By Edmund Kelly
This article in next big future highlights the rapid advances in large scale desalination deployment that Israel has led over the last decade. Israel, a country of 8 million people, has gone from a precarious water supply situation to a position today where 50% of its water supply is from desalination and by 2020 it will be 70%. Fortuitously for Israel this has occurred while the Middle East is in the middle of a multi year drought which would otherwise have had a serious economic impact, as has occurred elsewhere in the Middle East. As this recent paper illustrates in detail, reverse osmosis (RO) desalination has been steadily improving and is being deployed on an increasingly large scale worldwide, not just in Israel. The Israeli company IDE is selling water from the latest plant at Sorek for 58 cents a cubic meter. That is about $690/acre-foot, or less than much of the water purchased in California, some of which costs as much as $1,200/acre-foot. As the paper illustrates there are strong prospects for further cost reduction. Reverse osmosis currently consumes about 3kWh of electricity to produce a cubic meter of water. At $0.06/kWh that is $0.18/m3 or about one third of the cost. Providing the energy for desalination from a cheap and sustainable, high utilization source would alleviate a major environmental concern that limits a broader acceptability of desalination, particularly in California. Currently wind and solar alternative energy sources are expensive and worse, have a low utilization. The low utilization means desalination plants would have an equally low utilization. The combination of high cost and low utilization makes desalination powered by current intermittent alternative energy multiple times the cost from fossil fuels. The StratoSolar solution of high utilization PV combined with gravity energy storage provides a cheap, high utilization, clean sustainable source of energy for desalination. Its lower cost over time will help further reduce the cost of clean water. The continuous cost reduction learning curve of RO desalination combined with StratoSolar electricity would reduce water costs to around $0.20/m3 ($230/acre-foot) by the early 2020s. This would make desalination the cheapest and most environmentally friendly source of water, potentially reducing some of the environmental impacts of the current exploitation of natural clean water sources.
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By Edmund Kelly A complete renewable energy solution requires the attributes of dispatch-ability and reliability of fossil fuel power plants at a lower cost of generation. PV panels have come down rapidly in price in recent years creating a wave of optimism for PV. A realistic analysis projects further price drops over time, but not at the recent precipitous rate of decline. Current PV price levels still need subsidy in all markets to generate electricity competitive with that from fossil fuels. Also PV is an unreliable and intermittent source of electricity that requires backup fossil fuel generation (or excess capacity and distribution) to handle unpredictable long duration weather outages and daily energy storage for nighttime generation. Currently there is no viable large scale energy storage solution other than pumped hydro. To provide renewable energy for less than fossil fuels, the combined cost of PV generation, backup generation and energy storage generation have to be less than the cost of generation from fossil fuels.
StratoSolar is a system solution that directly attacks all the problems of PV generation and transforms PV into a real, disruptive and transformative lower cost renewable energy solution.
StratoSolar is a combination of tried and true PV technology with a new unproven high altitude buoyant tethered platform technology. The risk is concentrated on the new technology of the buoyant tethered platform. Viability depends on whether buoyant tethered platforms can be built, deployed and not damaged or destroyed by environmental hazards over the 30 plus year lifetime of the power plant. Other risks are whether the predicted capital costs are achievable and possible regulatory impediments from the FAA and local authorities. The new buoyant tethered platforms are really novel structural engineering towers. Large scale structural engineering is a well established engineering discipline. Building the first of a new class of large scale structural engineering projects could be compared with other once novel large structural engineering projects, like steel framed skyscrapers, concrete dams, oil production platforms or steel suspension bridges. This class of project always initially stretch human credibility but actually rarely fail because the structural engineering discipline is very robust. The same reasoning applies to StratoSolar platforms. By Edmund Kelly
There was a recent article in IEEE Spectrum that explained why Google halted an energy research effort called RE<C (Renewable Energy less than Coal). It prompted this critical analysis by Joe Romm. Its rare to see this perspective on clean energy discussed in any detail, so I was pleasantly surprised to see two articles on this topic. Between them they explained two positions that have much in common but differ in important ways. The Google engineers discussed how they had started with the goal of renewable energy less than coal and after several years of effort came to the conclusion that current technologies were not going to achieve that goal. In large part this realization came from the understanding that the problem was far larger than they had initially understood. Google halted their efforts in 2011. Google invests heavily in alternative energy deployment and in its operations is very focused on reducing energy, so halting RE<C was in no way a vote against clean energy or dealing with climate change. Joe tried to paint the Goggle engineers as confused and misguided. Joe is a strong advocate for the status quo opinion on how to deal with climate change. Basically that position is; what we have with current wind and solar is good enough and what is needed is policy change, preferably a carbon tax. This tax will somehow magically cause fossil fuels to decline and alternative energy to prosper. Joe does not see RE<C as a necessary or desirable condition for dealing with climate change. At its core this is a view that politics can dominate the large scale economics of energy. When Joe discusses the problems with nuclear power he is happy to use the facts of nuclear costs to counter the optimistic promises of nuclear advocates. In contrast when Joe discusses energy policy he uses the optimistic promises of carbon taxes rather that the facts of decades of failure to get agreement on such policies and the overwhelming evidence that such policies are unlikely to ever be approved at a global level. On top of that there is no clear evidence that such taxes will have the desired consequences. Developing nations, where most new energy consumption is concentrated see higher cost energy as a threat to their development. The central debate is simple. Some (including Bill Gates) see RE<C as a necessary condition for the world to deal with climate change. This opinion is guided by the facts on the ground and the central importance of economics in decision making. Joe and the status quo clean energy consensus he represents see economics as secondary to policy, and believe that advocacy will achieve policy change and policy change will lead to the demise of fossil fuels and the rise of clean energy. StratoSolar is a solution to RE<C. As Joe makes clear, the clean energy status quo does not believe that such solutions can exist and that they are not necessary. Unfortunately this perspective is self fulfilling in ensuring no such solution sees the light of day. By Edmund Kelly By Edmund Kelly
This article provides more evidence that the optimistic hopes for rapid growth in world PV installations seem to finally be running up against the economic and practical constraints. China in 2014 is a good example. China's PV goal for 2014 was 14 GW. It now appears actual installations will be about 10 GW (as was predicted earlier). In 2013 the bulk of PV installations in China were large utility scale. In 2014 they wanted to move the bulk to rooftop installations. This was motivated by growing electricity transmission bottlenecks. Rooftop installations don't need new transmission but take longer and are considerably more expensive than large installations. So China was caught between a rock and a hard place. Utility systems mean building lots of expensive long distance transmission that takes years and has political opposition. Rooftop PV is more expensive and less efficient and is also relatively slow to install. Neither option could meet the 14 GW goal. The projections for next year are also for 10 GW. That would be three years in a row at about 10 GW. This just adds one more piece of evidence to the case that none of today's carbon free energy technologies are practical or economically viable alternatives to fossil fuels. This includes wind, solar, hydro, bio and nuclear. All require government support to survive and governments cannot afford to support any or all of them at the significantly higher level needed to displace fossil fuels. The advocates of each technology are happy to take government subsidies and keep tilting at windmills as long as government keeps providing the subsidies. There are attempts at advanced versions of wind, solar and nuclear, but investment levels are miniscule. We are spending over $250B on installing clean technologies that cannot succeed, but investing a tiny fraction of that on R&D for technologies that might succeed. This is especially true for system solutions like Nuclear or large Solar. In part its because government is bad at and should not be involved in picking winners. Finding a structure to finance large scale energy R&D has proved elusive. It would take venture investments at a considerably larger scale than current venture capital funds can support. For a portfolio approach to work a fund would need maybe $100B to invest in maybe 100 ventures over maybe a decade. Given the scale of energy, one success would be enough. Clean energy investment likely to get limited support from growth of subsidies going forward11/23/2014 By Edmund Kelly World Renewable Energy Subsidies projected to grow from $110B in 2013 to $230B in 2030. Its interesting how the same information can be seen with very different perspectives. This article takes a positive spin, but growing from $110B to $230B in 15 years only represents a 5% annual growth rate. It is also very rare for articles to use the word subsidy. The word that is usually used is Policy. From the graph below, 2013 clean energy investment was $254B, of which PV accounted for about $110B. Subsidies were 110/254 or 43%. At 43% coverage, $230B of subsidies in 2030 will cover about $535B of clean energy investment. This 43% seems reasonable, as reducing costs for wind and solar generation will be offset by growing subsidies for energy storage and offshore wind costs. Numbers are numbing. These numbers seem large, but will only build a small amount of clean energy supply relative to what is needed to replace fossil fuels. The graph shows that clean energy investment has been in decline. The declines in 2012 and 2013 were due to diminishing subsidies. Reduction of one time American stimulus funds and the reduced FIT subsidies in Europe. China, and Japan have dramatically increased subsidies recently which seems to have stopped the decline. 2014 is predicted to about match 2013 at about $250B.
Given the general stabilization in investment since 2009 and the strong dependence on the amount of subsidy, to predict high growth means predicting higher levels of subsidy. US subsidies will almost certainly decline in 2016. Europe's recession, Japan's recession, and China's slowdown don’t bode well for increased subsidies. The projected 5% annual growth in subsidy and by inference in clean energy investment seems realistic when taken in perspective. This is not a path to reducing fossil fuel consumption. By Edmund Kelly This report titled “Beyond Boom and Bust” , was published in April 2012 and I commented on it in this blog post. It was the work of several bodies and individuals, including the Brookings Institute. It argued that US clean energy policy was producing boom and bust cycles, but making no progress in reducing atmospheric CO2. They advocated a more results driven “technology led” policy. The recent EPIA report on PV market outlook for 2014 to 2018 had an interesting section that described the recent behavior of the PV market in Europe as a series of unsynchronized national boom and busts that were hidden by looking at the overall European market statistics. To quote from page 31: PV seems to have always and everywhere followed a path of governments introducing subsidies, investors responding enthusiastically producing a rapid growth boom. Governments then belatedly see the costs mount and reduce subsidies, causing a market bust. Then investor confidence is broken and difficult to restore. Europe has few countries that have not gone through this cycle. Europe has gone from being the biggest PV market to number three or four, with little sign of a likely recovery.
The recent US rapid PV growth is driven by US subsidies enabling profitable investment in PV. The expiration of the Investment Tax Credit in 2016 will burst this bubble, just like all the rest. The governments in Japan and China are early in the subsidy cycle so the boom phase is only building up. In a year or two the costs will be un-sustainable and the bust will inevitably follow. All of this makes it virtually impossible for PV to reduce in cost. Low and unpredictable PV market growth will not encourage investment in newer plant and equipment that can reduce costs. At current cost levels PV market cannot grow without more subsidies. As the boom and bust cycles clearly illustrate, more subsidy is unlikely to be forthcoming. As the “Beyond Boom and Bust” report argued, current US clean energy subsidy policies are not succeeding. They only considered the US, but as we can see, the problem is worldwide. Perhaps it is time to consider the “technology led” policy reforms they advocated. By Edmund Kelly If we focus on new electricity generation capacity worldwide a pattern emerges that somewhat explains the lack of progress on reducing CO2 emissions. New electricity generation investment is about $400B/y, $200B/y in wind and solar and $200B/y in coal, gas, nuclear and hydro. Another $300B/y is invested worldwide in electricity transmission and distribution.
Looking at how the investment is apportioned between countries, a convenient division is between OECD and non OECD. This is a pretty accurate division between developed nations and developing nations. Developed nations have a relatively low growth in overall electricity capacity, with most new generation replacing old generation. Developing nations are growing their overall electricity generation capacity at a rapid rate to balance their rapid GDP growth. Interestingly, from a dollar perspective OECD and non OECD spend about the same on wind and solar, about $100B/y. Developing nations spend most of the $200B/y that is spent on coal, gas, nuclear and hydro, over 66%. They also spend most of the investment for transmission and distribution, about 66% or $200B/y. Because of the rapid pace and large scale of development, developing countries follow a well proven path of investing in low risk, proven, safe, and cheap technologies. Developing countries account for the bulk of investment in electricity infrastructure: about $450B/y (200 T&D + 150 G + 100 A)of the $700B/y. (T&D is transmission and Distribution, G is conventional Generation and A is Alternative generation) All of the OECD invests about $250B/y (100T&D +50G + 100A). In the OECD, wind and solar investment exceeds other generation by a significant margin, but in the non OECD the ratio is reversed. We are at point where PV is still too expensive to compete without subsidies. So what do Europe and America do? Introduce tariffs to protect domestic producers from Chinese imports. This protection supports already inefficient subsidized industries. What is the incentive to reduce costs through innovation when profits are guaranteed and competition is blocked? PV at current price levels will not become a significant enough producer of energy to have any affect on reducing CO2 emissions. Perhaps rising PV prices will break the cycle of over optimism about PV and get some focus on investments that might lead to competitive, clean, sustainable sources of electricity. Investors in Solar projects in the US and Europe think it burnishes their image as responsible planet aware companies when all they are really doing is partaking in corporate welfare on a grand scale. Public funds are subsidizing half the costs of private PV investment and guaranteeing large profits. Their actions prop up inefficient PV industries who rely on subsidies and now protective tariffs. There is little incentive to lower cost to where the PV business can grow without subsidies and perhaps help reducing CO2 emissions. Solar investors are reinforcing the equivalent of fiddling while Rome burns. The developing world (non OECD) is on a path to a high energy future based on fossil fuels. It is simply the affordable path and as such the only viable path out of poverty. Most of the of the doubling of world energy consumption by 2050 is projected to come from the developing world, by which time it will consume more energy than the developed world.
The developed world (OECD) is already high energy and despite much weeping and gnashing of teeth, is projected to continue burning more fossil fuels at current rates into the foreseeable future. Interestingly, the world already spends about $200B/y on alternative energy generation, over half its $400B/y overall investment in new electricity generation. This is divided roughly equally between the OECD and non-OECD countries. This is an objective measure of the considerable amount the world is collectively currently willing and able to pay for fossil fuel free energy. Unfortunately this currently only buys about 17GW average generation, or about 1% of world electricity generation, or about 0.1% of world primary energy. This is insufficient to reduce CO2 emissions which are projected to rise every year into the foreseeable future. The level needed to be on a path to reduce CO2 emissions is 500GW to 1TW average new clean generation every year. This is twenty to fifty times current levels. This highlights the patently obvious but constantly ignored fundamental nature of the problem. To paraphrase James Carville “Its the economics, stupid.” This succinct phrase gets to the heart of political reality. No matter if the energy problem is seen as climate change, energy security, resource depletion or poverty, the real problem is the economics. Energy is just too big a part of the world economy for it not to be so. Significantly increasing the cost of energy by replacing fossil fuels with current high cost wind, solar and nuclear will never be politically acceptable. So we are at an impasse. The current technologies lead to policy proposals that are politically unacceptable and a very polarized debate that can never succeed in forming a consensus. The politically viable solution to this economic problem is new sources of clean sustainable energy at lower cost than fossil fuel energy. Unfortunately the current energy policy consensus is frozen like a deer in the headlights. The common wisdom is no such present or near future low cost technology exists and the need for immediate action means we should find ways to finance more of current high cost technologies. Unfortunately this policy approach violates the first law of politics and as such has failed and is doomed to continue to fail. Breaking the impasse needs fresh thinking to get more options on the table. The consensus that there is no possible low cost energy alternatives is a self fulfilling prophecy if it leads to no attempt to search for such solutions. Policy proposals tend to be broad and vague. Here is an explicit proposal that is not meant to compete with the status quo. Relative to world energy investment of about $1.6T/y, $10B/y seems an affordable amount to spend on energy R&D focused exclusively on high risk, clean electricity generation, power plant solutions. This is not basic research and it is not government R&D. A model is Space-X. Space-X is a private company focused on a product and works on fixed price contracts with fixed deliverables. Its like venture funding. Say The US, Europe, and China each established $3B/y venture funds to fund high risk energy development companies. By high risk, I mean high risk. Already, despite starvation levels of investment, some such companies exist. There are several fusion energy companies. There are several companies focused on sustainable fission of Thorium and U238. There are high altitude wind companies, wind on the ocean, solar in space, the desert, and the stratosphere. Funding these and others to start with would bring out a lot more. Companies would start at say $10M/y or more depending on their current stage of development. Funding would be for fixed deliverables and if on successful paths a few would get to say $500M/y, keeping the average at around 100 companies at $100M/y. This portfolio approach would lead to exploring many approaches and the probability of significant advances in less than five years. One significant success is all that is needed. Its not inconceivable that private equity would eventually join the party, and share the risks and rewards. By Edmund Kelly This chart visually illustrates the economics of energy discussed in the previous post. The left column shows all major energy segments. The middle column expands the energy investment segment and the right column expands the power generation investment segment. The numbers in each segment are Trillions of dollars. Its interesting that Solar is the biggest segment of power generation investment but it provides the lowest average power, a testament to the political power of renewable energy.
By Edmund Kelly Looking at the money, for 2013, world GDP was $72T, of which energy was $6T, or about 8% of GDP. That $6T can be thought of as the income of the overall energy industry. This income balances with industry profit, investment and O&M. From IEA data the energy industry investment part was about $1.5T, of which about $0.8T was in oil and natural gas infrastructure, $0.4T was investment in electricity generation and $0.3T was investment on electricity transmission and distribution.
From Bloomberg data, investment in wind and solar generation in 2013 was about $200B, with additional clean tech investment of about $50B on smart grid, biomass and bio fuels. Some of the investment in transmission and distribution is to integrate wind and solar and some smart grid spending is also related to wind and solar integration. So current investment in clean energy generation is over half of all investment in electricity generation . I have to admit I found this surprising. I always see alternative energy as the underdog, not the biggest player. That $200B bought about 45GW ($82B) of nameplate wind and about 35GW ($114B) of nameplate solar. Using average generation as the metric, conventional power plant capacity runs on average at about 50% utilization worldwide, so the world’s almost 6TW installed capacity generates an average 3TW of power. The 45GW of new wind generates an average of about 12GW and the 35GW of new solar generates an average of about 5GW, for a total of about 17GW of new average generation. That's 17/3000 or about 0.5% of current average electricity generation. The other $200B bought about 140GW of coal, gas, hydro and Nuclear power plants, mostly in China and India, that generate more than 70GW of average power or about four times the 17GW average of the new wind and solar. When we account for the cost of fuel, wind and solar electricity averages about two to three times the cost of electricity from other sources. Most of the investment in new electricity generation is driven by economic growth which needs to add about 3% of new generation every year. If just that increase was met with current wind and solar, it would cost close to $1T/y. That does not cover replacing the existing generation. Of the $200B spent for wind and solar, government subsidies account for at least half, or $100B. This is a look at the money. The bottom line is that wind and solar are already the biggest money part of electricity generation but are not providing much electricity. To scale wind and solar up just to meet current new generation demand would mean they would probably be the biggest industry on the planet. By Edmund Kelly |
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