Its interesting that the two major alternatives to fossil fuel energy (wind+ solar and nuclear) are mostly at odds with each other. In the debate, they both point out the weaknesses of the other, and to an objective outsider clearly paint a picture where neither is a viable solution. The problems with cost overruns on new nuclear plants in the US and Europe have sharpened the debate recently with Toshiba’s announcement of massive losses from its Westinghouse division. The pointers at the bottom below show three perspectives on Toshiba’s woes. 

My most recent blog posts have focused on the problems with intermittent wind and solar. Nuclear clearly has its problems too. Toshiba’s and others (Areva) problems at minimum show how hard current nuclear is, without even getting to how it could be modified to be more sustainable and load follow. With reactors being shut down in Europe, the US and Japan and cost overruns leading to no new orders, nuclear is not going anywhere. China is the only country adding any significant nuclear capacity. This would seem to end what had been seen as the beginnings of a nuclear revival.

Most nuclear advocacy centers on new designs to remedy problems with current reactors. Nuclear takes a long time from experimental to demonstration to production power plants. Minimally the sequence takes decades and costs billions to tens of billions of dollars. 

So, nuclear power and wind and solar face similar problems. Neither are viable replacements for fossil fuels and it will take significant development of new unproven technologies to make them so. Compare this with StratoSolar. Much of StratoSolar is just today's PV. The unproven parts are relatively simple engineering based on existing mass produced technologies. To follow the nuclear model, the first step is to build an experimental platform. This could be done in less than a year for a few million dollars. An experimental nuclear reactor is many years and hundreds of millions of dollars. Relative to a new nuclear reactor, StratoSolar demonstration and production platform steps are equally as fast and low cost as the experimental platform. The point is that StratoSolar is no more speculative than wind, solar and nuclear, when the development paths of each that lead to viability are objectively analyzed. 

The perspective that wind, solar and nuclear are all unproven and speculative is not the perspective of their advocates. Wishful thinking rules the day. Recently Bill Gates led the founding of Breakthrough Energy Ventures (BEV), a fund to invest in long term energy ventures. Given Bill Gates fondness for nuclear power, funding nuclear power is probably the focus of the fund. Given the funding required to get to production plants, its very unlikely that a private fund could raise the tens of billions required even to develop one new plant. Presumably the plan is to fund the earlier cheaper development stages and persuade governments to foot the major bills. Perhaps we can persuade BEV to fund StratoSolar? It might be high risk but its cheap and fast. Its actually a typical venture funded opportunity. 
 
By Edmund Kelly

Rod Adams: reporter
http://www.theenergycollective.com/rodadams/2398838/toshiba-announces-6-3b-writedown-229m-construction-company-acquisition
Jim Green: Friends of the earth:
http://www.theenergycollective.com/energy-post/2399091/nuclear-safety-undermines-nuclear-economics
Michael Schellenberger: The breakthrough institute
http://www.theenergycollective.com/shellenberger/2398737/nuclear-industry-must-change-die

PV is not a free market. It is dominated by China and the peculiarities of the Chinese economy.  China is both the largest manufacturer and the largest consumer of PV. This has all occurred extremely rapidly over about the last five years. 2017 appears to potentially be a year of reckoning for PV, as this blog article neatly summarizes. The total historical PV cumulative installed capacity is about 300GW, most of it installed over the last few years. 2016 Installed capacity alone was about 70GW, with about 30GW of that in China. US installed a record 12GW in 2016, driven by the potential expiration of subsidy incentives. Most projections have 2017 world PV installations falling well below the 2016 70GW due to reductions in China and the US, with no major new growth area to compensate.

These reductions stem in part from the limited ability of electricity grids to absorb PV. The long-term limit is based on the capacity factor limit of grids to absorb intermittent sources.  We are far from this limit, but short term constraints are showing up at very low levels of PV penetration. China’s current limit is the lack of long distance transmission capacity to take the power from the deserts in the west to the users in the east.  As discussed in this blog post, California is hitting problems due to the inability of fossil generation to ramp up and down quickly enough to compensate for rapidly changing PV generation as the sun sets.

Advocates for PV are focused on the falling cost of PV generation and seem to assume that once PV becomes the lowest cost of generation the world will magically switch to solar energy. The reality is far from this rosy scenario. The real cost of PV electricity will increasingly have to factor in the additional costs needed to incorporate it into the electricity supply system. California is showing the need for storage at very low levels of penetration and China is showing the need for long distance HV-transmission. Both technologies are expensive and in need of development, particularly electricity storage. They are both additions to the current grid and both exceed the cost of PV generation. Add to this the geographical variability of solar, particularly at northern latitudes and the economic case for solar to be a large scale, economically viable supplier of electricity is far in the future.

StratoSolar is low cost generation with low cost, fast response storage built in and no need for long distance transmission. It has no daytime intermittency problem and it works well at northern latitudes. It needs relatively minor short term development to prove its viability. In contrast, the storage and HVDC transmission technologies needed to make ground PV viable are in many ways more speculative, unproven and longer term than StratoSolar.
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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. 

Google and Facebook have raised awareness of alternative strategies to get Internet service to the other three billion (O3B) without internet access in the developing world. Their motivations are not altruistic. The O3B are their future customers. Google is pursuing balloons with the Loon project, high altitude drones with its purchase of Titan, and satellites with its announcement that it plans to deploy a constellation of 180 medium earth orbit satellites.  Facebook has announced it is deploying satellites and purchased Ascenta, a drone company.

A quick look at internet statistics shows that the majority of those without an Internet connection are in Asia, about 2.8 Billion. A look at land areas in the countries that account for the bulk of the market shows that population densities are very high. This combination requires a high total bandwidth over relatively small land areas. We call this a high bandwidth density solution. Current and proposed satellite solutions can only provide low bandwidth density. Similarly Google Loon and high altitude drones have very small payloads and can only provide low bandwidth density.  All these technologies are years from deployment and have difficulty with a low $1.00/month price.

We propose a high bandwidth density StratoSolar platform wireless Internet solution using stratospheric permanently tethered platforms. A platform tethered at 20km altitude can provide reliable wireless internet service to a radius of about 75km, which is an area  of about 15,000km2. For the population density in Asia, a wireless internet platform solution covering an area of 15,000km2 needs to provide enough bandwidth for from about 1,000,000 to 8,000,000 customers, or up to a total of about one terabit per second for broadband access.

A crude analysis to scope the problem yields a platform count of about 1,100 for Asia. In most cases there are low population density areas that would be best served with low bandwidth density solutions like satellites, so the number of platforms would be less (perhaps 600). This is especially true for China. There would also be very high bandwidth density areas in urban cores where the wireless platform bandwidth density would be insufficient to satisfy the entire market.

We propose a quickly deploy-able solution based on existing hardware and software currently being used by the rapidly growing wireless internet service provider (WISP) market that uses the unlicensed radio bands. As is currently done with satellites we propose to provide very large overall bandwidth by using many spot beams with massive frequency re-use. The solution can be thought of as a WISP with a very tall tower that supports a lot of antenna.

With highly directional antenna at both the platform and the customer the link budgets are conservative and the interference requirements of the unlicensed bands can be met.

We would envisage from about 271 to 1000 cells per platform, providing broadband Internet access to from 1,000,000 to 8,000,000 customers. The aggregate cell throughput exceeds 1Gb/s.

The large payload, large antenna support structure area, and large continuous PV power with gravity energy storage provided by the platform are what enable the rapid deployment of this platform composed largely of off the shelf wireless internet and internet switch hardware. The off the shelf wireless hardware and the antenna are not designed for miniaturization and weigh several tonnes and consume several kW of power.

The major impediment to deployment is political. Each country will be different. The only physical problem is the hazard that tethers pose to aviation, which can be handled by the airspace regulator of each country.  Commercial aviation in Asia is very small and general aviation is almost non-existent compared to the US and Europe. The politics of communications infrastructure are harder to gauge. China may be a non starter. The initial goal is to get one country to deploy one platform.

The economics are very favorable and would provide internet  service at prices that most households in Asia could afford . If the average platform has 4,000,000 customers at $1:00/month, that is $48M/year income for a platform that costs about $4M including the wireless hardware. Customer premises equipment (CPE)  would be about $25 or less per customer. $25 is a lot of money in large parts of the target market, so reducing CPE costs and methods of financing CPE are important.

From an individual countries perspective, internet service deployment can occur without much investment and in a timeframe dictated mostly by customers. High altitude platforms will deploy in less than a week once airspace is approved. Coverage for a country could be deployed in less than a year. Initially a backbone internet could be provided with wireless or FSO links between platforms.

Once a platform is deployed customers can buy or rent CPE and be on the internet immediately. They will need electricity, but that might come from a PV panel and a battery in an isolated area. A local wireless base station could provide Wi-Fi internet to a village.

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.

There has been a series of recent articles that paint a picture of the improving state of the PV business. This article highlights that China is starting to deal with the zombie 2nd tier companies. The first tier like Jinko, Trina, Canadian, Sun Edison are pretty strong. This Jinko report shows them profitable with panel ASPs of $0.63/W in China. This matches well with $0.75/W in the US and Europe. China is lower cost because it has cheaper financing and cheaper labor. Also there is starting to be life in the Polysilicon market as polysilcon price has rebounded from $15/kg to $20/kg, with several new factories being announced by REC in China and GTAT in Malaysia.

China is the key.  As European demand  collapsed last year, China's new subsidies for local deployment provided the foundation for their PV panel makers and confidence for future stability. However if prices stay stable at current levels, more subsidy will be needed to grow the market. Projects in the US are profitable with current subsidies and apparently there is enough investor confidence in solar to support projects with IRRs below 10%. Projects in Texas have been bid at PPAs of $0.05/kWh based on low financing costs and current subsidies.

Chinese panel makers are becoming project developers as a means to ensure a market for their panels, following the example of US panel manufacturers First Solar and Sunpower that have successfully used this strategy to survive with uncompetitive panels.

Overall PV growth projections seem to hinge on new markets in the developing world. Panel prices should stabilize at current levels of around $0.75/W, or even rise over the next few years as the industry returns to profitability.

This is all good news, but does not paint a picture where the PV market is likely to grow to the level needed to make a significant impact on CO2 emissions any time soon.  

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

Alternative energy exists solely because of a political will to make it so.  It has been uneconomic from its modern inception in the 1970's, driven by the first oil crises. As a result, market driven economic viability has never been a central part of the alternative energy mindset.  At its core it has been driven by two perceptions. The first was simply the need for a clean fossil fuel replacement largely regardless of cost. The second was that given time, costs would reduce to make them more acceptable.  

The political will influenced government to provide subsidies to nurture the business. These subsidies now exceed $100B/y of investment worldwide and prop up a total investment of about $250B/y. However a business that depends so heavily on government support is subject to all the problems of such reliance. Firstly government support is volatile, driven by who wins elections. Secondly, subsidized industries are notoriously inefficient. Any long term subsidy regime encourages business that live off the subsidies with little or no incentive to improve.

The perception that costs would reduce has been borne out by time, but the path has been a rocky one. The recent history of PV shows the erratic nature of this progress.  On a day to day basis no one sees the big picture. When PV prices were stable for a decade, the perception was of stagnation which led to betting on thin film PV. When prices were falling the perception was they would continue to fall, regardless of fundamentals. Also, market size of a heavily subsidized industry is not perceived as inextricably tied to the size of subsidy.

If government continues to support the PV business, costs will decline to a point where PV is competitive for some fraction of energy for sunny locations, but to be a complete solution other technologies like long distance transmission and storage have to become economically viable as well. The current rate of improvement put that point out beyond 2050. This is the status quo. Governments willing to provide limited subsidy, a business happy to live of this subsidy with its current size and rate of growth and an alternative energy political consensus that thinks this is actually working.

This status quo is not reducing CO2 emissions and will not reduce CO2 emissions out to 2050. Realists point out that change of the degree necessary to reduce CO2 takes many decades and huge political will. While alternative energy imposes large new costs, the current small political will for change is directly measured by the small amount we are collectively willing to pay for subsidies. The only way to increase the political will is to reduce the cost at a faster rate or better yet turn things around and make clean energy an economic benefit.  This perception is sadly lacking.

The optimists place their hope in technological breakthroughs, and so we get daily updates on basic research, most of which we know will go nowhere, but create the illusion of progress.  The sad reality is that basic research takes decades to make it from the lab to the market and decades more to achieve large scale.

To scale quickly a technology needs both a long gestation to viability and to be mass producible. PV has recently demonstrated that it is at this point. The rapid scalability has surprised governments that provided subsidies assuming a slower ability to scale. Germany spent over $150B in two years for about 15GW before they adjusted. China just ramped to over 12GW in one year from a standing start for a lot less.

So PV technology is at a point where we can make and deploy as much as we can afford. The problem is the high cost of the resulting  electricity, especially if you count the costs of intermittency and storage, is just too much money for economies to sustain.

StratoSolar is only PV in a new location. It reduces the cost of resulting PV electricity to market competitive levels and increases the reliability of the supply.  There is no new technology or resource that limits its ability to scale. If it is proven viable, the major thing that needs to scale is PV manufacturing, the thing that has already demonstrated scalability. This is a lot like computers in the late 1980s. A large CMOS semiconductor manufacturing business had matured and companies like Sun Microsystems that built computers based on this technology rapidly scaled to volume in the millions. This pattern repeated itself for PCs in the 10s to 100s of millions and recently for mobile phones in the billions, as the cost of computers reduced with volume over time. The common elements are ability to scale supply and an affordable product with sufficient demand to match the supply. 

From an investment perspective the risk is like betting on a Sun Microsystems. They had engineering and market risk, but they were fundamentally enabled by available semiconductor technology. They were small investments in small teams that integrated existing technologies to build new products for very large new businesses. The market demand they produced could be met  by the scalable semiconductor supply. Similarly, StratoSolar can create a demand that can be met by a scalable PV semiconductor supply.

It’s continuing the triumph of the semiconductor age.

by
Edmund Kelly

I have written previous posts pointing out the benefits of StratoSolar for Japan and the UK, two very densely populated countries with few indigenous energy sources and a desire for clean energy. 

Though China is not as committed to clean energy the potential benefits of StratoSolar for China seem even more compelling, though for different reasons.

In general, solar and other renewables solve three problems:

1)      Fossil fuels are a finite resource.

2)      Burning fossil fuels damages the environment and is causing climate change.

3)      Energy security. Dependence on imported energy threatens national and economic security.

Interestingly, for the US, none of these problems are currently regarded as particularly serious, and the environmental argument 2)  is the only one propping up alternative energy.

China is the inverse of the US. For China 1) and 3) are already a problem today, and at China's rapid rate of economic growth the problem is only getting worse. China is now the world's biggest oil importer, but its oil consumption is set to a least triple by 2040, 75% of which will be imports.  This puts the Chinese economy at huge risk from oil price volatility and/or supply constraints. China has a lot of coal so coal is not in as precarious a situation, but China currently imports a lot of coal from Indonesia and Australia.

An unlimited local source of cheap energy solves these problems.  Not only does it remove the resource and security problem, it also potentially provides an economic  competitive advantage.  China has leveraged cheap coal energy into dominance of energy intensive industries like steel, aluminum and chemicals. If StratoSolar provides cheaper energy it can continue that strategy, with the added benefit of no pollution.  It also puts China in a leadership position in a technology of world significance. Following the PV cost reduction path and investing in fuel synthesis technology could cement and enhance this leadership position.

A quick short term benefit is StratoSolar deployment in China  would help some specific industries that China has overbuilt; aluminum and PV silicon. StratoSolar systems consume a lot of aluminum for the structure, and clearly use PV panels.  StratoSolar systems deployed on a large scale would rapidly become the world's  biggest aluminum and PV consumer.

Food for thought.
By Edmund Kelly