Wednesday, February 26, 2014

NY’s Energy and Renewable Energy Futures… (Long)

Primer:
The NY State Energy Plan (NYSEP) of 2014 is basically a very inadequate plan/set of documents UNLESS you would benefit from INCREASING sales of natural gas, and this means fracking based methane. Increasing and continued addiction to methane extracted from the ground (tight shale, tight sandstone, tight limestone and that collected as a by-product from oil extraction as well as the decreasing percentage of "conventional gas" now produced in North America) is the at the CORE of NYSEP. Since NY State has essentially no commercial grade supplies of methane, even from the Utica and Marcellus shale layers, this means importation from other parts of the country, notably nearby Pennsylvania (alias Fracksylvania), West Virginia and Ohio. Our only possible economic gain will be as the trash depot for fracking and drilling mud wastes. And isn't that SPECIAL....?

Fracking for methane is going after the dregs of North America's once plentiful and low production cost methane fossil fuel resources. It is like an alcoholic dumpster diving for a mostly empty booze bottle that might still have a swig or more of that elixir of ethanol. And like most "alkies", continued addiction when there is a large user base and a dwindling supply that is ever most costly to obtain will eventually cause the pusher of the addictive substance (natural gas) to dump us when our credit is no longer any good for those with the cash to pay for the goodies get that fix, while those without the coin must do without. And on this downward spiral, everything will be sold off/traded/discarded, becuase without that fix, life could get really bad really fast. Unless we dump "natural" gas and start deploying alternatives that do not deplete and do not trash our planet's climate control system, well, it will not be pretty. After all, if a Polar Vortex happens and the gas supply is cut off due to lack of money, lot's of people will not survive the cold spell. And ditto for a heat wave, where no gas could mean no electricity, which means no cooling.

So who would dream up such as horrid arrangement? Well, try the Cuomo Administration, for size. This is totally a short term focussed plan. It needs to be dumped, and then plans not based on a single source of an ever depleting resource and a business model based on massive fraud needs to replace this proposed piece of junk plan. Renewables like wind turbine based electricity do not deplete, and they COULD create far more jobs per dollar spent on heating and electricity bills than would be the scenario of exporting our dollars to import fracking based methane from elsewhere.

Discussion

We COULD easily power up NY’s electricity system with all renewables within a decade at affordable prices.  After all, we start off at 20% renewables via mostly Great Lakes based electricity. The vast majority of the remaining 80% easily could be supplied mostly by onshore wind coupled to pumped hydroelectric energy storage within NY plus some grid connections to Quebec and the Canadian Maritimes. Some of our wind energy COULD be provided via offshore wind turbines – notably near our southern coastline – and although these will always be more expensive than onshore wind, sometimes location really does matter. We could provide most of the heat and cooling we need mostly via Ground Sourced Heat Pumps  (GSHP) and biomass based district heating. The oil issue will be a more difficult problem – some electricity, more mass transit, and lots of biomass to liquid fuels. Those biomass fuels will be made possible as oil prices continue, on average, to double every 5 years (since 1998) as a result of Peak World Oil Exports  (that occurred in 2006). After all, things grow prolifically in NY in the growing season…

Renewable energy has as a central feature price predictability. We know what the price of wind based electricity will be for the next 25 years based on the cost to buy/install these systems and the associated price of money used to finance these systems. We absolutely have no way of knowing what the price of oil or methane will be 5, 10 or 20 years from now except with the general descriptor of “MORE”. And forcing this fossil fuel “casino” pricing system onto renewables actually makes the renewable MORE EXPENSIVE than it otherwise would be as this increases the financial risks and the costs that go with loans and investment money. However, if we do not change the way that we price electricity, very little of this renewable development of this will take place. Instead, we will suffer the fate of most addicts (in our case it is methane and crude oil sourced fuels) and continue a downward spiral until the pushers who supply us our fossil fuel energy sources no longer assume our credit has any value. We cannot have a viable renewable electricity system if those selling the product can’t either make a profit (private industry option) or break even (public ownership option). It is shear idiocy to base the price of renewable electricity not on the cost to make this electricity but instead on the price of coal and natural gas, with the difference supplied perhaps by tax payers via tax avoidance based subsidies.

NY is a state with essentially no commercializable fossil fuel resources. It’s meager Marcellus and Utica shale methane resources would produce methane so costly that it will be less expensive to make that electricity with (mostly) wind turbines. That methane also would be so costly that heating most homes and business with wind turbine sourced electricity to power up GSHP will be a lower cost option than using methane in “conventional” heating systems. Insistence on maintaining this present addiction to methane – and for our transportation, crude oil based products – means that we must export increasingly large amounts of money in exchange for these fossil fuels. It also means more carbon dioxide pollution and methane leakage, both of which are the leading causes of Global Warming and Climate Destabilization. Despite bizarre views that we can “mitigate” around the heat induced disasters to be caused by Global Warming, mitigation will only apply to a small percentage of our population – coincidently, the wealthiest. As for the majority of NY’ers – our Global Warming fates probably reside under the proverbial bus.

If NY were actually serious about renewable energy, it would end the casino pricing system for renewable electricity (but leave it for pollution based electricity pricing). This will rapidly remove profitability from pollution sourced electricity (coal, natural gas, nukes. Without profitability for pollution sourced electricity, such operations WILL shut down, and that WOULD be a good thing. The “reasonable profit rate” for renewables may well chase away a lot of “investable” monies, as the present owners of this money generally are not interested in “reasonable rates of return”. However, other options are possible for the people of NY state, and private capital can either participate or go elsewhere. When it finds nowhere else to go, it will come back – we just have to ask whether we want it, and at what cost.

All that is needed is a sane pricing system for electricity in NY State, and some sensible procurement policies from NYPA and LIPA. Some focused attention into the technology capable of powering up NY electrically at the lowest cost – Low Wind Speed Turbines with tall towers – can be done at a very low percentage of the benefits of this approach. At stake is close to 200,000 jobs SOMEWHERE – the trick would be to get them for NY workers. The wind turbine-pumped hydro approach will require roughly $120 billion investment that would get repaid over a 20 to 40 year period by NY’s electricity consumers. It would also require $100 billion in GSHP units for most of NY’s residential, governmental and commercial entities. And what group of businesses wouldn’t like a crack at a $220 to $250 billion market over the next decade or two? But, if we insist on casino–style NYISO Spot Market Location Base Marginal Pricing, we get none of that. Instead, the vast majority of NY’ers will face more of a non-viable future, while the jobs associated with making renewable energy systems go to our neighbors who have sane pricing systems for renewables as well as a respect for manufacturing as a wealth creator - not just as a host that parasitic financiers can extract money from until there is no more money to be had.

That is the choice we face. So far, we have chosen badly, and we have less than 300 permanent jobs in a wind turbine industry despite investing over $3.5 billion worth of installations in NY State. Some of our neighbors – notably Quebec (6000 jobs) and Ontario (12,000 jobs) - have done better, and now have significantly greater wind sourced electricity installed and a lot more on the way. In NY, our wind industry is effectively in hibernation. That we would do that to the one form of electricity production that is both non-polluting, capable of more than supplying ALL of NY’s electricity needs and also could do so at prices we can afford and which are AT LEAST 6 to 10 times less than the solar PV option says a lot. And this is NOT a good thing. It means that so far we are those proverbial “surrender monkeys” to the natural gas industry. It seems to mean that these fossil fuel/financial interest living large on fossil fuels own/control/rent our state’s leaders. It is made easier by how complicated and convoluted and opaque our electricity pricing system happens to be these days, one that only a really small percentage of people have even some degree of understanding of it.  And the constant propaganda barrage of the “clean natural gas” – and natural gas is anything but that – also helps in this image and disinformation war coupled to the way that ownership of the media has evolved and been arranged just adds to this slow motion horror of continued “stagflation” and economic decline by MOST NY’ers, even though a small percentage are doing more than fine. But maybe that only a few prosper by extracting from the many is not a “bug” but a “feature” for this crew that believes that the short term and the long term economics have to be in sync, even though they are not, and that it is only the short term that really rules.

We are starting to see the effects of this short-sighted reign of the short term. Few will invest in ANY kind of power generation in NY. After 6 years of depressed electricity pricing brought on by selling methane below its marginal cost of production, NYISO pricing has reduced pricing to competitive or less than competitive pricing within the sate, and it has yet to boost electricity consumption OR manufacturing job creation. We need to replace 6 dangerous and increasing old nukes in NY (including one that is a Fukushima “knock-off” – Ginna), and there is no plan to do so in the NY Energy Plan. We need to get “un-addicted” to rapidly depleting mined methane (natural gas), and there is no plan to do so in the NY Energy Plan. As of the end of 2013 more than 40% of the US methane supply has to be obtained from the dregs of supplies  - tight shales and tight sands – via extensive fracking. Each fracking based gas well is generally commercially useless within 5 years,and as the “choice spots” get tapped and rapidly burned through, well, that is a seriously bad product cost escalator to be trapped on. And there is the “money bleed” – junkies need money to keep their pushers convinced to supply them, and NY financially only survives via Wall Street extraction of Other People’s Monies. As Wall Street takes on more and more of a virtual aspect (it could be headquartered anywhere, it’s more and more of a “pushing electrons and photons” arrangement) why does its major players even need NY City any more? Odds are, the thieving can be more lucrative elsewhere, as are the places where the gains from such activities be hidden and dispersed.

And we need middle class jobs based on real wealth creation as never before. Median incomes are still dropping, as are the household incomes of those in the bottom 80% of the income brackets. But where is the economic demand needed to create these jobs going to come from?  A lot of it COULD come from manufacturing renewable energy systems needed to replace dangerous (nukes) and depletion based fossil fuel (methane). It could come from making the components for and assembling pumped hydroelectric storage systems that are so well suited to NY’s temperate rain forest climate and hilly/mountainous topography, as well as the Great Lakes based water that defines much of the state. It could come from making and installing Ground Sourced Heat Pumps that allow GSHP to deliver heat using mostly wind based electricity at less cost that natural gas. And by the way, GSHP deliver the same quantity of heat removal (air conditioning) using less than 25% of the electricity as to conventional air conditioning systems. And it could come when farmers can grow cellulose that can be used as a coal substitute for bulk heat generation or that can be used to make liquid fuels via pyrolysis and fermentation.

It is amazing how one small flawed action – our NYISO  Enron-style electricity pricing system – can have such massive and disastrous implications, but stuff happens.  NY’s old “RPS” system collapsed when below cost electricity from below cost of production fracking sourced methane required ever greater RPS prices. And without any ability to predict electricity prices over a 20 year time period, money lenders and investors insist on very high prices for their money. Renewable electricity systems are inherently VERY capital intensive, and require “cheap money” to produce lower cost electricity. High financial risk means high cost money, which means higher cost renewable electricity. The “future pricing risk” for renewables is a totally made up/fantastical arrangement. There is no fuel cost associated with a wind turbine making electricity. Why must the price paid to the wind turbine owner (public OR private) be based on the cost of fossil fuels, especially methane sourced from rapidly depleting wells developed by an industry riddled with fraud? Perhaps the most likely reason is that renewables are not “supposed” to be implemented until most of the extractable fossil fuel in North America – especially methane – has been extracted. But a few “oopsies” happened. One is Fukushima, which ripped the veil of respectability off of nukes, and put the question of “Does the Inevitable Always Happen, Eventually?” back in play. Another was the Great Recession of 2007 and beyond, as well as the completely inadequate response to it. Still another was the rapid evolution of the wind turbine technology that allows low to medium speed winds to be tapped for electricity at moderate costs. And another was Peak North American Natural Gas (2000). And finally, Global Warming is a very real thing, and far nastier than most will admit as exemplified in Hurricane Sandy.

 But customers without jobs aren’t much of a customer. And customers with no money leads to a downward spiraling economy, which few people either want or can take advantage of and live large while most people do no such thing. Ever increasing exports of money is also a net job EXPORTER situation, especially when ever smaller volumes of manufactured items can compensate for that. As for the manufacturing of renewable energy systems – without a local market, and a big local one at that, such an industry is unlikely to take place within NY State. Instead, these new businesses and jobs in those businesses will go to the states and provinces surrounding NY State. We are very late in the game with respect to wind turbine technology and essentially have NOTHING to offer the world that cannot be obtained in Europe. Nor do we need to reinvent the wheel. But without a local market for the wind, pumped hydro, GSHP and biomass to fuels businesses, there will be no entry into these areas, and no meaningful ability to innovate and participate in them. We should be able to do better than that.

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