germany, which is made in excess of their needs via renewables (wind, biomass, biogas and solar, in that order of importance). It seems that its nukes are now too expensive to build, and there is certainly no desire in that country to frack for methane… And this is just practice for the next round, tentatively slated to be worth 6 GW of capacity, and worth roughly $US 27 BILLION. That's some serious renewable energy infrastructure investment...


The winners were teams made up of Areva/Iberdola/RES (Iberdola also owns NYSEG and RG&E, as well as the Hardscrabble wind farm near Herkimer NY) for one 500 MW array (100 x 5 MW units) and 3 arrays – total of 240 turbines of 6 MW each – by Alstom/EDF/Dong. Areva also is a major world player in nukes (they built most of France’s), and Alstom is a sort of equivalent of GE and Siemens, but French. These projects represent a diversification from pollution based electrical generation for these two companies. Areva bought out the German company Prokon-Nord and their 5 MW “multi-brid” unit, and they recently announced an improved unit with a 135 meter rotor diameter - see http://www.areva.com/EN/operations-3591/areva-wind-energy-solutions.html. Alstom recently installed their first “Haliade” 6 MW x 150 meter rotor diameter unit that is gearless and uses a permanent magnet low speed generator system - more details here: http://www.alstom.com/power/renewables/wind/offshore-wind-turbines/. The Alstom effort is entirely their own - especially the generator and nacelle design. Both companies immediately announced they will begin construction of the factories to make the nacelles, foundations and towers, and with work with partners to locally source major components, such as the blades. The Haliade blades were designed by LM Glasfiber (a major Danish based blade manufacturer) and will be 73.5 meters long (240 feet) – or 80 yards a pop. Alstom estimates 5000 jobs by 2014, and Areva estimated 2000 jobs for nacelle and blade production, as well as significant export opportunities..


France has one of the better wind resources in Europe and the English Channel/Atlantic coastline is really windy – the winds tend to blow across at least 2000 miles of Atlantic Ocean. So the resource is there, and so, evidently, is the will to do this. The government realizes that this will not be cheap electricity, but Atlantic winds also do not deplete and they don’t melt down. But far more importantly, there are the jobs…. As it so happens, Europe is in a “economic death spiral” via “expansionary austerity”, and the recession is causing job losses that in turn cause greater governmental budget deficits. Money spent importing fossil fuels/electricity from outside of the country just makes this so much worse. And countries have also noticed how Germany is using renewables as an anti-recessionary approach, one that creates employment, export opportunities and which also avoids the need to install more hyper-expensive, and to some, outright lunatic danger grade nukes.


And so, as we celebrate getting along with our ecosystem on Earth Day, maybe WNY and NY State needs a French Lesson .... and certainly not more recession caused by ignorance of macroeconomics and mental enslavement to the "expansionary austerity" concept along with the requisite faith in what Paul Krugman calls the "Confidence Fairy" ....


The press announcements can be seen here:

http://www.areva.com/EN/news-9297/offshore-wind-power-areva-technology-chosen-to-develop-the-saintbrieuc-wind-farm-alongside-iberdrola-and-eoleres.html and

http://www.alstom.com/press-centre/2012/4/alstom-confirms-four-new-factories-to-be-built-in-cherbourg-and-saint-nazaire-to-produce-haliade-150-turbines-for-the-edf-en-consortium/


DB



Sunday, April 1, 2012

Oil Pricing Scams and Trends


from http://www.oilnergy.com - the long term price chart for North Sea (Great Britain) "Brent Oil", back to when it started.

After the discovery of a huge set of oil fields in the North Sea between Britain and Norway, production was commenced at a blinding pace, and since the mid 1980' about 40 billion bbls of oil and a lot of natural gas have been produced. Much of that happened when oil was cheap - and part of the reason oil was cheap was because it was the policy of the British government to flood the market with oil. This helped lead to the financial ruin of the Soviet Union, and got Great Britain to live "fat and happy" till the oil production rate could no longer be maintained. Production for Britain peaked around 2001, and it's been downhill for some time - England is no longer self-sufficient in either oil or natural gas, though they still produce a lot. Too bad they weren't as frugal with it as the Norwegians were, though even the Norsemen are having a hard time maintaining production rates faster than decline rates.

Well, they don't call it Peak Oil for nothing, though you apparently will NEVER hear President Obama acknowledge the obvious.... http://www.energybulletin.net/stories/2011-02-17/urge-obama-say-%E2%80%9Cpeak-oil%E2%80%9D-april-20 - but I guess he does like to hint at it.... Anyway, telling the truth to a nation full of petroleum addicts probably is not that smart a thing to do, especially when prices are high, and so tempers are aroused due to those high prices. Getting a logical and thoughtful response from a bunch of cash starved petro-junkies is, well, not logical or well thought out, at all. But, in Norway, gasoline now sells for the equivalent of $10/gallon - they put AT LEAST $6.50/gallon of sales taxes on it to discourage consumption. And they export several million barrels/day (mbd) of crude and refined oil, still. But that's a civilized view, from a country that readily acknowledges they only have a finite supply of oil off its coastline, and that more than half of the oil that will be produced from these really windy, really treacherous and dangerous waters has already been extracted. After that, they need to have something planned to take its place (and they do), and that is more than our country can say at the present time. BTW, worldwide, Peak Oil apparently happened in 2006 according to the International Energy Agency chief financial expert: http://www.abc.net.au/news/2011-04-28/age-of-cheap-fuel-is-over-iea/2695928. And in retrospect, the data backs him up, especially if you just concentrate on the crude oil + NGL (natural gas liquids) production rates, and not "all liquid fuels":
http://www.graphoilogy.com/2012/03/world-production-update.html. That last graph shows that worldwide production has pretty much ossified at a bit less than 84 mbd.

So, the price of oil is up, but production does not seem able to respond the way that "conventional economics" says it should. And that is the underlying trend for the last 13 years, ever since an article in Scientific American (March, 1988) called "The End of Cheap Oil" by Colin Cambell and Jean Laherrare (see http://dieoff.org/page140.htm - it's a classic) - note the price in the Brent Chart in 1998. Though they were not the cause - just the messenger.

So, a touch of "geek" is now called for, at least for those of you not even modestly math inclined. One way to calculate the rate that the price of something has been going up - especially if it is in a "noisy" manner - is to do so graphically. You plot the natural logarithm of the price (y axis) versus time (x axis) and draw the best fit line (least squares method). The slope of the line is the rate constant, or the average rate that the price is going up (%/yr is a good unit in this case). And then you can replot this in "real terms" and if the rate is positive, you get a classic exponential curve reaching to infinity if there is enough time. So here it is:

This graph uses West Texas Intermediate (WTI) prices, which are a bit lower than Brent ones these days ($104/bbl), but the two prices are connected, and if the Keystone XL pipeline gets finished, they REALLY will be! And that's why the big push is going on for that, to allow Canadian Tar Sands Sludge to get priced at $120/bbl (minus a quality discount) instead of at $104/bbl (minus that quality discount, since there is nothing quality about Tar Sands Sludge).

That 14.6%/yr rate roughly translates into doubling every 5 years (Exp[.146/yr *5 ys] = 2.075).

But it turns out that the rate of world oil production really has little to do with the world oil price, since the price of oil in places like Venezuela, Saudi Arabia and Russia (and most oil exporting countries EXCEPT Norway and Canada) is highly subsidized compared to world oil prices. And this just drives up oil consumption rates in these countries (hey, it's their oil, until it runs out), leaving less available for export, but who cares, because the price keeps going up faster. This phenomena is called the "Export Land Model", or ELM for short, and it helps explains why world oil prices for exported oil ARE so high. A great explanation can be found here: http://en.wikipedia.org/wiki/Export_Land_Model. If you haven't already gone through it, you should, and it probably should be required reading for a driver's license or a High School and College degree...

But, there is still one other part to the oil price puzzle, and it's a short term thing where big money (as in trillions of dollars) likes to frolic in "games of chance" that also serve as a way to lure "suckers" in, where they get taken to the cleaners. Remember that Brent graph - the Brent Exchange was set up by British Petroleum (alias BP) and Goldman Sachs as a way to "monetize" oil still in the ground, stashed in inventory or in transit. And a couple of things to remember about Goldman Sachs (alias Vampire Squid according to Matt Taibbi of Rolling Stone Magazine - see http://www.rollingstone.com/politics/blogs/taibblog/starve-the-vampire-squid-20111111 and http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405) is that they do a lot of commodities trading, and that they are completely amoral, and have no problem "ripping the face off" (alias making a big profit on a trade) of their clients, or anyone else. And oil, due to the price and volume, is a big commodity, dollar wise. After all, the 38 mbd exported from producing countries at $105/bbl is worth about $4 BILLION PER DAY, or roughly $1.5 TRILLION each year. And a given quantity of oil can be traded several times during its travels from well to refinery, and then the refined products sell for even more, since they sell by volume, and on average, the volume of oil products is greater than the volume of crude (even though this makes no sense on a mass basis). Of course, every time a trade is made, somebody gets a cut, a "golden crumb", and that gets passed onto the ultimate customer.

One way to hedge the volatility of a commodity is to buy a futures contract for it - say at a given price but 12 months from now. This works for corn, orange juice, coal, gasoline, jet fuel, heating oil and crude oil, and large scale users and oil producers often do this. But what happens when the trillions of dollars that were swindled from Middle America and other bond investors via the Residential Mortgage Backed Securities (RMBS, with heavy emphasis on the BS part) scams goes looking for a home that will convert it into even more money? Why not leverage some or a lot of this and get a loan from the likes of Goldman Sachs (evidently JP Morgan Chase is also really into this these days) and lock in some oil futures. After all, the price of oil can only go up, right? What are the car drivers of America going to do - conserve? Yeah, right.....

So, welcome to this graph of a measure of the rate that oil futures contracts are being bought and sold:
This is from a very informative article by Chris Cook, a former higher up in the International Petroleum Exchange - see http://www.nakedcapitalism.com/2012/03/chris-cook-spikes-and-speculation-in-the-oil-market-%E2%80%93-flash-crash-part-deux.html. The bottom line is that there is more money than there is actual oil in inventory or likely to be extracted for some time, hence those absurd ratios of long (betting on the price going up in the future) to short positions (betting that prices when the contract comes due will be lower). And since a lot of this is being done with borrowed money..... well, it's called a bubble. Feeling lucky?

It is estimated that prices of oil and especially oil products (these can also be gambled with) have been jacked up considerably by all this fast and loose money searching for something to invest in, which invariably results in an asset bubble (houses in the recent past, tulips in the distant past). Roughly 55 cents/gallon has been added to gasoline prices due to this effect. There are plenty of ways this can also be played with - rumors over an air strike on Iran and resulting closure of the Straits of Hormuz, trouble in Syria, Sudan, perhaps Nigeria. And then there is the weather - a hurricane in the Indian Ocean messing with Australia's oil and gas fields off of Western Australia. And with record warm temperatures in North America already, what about the hurricanes in the Gulf of Mexico this summer and fall. And there are always those nasty accidents like Macando, as the oil industry pushes the envelope of what can be done, dosed with extraordinary greed that comes from $100 plus per barrel oil.

Of course, there is only one thing that consumers can do in the face of this nonsense - consume less oil. And as voters, we could insist that strong position limits get put on the futures contracts (not as much borrowed money available to buy them, more cash put down to actually buy the oil), but that would make GS and JP very unhappy, and they seem to own much of the US Congress and especially "Mittens", who might think that he is at one with them. Yeah right. And for a stretch goal, we could even insist on that fast and loose money getting invested in real wealth producing projects - like wind turbines - in this country, or otherwise we tax the beans out of it. But, that probably also is another Finnish refrain of "Ya sure you betcha".

But, unless you want to make these hyper-greedheads even richer, use less oil, and when you do use it, use it wisely. Because Peak Oil and peak Export Oil are real, and are really here to stay. And now you can't even say that you weren't warned...

DB

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