The Washington Post has a good article about the tough decisions that face lawmakers and renewable energy system planners regarding wildlife protection, other environmental concerns, and economic feasibility. It highlights a new transmission line, the SunZia line, that would connect New Mexico's renewable energy potential in wind and solar with Arizona's large cities' demand for electricity. The line would provide additional electricity to consumers that would prevent the need for new coal-fired plants, but its location threatens wildlife - its path is set to cross the Rio Grande, acres of grassland, and go along two national wildlife refuges.
One of the biggest challenges renewable-energy projects pose is that they often take up much more land than conventional sources, such as coal-fired power plants. A team of scientists, several of whom work for the Nature Conservancy, has written a paper that will appear in the journal PLoS One showing that it can take 300 times as much land to produce a given amount of energy from soy biodiesel as from a nuclear power plant. Regardless of the climate policy the nation adopts, the paper predicts that by 2030, energy production will occupy an additional 79,537 square miles of land.
The impact will be "substantial," said Jimmie Powell, the Nature Conservancy's national energy leader and one of the paper's co-authors. "It's important to know where the footprint is going to be."
In some cases, scientists are just beginning to discover the unintended effect of projects such as wind turbines. Grassland birds such as the lesser prairie chicken and the greater sage grouse, both of which are candidates for listing under the Endangered Species Act, appear to avoid vertical structures such as wind turbines and transmission-line towers. This is proving to be a problem in states such as Kansas, an ideal site for wind power, because as more turbines are built, lesser prairie chickens will confine themselves to narrow ranges, fragmenting a population that must be connected to survive.
The more impacts and effects that are taken into account, the harder solving these problems seems to be.
And the winner is wind! According to a study done by Mark Z. Jacobsen, a professor of civil and environmental engineering at Stanford, wind the cleanest of the "clean energy" technologies. Other winners, in order, are concentrated solar (the use of mirrors to heat a fluid), geothermal, tidal, solar photovoltaics (rooftop solar panels), wave, and hydroelectric. The losers include biofuels, nuclear, and "clean coal," which Jacobsen says are not nearly as clean as currently touted.
Not a huge surprise, but he used an apparently new method:
Jacobson has conducted the first quantitative, scientific evaluation of the proposed, major, energy-related solutions by assessing not only their potential for delivering energy for electricity and vehicles, but also their impacts on global warming, human health, energy security, water supply, space requirements, wildlife, water pollution, reliability and sustainability.
For more information, see:
The AP had an interesting article that I read in the Star Tribune on Sunday (but subsequently couldn't find online - found it elsewhere: Neighbors Clash Over Trees, Solar Power) In California, a man put up solar panels in 2001 and then sued his neighbors because their trees blocked his panels. The trees were there before the panels were erected. After a 6-year lawsuit, a judge ruled that two of the 8 redwoods would need to be removed because California has a law protecting a homeowner's right to sunlight. The Solar Shade Control Act states that a homeowner can block no more than 10% of a neighbor's solar panels between 10 am and 2 pm with shrubs or trees. This is the first conviction under the law since it was enacted 30 years ago. Fascinating. A spokeswoman for a local environmental group thinks the law may need to be reexamined to prevent similar lawsuits in the future. I can't imagine being in the same situation - I don't think I would put up solar panels if my neighbors' trees were blocking them significantly... or at least I would talk with the neighbors first!
A drive-by look at interesting news stories just now...
Governor Pawlenty signed the omnibus ag bill. Mostly. Agri News covered the bill and its broad details.
As ethanol plants come off the state subsidy, other ag programs will receive that funding, Juhnke said. The money is going toward value-added research and NextGen ethanol now.
For whatever reason, Agri News does not talk about the Governor's two line-item vetos that eliminated spending on sustainable agriculture. Fortunately, Loon Commons covered it.
Nationally, the U.S. Senate is looking to improve fuel efficiency standards in cars.
Finally, on the West Coast, California has some problems with their solar industry. The L.A. Times covered the problem on May 8.
The problem appears to be that the rebate program requires customers to enroll in a variable pricing program. The program charges more for electricity during peak times than during periods of low demand. These higher prices means that people have to build a large enough system to cover all their electricity needs during those peak hours or risk making their investment uneconomical due to the increased cost of the electricity (though less is purchased overall).
Their electricity prices are stunningly high, with peak residential charges more 3 times higher than ours. Compare that with recent claims that businesses will flee MN if the cost of electricity rises by a few cents per kilowatt-hour (claimed during committee hearings around the climate change bill). Seems to me that California remains an economic powerhouse despite its high energy prices. It also conserves far more electricity than any other state.
I'm a supporter of time-of-day pricing. I think people should understand the impact of their energy usage - if they want to use lots of electricity during high demand, they should pay extra because that usage stresses the system far more than during periods of low-medium demand. The grid has a limited capacity and increasing that capacity is costly. Perhaps we can delay investments to increase the capacity of the grid by forcing people to pay for their usage.
However, pushing more usage to low demand periods will likely increased coal-based generation. That is why I think the variable pricing system should heavily encourage renewable energy with an artificial floor. Thus, the price of electricity would not drop below $.08 per kilowatt-hour regardless of demand unless there was a lot of wind on the grid at the time. As this floor would generate excess profits, that money could be diverted into conservation funds or revolving loan programs to encourage renewable development.
Photon Consulting, based in Germany, is projecting that electricity from leading (mostly silicon) photovoltaic (PV) crystalline cells will cost around 10¢/kWh - almost equal to the average residential grid price of 9.8¢/kWh. Many sunny states already exceed the 9.8¢ average: California - 14.48 ¢/kWh, Florida- 11.21 ¢/kWh, Texas- 11.54 ¢/kWh and Nevada - 11.22 ¢/kWh.
Only problem? Cheap solar energy will continue to be a victim of its own success The report predicts that demand will continue to greatly outstrip supply. Prices will remain high until production can ramp up to global demand. Photo Consulting should know - demand for PV cells in Germany is a large component of the global silicon shortage which has seen silicon rise from $9/kg early this decade to $60/kg this year.
Good news - technologies in the pipeline will help solar power simultaneously increase production, reduce material costs and increase efficiency.
Researchers at Massey University in New Zealand figured "if it ain't broke don't fix it". If you want to harvest solar energy, use chlorophyll! Nano-engineers unveiled a titanium dioxide solar cell dyed with synthetic chlorophyll that can produce electricity at 1/10th the cost of current silicon based PVs (once commercialized).
Savings arise from cheaper production costs (the cells can be easily mass produced and titanium dioxide is plentiful) and higher efficiencies under low-light conditions. The dyes can even be used in tinted windows.
Boeing researchers are succeeding in improving efficiencies at the other end of the spectrum - concentrated light conditions equivalent to 240 suns. These cells double the efficiency of standard PVs (22% to 40%) by combining multiple layers of semiconductors with light concentrators. Their cost goal once commercialized?
8 - 10¢/kWh.
Hat tip to The Sietch blog for info on the synthetic chlorophyll solar cells.
If you are looking for ways to "green the good life," then start today, because you now have a fantastic tool at your fingertips. Green Options is a site that provides practical, personal information on ways we can all live a more efficient, healthy, and eco-friendly lifestyle. I'm blogging daily there as well, covering the national renewable energy scene.
In addition to a blog hosted by a stable of writers covering issues like green business, politics (the site is strictly nonpartisan), and Do-It-Yourself (DIY) posts, Green Options features a Green Life Guide, discussion forums, daily green news, and other tools.
We haven't even been live for a full month yet, but we're adding more tools all the time and still have more to come. In response to suggestions that we cover more geographic areas then just green living in the United States, we've added a blogger from Israel and may be adding more. And stay tuned for more practical, applicable tools coming out in the near future to help you incorporate renewable energy into your life.
The Energy Efficiency and Renewable Energy (EERE) office of the US Department of Energy is reporting today that President Bush signed Executive Order 13423 calling for increased energy efficiency in Federal Government operations and increased usage of energy from renewable sources.
Following are summaries of the directives in the order:
- Agencies must reduce their energy intensity 3% per year or by 30% by 2015 relative to their 2003 baseline.
- That at least half of mandated renewable energy use come from newer facilities. Agencies are also encouraged to work to have renewable energy sources constructed on agency property.
- Agencies must reduce their water usage intensity by 2% annually or by 16% by 2015 relative to their 2003 baseline.
- Requires increased sustainability in goods purchased and used by agencies. This includes requiring paper have at least 20% recycled content, use of bio-based products, and energy efficiency products.
- Agencies to improve waste management including increasing recycling, reducing use and disposal of toxic materials, and improved waste handling.
- Ensure that new buildings comply with the Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings. 15% of all Federal buildings are to meet these guidelines by 2015.
- The fleets reduce petroleum product usage by 2% annually and increase portion of fuel used that is non-petroleum-based (yes, it says non-petroleum instead of renewable) by 10% per year.
- Increased use of Energy Star products.
Many of the provisions listed above are mandated by the Energy Policy Act of 2005.
There is a lot of internet hype out CitizenRE, a multi-level marketing company that intends to rent solar panels to homeowners for the same price of electricity you pay to your electric company. Sounds great, right? Low or no money down and a solar system on every roof. Maybe too good…
Most interested people have either environmental intentions, economic motivations, or both. Solar electricity is your LAST priority for the environment and your bottom line. Solar is sexy, cool, and holds great promise, BUT if you weighed the costs and benefits, for the average homeowner, there are many things they should be otherwise doing - buying a more efficient car, putting in CFL lightbulbs, becoming a vegetarian, etc.
There’s always a balance between getting in on a “deal” and “too good to be true.” A deal on a car is one thing. Everyone buys a car, understands what a car does, how they’re made, where they come from, and has relatively good information about the transaction. How many people understand solar panels, how they work, are made, etc?
There is very little concrete information about this company other than “rah rah” and hype. They are recruiting salespeople through newspapers, Craigslist, and blogs. There is very little critical analysis, but here are two blogs that aren’t just sliced-bread:
EE/RE Investing (somewhat supportive of CitizenRE)
Renewable Energy Now (skeptical of CitizenRE)
I am a skeptic of CitizenRE in particular (though the business model will certainly emerge in the future). Here are the big questions:
1. Where is this 500 MW plant being built and is it under construction now? Where are they getting scarce raw silicon supplies? Why hasn’t anyone in the industry heard of this plant? Where is the money coming from?
2. Where are they developing an installer network? Will they be NABCEP certified? Why would existing dealers with their own businesses want to join this network?
3. They claim to be able to install in any state with net metering and a retail price over 7 cents/kWh. As such, they are willing to accept wildly variable profit rates - different electric companies and states have very different economic conditions. Is this realistic? Are they really doing business in every state with net metering?
4. Two companies in the US offer this same “rental” model on a commercial level (SunEdison, MMA Renewable Ventures) but only at a scale of at least 500 kilowatts or larger, i.e. over 200 times bigger than a home. This model is still emerging and developing and other large companies are considering getting into it on large installation. Why would CitizenRE have struck upon something that these companies haven’t at a size 1/200 of what is typically economical?
5. Why is there such a lack of information? Wouldn’t transparency help them answer these kinds of questions to the industry? Why has no one in the industry heard of them? Why aren’t they at solar conferences presenting their information? Why the hype and unrealistic dates and targets? (Proprietary jargon doesn’t cut it - the construction of a manufacturing plant can’t really be hidden.)
More to come as I put out feelers to some industry contacts…
The MN CERTs conference was held on Tuesday and Wednesday this week...
MN CERTs Local Energy / Local Opportunities
On January 17, 2007 the Minnesota Clean Energy Resource Teams (CERTs) held their annual conference, Local Energy/Local Opportunities, in St. Cloud. CERTs is a program that is funded by several state agencies, private foundations and the University of Minnesota. Here is a brief description of the program from the CERTs web site:
“The Clean Energy Resource Team project is your opportunity to play a role in shaping energy conservation and renewable energy implementation for your region of Minnesota. A growing number of Minnesotans envision an energy future built on using energy wisely and generating energy from local renewable resources like wind, solar, biomass, and even hydrogen from renewable sources. By relying more on community-scale renewable energy resources and energy conservation, communities can help prevent pollution and create local economic development opportunities.”
How is Wal-Mart doing, one year after initiating energy efficiency programs? (link to article on sustainablog) It has learned some interesting lessons and appears to be committed rather than attempting to greenwash.
Already, some of the experimental technologies are proving to be successful. LED lights installed in exterior signs and grocery-, freezer-, and jewelry- cases use less electricity, contribute less heat and have a longer lifespan. Wal-Mart has been using LED lights for all building-mounted exterior lit signs for the last two years and now after 16 months of testing in the experimental stores, Wal-Mart has decided to integrate these lights into freezer cases in new Wal-Mart and Sam’s Club stores nationwide beginning in January 2007. Other energy efficient lighting opportunities continue to be monitored at the experimental stores.
In a different sustainablog post, it notes that Wal-mart has a "'request for proposals' (RFP) for solar power generating systems for some stores in California, Colorado, Connecticut, Hawaii, and New Jersey."
I have to wonder about choosing those particular states. The only common denominator between them in my limited knowledge is that they all have strong policies to encourage PV investment. Regardless of where it invests, it could seriously boost the PV market.
The confidential RFP document, which I recently reviewed, is part of the company's stated commitment "to reduce our overall greenhouse gas emissions by 20 percent over the next eight years" and to "design a store that will use 30% less energy and produce 30% fewer greenhouse gas emissions than our 2005 design within the next 3 years," according to the RFP.
He goes on to comment:
What's the impact of all this? Wal-Mart doesn't mention a specific purchase size, but my sources tell me that the company could put solar on as many as 340 stores in the next few years. Assuming that each store utilized about 300 kilowatts of solar panels (it could be as much as 500 kilowatts), we're talking roughly 100 megawatts of solar. To put that into perspective, the solar system currently being installed at Google headquarters in California -- the largest single corporate solar installation in history -- is 1.6 MW, about 1/60th the size.
Of course, it's unclear whether Wal-Mart will install solar in all of those locations. The company could look at the bidders' numbers and decide to install solar at only a handful of stores -- or none at all.
I have to assume that Wal-Mart will not dive too deeply into solar. It is too expensive for a company made famous by fiscally conversative focus.
Wal-Mart is really working both ends of the energy spectrum though - from generating renewably to encouraging its users to become more efficient. WCCO recently did a segment on Wal-Mart and its push for compact fluorescent lights, as did the NY Times. The following is from the NYT.
At the same time that it pressured suppliers, Wal-Mart began testing ways to better market the bulbs. In the past, Wal-Mart had sold them on the bottom shelf of the lighting aisle, so that shoppers had to bend down. In tests that started in February, it gave the lights prime real estate at eye level. Sales soared.
To show customers how versatile the bulbs could be, Wal-Mart began displaying them inside the lamps and hanging fans for sale in its stores. Sales nudged up further.
To explain the benefits of the energy-efficient bulbs, the retailer placed an education display case at the end of the aisle, where it occupied four feet of valuable selling space — an extravagance at Wal-Mart. Sales climbed even higher.
In August 2006, the chain sold 3.94 million, nearly twice the 1.65 million it sold in August 2005, according to a person briefed on the numbers.
But to reach 100 million, Wal-Mart has to do much more — and that, executives concede, is where the biggest challenges rest. In the fall, the company began reaching out to competing retailers, Internet companies and even filmmakers.
The goal was to turn its sales campaign into a broader cultural movement.
We need to keep an eye on Wal-Mart. These energy-saving moves are great but cannot make up for the downsides to Wal-Mart in terms of how it treats its employees. I think Joel Makower put it best in his post:
It's far from a done deal, and there are significant hurdles to overcome. Not the least of these will be to accommodate Wal-Mart's voracious appetite for renewables as well as its legendary cost-cutting pressure. The company's opportunity is to help bring the price of solar down to earth. The challenge will be to do it in a way that doesn't negatively exploit its suppliers, or those that toil for them.
I tend to be pretty critical of solar PV because the economics are so bad relative to other sources of electricity. But this chart made me think that I'm missing something.
Solar production would seem to be at its max just when retail electricity is the most expensive - those two really tall columns in July and August. I can actually see a path forward to solar PV.
A few things would have to happen for this to work out. 1) People would have to know what they were paying for electricity at any given time (the premise of the article); 2) The cost of PV would still need to come down a bit. Still, more promising that I would have thought.
The Network for New Energy Choice recently issued a report, "Freeing the Grid" (PDF) on state-level net metering policies, ranking them according to a grading criteria. Minnesota ranked 6th nationally, getting an "A" grade.
While it's a generally interesting report, and a good primer. Generally speaking, utilities hate net metering because, like energy efficiency, it reduces their electricity sales, which are tied to revenues and profits. Coops hate it, not because of loss of profits, but because of a cross-customer subsidy from non-participating customers to the net metering ones. Only one state (California) has decoupled sales and profits, which makes net metering a zero-interest game for them.
Regarding the report, I have two problems with it:
1. On p55 they have this to say about Minnesota, net metering, and RECs:
"Customer-generators retain ownership of all the renewable-energy credits (RECs) associated with renewable generation used to meet their on-site demand. Utilities
purchase any RECs that adhere to NEG purchased from customer-generators."
To my knowledge this is not true. Minnesota requires all IOUs and Coops to use a standard state contract under MN Rule 7835, which doesn't mention RECs (because they weren't invented in the 1980s when the contract was written). FERC ruled that states should decide on who owns them when contracts are silent, and to my knowledge, the MN PUC hasn't ruled one way or another.
2. The scoring system muddies incentive programs and net metering policies. A significant amount of the "score" is based on the percentage growth and number of net metered locations in the state. NJ and CA may very well have good net metering policies, but the growth in number is less a function of the good policy as much as it is a good solar rebate and/or high electricity prices that make net metering more attractive. Data for 2006 after the 30% solar federal tax credit will result in a lot of percentage growth in a lot of states that has nothing to do with net metering.
I attended the Renewable Energy Workshop today sponsored by the U of MN Electrical Engineering Department. As expected, it was largely technology-focused, with some general discussions of the challenges facing renewable energy here and elsewhere. (And a good buffet style lunch). Here a few salient points of the talks I attended.
A Power Grid for the Hydrogen Economy - Thomas Overbye, U of Illinois
The speaker talked about his research into superconducting transmission lines. The idea behind the project is to supplement our existing grid with a network of underground high voltage DC transmission lines made with superconducting material. The benefit of using superconductors is that the current density can be much higher, so fewer transmission lines have to be built. Line losses would also be minimized.
Each line would consist of a superconducting core for carrying the electricity with an outer ring of liquid hydrogen, which would act both as a coolant and an energy storage mechanism. During times of low electricity demand, excess electricity from renewable sources would be used to create the hydrogen via electrolysis.
Though such a grid is technically feasible, cost is a major issue, though the speaker was quick to note that anything transmission related is expensive. He quoted a figure of roughly $2.5 million per mile to install these cables. Water scarcity may also be an issue in some places.
Lessons from Norway - an unlisted speaker, didn't get his name
(A grad student actually did this talk in place of his professor, who was scheduled to speak but couldn't make it.)
This talk mainly focused on the challenges facing Norway in meeting its future electrical demand and making use of its vast renewable energy potential (enough to supply twice that of its current annual consumption.) Currently, 99% of Norway's generation comes from low cost hydropower. However, similar to here, demand is outpacing supply. More supply will have to be brought on in coming years.
I was struck by how similar the challenges facing renewable energy are to here - public resistance (in the case of wind), cost (wind energy is still more significantly more expensive than hydropower), and political uncertainty (will subsidies continue?) Norway is also facing transmission limitations, just like here.Especially of note is that public resistance to wind energy projects has increased in recent years, for all the typical reasons - avian mishaps, other wildlife impacts, and aesthetics.
Planning for Renewable Energy at a MN Utility - Glen Skarbakka, Mgr of Resource Planning, Great River Energy
The speaker talked about the challenges of meeting GRE's rapidly growing load (about 100 MW/year) while incorporating renewables. GRE's load is mostly residential, meaning that demand goes way up in the summer, but varies a lot day to day, depending on weather. This makes it a challenge to use wind energy, which is not dispatchable in the traditional sense (though forecasting has gotten highly accurate.)
I was mostly impressed by GRE's goals to reduce its CO2 emissions to 2000 levels by 2020, as well as doubling its renewable objective of 10%. The speaker admitted that meeting the first will be extremely challenging, to say the least.
Wind Energy - Present Projects and Potential in Minnesota - John Dunlop, American Wind Energy Association
The speaker talked about how wind turbine technology has advanced over the last 20 years and how wind energy continues to grow rapidly in the US and elsewhere. He also provided a nice summary of the recent situation with the Dept of Defense blocking new wind farms due to concerns over radar. The report finally came out on Sept. 27, 143 days late. It didn't really say anything that could not have been written in one day - only that wind farms can interfere with radar. It didn't offer any mitigation measures to help current or future projects move forward. Sounded like a great use of taxpayer dollars.
Update on CapX 2020 - Terry Grove, GRE
The CapX project is an ongoing transmission planning project involving all major utiltiies in Minnesota, planning transmission needs through 2020. I already knew how long this process takes, but the uninitiatied would probably be shocked. Though, there are good reasons it takes this long. The Certificate of Need process for the first group of lines, mainly to improve reliability, alone will take through 2008. Then route permits have to be aquired, which will take through 2010. During this time, lots of meetings are held with city governments, landowners, and other agencies. The proposed Brookings -SE Minnesota line alone will require that 200,000 landowners be notified. This is just a massive undertaking.
From what I've heard, the last round of tranmission construction was an extremely drawn out and painful process. It will be even worse this time around, due to the industry restructuring that has occured since then. Now, independent power producers can bid in new projects to the MISO queue. Most of these projects fail to get off the ground, since banks won't supply the financing until a power purchase agreement is signed - a chicken and egg problem - meaning that planners don't know where new generation will actually be.
Results of Research Funded by NSF, Xcel Energy, and ONR - Ned Mohan, Electrical Engineering, U of MN
Ned gave an overview of renewable energy-related research in the EE department, then talked mainly about a matrix converter his research team developed. The converter can be used with any variable speed generator, including wind turbines and will boost power output by 1.5X of nameplate ratings. This would also eliminate the problem of bearing currents in typical motors, which eventually destroy the bearing and represent a major maintenance headache. Ned also talked about the benefits of using silicon carbide (SiC) in power electronics, which improves device performance by 10-100 times over plain silicon (Si). The cost of SiC continues to fall, making the use of this material more feasible.
When one has made a decision to kill a person, even if it will be very difficult to succeed by advancing straight ahead, it will not do to think about doing it in a long, roundabout way. One's heart may slacken, he may miss his chance, and by and large there will be no success. The Way of the Samurai is one of immediacy, and it is best to dash in headlong.
-Ghost Dog: The Way of the Samurai
So Al Gore’s speech at NYU on September 18 got me thinking about Distributed Generation. For those who haven’t read it yet, an archived webcast and the full text can be found here.
It was a terrific speech, by the way, and I could occupy a lot of space praising it, but that wouldn’t be very interesting. After all, you probably liked it too. But it was one issue that got me thinking, and which gave the impetus for this post. What I really want to talk about today is Distributed Generation, or DG. Gore gave voice to some ideas that are very widespread among left-leaning energy advocates, and many of those ideas deserve closer consideration.
I’m using this post to flesh out some of my critiques of the idea of Distributed Generation. Fundamentally, in reference to the quote above, I think DG advocates are setting out to solve the wrong problem. Our problem is not large-station electricity generation, our problem is climate change and energy security. Its my feeling that in dealing with climate change we are likely to deploy carbon-neutral energy technologies using the same large station (or refinery) production and distribution model that we use right now.
Wikipedia describes DG thus:
Distributed generation is a new trend in the generation of heat and electrical power. The Distributed Energy Resources (DER) concept permits "consumers" who are generating heat or electricity for their own needs (like in hydrogen stations and microgeneration) to send surplus electrical power back into the power grid - also known as net metering - or share excess heat via a distributed heating grid.
Here’s what Gore says on the subject.
Today, our nation faces threats very different from those we countered during the Cold War. We worry today that terrorists might try to inflict great damage on America’s energy infrastructure by attacking a single vulnerable part of the oil distribution or electricity distribution network. So, taking a page from the early pioneers of ARPANET, we should develop a distributed electricity and liquid fuels distribution network that is less dependent on large coal-fired generating plants and vulnerable oil ports and refineries.
So the main point of DG is that we rely more and more on homes and businesses producing their own electricity, and possibly selling electricity onto the grid and less and less on large station power generation (how we, by and large, do things now). Gore extends DG to include distributed (presumably somewhat larger scale) biofuels production as well. The main arguments are security (Gore’s argument), greater energy efficiency through the use of combined heat and power, and economic/self-reliance benefits (producing your own power, yeah!).
I think a lot of DG advocates miss some glaring problems.
DG and Economies of Scale
One problem with DG is that it would rely on small-scale power generation. This is actually put forward as one of the main BENEFITS of DG by many advocates. What these advocates miss is that the economics of energy production are absolutely dominated by economies of scale.
Let’s use wind as an example. A 1MW turbine produces cheaper electricity than a 200 KW turbine. And a large scale project produces cheaper electricity than a small scale project. The reasons for this are fairly intuitive. There are a lot of fixed costs that must be paid whether you’re building a large project or a small project – feasibility studies, wind measurement, planning, running around securing financing and power purchase agreements, paying to secure all of the cement manufacturing capacity in your county to pour the bases for the towers, etc. A larger project produces more kWhs, and the fixed costs can be divided over more kWhs, making the levelized cost of power cheaper.
But if you don’t believe me, you can use NREL’s online Wind Energy Finance Calculator.
To prove my point, I calculated the real levelized cost of energy for a 500 kW project (small), and for a 100 MW project (200 times bigger). I used all of the default assumptions, and only changed the size of the project.
Small (500 kW) real LCOE – 64 cents/kWh
Large (100 MW) real LCOE – 1.29 cents/kWh
So the electricity from the small-scale project is about 60 times more expensive, give or take. Its also about 6 times more expensive than retail grid electricity at about 7 cents/kWh. So in asking people to adopt small-scale distributed wind, we’re asking them to pay a LOT more for electricity than they would pay for grid electricity. Note also that, according to this calculator, a large scale project sells electricity that’s probably cheaper than even WHOLESALE electricity.
Economies of scale differ for various energy technologies, but are almost always a factor. The optimal size for pulverized coal plants, for example, is on the order of 1000 MW or larger. Gas turbines burning natural gas or fuel oil have low capital cost, and are therefore more economical at small scale. But because the levelized cost is more expensive then large station power, and they can be quickly ramped up and down, they are typically used only for peaking power.
Solar power is also cheaper at scale. Home or business scale photovoltaic panels produce electricity at around 20 cents/kWh (around 3 times higher than retail electricity). Only large-scale concentrating solar can produce electricity at anywhere near retail rates.
I could go on and on. The fact is that I can’t point to a DG technology that delivers electricity at a rate that is cheaper than, or even close to, the cost of grid power.
Economies of scale aren’t going away. If we have a limited amount of money to spend, as a society, on dealing with climate solutions, the cost of individual solutions must be a factor. Until we see the new cheap solar panels or fuel cells that we constantly hear are 6 months away (how’s that for a “Friedman”?) may not be able to afford the deployment of DG on a large scale.
Giving Up our Great Renewable Energy Resources
Another damning aspect of DG is that it may mean giving up most of our greatest renewable energy resources. Renewable energy resources like wind, solar, and biomass are not uniformly abundant around the nation. And, unfortunately, many of the best resources fall far from population centers. To stick with the wind example, taking advantage of the vast wind resource of the Great Plains likely means building large transmission lines connecting the wind resource with the potential users of that wind energy (or building large hydrogen pipelines, or building infrastructure for some other energy carrier).
This is true for biomass as well. In urban areas, where most energy is used and most people live, there are serious limits on the potential biomass supply. Take the Twin Cities as an example. There is a famous district heat project in St. Paul (District Energy) that has recently switched from coal to biomass as an energy source. Other projects are being planning, including Rock Ten and the south Minneapolis project formerly run by the Green Institute. Those projects are reportedly having great challenges in finding a sufficient supply of biomass because District Energy has secured much of the available supply of urban wood trimmings and the like. So we’re reaching the limited of the DG biomass potential in the Twin Cities, and supplying only a small fraction of the metro area’s biomass needs.
Utilizing the country’s biomass supply on a large scale probably means having projects in rural areas – with cheap land, fertile soil, and lots of biomass, and transporting products like cellulosic ethanol to demand centers. This will likely be wonderful for rural areas, but its not DG.
Solar energy may one day be an exception to this, but right now economics and the efficiency of panels stand in the way.
My point is not to argue that DG shouldn't be done. I think there are many niche applications for DG. In rural areas and small rural communities, for example, there will be applications for Distributed Generation from renewables, possible in combination with combined heat and power. I know some people who are very excited about their rooftop solar panels, and they don't really care that they're paying a lot for the electricity. I also think that there are credible scenarios under which DG could play a larger role in our energy system, provided there are some really fundamental technological innovations. I think that the vision of mass-produced, highly efficient, renewable DG technology, similar to Personal Computers, is pretty exciting to contemplate. But lets not fool ourselves. This kind of thing is a ways off, whereas there are a variety of large-scale carbon-neutral technologies that are commercial or near commercial and could be deployed over a relatively short time frame.
There are many energy advocates who feel that large station electricity generation is bad by its very nature. There are some who offer DG as an alternative, and even use the DG alternative as a rationale for fighting new transmission and new large energy projects. In the MN legislature last year there was infighting between those who wanted only community, small-scale wind development and those who wanted 20% renewable energy standard which would require a lot of large-scale projects.
All that said, I think that macro-scale analysis of power generation technologies, resources, and demands, will reveal that DG is likely to play a small role in the near term. DG can't be used as an excuse to fight large carbon neutral energy projects.
I welcome comments, and hope this starts some discussion.