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US Energy Policy

US Energy Policy

Energy Policy

The incandescent lightbulb is now outlawed.[1]  This fact is a perfect metaphor for “energy policy.”  Should it be illegal in the United States to manufacture, sell, buy, and use a traditional incandescent light bulb?  Your informed answer to that question will provide deep insight into your views on hundreds of other energy policy questions.   (BTW, my answer is no, but I bet you guessed that.)

Energy is the lifeblood of our economy; it touches your life in a hundred ways each day.  Yet energy policy--the set of government rules and regulations that prescribe how energy is produced, delivered, and consumed--is a complex and even a chaotic subject.

Energy was an uninteresting subject for the average person prior to the OPEC Oil Embargo in 1973.  Oil prices had been stable at about $20 a barrel in real terms for nearly a century and electricity prices had declined from about 22 cents per kilowatt to about 13 cents from 1960 to 1973, even as consumption of electricity quadrupled from 1950 to 1973, as more and more homes and appliances used electricity and utilities became better at building large coal and nuclear plants.

But the OPEC Embargo changed everything about energy and energy policy.  Four points will illustrate this importance. 

  • President Jimmy Carter’s presidency (1976 to 1980) was dominated by energy issues which he characterized as the “moral equivalent of war.” 
  • A little more than two decades later a California governor was recalled because he botched an electricity crisis in California and Arnold Schwarzenegger was elected Governor. 
  • There is a widespread perception that the US has gone to war in the Middle East over oil issues.
  • The Pope of all people has recently declared war on climate change, most of which is laid at the feet of fossil energy.

Part of the complication in energy policy is that it must be addressed on many fronts; international, national, State, and local governments all have a role in stirring the pot. 

Many books and articles are written on very specific aspects of energy policy but most are written for other experts.  Surprisingly, few are written that cover the broad landscape of energy policy.  Even fewer of these writings take a strong market-oriented perspective; the vast majority take an interventionist approach largely for environmental and oil import reasons.  And none that I have found are addressed to the pro-market political activist who has a real job during the day and then tries to save the country in his or her spare time.  This discussion is for that heroic citizen, The Forgotten Man.

So what’s the bottom line on energy policy? 

  • First, we make energy policy much more difficult than it has to be.  Energy is a commodity just like wheat or cars or hamburgers.  Mostly, we rely on competitive markets in each of these other commodity industries to make sure that we have an adequate supply to meet the consumers’ needs at reasonable prices.  But we treat energy differently.  I venture to guess that there are only a few industries more affected by government intervention than energy.  Why is that?  Does that mean we benefit from that intervention?  Is there a better way?  The article explores these questions.
  • Second, right now energy policy is being driven by climate change.  Even if one is sympathetic to some of the claims made about climate change, many stupid actions are being taken in its name that has profoundly negative effects on energy markets. 
  • Third, oil issues get the most attention but we do not face any real danger in oil markets.  Oil trades in global markets and while there may be price fluctuations (as I write, oil is about $35 a barrel, having been over $100 in the recent past), we will never face a situation where we run out of oil.  Most countries with plentiful oil have built their economies on oil revenue and the recent drop in oil prices has created serious political problems for these countries.  They simply can’t afford not to produce oil.  But problems in oil markets can result in unnecessarily higher prices and thus we need to pay some attention to them in order to promote prosperity. 
  • Fourth and most important, electricity faces real problems that could result in catastrophic failure of the system, thus threatening not only prosperity but human life.  The major framework for electric policy was set in 1935.  That framework worked fine up to the OPEC Embargo.  Electricity can compete against oil and natural gas in many applications.  Thus adjustments were necessary to the historical framework after the Embargo.  But policymakers have only nibbled at the edges of electricity policy and have not fundamentally changed the 1935 framework.  Yet little more than additional tinkering is being done to promote an electricity industry for the 21st Century.  Many special interests are pushing and pulling on the antiquated framework for personal gain but few are fundamentally committed to a complete rethinking of the role of the electric system of the future, especially given the increasing digitalization of our economy.  And as noted above, unsound policies on climate change make electric issues even more difficult.


[1] This is a good place to make a point.  Some pointy headed academics will disagree with even this first sentence.  Technically, Congress did not “ban” incandescent bulbs in the Energy Independence and Security Act of 2007.  Rather, they set a standard that most, if not all, traditional incandescent bulbs could not achieve and established a schedule for light bulbs of different wattages to meet this standard.  So it is fair to say that Congress outlawed incandescent bulbs.  But since the accompanying Article is a synthesis of the broad topic of “energy policy” it would needlessly clutter and complicate the text to be “technically” accurate in every instance.  The size of the document would need to double and the reader would understand less of the essence of energy policy if I did not make some broad generalizations.  Nonetheless, I am sure I will receive some criticism that many of my statements are not “technically correct.”  I hope that making this point early in the article will allow for a better understanding of the content of the Article.

 

Existential Threat - ORIGINAL CONTENT

The United Nations and several national governments have begun referring to climate change as an existential threat, meaning a threat to the future existence of life on earth. This is a political position intended to draw attention to the issue and incite fear in the population. Several national polls suggest that the effort has not been particularly successful, as the general population rates climate change as a relatively low-level concern, despite a coordinated government and media campaign.

You would think that, if global governments actually believed that climate change driven by CO2 emissions represented an existential threat, they would be united in aggressive efforts to eliminate CO2 emissions. However, numerous nations, led by China and India, are embarked on concerted efforts to build new coal-fired generating stations, which would increase their CO2 emissions and global CO2 emissions as well. Indonesia, Japan and Vietnam are also pursuing new coal power plant construction, as are Botswana, Malawi, Mozambique, South Africa and Zimbabwe. Clearly, these countries believe that failure to develop their economies is a greater threat than climate change.

The EU and the UK, which have been at the forefront of the “global” CO2 emissions reduction efforts, are reviewing their plans to close coal-fired generators and are considering reopening some closed coal-fired generators. Several of these nations are also reconsidering their plans to close nuclear generating facilities in the face of growing energy shortages and rapidly rising energy prices.

The US is still pursuing an effort to eliminate coal-fired generation by 2030 and to eliminate all fossil-fueled generation by 2035. However, there is growing concern in the US that fossil-fueled generating capacity is being eliminated far faster than it is being replaced with renewable generation and storage. This issue is projected to result in increased rolling blackouts in the US this summer, as cooling demand increases. This issue will only become of greater concern as electricity demand increases as a result of the effort to electrify the entire economy and completely eliminate the burning of fossil fuels for any purpose.

The efforts in the developed nations to eliminate fossil fuel use in favor of renewables plus storage is an existential threat to industries in those nations, which are already faced with rising energy prices and reduced energy availability. Many industrial plants in the UK and the EU have closed or significantly reduced production as the result of increased energy costs and restricted energy availability. This issue is likely to expand to the US, Canada and Australia if current national policies remain unchanged.

Meanwhile, China is investing heavily in the metals and cement industries, which are major fossil fuel users and CO2 emitters. The increased availability of low-cost coal-generated electricity to power the metals industries in China and the availability of coal for cement production would render those industries in nations reducing CO2 emissions uncompetitive in global markets with lower-cost Chinese metals and cement.

These developments would leave the US, the UK, the EU, Canada and Australia heavily dependent on China for metals and cement, as well as for the rare earth minerals necessary for wind generators and solar cells. Arguably, this growing dependence on China is a greater existential threat than climate change.

 

Tags: Climate Change Debate, Climate Policy, CO2 Emissions, Developing Nations Power, Electric Power Generation

Intermediate Replacement - ORIGINAL CONTENT

Replacement of conventional intermediate load generators with renewable generation plus storage is similar to, but not identical to, replacement of baseload generation. Intermediate load generators must be able to deliver their full capacity to the grid during periods of high demand, at or near the system peak. Therefore, they require sufficient storage capacity to deliver full capacity in the absence of active wind or solar generation. However, the full capacity requirement exists for only a portion of the day, so the storage capacity required is less than that required when replacing a baseload generator.

However, like the baseload generators, the intermediate load generators must be able to perform their function over the maximum number of days for which wind and solar generation might not be available. The long duration storage capacity required would be a function of the expected load duration for that intermediate load generator on a day when demand was at or near the system peak. For wind generation, this situation might occur near the summer peak, during a period of hot, still days. For solar generation, the situation might occur near the winter peak, during a period of overcast skies, or during and after a snowstorm.

Like baseload generators, intermediate load generators must have sufficient capacity to recharge storage used during a period of low/no wind or solar generation while still meeting the contemporaneous demand of the grid. The required capacity would be determined by the number of low/no wind and solar days and the likelihood of these days occurring at or near grid system peak demand.

It has been common for electric utilities to maintain a capacity reserve margin of approximately 20% relative to peak demand to allow for the possible unavailability of one or more conventional generators. Conventional intermediate load power plants are capable of operating at design capacity for extended periods in the event of a generator failure, though they typically operate in load-following mode. Some portion of the intermediate load renewable plus storage generation would likely also be designed to be capable of baseload operation. However, the percentage of intermediate load renewable generation designed for this purpose might be reduced significantly, since the generating capacity of renewable plus storage generators is typically far lower than the capacity of a single conventional generator, so the loss of a single generator would have less effect on system capacity.

Short “needle peak” demand events would likely be served primarily from additional storage capacity at some portion of the intermediate load renewable generators, since storage would likely be capable of very rapid response to changes in grid demand. This storage capacity would likely not be kept fully charged for most of the year, but would be charged in anticipation of high demand on the grid.

The uncontrolled variability of the output of wind and solar generators will present growing grid management challenges as the renewable fraction of grid generation increases and the dispatchable fraction of grid generating capacity decreases.

 

Tags: Energy Storage / Batteries, Electric Power Generation, Electric Power Reliability

Baseload Replacement - ORIGINAL CONTENT

Baseload powerplants operate continuously at, or close to, their rated capacity to meet the continuous demand on the electric grid. Nuclear power plants are typically operated as baseload plants. Some coal power plants are also operated as baseload plants, as are geothermal plants and hydroelectric plants, depending on local availability.

The transition to a renewable plus storage grid would require replacement of baseload coal generation and perhaps nuclear generation as well. Replacing reliable, continuous generation resources with discontinuous generation sources is a complex challenge. US EIA uses 40% as the capacity factor for new onshore wind generation and 30% for solar photovoltaic generation. The IEA uses 50% as the capacity factor for offshore wind generation. Clearly, these discontinuous generation sources are unsuitable for application as baseload generation without support.

At a minimum, replacing 1 GW of baseload generation would require installation of 2 GW of offshore wind capacity, 2.5 GW of onshore wind capacity or 3.3 GW of solar photovoltaic capacity, assuming each type of renewable generator operated at its average capacity every day throughout the year. However, that is not the case, as hourly, daily and seasonal variations in wind and solar conditions affect generator output.
 
Assuming that the renewable generators which constitute the 1 GW (24 GWh/day)of baseload generation are colocated and thus experience the same wind or solar conditions, 50% of the output of the offshore wind generators (12 GWh), 60% of the output of the onshore wind generators (14 GWh) and 67% of the output of the solar collectors (16 GWh) would need to be stored for use when the wind and sun are unavailable, on average.

As baseload generation, the renewable generators must reliably generate 24 GWh of power each day. Therefore, a day with no wind or no sun would require an additional 24 GWh of energy storage, or 27 GWh of storage capacity assuming a 90% round trip storage efficiency. Each additional possible day of no wind or no sun would require an additional 27GWh of storage capacity. This storage capacity would have to be charged before it was available for use.

Of course, once the stored energy is used to replace non-functioning generation, storage must be recharged. This could be accomplished by diverting a portion of the baseload generator output and increasing the output of intermediate load generators to replace the diverted baseload capacity. Diverting 25% of the baseload generator capacity for recharging would require 4 days to recharge storage for each day (24 GWh) of storage capacity used, assuming average renewable generation.

While some storage has been installed to smooth out brief fluctuations in renewable generator output and grid demand, the four-hour storage required to carry solar generation through the evening peak is only beginning to be installed, and the twelve to sixteen-hour storage required to time shift renewable output to provide baseload operation and the multi-day storage required to operate through low/no wind and solar days are not commercially available, nor is there any schedule for their availability.

Therefore, it is essential that conventional generation be retained to support renewable generation until these storage technologies are available and installed.

 

Tags: Energy Storage / Batteries, Electric Power Generation, Renewable Energy, Power Grid

Climate Change Playbook - ORIGINAL CONTENT

It appears that the White House and at least two of the Executive Branch Agencies are not on the same page of the climate change “playbook”. The Administration has clearly enunciated goals of eliminating coal use by 2030, achieving fossil-free electric generation by 2035 and achieving Net Zero CO2 emissions by 2050.

The US Energy Information Administration (EIA) Annual Energy Outlook 2022 projects that petroleum and natural gas will remain the most-used fuels in the United States through 2050, based on consumer preferences, as shown in the graph below.

 

Energy consumption by fuel


This projection is inconsistent with the Administration’s Net Zero goal. EIA projects total energy consumption of approximately 108 Quads, of which approximately 75 Quads is petroleum, other liquids and natural gas in 2050. Other renewable energy (predominantly wind and solar) increases from approximately 3 Quads to approximately 18 Quads, far short of the intended transition to a renewable plus storage goal with limited nuclear, hydro and liquid biofuels. Coal decreases from approximately 10 Quads currently to approximately 8 Quads by 2030 and to 6 Quads by 2050, rather than to zero by 2030 as proclaimed by climate czar John Kerry.

Similarly, the US National Renewable Energy Laboratory (NREL)projects that even what is described as “widespread electrification”, the high growth scenario projects electric consumption growth of 67%, mostly in increased consumption in the transportation sector (EVs). Note that this study is now 4 years old and was conducted during the previous Administration, prior to the goals set by the current Administration. The projected growth of electric consumption is far short of that which would result from the implementation of an “all-electric everything” goal to be achieved by 2050.

 

Electricity consumption - NREL

In its June 2018 Electrification Futures Study, the National Renewable Energy Laboratory (NREL) projects that even with “limited impacts” from electrification, U.S. electricity consumption could increase 21% over the 2016–2050 period (using moderate assumptions about technology changes), resulting in a compound growth rate of 0.65% per year. In the medium and high scenarios, which assume “widespread electrification,” electric consumption growth is 45% and 67%, respectively (compound annual growth rates of 1.2% and 1.6%, respectively). Source: NREL

 


This is not to suggest that these projections could not be changed if consumer preference is superseded by government fiat, as now appears likely to occur. However, replacement of three-quarters of projected future energy consumption with renewables plus storage would be a massive and extremely expensive undertaking. It would include abandonment in place of more than $50 trillion of fossil fuels, abandonment of large numbers of coal and natural gas generators before the ends of their useful lives and the installation of more than 1,000 GW of new wind and solar generating capacity (actual, not nameplate) plus storage capacity sufficient to carry the grid through the longest anticipated wind or solar “drought”. The storage technology required by this transition is not currently available.

 

Tags: Electricity Consumption

Full Disclosure - System - ORIGINAL CONTENT

The fossil-free, all-electric everything grid envisioned to avoid catastrophic anthropogenic climate change would be a very different grid from that which serves the US today. The fossil-free grid would still include the non-fossil generation currently in service, including hydroelectric, geothermal and biomass generators; and, possibly, some existing and even new nuclear generation.

The all-electric everything transition would require a grid with approximately four times the capacity of the current grid, upgrading existing transmission and distribution infrastructure to handle the increased demand. The existing transmission infrastructure would also have to be expanded to connect a far larger number of smaller generators, frequently in remote locations at some distance from the existing infrastructure. The transmission infrastructure might also need to be restructured to permit longer distance transmission than is currently common.

The intermittent generators connected to the grid would either be required to be configured to be dispatchable with the addition of storage, or the grid would have to be equipped with sufficient storage at multiple locations to compensate for the intermittency or unavailability of multiple intermittent generation sites.

Configuration of each intermittent generation site to be dispatchable would require installation of equipment to increase the DC voltage output of the generators to the battery storage voltage, batteries to store surplus power, inverters to convert the DC to AC and transformers to increase the AC voltage to transmission voltage. The output of each dispatchable generator site would then be connected to the grid.

Configuration of each intermittent generation site to be non-dispatchable would require installation of equipment to invert the DC output of the generators to AC and transformers to increase the AC voltage to transmission voltage. The output of each non-dispatchable generator would then be connected to the grid.

Numerous locations on the grid would be required to install battery farms or other storage approaches to store power supplied by the intermittent generators in excess of grid demand. These battery farms would require the installation of rectifiers to convert the excess AC power from the grid to DC power at battery storage voltage as well as inverters to convert DC power drawn from the batteries to AC for redelivery to the grid at grid voltage when the current intermittent generator output was insufficient to satisfy the contemporaneous demand of the grid. The long-duration storage required for this grid is not currently commercially available. Other storage approaches, such as pumped hydro or compressed air storage, might use the AC power from the grid directly, but face difficult project approval processes.

The selection of the location for storage in the system has efficiency consequences. Assuming that each inversion and rectification step has an efficiency of 95% and that the batteries have a round-trip efficiency of 90%, the dispatchable generation configuration experiences losses of approximately 19% of the generated electricity, while the intermittent generation with grid storage configuration experiences losses of approximately 27% of the generated electricity.

The selection of the location for storage likely also has system investment consequences. The connection of multiple, independent intermittent generation sites to a common storage location might reduce the storage capacity required per unit of generation capacity because of the diversity of locations and generator types.

The type of intermittent generators would be expected to vary as a function of geography and wind and weather conditions. The northern tier of the US experiences lower solar insolation than the southern states, particularly in winter. The northern tier states also experience more snow and ice in winter, which would coat the solar collectors and reduce collection efficiency, periodically to zero. Wind installation in the northern tier states would experience periodic icing and might require the installation of wind turbines with heated blades to prevent or minimize icing, adding cost and parasitic power consumption. The southwestern US has far greater solar availability, but it is frequently located remotely from the loads it would serve. Offshore wind will likely be a significant factor near the coasts.

The current US electric grid has transmission and distribution losses of approximately 6%, of which transmission losses are approximately 1%. Designing the restructured electric grid to permit longer transmission distances would likely increase these transmission losses.

The design of a primarily intermittent renewable generation plus storage powered grid is a very complex problem. A satisfactory system design has yet to be demonstrated.

 

Tags: Electric Power Generation, Electric Power Reliability, Energy Storage / Batteries

(in)Dependence Day 2022 - ORIGINAL CONTENT

Energy independence has been an aspirational goal of the US for decades. However, the US actually achieved that goal in the period from 2017-2020 as the result of the application of US ingenuity and the encouragement of a supportive federal government. Energy was readily available at reasonable cost and the economy experienced robust growth.

Regrettably, a change in the federal Administration has ended both the recent energy independence and the robust economic growth. The US has now rejoined the Paris Accords and the Administration has committed to the destruction of the US fossil fuel industry and the restructuring of the US electricity sector and the entire US energy economy in an attempt to achieve net-zero CO2 emissions by 2050. Rapidly increasing energy costs and looming energy shortages are the result.

The Administration has halted oil and gas lease sales, slow-walked the issuance of drilling permits in existing oil and gas leases, slow-walked approvals for increases in oil refinery capacity, actively discouraged investment in new oil and gas projects and claims it can’t understand why oil prices have increased and oil supplies are declining. The Administration has been quick to blame rising prices and energy supply problems on the industry. Elements of the industry have adopted a posture of “orderly liquidation” of their businesses in the face of forced liquidation by government fiat.

Meanwhile, the Administration is incentivizing investments in wind and solar electric generation and subsidizing the purchase of electric vehicles and the construction of EV charging station infrastructure. Goals have been set for the end of coal-fired electric generation, the end of all fossil fuel electric generation, and the termination of the sale of vehicles with internal combustion engines. These federal goals are both market and technology forcing. They rely on the timely installation and operation of technologies which have not been invented or introduced into the commercial market.

Fabrication of wind and solar generation equipment, electricity storage and electric vehicles require large quantities of rare earth minerals, largely available from China and other non-friendly countries. These requirements render the US energy economy dependent upon unfriendly foreign governments for the maintenance and expansion of US energy infrastructure. Recent Russian actions to reduce energy deliveries to European nations provide a warning regarding potential future Chinese actions regarding the supply of rare earth minerals for wind, solar, storage, and EV applications.

Should the US allow itself to become totally dependent on wind, solar and storage for its electricity needs, it would be at great strategic risk when it came time to replace the first tranche of this equipment in approximately 20 years. The same would be true for dependence on EVs for our transportation system.

Perhaps the greatest risk, in the short term, is that the current energy and electric generation infrastructure will be driven from or retired from the market before the necessary replacement infrastructure is in place and operational. The current haphazard approach to infrastructure replacement has resulted in several failed demonstrations of a renewable intense generation infrastructure which would be disastrous if repeated at national scale.

 

Tags: Electric Power Generation, Electric Power Reliability, Electric Vehicles

Full Disclosure - Storage - ORIGINAL CONTENT

Wind and solar are intermittent resources, so both wind and solar generation are intermittent and require backup. This backup is currently provided by conventional generation. However, with the evolution of a fossil-free grid, storage capacity would be required to provide backup. Additional wind and solar generating capacity would also be required to recharge storage when wind and solar again become available.

Storage must be capable of functioning under several different conditions. Some storage is currently being used with both wind and solar installations to smooth the output of the generators when the wind is fluctuating or when the sun is partially obscured by clouds. This storage has relatively limited capacity and responds quickly to fluctuations.

Storage is now beginning to be installed with solar arrays to deal with the typical increase in demand and consumption at the end of the day, when solar output has decreased or ceased. This “four-hour storage” has approximately half the capacity of the solar array during a normal day. This storage must be recharged the next day during periods when grid demand is less than solar array capacity, or must be recharged overnight or during the next day from other generation sources. This storage has a current cost of approximately $350 per kWh and is projected to decline in cost to between $150 and $100 per kWh by 2050 according to the National Renewable Energy Laboratory (NREL).

As the transition to a fossil-free grid progresses, there will be a growing need for long-duration storage capable of storing the output of wind and solar generators in sufficient quantities to power the grid for multiple hours to multiple days when either wind or solar, or both, are unavailable or significantly diminished. The “wind drought” which affected the United Kingdom and parts of Western Europe in the fall of 2021 is an example of a situation requiring such long-term storage. In that event, storage capable of powering the grid for 10 days would have been required, had conventional generation not been available.

Another situation requiring long-term storage is those periods when wind and solar output are diminished seasonally. EIA reports that, in 2021, solar photovoltaic system output was below 25% of rating plate capacity in the period from October through February, while (onshore) wind capacity was below 35% in the period June through October and in January and February. The January through February period is of particular concern because both wind and solar capacity are diminished. Long-duration storage would be required to make up the generation deficit for a period of several months.

Clearly, additional wind and solar generating capacity would be required to charge long-duration storage to supplement both wind and solar generation through the Fall and Winter, as well as to support the grid through a “drought” period. This long-duration storage is not currently commercially available. Technology capable of approximately 150 hours is currently under development, but would be insufficient to support the grid through a 10-day “drought” or through a multi-month period of insufficient generation.

The cost of such long-duration storage is currently unknown, but the storage capacity required to support a fossil-free grid would be very large and very expensive. However, the cost of not having long-duration storage in sufficient quantities would be substantially greater.

The expected service life of current grid-scale batteries is approximately 10 years, compared to the expected 40 year service life of utility assets. This difference dramatically increases depreciation expense and system ownership costs.

 

Tags: Energy Storage / Batteries

The Cost of Net Zero Electrification of the U.S.A. - Highlighted Article

  • 6/23/22 at 07:00 AM

 

From: Friends of Science Calgary

By: Ken Gregory, P.Eng.

Date: December 21, 2021

 

The Cost of Net Zero Electrification of the U.S.A.

 

Executive Summary

Many governments have made promises to reduce greenhouse gas emissions by replacing fossil fuels with solar and wind generated electricity and to electrify the economy. A report by Thomas Tanton estimates a capital cost of US$36.4 trillion for the U.S.A. economy to meet net zero emissions using wind and solar power. This study identifies several errors in the Tanton report and provides new capital cost estimates using 2019 and 2020 hourly electricity generation data rather than using annual average conditions as was done in the Tanton report. This study finds that the battery costs for replacing all current fossil fuel fired electricity with wind and solar generated electricity, using 2020 electricity data, is 109 times that estimated by the Tanton report. The total capital cost of electrification is herein estimated, using 2020 data, at US$433 trillion, or 20 times the U.S.A. 2019 gross domestic product. Overbuilding the solar plus wind capacity by 21% reduces overall costs by 18% by reducing battery storage costs. Allowing fossil fuels with carbon capture and storage to provide 50% of the electricity demand dramatically reduces the total costs from US$433 trillion to US$24 trillion, which is a reduction of 94.6%. Battery storage costs are highly dependent on the year’s weather and the seasonal shape of electricity demand.

 

Introduction

The U.S.A. government has set a target to reduce greenhouse gas emissions from fossil fuel use and cement manufacturing to net zero economy-wide by no later than 2050. Some believe we could achieved this by replacing most fossil fuel use with non-emitting energy sources and sequestering carbon dioxide (CO2) emissions from the remaining fossil fuel use by carbon capture and storage (CCS).

This article provides an estimate of capital costs to achieve net zero emissions in the U.S.A. based largely on an analysis by Thomas Tanton in his report “Cost of Electrification: A State-by-State Analysis and Results”. [1] Estimating the increased operating costs is beyond the scope of this study. (continue reading)

 

The Cost of Net Zero Electrification of the U.S.A.

 

Tags: Highlighted Article

Full Disclosure - Solar - ORIGINAL CONTENT

Solar is intermittent. Therefore, solar generation is intermittent. Solar is unreliably available during the day and reliably unavailable at night. Solar conditions vary geographically and seasonally. Therefore, solar generation potential varies geographically and seasonally. Solar generation has been implemented initially in the best locations for solar generation potential. However, expansion of solar generation would require installations in less than ideal locations.

US Energy Information Administration reports a capacity factor of 25% for solar generation. Virtually all solar generation in the US and globally is redundant capacity, in that it cannot replace dispatchable conventional generation in a reliable grid, though it can displace the output of that conventional generation when solar generation operates.

Solar arrays are typically proposed and reported based on the rating plate capacity of the solar generators. However, since the solar collector capacity factors are in the 25% range, their annual potential output is typically a quarter of the annual potential output of a conventional generator of the same rating plate capacity.

Solar generation must be supplied with full capacity backup to replace the solar generator output when the sun is not shining. This backup capacity is currently provided by the conventional generation fleet. This is also true of most rooftop solar installations. Some rooftop solar installations include storage plus excess solar collector capacity to permit them to operate independent of the utility grid.

Solar generation capacity cannot be permitted to increase beyond the capacity of the conventional generation fleet if the grid is to remain reliable. This situation could result from an increase in solar generation capacity or from a decrease in conventional generation capacity, or both.

The full cost of solar generation includes the capital, operating and maintenance costs of the solar array plus the capital and operating costs of the conventional backup generation required when the solar generation is unavailable. The solar industry typically ignores the real cost of conventional backup, so that it can claim that solar generation is cheaper than conventional generation.

As conventional generation is retired, either because of age and condition or because of environmental regulation or Executive Order, its capacity must be replaced by storage capable of storing the rating plate output of the conventional generators for the maximum period of time solar generation might be unavailable, plus additional solar generating capacity sufficient to recharge the storage in the shortest period of time between solar interruptions. In this case, the full cost of solar generation includes the capital, operating and maintenance costs of the solar array plus the capital, operating and maintenance costs of the storage and the extra solar generation capacity required to recharge storage.

Clearly, solar generation is not cheaper than conventional generation when its full costs are considered. Solar generation increases total generation investment in the short term, since it is redundant capacity. It also increases grid investment in the longer term, since it requires both storage capacity to backup the solar generation and additional solar generation capacity to recharge storage. The undepreciated investment in conventional generation retired by environmental regulation or Executive Order also remains as a grid investment, further increasing the cost of the solar generation plus storage which replaced it.

The expected service life of solar PV collectors is 20-25 years. This compares with the 40-year depreciation period for utility generation assets. This shorter service life expectancy increases the cost of ownership of the solar array.

 

Tags: Solar Energy

Full Disclosure - Wind - ORIGINAL CONTENT

Wind is intermittent. Therefore, wind generation is intermittent. Wind is unreliably available around the clock. Wind conditions vary geographically and seasonally. Therefore, wind generation potential varies geographically and seasonally. Wind generation has been implemented initially in the best locations for wind generation potential. However, expansion of wind generation would require installations in less than ideal locations.

US Energy Information Administration uses a capacity factor of 40% for new onshore wind generation. The International Energy Agency uses a capacity factor of 50% for offshore wind generation. Virtually all wind generation in the US and globally is redundant capacity, in that it cannot replace dispatchable conventional generation in a reliable grid, though it can displace the output of that conventional generation when wind generation operates.
 
Wind farms are typically proposed and reported based on the rating plate capacity of the wind generators. However, since the wind turbine capacity factors are in the 40-50% range, their annual potential output is typically half, or less, of the annual potential output of a conventional generator of the same rating plate capacity.

Wind generation must be supplied with full capacity backup to replace the wind generator output when the wind is not blowing, or is blowing at too high a velocity for the turbines to operate. This backup capacity is currently provided by the conventional generation fleet.

Wind generation capacity cannot be permitted to increase beyond the capacity of the conventional generation fleet if the grid is to remain reliable. This situation could result from an increase in wind generation or from a decrease in conventional generation capacity, or both.

The full cost of wind generation includes the capital, operating and maintenance costs of the wind farm plus the capital and operating costs of the conventional backup generation required when the wind generation is inoperable. The wind generation industry typically ignores the real cost of conventional backup, so that it can claim that wind generation is cheaper than conventional generation.

As conventional generation is retired, either because of age and condition or because of environmental regulation or Executive Order, its capacity must be replaced by storage capable of storing the rating plate output of the conventional generators for the maximum period of time wind generation might be unavailable, plus additional wind generating capacity sufficient to recharge the storage in the shortest period of time between wind interruptions. In this case, the full cost of wind generation includes the capital, operating and maintenance costs of the wind farm plus the capital, operating and maintenance costs of the storage and the extra wind generation capacity required to recharge storage.

Clearly, wind generation is not cheaper than conventional generation when its full costs are considered. Wind generation increases total generation investment in the short term, since it is redundant capacity. It also increases grid investment in the longer term, since it requires both storage capacity to backup the wind generation and additional wind generation capacity to recharge storage. The undepreciated investment in conventional generation retired by environmental regulation or Executive Order also remains as a grid investment, further increasing the cost of the wind generation plus storage which replaced it.

The expected life of wind turbines is 20-25 years. This compares to the 40-year depreciation period typical for conventional generation, increasing the annual ownership costs of the wind farm.

 

Tags: Wind Energy

Offshore Wind Project - ORIGINAL CONTENT

 

Dominion Energy has proposed Coastal Virginia Offshore Wind (CVOW), the first large offshore wind project in the United States. CVOW would be a 2.6 GW wind farm consisting of 176 15 MW wind turbines, 3 offshore electric substations, underwater and onshore power delivery cables, a collector station and an interconnection to the existing Dominion grid.

 

 

offshore wind schematic


The estimated cost of the project is $10 billion, or approximately $57 million per wind turbine. The 15 MW Siemens Gamesa wind turbines are the largest commercially available wind turbines and will be mounted 800 feet above mean sea level, approximately 27 miles offshore of Hampton, VA.

The International Energy Agency (IEA) estimates the annual capacity factor of offshore wind turbines at 50%. I will use this estimate, since there is no commercial experience with these new wind turbines and no experience with offshore wind turbines in the Norfolk, VA area. At this capacity factor, the actual average annual capacity of the CVOW wind farm would be approximately 1.3 GW, fluctuating over a range from 0 – 2.6 GW. The output of the CVOW wind farm, as proposed, is non-dispatchable. Therefore, it would require either conventional generation backup or massive electricity storage capacity.

The daily average power generated by the CVOW wind farm would be approximately 31 GWh (1.3 * 24). Therefore, storage capacity of approximately 31 GWh would be required to replace wind farm output for each low/no wind day. Replacing wind farm output over a 10-day wind drought similar to that experienced in the UK and Western Europe in the Fall of 2021 would require long-duration storage of more than 300 GWh. Such long-duration storage is not currently commercially available and there is no schedule for its commercial availability.

The National Renewable Energy Laboratory (NREL) estimates the current cost of 4-hour battery storage at $350/kwh. This cost is projected to drop to an average of $150/kWh by 2050. Since long-duration storage capable of a 10-day operating cycle is not commercially available and its future cost is unknown, I will use the current cost of 4-hour storage to estimate the cost of making the output of the CVOW wind farm dispatchable. The approximate 300 GWh long-duration storage requirement is equal to 300,000,000 kWh, at a storage system cost of $350/kWh, or a total cost of approximately $105 billion, or approximately 10 times the cost of the wind farm.

Storage is a passive component of the overall wind energy system. Storage must be charged with surplus electricity generated by the wind farm or elsewhere in the Dominion grid; and, it must also be recharged after each use. While this could be accomplished today using the Dominion grid’s conventional generation capacity reserve margin, charging and recharging in a renewable plus storage grid would require additional renewable generating capacity beyond the capacity required to serve the contemporaneous demand of the grid. The additional renewable generating capacity required to charge and recharge storage would be determined by the number of days allowed for charging and especially recharging storage.

 

Tags: Wind Energy

“The Thick Plottens” - ORIGINAL CONTENT

“A goal without a plan is just a wish.”, Antoine de St. Exupery

The Biden Administration has announced several goals to be achieved regarding climate change, culminating in Net Zero GHG emissions by 2050 in the US. However, the Administration has not publicly introduced plans to achieve these goals, though the elements of such plans must be in existence.

Certain elements of such plans have begun to become obvious over the past 15 months. The Administration has taken numerous actions to hamper the exploration for and production of oil and natural gas to starve the market for these commodities, including delaying or canceling lease sales and “slow walking” operating permits on existing leases. The Administration has also encouraged the financial markets to deny financing to new fossil fuel projects. The Administration is also preparing new environmental regulations intended to make oil and gas production, transmission and distribution more difficult and expensive.

These actions have resulted in an approximate doubling of fossil fuel prices. The intent of these actions and the resulting increases is to make fossil fuel use less attractive and thus make electric end-use more attractive to consumers and businesses. The most obvious manifestation of this intent is the promotion of electric vehicles of all types, including purchase incentives and federal support for the installation of EV fueling infrastructure. The Administration has actually recommended that people buy EVs to avoid increasing gasoline prices. The recent ban on imports of Russian oil will likely further increase gasoline prices, which have already doubled under the Administration.

The Administration is also actively promoting renewable electricity generation and providing continuing incentives for the construction of wind and solar generation. However, wind and solar generation represent redundant generating capacity, since they require full conventional generation backup in the absence of electric energy storage sufficient to power the grid during periods of low/no wind and solar generation. The conventional backup requirement, combined with dispatch preferences for renewables when available, increases the cost of utility electricity while disincentivizing the operation of the conventional backup generation, which operates at progressively lower capacity factors and thus higher cost per unit of power generated.

Interestingly, the proliferation of renewable generation is increasing electricity costs and thus increasing the cost of the electricity required to recharge the batteries in the EVs being promoted to avoid rising gasoline costs.

Perhaps the most interesting outcome of these Administration actions and the resulting price increases and electric grid reliability issues is the “Blame Game”, in which the Administration denies any responsibility for the results of its actions and points the “finger of blame” at the oil and gas industries and the electric utility industry.

The Administration is joined in pointing the “finger of blame” at the electric utility industry by the developers of renewable generation projects, who assert that the utilities should be responsible for extending transmission lines to their projects and also for providing sufficient electricity storage to meet grid demand during periods of low/no wind and solar generation. That position allows the renewable developers to brag about their low generating costs while blaming the utilities for the increased utility rates resulting from these transmission and storage investments.

 

Tags: Electric Power Generation, Energy Storage / Batteries, Fossil Fuel Elimination / Reduction

Navigating America’s net-zero frontier: A guide for business leaders - Highlighted Article

  • 5/19/22 at 07:00 AM

 

From: McKinsey Sustainability

By: Rory Clune, Laura Corb, Will Glazener, Kimberly Henderson, Dickon Pinner, and Daan Walter

Date: May 5, 2022


Navigating America’s net-zero frontier: A guide for business leaders


With the United States’ announcement of targets to halve US greenhouse-gas (GHG) emissions by 2030 and reach net-zero emissions by 2050, the world’s largest economy (and second-largest emitter) has joined some 130 nations in its intention to act on climate change.1 Some 400 large US-based companies have also committed to net-zero targets of their own, many of which have set ambitious emissions reductions targets for 2030 or sooner.2 In our experience, few have yet turned those pledges into detailed plans for adjusting their business models to thrive in a net-zero economy.

Creating an effective business plan for the net-zero transition won’t be easy, for uncertainty surrounds the pace and scale at which this transition will progress in America and in other countries. That uncertainty has been compounded by the conflict in Ukraine, which has increased the world’s attention to energy security, creating both tailwinds and headwinds for the energy transition. In light of this uncertainty, US companies may wish to assess the business risks and opportunities and the socioeconomic impacts associated with the transition. We believe the companies that understand these factors can better position themselves for long-term success and positive impact. Those that delay action may miss out on growth prospects that should arise as institutions in America and elsewhere strive to eliminate GHG emissions in pursuit of national and corporate targets.

This article is intended as a guide to America’s net-zero transition. It examines four topics critical for business leaders as they shape strategies for this defining decade. First, we describe America’s starting point and trace a pathway that we modeled for achieving federal net-zero targets. Next, based on this pathway, we identify five areas in which climate solutions could offer enormous potential for both emissions abatement and economic growth through 2025: renewable power, electrification, operational efficiency, clean fuels, and carbon capture. We then examine several macro trends that business leaders should anticipate. Finally, we suggest how executives might define their company’s approach to the transition. Even if the transition plays out differently from what our scenario envisions, it appears that a time of climate-focused innovation, investment, and change has arrived—and that leaders would do well to prepare for it. (continue reading)

 

Navigating America’s net-zero frontier: A guide for business leaders

 

Tags: Highlighted Article
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