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  • Dark Clouds Threaten German Clean Energy Ambitions: Global Implications [View article]

    Solar and wind are not the same thing... a clarification that seems to be needed almost every single time the subject of alternative energy comes up - by either side of advocacy.

    The solar PV market was extremely successful in Europe because the subsidies were enormous. A German friend told me that solar energy is subsidized at 20 eurocents/kWh. That's $260/MWh!, or almost exactly twice what I pay for electricity!

    But solar is an incredibly foolish choice for Germany... It's too high of a latitude, it experiences snow in the winter, it's not particularly dry... etc. The average capacity factor for German solar PV systems is less than 12%... which makes the LCOE so high that even with that $260/MWh you would still see the cost of solar being too high.

    However, my German friend told me that Germany is now expected to extend that massive subsidy for offshore wind - to boost that industry as they did solar. The implications here are incredible. While Germany is a completely lousy place to contemplate solar energy recovery, the North and Baltic Seas have some of the best wind resources in the world. Rather than a lousy 10% capacity factor, offshore wind farms might average closer to 45% cf. The LCOE for offshore wind is projected to be ~$100/MWh. If German subsidies offer $260/MWh for delivered energy, these wind farms could face more than 60% curtailment and still generate profit. The return will be enormous, and combined with excess nuclear power from France and load balancing from Norway's hydropower... Germany will be able to handle the variability quite well.

    So Germany has finally seen the light and come to understand that putting solar panels in a wet climate at 50 degrees North is kind of dumb... But that doesn't mean that they are abandoning green power. They are just choosing to invest their money in more cost effective green power.
    Jan 27, 2012. 04:32 PM | 3 Likes Like |Link to Comment
  • Understanding Manufacturing Economics For Grid-Scale Energy Storage [View article]
    The grid management of PJM is sold either in day ahead (DA) or real time (RT) markets. If I was negotiating a contract for behind-the-meter frequency regulation, I would try to pin them down to some discount from the market price (though I would choose the RT market)... so I'm not sure that references to the DA market in any way suggests a length of contract, merely the market that the price is referenced from.

    That was funny with your "friendly pointed out... bad typist and proof reader".
    Jan 25, 2012. 09:26 AM | Likes Like |Link to Comment
  • Understanding Manufacturing Economics For Grid-Scale Energy Storage [View article]
    Good piece John,

    Do you have any details of the PJM frequency regulation contracts? I wouldn't expect you to know the price points, but I was curious as to whether the length of the contracts were available. It's one thing if PJM signed a 1-year contract as a kind of bonus incentive... It's another thing if there's a solid 20-year contract assuring long term value.

    I was just wondering if any further details were allowed to be divulged.

    Also, the first line of your second chart erroneously labels power in kWh. I assume it's a typo, but you should probably correct it before some of your detractors read the article and use it as an excuse to insult you.
    Jan 24, 2012. 11:01 AM | 3 Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    It isn't a question of export or import, it's a question of trade balance and net profit from the export.

    If all you want to do is export something, simply start offering to export - to Europe, South America, and Asia - any metal we dig out of the ground at 3/4 the going price...

    That sounds stupid doesn't it? If we were to offer to Chinese some of our gold reserves at ~$1200/oz, they'd probably buy every single oz we offered... We would have EXPORTED something.

    But that would be stupid. Exports don't help, at all, if we have to subsidize 1/4 the price of the product. GM's volt is a major money-losing item. If we export that, we are flat-out giving capital away to whatever (dummy) entity chooses to buy the thing on the other side of the pond. That doesn't help us.

    Exporting at any cost isn't a smart strategy.

    If you simply generated more oil here, you'd be improving the trade balance, by importing less... the money continues to circulate here, and all is well. In a perfect world, we'd be importing the cheaply produced oil from Arabia and exporting the high-profit computer technology and HIGH PROFIT vehicles and other items made here... but we don't live in that world. But you don't gain anything by exporting stuff that you are losing money on. That doesn't help.
    Jan 23, 2012. 10:30 AM | Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    You're getting it.

    It will be decades before the price of natural gas rises to a point where synthesized methane can compete (though someone needs to tell the misguided German government), but current prices of transportation fuels make it very easy to compete and profit heavily.

    But that's the crux of the issue. If you find something that works WITH market dynamics and is profitable, then you have a rapidly scaling product that no-one objects to.

    If you have a non-competitive product that simply cannot sell without massive subsidies, then your scale-up will always be limited by government budget concerns, and you will never have a significant impact.
    Jan 23, 2012. 10:08 AM | Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    I'm not sold that natural gas will heavily displace coal. The problem is the market dynamics.

    If even 50 GW of coal plants are shifted to natural gas (at reasonable expense), there would be a rapid tightening of the natural gas market at the same time that there would be a glut in the coal market, making coal MUCH more cost effective than natural gas. Actually, even with current very-low prices for natural gas, coal is still half the cost of natural gas on a fuel/MWh generated basis, so a sudden crash in demand for coal coupled with a sudden increase in demand for natural gas could exacerbate that ratio manifold.

    The ultra-warm winter we're having will impact the price of natural gas significantly though... We had inventories of natural gas crushing the prior records moving into this winter season, and natural gas drawdown has been at a record low over the past 3 months... We may see the price of natural gas plummet by September out of a flat-out lack of storage space... so I do expect many power companies will be using more natural gas for baseload as long as the glut in stored natural gas persists... But if a large number of new natural gas plants are built to replace coal, the economics will reverse quickly.

    Coal will be with us long after both you and I are in the ground. I'm hoping that regulations and incentives will make it cleaner, but I cannot hope or believe that I will see it go away in my lifetime.
    Jan 20, 2012. 10:16 AM | Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    You asked: "What's more cost effective, a high transmission line to neighboring states, or WindFuels plants?"

    The answer is WindFuels plants, easily.

    In theory, the costs of installed transmission are ~$1/km. But a single landowner that objects could cause that price to increase significantly and bog down the project in courts for several years.

    That said, the problem will always be a matter of total penetration of wind power for a specific region. Transmission serves to increase the size of the region, but doesn't change the underlying problems of managing high penetrations of wind. You still need integration technology to go beyond ~10% penetration without significant pain - whatever size region you're talking about.

    Keep checking the link on the wind speed to get a sense of the average issue... and if you can stay up late over the weekend, watch the night-time wind speeds... That's where the action is anyway. You'll see broad uniformity and regularly high winds at night - especially in the summer.
    Jan 20, 2012. 09:49 AM | Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    You don't get it. Coal is used for baseload demand - constant, reliable, overnight demand. Wind is variable - UNreliable - nighttime demand.

    They curtail wind while the coal plants are still burning at a constant rate. Why?

    Because they cannot tamp the coal plants down and risk a sudden lull.

    If you plugged in a constant, overnight, predictable load... then the power companies would likely respond by tamping down their coal plant a little less and still curtailing the wind. It would be a difficult calculation to predict.

    The WindFuels paradigm is effective because of the ms ramp/tamp rates on the electrolyzers. Whatever the wind does, the WindFuels plant would be able to respond instantly, allowing the power company to run them full out without fear. There is a difference.

    That said, you are right that some of the energy would certainly come from wind for every EV plugged in in West TX, the OK and TX Panhandles, Northeast NM, IA, MN, ND, SD, and IL.

    I will concede that vehicles purchased within these regions will have a lower emissions profile than the Prius.

    Now, how many vehicles do you think that adds up to?
    Jan 19, 2012. 04:10 PM | 1 Like Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]
    I'm sorry that you feel that way Mike,

    But I'm much better informed on this topic, and the facts don't change just because you want them to.

    For what it's worth, I AM an environmentalist - the most strident eco-nazi I know... That's one of the biggest reasons for my objection to EV's. They pollute more than ICE's.
    Jan 19, 2012. 09:18 AM | 1 Like Like |Link to Comment
  • Why The Electric Vehicle House Of Cards Must Fall [View article]

    The money the military spends on oil is factored into the defense budget. The defense department spends a shockingly large amount on fuel as well. Recently, the Navy paid $425/gallon (yes GALLON, not bbl) to buy oil made from anaerobic "algae" (otherwise known as bacteria).

    Just because the military is doing something does not in any way indicate there is sound economic motivation for the military doing so.

    Jan 18, 2012. 03:37 PM | Likes Like |Link to Comment
  • Why The Electric Vehicle House Of Cards Must Fall [View article]

    I've heard that exact same nonsense/piffle from several EV pushers...

    When I first heard it, I exclaimed "that's the dumbest thing I've ever heard". Since some of the republican tax plans were released in this campaign cycle I can't say that any more... but that's nearly the dumbest thing I've ever heard.

    Refineries produce net generation by burning off petroleum coke - a waste product in the refining process. Most of the remaining energy within a bbl of crude other than petroleum coke is preserved within the products that are sold to market. But the coke - a waste product - produces more electricity than the refinery needs, and most refineries sell electricity to the grid.

    You desperately need to shift your source of information... The current drivel you are taking as gospel makes you look like a fool.

    The installed cost of 10,000 square miles of rooftop solar will be ~11 trillion dollars. For that, considering only ~30% of the rooftops are unobstructed south-facing or flat, we'd probably average ~6% capacity factor. Assuming 10% efficiency of the panel (fair considering the cost), you would have a total installed capacity of ~2.6 TW. So, you'd get 1.367 PWh/year for the first year, all during the daytime. Every year thereafter the generation would deteriorate. You're looking at a LCOE of ~$800-$850/MWh. I'm not interested.

    In choice locations, LCOE for industrial solar can be as low as ~$150-170/MWh, and LCOE for rooftop solar can be as low as $190-200/MWh. Let's start there, and see what happens in the next decade before doing anything really crazy.
    Jan 18, 2012. 11:01 AM | Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    We've walked through this before, so I won't bother repeating myself... but I do encourage you to review our previous conversations.

    The amount of alternative energy on the grid doesn't matter, the amount of spare capacity is the only thing that determines the marginal carbon impact of new marginal demand. Right now, for baseload needs (long-term nighttime charging), there is plenty of spare coal capacity, so coal is what will be used.
    Jan 18, 2012. 09:46 AM | 1 Like Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    As to why the wind power - in the case of Minnesota - wouldn't be sent to the Dakotas or Wisconsin... In short, some of it is. But the Dakotas have nearly the same penetration of wind that Minnesota has, and Iowa has more... Illinois has 50% nuclear energy and has over 5% wind. Wisconsin has a good deal of wind. Iowa has more than 15% wind... Montana is now over 10% wind...

    The lines just get congested.

    Contrary to the hype, generally if the winds blow in one area, the wind is also blowing 100 miles away, and 500 miles away, and 1000 miles away. Without a geological obstruction - such as a mountain range - generally a region's wind pattern is going to be very similar. So at the same time too much wind energy is generated in Minnesota, there's also too much wind energy in Iowa, North Dakota, South Dakota, Missouri, and Illinois. This excess energy is transmitted as best it can be, but as the lines get congested, the price available to the seller starts dropping. Once the absolute value of the negative price is greater than the total subsidies for wind, the wind power starts getting choked off (so an independent wind farm is getting a total of ~$50/MWh between green tags and state and federal incentives to produce carbon-neutral energy, they'll keep their turbines turning until the price dips below (-$50)/MWh, but a large producer like Xcel, who sees losses on multiple types of fossil generation as well as their wind, might start cutting some of their wind when the price dips to $5/MWh, as the money they lose on their coal power will exceed the money they gain on their subsidies... but they may have regulatory penalties if they don't produce a certain percentage of their energy from renewables, so they may choose to take the loss that night on coal to avoid bigger losses...). At that point it's just a numbers game, with each player trying to maximize profit, and in almost all cases that profit is increased when some element of curtailment is added in.
    Jan 18, 2012. 09:41 AM | 1 Like Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    Multi-day wind lulls in a class 6 wind zone are quite atypical (maybe 5-10 days/year), but during those periods there may be some coal power included within the power mix.

    However, the more important issue is what the introduction of a WindFuels plant would do for the grid at large - which is stabilize it at any wind power penetration level. That's critical. Right now almost every class 7 and class 6 wind region in America are fully saturated with wind power, and new wind is being added very slowly as more long distance transmission is brought online. The lack of grid integration technology is specifically limiting the extremely economic build-out of wind power in these regions. So, by providing grid integration, we anticipate that as much as 5 times the stated nameplate capacity of the WindFuels plant can be built out in additional wind power onto the currently saturated grid.

    This is not the same as a specious claim to additional solar power being incentivized by an EV. Some EV owners might be buying more solar, but these are aggressive environmentalists that have a lot of spare cash... they would have either invested that money in environmental companies (such as those building wind farms in the Midwest), or some other environmentally-sound usage - such as carbon offsets. Since the EV/solar panel route is one of the most expensive means of reducing pollution (on a $$/ton-CO2 basis), it's almost certain that the EV/solar panel people would have done better with a different investment. But I suspect that represents less than 10% of the EV market, the rest are just polluting more.

    With WindFuels, there is a large financial incentive/opportunity to build more wind (wind power is considerably cheaper than coal power in these regions), but without grid integration technology that opportunity cannot be realized. So adding WindFuels plants should in all cases directly result in more wind build-out.
    Jan 18, 2012. 09:22 AM | Likes Like |Link to Comment
  • Morgan Stanley's New Dance Step: The Electric Crawfish [View article]

    Cost is cost. Period.

    You don't understand the oil market very well, and that's fine - you don't have to. But even if OPEC was this evil entity just waiting to drop the price of oil (it's not)... then the cost of generating new production here doesn't change.

    The cost of generating new production is considerably less than the cost of trying to get people to buy EV's. Period. With oil production, the threat is that the oil we use will cost more than the oil we could buy, but that's true with EV's regardless, and they don't magically become cheaper if the evil OPEC people decide to drop the price of oil.

    Cost is cost. Production increases are far cheaper than EV's, and oil pollutes far less than EV's.
    Jan 18, 2012. 09:04 AM | Likes Like |Link to Comment