I truly believe that we need to transition to a sustainable energy environment. If you have read posts on the Black Swan Blog you know that. And when I say “sustainable” I mean “sustainable for millennia” – an environment where all the inhabitants of planet earth have abundant and affordable energy for thousands of years. That means, in essence, eliminating the consumption of non-renewable energy resources (which includes uranium in the long term so I only support nuclear fission power as a bridging technology – viable fusion would be a different story).
As a result I advocate for alternative energy solutions in whatever form they take. But I avoid exaggerating the achievements of any renewable energy technology or project. More importantly, I do not try and minimize the immense difficulties that have yet to be overcome in making the transition to a sustainable energy environment. There is much work to do and some sacrifices to be made. Any statements to the contrary are not helpful in my opinion.
So it irks me to no end to constantly see statements that are, to be charitable, misrepresentations of the facts. I am convinced that these kinds of statements make politicians and decision-makers either complacent or encourage their support of ineffective policies. This blog addresses some recent statements and why I believe they are so destructive.
Solar accounted for 32 percent of the nation’s new generating capacity in 2014, beating out both wind energy and coal for the second year in a row.
This statement is only true with regards to what is known as the “nameplate” capacity of a generation source – the theoretical maximum output that could be obtained from the source. The actual output from a solar panel comes close to the “nameplate” capacity for only a few hours around noon each day in the summer.
A true measure of the contribution that a solar panel can make can be obtained by dividing the actual energy production of a solar panel by the theoretical maximum if it could generate electricity 24 hours a day, 365 days a year. This is known as the capacity factor.
Statements regarding capacity factors, even from relatively reliable sources, are typically very optimistic and therefore misleading.
In the latest publication from the U.S. Energy Information Agency (“Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2016) the capacity factor for solar is listed as 25% on page 7. That is a ludicrous number. Although it might be achievable with utility-scale solar farms with dual-axis sun tracking located in the southern U.S. it does not represent the average attainable from most re-world installations.
I prefer to use actual production numbers when determining capacity factors.
In Germany, with 38 GW of solar capacity, the largest in the world, the average capacity factor is about 11% (source: Fraunhofer – 33.3TW-Hours generated in 2014). In the winter it was more like 3%. Applying those capacity factors to the U.S. it would probably be fair to say that it would take at least 8x as much solar “nameplate capacity” to match the equivalent nuclear or fossil fuel generation. On that basis a more reasonable statement would be that effective solar generation added in 2014 was 1/8 that of coal generation.
Why does it matter if the figures published for solar are misleading? Because those deceptive numbers undermine the business cases for much more valuable renewable energy technologies such as geothermal and hydro-kinetics.
The Kauai Island Utility Co-operative commissioned one of the world’s largest utility-scale solar farms in 2015 – a 12 MW facility which cost $40 Million. Therefore the installation cost for this landmark facility is $3.33/W (Nameplate capacity) which is in line with figures presented by NREL.
Recent communications with KIUC indicate that the Koloa solar farm has achieved an average capacity factor of 21% over the past two years. That makes the cost per effective Watt for this solar farm almost 5 times higher; more than $16/Watt.
The only number you will ever see quoted for a solar installation is something like $3-4/Watt. The very poor capacity factor for solar is conveniently ignored.
Effective costs of greater than $16/Watt would make most geothermal and hydro-kinetics projects viable. Those technologies are available 24 hours a day, 365 days a year with capacity factors typically greater than 80-90%.
But even comparing installation costs/Watt is optimistic with regards to the cost of solar.
Very little solar power is available after 6:00 pm which is a very high demand period of time in most locations. As a result, it would not matter how much solar power was developed. Without economical storage solutions there would still be no power available in the evening and overnight. Should there not be some recognition of the cost to provide an alternative, backup source of power when solar is unavailable? And given that the backup power source today would probably be fueled by natural gas, how does the development of solar power without storage move us to a truly sustainable energy environment? What is the end-game?
Statements about wind generation are equally misleading.
The EIA report lists a capacity factor for onshore wind as 40%. The average capacity factor of wind in Germany (with an installed nameplate capacity of greater than 35 GW) based upon actual production numbers, was 13.5% in 2014. Installation of high capacity wind turbines is currently running around $2-3/Watt of nameplate capacity. Taking into account the capacity factor the cost/effective Watt is once again north of $10.
In terms of having to provide a backup power source the situation with wind is even worse than with solar which is at least predictable. Once wind becomes a major source of generation in any jurisdiction the problems begin in earnest.
In Denmark, with about 4.5 GW of nameplate wind capacity (as compared to peak demand requirements of just over 6 GW) when the winds are blowing strongly Danish wind generators are being paid not to generate. In fact, most statements about the miracle of wind power in Denmark are exceptionally misleading and unhelpful. Denmark continues to burn coal to generate electricity despite having more than 100% excess generation capacity. Denmark wind generation is greater than 40% of the total electricity produced in Denmark but only a fraction of that wind generation is actually consumed in Denmark, the remainder being dumped onto Nordic and European grids which Denmark uses as a giant battery. Some interesting observations on the Danish situation can be found in posts here at the Black Swan blog as well as at the Energy Matters blog. The master of all wind data for Denmark and Germany is Paul-Frederik Bach.
The bottom line is that the true costs of wind and solar are minimized and obscured while the benefits are exaggerated. A watt of solar energy generated at noon in Hawaii when that watt is not required is considered to be equal to a watt generated at a peak demand time in the evening from a reliable source such as hydro, nuclear, coal, or natural gas. A watt generated by a wind turbine in the middle of the night is considered to be of equal value as well. This is not reasonable and these attitudes represent a significant barrier to the development of energy storage solutions and reliable and renewable sources such as hydro-kinetics or geothermal. Even as tens of $billions are poured into wind and solar subsidies each year more effective alternative energy sources get little or no support.
The impact is not hypothetical. In California, which prides itself on being a leader in the “green energy” revolution, almost 2 GW of geothermal energy remains undeveloped under the Salton Sea because of regulatory and financing hurdles. That is the equivalent of two large nuclear plants or at least 1,000 wind turbines (if you could get them to generate when electricity was needed).
In Northern California the Idaho Hill pumped storage facility with 3.2 GW-Hours of capacity is not being built because the local utility cannot justify the cost (which at about $440/KW-hour is lower than any other energy storage technology available). That despite California’s mandated development of 1 GW of energy storage by local utilities because it specifically excludes pumped storage.
I am getting the distinct impression that the solar and wind industries in the U.S. are now such strong lobby groups that any message that might temper the enthusiasm for these technologies (and therefore might impact the profitability of these industries) is not being heard. The predictable result, in my opinion, is that the technologies that need to get developed to transition to a sustainable energy environment are simply not being given the support they deserve.
All the hyperbole and disinformation about wind and solar makes me wish that George Washington was still President. He would have to tell the truth about the various forms of alternative energy and allocate resources accordingly.
A future blog will provide more details regarding the potential of geothermal and hydro-kinetics. Some other initiatives are outlined in my Sustainable Energy Manifesto.
The Black Swan Blog posts have covered a wide variety of topics related to renewable energy. Many of those posts have focused on the need to develop reliable and affordable energy storage options so that wind and solar power generation can be time-shifted to match demand. No such energy storage technology is viable today but I am convinced that a number of technologies will become mainstream within 20-30 years – possibly more quickly than that.
Without in any way minimizing the challenges that lay ahead with energy storage (which I think should get vastly more R&D funding than is the case today) I thought it would be interesting to imagine what the world would be like when electricity is being generated primarily from renewable sources.
Renewables, whether they be always available such as hydro, hydro-kinetics, or geothermal, or whether they need support in the form of energy storage (wind and solar) all have very low long-term operating costs. Because they do not require any input fuel the only ongoing costs are operations and maintenance which are, in most cases, quite low. So what would be the impact of abundant and cheap electricity that has minimal negative environmental impacts?
About half of the world’s population live north of 27 degrees latitude. That means that there are a lot of people living in areas where crops cannot grow for 1/3 of the year or more. As a result many large population centers are completely dependent upon agricultural production from areas farther south.
The transportation of these agricultural products requires large amounts of energy and inevitably results in a great deal of spoilage. In a world where electricity is abundant and inexpensive there would likely be a significant shift of food production to greenhouses in more northern areas. The result would be fresher produce and lower carbon emissions from the transportation sector.
Water through Desalination
Throughout human history there have been areas of the world experiencing drought. From the dust-bowels of the 1930’s in North America to the more recent dry spells in Australia and California a lack of fresh water can severely reduce food production as well as causing a variety of other problems.
Because transportation and trade via ocean-going vessels has been important to human settlements for millenia many large cities are located on the coastline. For those populations desalination would provide all the fresh water needed. Although such plants have been deployed quite extensively, notably in the Middle East, the cost of energy required for these plants has been a significant deterrent. It should be noted that more than 1% of the world’s daily oil production is burnt in the Middle East to desalinate sea water. In a world where electricity is abundant and inexpensive desalination would become a viable option everywhere.
Areas such as North Africa could possibly be transformed to conditions similar to those experienced during the last “Green Sahara” period which ended about 5,500 years ago. The result would be greater self-sufficiency and improved living conditions for the millions of people suffering through the repeated droughts that have afflicted Sub-Saharan Africa over the past decade.
The Al Khafji Solar-powered desalination plant in Saudi Arabia may be a “postcard from the future”. Using the power of the intense solar radiation common in the area this plant will replace the burning of oil to produce 60,000 cubic metres of water a day.
Inexpensive electricity could be used to power vastly expanded mass transit systems as well as the factories that will manufacture the trolleys and trains that will be used in those systems. Inexpensive electricity will reduce the costs of heating and cooling homes and offices with the result that families and businesses will have more disposable income. It is a fact that inexpensive electricity will transform human society in ways as significant and unimaginable as any technological innovation that has been experienced to date.
And that does raise a concern.
On ancient maps and globes uncharted territory was annotated with warnings such as “here be dragons” or “here be lions”, the intention being to discourage potential explorers or at least advise them to be well armed! A world of abundant and inexpensive energy may also have dragons that we need to guard against. As far as I am concerned the largest and most deadly of these would be the concentration of ownership of this energy by organizations that were not acting in the public good.
In most jurisdictions in the world electricity production is either publicly owned or managed by organizations that are monitored and controlled by public utility commissions or similar bodies. This system, although it suffers from inertia in some cases, has by and large worked quite effectively. As long as the new renewable energy sources continue to be part of this type of structure there is no real danger.
Considering all the positive consequences that could be realized in a world fueled by renewable energy it is reasonable to try and map out the path to get us to that blissful state as quickly as possible.
In my postings here at the Black Swan Blog I have identified numerous technologies that can be used today to store energy. I have also identified the problems associated with each of them. The bottom line, which few green energy advocates are honest enough to admit, is that energy storage on the scale required to transition to 100% wind and solar is not even close to being a reality. Euan Mearns has conducted detailed technical analyses on several real world scenarios. His summary post is a worthwhile read.
As daunting as the technical challenges are the real problem with energy storage is political will and funding. Politicians, with the best of intentions, continue to chase energy mirages such as roof-top solar and wind without storage under the entirely false theory that those approaches can achieve the desired result – a world powered by renewable energy sources.
The intermittent and unpredictable nature of those sources causes escalating problems when implemented to any significant degree. Denmark, Germany, and Hawaii represent well documented case studies that prove without any doubt that every step forward in the development of renewables increases the difficulty of taking the next step.
Having said that, one or more viable and economical energy storage systems would make all the problems go away. A large portion of the solar energy received at mid-day could be shifted to the evening and night. The huge variability of wind energy could be reshaped to better match demand curves. Regulation of electricity flowing into regional grids would mean that costly upgrades would not be necessary.
But in today’s world it is impossible to make a business case for a utility-scale energy storage solution.
In almost every jurisdiction there is little or no support for energy storage solutions. Instead, energy storage developers are faced with having to purchase electricity from local utilities, including paying a grid transmission fee, then store the electricity using some hugely expensive and largely unproven technology, then try and resell the electricity back into the grid in competition with other sources including cheap coal and natural gas-fired plants. Just as in the 1951 cartoon “Cheese Chasers” this scenario just don’t add up!.
Substantially increased R&D funding and operational support for energy storage are essential. A Feed-In-Tarriff for energy retrieved from storage should be provided.
In the short term, as energy storage solutions mature, more support should be provided for existing dispatchable energy sources such as geothermal and hydro-kinetics. These are sources that, despite very compelling attributes, also continue to suffer from a lack of R&D funding and direct financial support.
A sustainable energy future is possible with all the positive benefits that come with it. We just need to want it badly enough to make the best investments possible to achieve the desired result. There are more ideas discussed in my Sustainable Energy Manifesto.
The countries of the world have agreed to reduce carbon emissions significantly by 2030. Although this agreement is designed to limit the forecast rise in global temperature I am more enthusiastic about the fact that it will result in reduced consumption of non-renewable hydro-carbons.
But now comes the hard part. How to decide which actions will produce the maximum benefits for the least cost and economic disruption.
I’ll start by listing a few things that I don’t think should be priorities.
Roof-top solar panels: there will be a great temptation for governments to jump on the roof-top solar bandwagon. It sounds like such a great idea – let people generate their own power. And many, many countries are doing it so it must surely be a good thing – right?
There is nothing evil about roof-top solar panels. But an objective analysis of all the possible ways that renewable energy can be generated would have to conclude that providing financial support for roof-top solar is one of the most expensive and least effective approaches available.
On the other hand I am an enthusiastic supporter of utility scale solar developments between latitudes 35 north and south such as those built over the past few years by Kauai Island Utility Co-op. Solar energy in the equatorial/subtropical regions is probably the best source of renewable energy available.
The reason I don’t support the development of solar energy north or south of 35 degrees is not because there isn’t solar energy potential at higher latitudes. Obviously there is. The problem is that at higher latitudes the electricity demand usually peaks in the winter and there is significantly less solar energy available in the winter outside the equatorial/subtropical regions. At 35 degrees winter insolation is theoretically about 75% of summer. At 45 degrees the ratio is 66%. But actual generation is much, much less than that because in the winter the low sun angles mean that nearby trees, buildings, and hills place the solar panels in the shade for much of the day. So, for example, in Germany the winter solar generation is 1/10 the summer generation.
Wind: There is no doubt that the extensive development of wind energy is already and will continue to be one of the cornerstones of a sustainable energy environment. The increasing capacity of individual turbines and the decreasing cost/MW make wind energy a very attractive option – when it is available. And that is the big problem with wind.
Although it is true on a global scale that “the wind is always blowing somewhere” it is a fact that calm winds can extend over very large geographic areas for hours or days at a time. It is not uncommon for wind generation to be at less than 10% of nameplate capacity for 30% of the hours in a year. Dealing with the variability of wind will be perhaps the biggest challenge to be overcome in order to meet the carbon emission reduction targets envisioned in the COP21 agreement. Until some progress is made in this regard the financial support provided to wind developers should be significantly reduced.
So much for what should not be priorities.
It is clear that solar and wind can be developed to whatever scale is required and that the cost to do so is not unreasonable. The only remaining problem is how to handle the times when solar and wind are not available. The vast majority of financial support and Research and Development should be directed towards addressing that single issue.
In equatorial and subtropical regions this problem is well defined and can be addressed through energy storage systems that exist today. Solar energy is very predictable and by building enough solar generation to simultaneously meet daytime needs and charge a storage system it is possible to release energy from storage to meet evening and night demand. The Gemasolar plant in Spain is already providing 24×365 electricity generation using only solar energy.
The proposed Kapaia power plant will use solar energy stored in batteries to provide electricity in the late afternoon, evening and through the night. The Noor1 plant in Morocco will have the largest molten salt storage capability in the world when it is completed in 2017.
These positive developments in short duration energy storage should be encouraged by providing the same kinds of financial and regulatory support currently used to encourage wind and solar developments.
Outside the equatorial/subtropical regions the problem is much more difficult.
Wind generation can never truly replace fossil fuel or nuclear generation – it can only displace those traditional sources. By that I mean that regardless of how much wind capacity is developed there will be times when there is simply no wind energy to be harvested. During those times dispatching fossil fuel generation is the only way to keep the lights on.
Energy storage systems will help cover short duration periods of calm winds but they will be unable to solve the problem completely anytime soon.
Roger Andrews and Euan Mearns have done a lot of detailed analyses on large scale energy storage scenarios and have demonstrated quite convincingly that the scale of storage required to truly address calm winds is impractical. I would have to agree.
So if storage can’t solve the wind intermittency problem what approaches might work? I see three possibilities all of which are deserving of investment and regulatory support;
- Development of reliable and renewable energy sources. This would include Geothermal Resources such as the potential 1.6 GW under the Salton Sea and the estimated 25 GW of hydro-kinetic energy available for development in the U.S. alone. These reliable sources of electricity should receive financial support through R&D grants, accelerated capital write-offs and feed-in-tariffs in recognition of their superior value as compared to wind. It would also be possible to implement additional generating capacity at large scale hydro developments that could be used for short durations when winds are calm in a concept I have referred to as unpumped storage.
- Demand response. Post-Fukushima Japan has demonstrated the true power of demand response with peak demand being reduced by as much as 10-15% through the direct action of individuals and businesses. The key ingredient to success is a broad engagement of the population through advertising, public service announcements, and educational programs. It is clear that people will modify their use of energy if they are mobilized when electricity is in short supply.
Another mechanism for reducing peak demand over the long term would be the widespread use of geoexchange technology in preference to traditional HVAC systems. Requiring that geoexchange be integrated into any new commercial and industrial buildings would be a very low cost and effective way to significantly reduce demand.
- Development of a capacity market: I stated before that wind generation displaces fossil-fuel generated electricity. That would not be particularly problematic except that it seriously impacts the profitability of operating those fossil-fuel plants.
In Texas utilities took out a full page ad describing the deterioration in reserve capacity that the increasing penetration of wind energy is causing.
In Germany the development of a “grid balancing market” is helping to deal with fluctuations in wind output but there are problems with this approach.
Although the idea of paying for a duplicate set of generation assets is not appealing it might well be the most effective way to increase the amount of renewable generation that can be developed.
How quickly Can These Measures Be Implemented?
Building code changes to encourage or require the use of geoexchange can be put in place almost immediately. The same is true of changes to the operating practices of Independent System Operators so that organizations storing energy for later use are not charged a grid transit fee.
A feed-in-tariff (FIT) for electricity produced from storage and for reliable renewables such as geothermal and hydro-kinetics would take a bit longer but can certainly be available in less than a year or two. Public education and awareness programs with real-time indications of energy use can be delivered in the same time frame.
Development of a capacity market will require investigation and a thorough analysis of options. But an early commitment to a capacity market would send a positive signal to the operators of the fossil-fuel generating plants that will be needed during the transition to more dependence upon renewable energy sources.
The COP21 agreement represents an historic opportunity to make real progress towards developing a truly sustainable energy environment. But it is quite likely that political leaders will continue to support strategies that are not optimal and could encounter very significant barriers as the amount of renewable generation increases.
To quote Yoda “if you choose the quick and easy path as Vader did – you will become an agent of evil.” That may be a bit dramatic but I think the danger is real. As we move forward with the development of renewables the difficult challenges regarding energy storage need to be addressed as a priority.
There is a consensus in many countries that burning coal to generate electricity is something that needs to be phased out as quickly as possible. The Clean Power Plan in the U.S. has that as one of its most likely outcomes and there have been explicit commitments to retire coal-fired generation plants by governments all over the world.
When considering the options for replacing the electricity generated by coal-fired plants there are two characteristics of these plants that need to be considered. The first is that coal is the cheapest and most abundant non-renewable fuel available. The second is that coal-fired plants are very reliable – more reliable even than natural gas-fired plants because they can stockpile fuel on site so that they are not subject to pipeline congestion problems. And getting approval to build new pipelines is not easy these days.
One of the strategies for replacement of coal-fired generation is the development of more wind and solar power. This approach is not without its problems because of the inability to store energy from these sources which are often not available during peak demand times of the day. Matching the 24×365 reliability of coal-fired plants using renewables would be very challenging.
When you think about it the only thing wrong with coal-fired plants is the fact they burn coal to produce the steam used to drive turbines. If a renewable source of heat could be supplied to these plants they could continue providing reliable power and the negative aspects of burning coal would be eliminated.
In jurisdictions where renewable energy sources have been developed extensively the disconnect between electricity production and system load is starting to become problematic. For example, on many circuits on Oahu the amount of electricity generated by roof-top solar panels actually exceeds system demand mid-day some days. Although there is plenty of potential to expand solar power in Hawaii from a resource standpoint it will not be possible without the ability to time-shift production to match demand through the use of energy storage. As a result solar panel permits have been falling for the past two years.
In Denmark, where the nameplate capacity of wind turbines is approximately 1/3 of total generation capacity in the country, wind generation frequently exceeds domestic demand which requires the export of the excess to neighbouring countries. Obviously if all of Denmark’s neighbours also developed a similar amount of wind capacity there would be nowhere to export the electricity to. Texas and parts of the American Mid-West are facing similar issues.
So we are faced with two different problems;
- The need to stop burning coal to generate electricity
- The need to store excess electricity generated from wind and solar
Fortunately, there is a combination of field-proven technologies available today that can solve both problems. I will refer to this combination of technologies as “Thermelectric Power”.
Thermelectric Power provides a large rapid response load which can be used to stabilize the grid when there are variations in renewable energy generation. It also stores renewable energy by converting it to thermal energy.
The mechanism for storing the energy is molten salt – a mixture of 60 percent sodium nitrate and 40 percent potassium. Thermal Energy Storage (TES) systems using molten salt have been used for more than 10 years as a way to extend the hours that Concentrated Solar Power (CSP) plants can deliver electricity.
The initial research was done at the Sandia National Solar Thermal Test Facility in New Mexico. The first large-scale commercial application of the technology was at the 50 MW Andasol CSP in Spain which came on-line in March, 2009. The Solana CSP plant commissioned in the fall of 2013 in Arizona includes the largest TES facility deployed to date, able to produce 280 MW of electricity for up to 6 hours after sunset.
Excess wind or solar generated electricity can be used to heat the molten salt to a temperature of more than 1,000 degrees Fahrenheit using industrial electric heating elements. During peak demand periods the molten salt would be circulated through a heat exchanger to transform water into the steam required to power conventional steam turbines. The infrastructure to support the conversion of thermal to electrical energy by means of steam turbines exists at every coal-fired electrical generating station which allows the re-use of these very expensive components with only minimal modifications.
Both the heating of the molten salt and the use of molten salt to generate electricity using steam turbines are proven technologies that are deployed today. By integrating Thermelectric Power into an existing coal-fired generation station it would be possible to phase out the burning of coal as more and more wind or solar generation is developed. This approach would also maintain energy security because it would be possible to switch the power source back to coal for short periods of time to deal with extended periods of calm winds. This dual source approach minimizes both CO2 emissions as well as any risk of power failures on a grid where the primary sources of electricity are renewable.
The cost to implement molten salt storage at an existing coal-fired plant would be $250-$350/kwh. This is a fraction of the cost of utility scale battery storage. More importantly molten salt storage does not suffer degradation in capacity over time. The molten salt can be heated and cooled over and over again so that the service life of this technology is measured in decades.
Thermelectric Power could transform the more than 500 coal-fired generating stations in the U.S. into “green” energy sources. More than 10% of those plants are combined heat and power (CHP) plants on University and College campuses. Students and faculty have been actively protesting to stop the burning of coal at these plants for years.
As rate-payers, tax-payers, and advocates for a sustainable energy future we have a choice to make.
We can demand that coal plants be decommissioned and dismantled at a cost of billions of dollars. That choice would require the construction of natural gas-fired plants or nuclear plants with approximately the same generation capacity in order to handle peak loads in the evening when winds are calm – construction that would require more billions of dollars and would continue to emit vast amounts of CO2 annually.
Or we can demand that our coal plants be converted to Thermelectric Power which would dramatically reduce the amount of coal being burnt to generate electricity. Coal would only be used as a fuel when electricity generation from renewable sources was not available for extended periods of time. But the flip side of that is that coal could be used in that way to back up renewable generation. As a result we could develop as much wind and solar energy as we wanted without worrying about dealing with excess when demand is low and without worrying about destabilizing the grid.
A future fueled by renewable energy is possible using technology that is available today. We just need to want it enough to make it happen.
There is an ongoing debate regarding the value and/or wisdom of the German Government’s implementation of an energy transformation – the Energiewende. The primary driver for this initiative was the policy decision, first made in 2000, to eliminate nuclear power in Germany. Nuclear generating stations contributed as much as 25% of the electricity supply in the late 1990’s.
Sorting out fact from fiction when assessing the Energiewende is not as easy as you might expect because most commentators put a significant “spin” on data that is admittedly subject to multiple interpretations. In this post I will try and summarize the most salient points regarding the Energiewende that can be supported by publicly available factual information. These are;
- Germany has successfully developed a very significant base of renewable energy over a sustained period of time without going bankrupt or causing unbearable economic hardship to electricity consumers whether they be residential or industrial. This is a very laudable achievement – one that many observers would have declared impossible.
- The Energiewende in and of itself represented enough of a demand for wind turbines and solar panels to have resulted in very significant decreases in the prices for all of the components associated with these technologies. As every country in the world develops their own renewable resources they will ultimately enjoy substantial cost savings due in large part to the Energiewende.
- Germany has spent far more public money, in the form of direct grants, tax incentives and utility rate increases than was needed in order to attain the same level of renewable energy generation that it enjoys today.
- Germany, like Denmark, has only been able to develop intermittent renewable energy resources because of the high capacity inter-connections with other large European energy providers/consumers. In effect, Germany and Denmark have used the European and Nordic grids as a large battery. It follows that if other European countries were to follow the path taken by Germany the system as a whole would soon run out of capacity to deal with the fluctuations in renewable energy production.
- The German Energiewende has not resulted in less dependence on the burning of coal to generate electricity and will not do so anytime soon.
- The preferential access to the grid that is given to renewable energy production has frequently pushed thermal generation off-line for extended periods of time, particularly at mid-day on windy days in the springtime. These base-load plants were designed to run 24×365 and the business cases underpinning the financing of these plants assumed high utilization factors. As a result these plants are marginally profitable at best. The market response to this situation would be to close many of these plants to reduce capacity and stabilize wholesale prices. That is not possible because all of the thermal capacity is required in the late afternoon and into the night on calm days.
These facts (see detailed discussion below) lead me to the conclusion that the Germany Energiewende has achieved remarkable changes to the energy economy of the largest country in Europe. Unfortunately, I believe that the approach taken was far from optimal and has influenced many other jurisdictions around the world to follow a similar non-optimal path. I also believe that without finding an economical and hugely scaleable energy storage system this approach cannot proceed much further.
The impact of the Energiewende on Wind and Solar Component Prices
I suppose you could argue that the impact of the Energiewende on Wind and Solar Component Prices has not been significant but given the scale of development and the timing it seems clear to me that there has been a large impact. Until China got moving on solar panel installations Germany was purchasing about half the worldwide supply and still represents about 25% of installed capacity.
Germany has also been one of the largest purchasers of wind turbines consuming about 10% of the worldwide supply from 2004-2010 dropping to about 5% more recently as other countries have accelerated their development of wind resources.
Roof-top Solar: $100 Billion plus lost in translation
The biggest failing of the Energiewende has been the investment in subsidies of roof-top solar panel installations.
As I have argued in another blog posting even under the best of conditions in arid regions between 35 degrees latitude north and south roof-top solar does not make sense. Installations are complicated and expensive, roof pitch and orientation is never ideal and there is no ability to implement sun tracking.
In the case of Germany which is located between 48 and 52 degrees north latitude subsidizing roof-top solar panels is pointless. The graph below summarizes electricity consumption and solar power production in Germany in 2013.
Solar power production peaks at about the same time German electricity consumption is at a minimum. For those months solar can meet about 11% of total demand (as much as 30-35% at mid-day on sunny days).
The real problem comes in the winter months when German consumption of electricity is highest. In the months of December and January German solar production is about 500 GW-Hours which meets about 1% of demand. Even if Germany was to double the number of solar panels that have been installed over the past 15 years it could meet only 2% of winter demand and in that situation there would be a huge surplus of solar power at mid-day in the summer. There is no solution to this imbalance between winter and summer insolation which is the primary reason that solar power is so ineffective in Germany.
I am not alone in my criticism of the German approach. A recent report states that Germany has in effect wasted over $100 billion by focusing on solar power. The study suggests that if the same amount of financial support had been directed towards developing solar power in Spain together with additional transmission capacity in central Europe then northern European Countries would have access to much more renewable energy when they need it most in the winter.
It is undeniable that solar panels generate a lot of electricity in Germany. But it is also true that the return on the investment made in solar power has been very poor both in financial and environmental terms.
“Green power sets new record at 78% of German supply!”
Statements similar to this come out on a regular basis, usually in June or July. They are factually correct and impressive but they can easily lead the reader to conclude that the majority of electricity in Germany can be generated from renewable sources quite often. It is in fact a very rare event.
On very low demand days between May and August when winds are blowing strongly Germany can see renewables reach those levels for a few hours at mid-day. However, there are many, many more days and even more late afternoons and evenings when renewables make almost no contribution to the electricity supply. This can be seen by the annual average generation by renewables which stands at about 25%.
Renewable penetration of 25% of total generation would be very impressive if it was actually used in Germany. However, just as in Denmark which makes similar claims regarding wind as a percentage of total generation, a large amount of renewable generation in Germany is of absolutely no value. This is solar energy at mid-day and wind energy at night when there is insufficient domestic demand. In those circumstances Germany has no choice but to export this surplus electricity at very low prices (sometimes negative) and Germany’s neighbours have to absorb this electricity whether they need it or not. The Czech Republic, France, Poland, and Switzerland have been complaining quite bitterly about the negative impacts of these exports. Stress on the regional grids, the need to cycle power sources in those countries in response to the fluctuations in German generation, and low wholesale spot prices are issues that are increasing in severity every year.
From the graph above you will note that German exports have increased about 35% since 2009 as more renewable energy has entered the market. Note however that imports have decreased less than 10% since 2009. This is because of the intermittent nature of renewables. Exports take place at times of low demand and garner low prices. Imports typically take place at peak demand times and at peak demand prices. As a result German retail electricity prices have continued to rise despite the fact that generation capacity has exceeded domestic demand for a number of years. In my blog I have called this combination of increasing supply, increasing or stable imports and increasing prices an Electricity Paradox – or Electrodox
Non-Renewable Sources Supplying More Electricity Than 25 Years Ago
One of the claims by supporters of the Energiewende is that the growth of renewables will allow Germany to reduce its dependence upon coal-fired generation thereby reducing CO2 emissions. That has not happened over the past fifteen years and reducing coal-fired generation will not take place anytime soon.
Source: Heinrich Böll Stiftung
Germany is burning almost exactly as much coal today as it was 10 years ago. A number of new coal-fired plants have actually come on stream in the last 5 years. The addition of natural gas fired plants means that Germany is now generating more electricity from burning hydro-carbons than it was 25 years ago.
From the graph it might appear that renewable generation has largely replaced nuclear generation but the situation is a bit more complicated than that.
Germany has had surplus capacity for many years (all responsibly regulated electricity markets have reserve capacity) and has exported electricity since before the turn of the century. In the past those exports were primarily nuclear power at peak demand times and prices and German nuclear was a welcome addition to the central European energy mix. Now those exports are renewables at off-peak times and very low prices which cause issues for Germany’s neighbours.
It is true that every day of the year renewables make a significant contribution to the electricity supply in Germany, reducing the need to burn hydro-carbons and/or generate power from nuclear stations. The positive impact on CO2 emissions and other forms of pollution is significant. But it is also true that there are many times when renewables contribute very little generation and Germany must make use of all its thermal generating capacity and import power from its neighbours. As a result it has not been possible to retire any significant amount of coal-fired or natural gas-fired generation capacity.
Can Price Volatility Guarantee Security of Supply?
With renewables pushing conventional generation off the grid frequently and with little notice it is very difficult to operate thermal power plants efficiently or profitably. Frequent and unpredictable cycling of coal-fired and natural-gas fired plants increases operating expenses, reduces service life, and introduces uncertainty into revenue projections.
In the absence of any kind of capacity plan utilities are making economic decisions that can be in conflict with the goals of the Energiewende. For example, highly efficient Combined Cycle Gas Turbine (CCGT) facilities are being closed while lignite coal-fired plants remain open. Natural gas is simply more expensive than coal in Europe. As a result the rational economic choice favours plants that emit more than twice as much CO2 as well as harmful airborne pollutants.
The heated debate over the need for a capacity market in Germany has been going on for several years. For the time being nuclear plants contribute to a significant oversupply situation. That will change in 2022 when the remaining nuclear plants are due to be retired. Making sure that there is adequate and reliable generation capacity available to replace the loss of the nuclear plants remains a work in progress.
The government position at the moment is to allow high spot market prices to be the primary incentive for utilities to maintain adequate generation capacity. German Energy Minister Sigmar Gabriel has stated that “high prices at times of scarcity would ensure that conventional power plants would remain profitable”. The idea is that if prices are allowed to go high enough when renewables are not available (for example on calm nights), then it will still be possible to make a profit running a thermal generation station if only for a few hours on a few days.
This is the same approach taken by Texas which has raised its ceiling spot price to $9,000/MW (the average price paid is $45/MW). The response of Texas electricity utilities has been “That dog don’t hunt”. In January, 2014 they took out a full-page advertisement warning of a future plagued by blackouts and system failures.
Where Do We Go From Here?
Of course nobody can reliably predict the future so the following comments are pure speculation.
I cannot see how Germany can continue to develop significantly more wind and solar resources in the next few years. The imbalances between supply and demand at different times of the day and different months of the year are becoming too extreme. And with so much generating capacity in place it is difficult to imagine utilities building any new plants. What that means when the nuclear plants shut down is anyone’s guess but it does not look like a pretty picture to me.
The ability for other European countries to move aggressively with renewal energy development also appears to be constrained by the challenges to regional grid stability introduced by Germany. The need for a pan-European strategy seems clear.
Setting up a capacity market in Germany might address the profitability of existing thermal generation but would raise electricity prices. Despite a small decrease in 2014 Germany consumers still pay the second highest retail prices in Europe. Any further increase to support a capacity market would not be welcome.
There is certainly plenty of potential to continue developing solar power in southern Europe – particularly CSP plants that can provide power after sunset such as the Gemasolar plant that runs 24×365. The potential to make greater use of Nordic hydro resources through conventional pumped storage schemes or by adding generation capacity in a concept I have termed “unpumped storage” also exists. Both of these approaches would require significant investments in the European grid infrastructure as well as an increased level of political co-operation amongst Euro-zone members.
My assessment of the German Energiewende is mixed based upon what I feel is the ultimate goal – an end to the burning of hydro-carbons to generate electricity. Reducing hydro-carbon usage is not sufficient and will not transform us to a truly sustainable energy society.
What Germany has achieved so far is impressive. It is impossible to deny that. But I would have preferred to see even 20 GW of renewable energy equipped with storage of some sort so that some coal-fired or natural gas-fired generation could be permanently retired. A financial and policy commitment to storage technology that was as firm as the position taken by Germany with respect to solar panels would have been more constructive in my opinion.
If we had affordable and reliable utility-scale battery systems our energy problems would be over. We could easily develop enough wind and solar power to meet our energy demands by storing excess energy generated at mid-day and when the winds were blowing strongly. It would then be available to use at night and/or when the winds are calm.
Inexpensive and abundant energy from renewables would also go a long way to solving water shortages in coastal areas around the world because desalination on a large scale would become economically feasible.
One energy writer back in 2013 stated that we had already reached the promised land and that concerns about the reliability of wind were effectively over. She was talking about the building of the Notrees battery complex in Texas – the largest such facility in North America. At that time I pointed out the fact that the installed batteries could deliver only 25% of the capacity of the wind farm. More importantly, the batteries could deliver that power for a total of 15 minutes. The facility, which cost $44 million, was not designed to replace the energy output of the wind farm. It was intended to stabilize the output over very short periods of time and to allow for a few minutes to bring on other rapid response power sources when wind was ramping down such as when a weather front passes.
Despite the limitations of the Notrees battery complex it appeared to be a step in the right direction. That is, until it was announced that all of the batteries have to be replaced after less than 4 years of service.
Oh well, maybe they just got unlucky … or maybe not.
The Kauai Island Utility Co-operative also installed a large battery complex in 2012 using the same technology as that used at Notrees and all those batteries also have to be replaced. In both cases the replacement batteries will be lithium ion – from Samsung for Notrees and SAFT for KIUC. My personal experience with Lithium Ion batteries in laptops and smart phones does not make me confident that they can last more than 5 years but only time will tell.
Regardless of the potential longevity of large battery systems the cost of truly backing up renewable resources such as wind remains unacceptably high. It is worth considering a real world example in order to understand the scope of the problem.
Texas currently has over 12 GW of wind energy capacity, the largest amount of any state in the U.S. Many renewable energy advocates make the claim that “the wind is always blowing somewhere” so that periods of calm in one area can be handled by shipping electricity from distant locations where the wind is blowing. I would dispute that contention.
There are frequent occasions when large high pressure systems cover much of the North American continent resulting in calm conditions over very large areas. For example, from November 22 to 26, 2013 the winds across the whole of Texas were calm even as electricity demand increased.
The average capacity factor for Texas is about 28% so for this period of time there was a shortfall of at least 1.5 GW of wind generation. In order to replace this “missing” wind generation with energy produced from storage it would be necessary to have 4 days x 24 hours x 1.5 GW = 144 GW-Hours of energy storage. The battery complex at Notrees cost $44 million for 36 MW x 0.15 hours = 9 MW-Hours of storage which translates into about $4.8 Million/MW-hour or $4.8 Billion/GW-hour.
The bottom line? It would cost 144 x $4.8 Billion = $690 billion to provide backup for a relatively short period of calm weather for just the state of Texas. If that enormous capital expenditure could be amortized over 30 or 50 years (as can be done with a hydro dam or a coal or natural gas fired thermal plant) then it might make sense. But it seems unlikely that any batteries implemented today would last more than 10 years.
Despite the many problems that have been encountered with large scale battery installations and the rather daunting costs there are still interesting projects under development. Once again, Kauai Island Utility Co-operative is blazing new trails with the proposed 52 MW-hour array at Kapaia. The batteries will be charged using the output from a new solar array which, for the first time, will not be used to provide electricity to the grid during the daylight hours. The project is going to break ground in the spring of 2016.
If successful this project will be the new benchmark for renewable energy storage based upon MW-Hours (the largest such facility currently in operation that I am aware of is a 36 MW-Hour iron phosphate battery project in China).
22-Nov-15: Update: I noticed that another large LI-ion battery project was commissioned in the fall of 2014. The Tehachapi Energy Storage Project
came in at about $1.5/watt-hour, less than a third the cost of the Notrees complex so that is a major step in the right direction. Now if only the batteries can hold up we might be getting somewhere.
30-Nov-15: Update: I found another really interesting battery project – AES has been awarded a contract for a 100 MW facility
that can deliver power from storage for 4 hours – that’s a total of 400 MW-Hours which will be by far the largest battery storage project in the world. I have not been able to find a reference to the cost of this facility but from comments
made by the President of AES Storage the cost would be about $400 Million. Despite Mr. Shelton’s contention that the AES battery storage system is competitive with Natural Gas Peaker plants this would appear to require a very strange interpretation of costs. A recent Peaker plant in Texas is costing about $400/KW
of capacity and this plant has an unlimited ability to deliver continuous power. The AES battery solution costs $1,000/KW of capacity and can deliver for 4 hours. So the capital cost per KW-Hour is very much greater for the battery based system not to mention that the electricity to charge the battery has to be paid for and that cost will be larger than the equivalent cost of natural gas. This is a great project but like so many others is being oversold with questionable claims.
If you have read any of my blog posts you will know that I am not a big fan of roof-top solar.
Roof-top solar panels are expensive and inefficient to install. These systems also cause major issues for utility grids because of the need to handle the bi-directional flow of electricity to and from the customer. This additional complexity unfairly imposes additional costs on all electricity users who do not have roof-top solar panels. I have also argued that the value of all solar energy, including roof-top solar will decline significantly between 10:00 am and 2:00 pm as supply begins to exceed demand.
Over the past 2 years some of these concerns have become reality in many parts of the world.
The problems associated with integrating large amounts of roof-top solar into the electricity grid on Oahu have led to a steady decline in installations.
On October 13, 2015 it was announced that the Hawaiian Public Utilities Commission was ending the Net metering program whereby customers with solar panels received a credit for any electricity they returned to the grid. The inequity of that approach was that it equated mid-day electricity generation that was increasingly problematic and would exceed demand on some circuits to expensive peak demand evening electricity that was required by all customers including those that had roof-top solar panels. The new system will pay customers something close to market value for their solar power generation – a value that will be much lower than what was received under the net metering system. Customers with solar panels will now also have to pay a minimum monthly bill to help cover the costs of servicing their more complex inter-connections. Most observers have concluded that the impact will be a further reduction in roof-top solar additions.
Hawaii is not the only place where roof-top solar installations are declining significantly.
The world leader in roof-top solar for most of this century has been Germany. I personally have never understood why a country at a latitude of 48 degrees would spend hundreds of billions of dollars subsidizing roof-top solar when there is very little solar power available in the winter – the peak demand season for electricity use in Germany.
I don’t know if this reality has finally become apparent to the Germans but subsidies have been decreased significantly in the last few years and solar panel additions have dropped pretty dramatically.
As in Hawaii, other jurisdictions with high penetration of roof-top solar utilities are requesting and being granted the right to charge customers with solar planels a fixed monthly fee. They are also being allowed to pay customers market based prices for excess solar power rather than a fixed feed-in tariff.
In Spain the government has dramatically cut subsidies and support for solar power development over the past few years most recently targeting residential battery storage systems. In September the Spanish government won a court case that was an attempt to force restoration of these subsidies.
Most recently the Tennessee Valley Authority published the most comprehensive study I have seen yet on the costs and benefits of residential roof-top solar. The study concludes that the amount paid by TVA for rooftop solar is still higher than the true value to the system despite the fact that the TVA has reduced the payments from $.22/kwh to $.12/kwh since 2012.
When you consider these developments it is difficult to see the installation of roof-top solar panels maintaining the pace of the last few years in the developed world (China is a different story where government mandates will ensure that solar installations continue at an accelerated pace). In my opinion that is a good thing. Development of solar power needs a reboot to take a more rational and less subsidized approach.
Believe it or not I am actually a big believer in solar power. At latitudes below 35 degrees N/S I think it is absolutely the best renewable source available. By pairing concentrated solar power installations which include molten salt storage with photo-voltaic solar panels to reduce costs it would be possible to build plants which can supply electricity 7x24x365 (the Gemasolar plant in Spain can already do that). Utility scale solar plants have the added advantages of being easily equipped with sun tracking which significantly increases plant output.
By centralizing solar panel installations it is also much easier to integrate this generation into the regional grid and to supply battery or other short-term voltage stabilization storage technologies. A recent example of how effective this approach can be is the Kauai Island Utility Co-op’s drive to install 30 MW of utility-scale PV solar by the end of 2015 some of which will have battery backup. These facilities will consistently generate more than 50% of the electricity required at mid-day on the island.
For many parts of the world including the Southern United States, Mexico, Southern China, all of India, north Africa, the Middle East and many other areas solar power is the obvious choice when it comes to renewable energy. Innovative projects such as the Khafji Saltwater Desalination plant point to a future where not only energy but abundant fresh water will be available in these areas. Energy storage systems based upon molten salt, batteries, or other technologies need further development and significant R&D funding needs to be directed towards this effort. But there is no doubt that in the long run solar power in equatorial regions has enormous potential.
North and south of 35 degrees latitude I believe that other technologies including wind, geothermal, and hydro-kinetics offer a better value proposition for both subsidies and R&D funding.
I have read a couple of articles recently that have crystallized my thoughts about a topic that has me concerned about the future faced by my sons and daughter.
The article I read yesterday had the title The Raise that Roared. It is about an entrepreneur in Seattle that decided that he was not paying enough to his employees for them to live a middle class lifestyle. He came to the conclusion that the wage gap between himself and his employees was too large and as a result he lowered his own salary and made the minimum wage within his firm $70,000.
This move has been heralded as visionary and lambasted as cynical and/or socialist. But to my way of thinking it simply highlights the yawning gap between the rich and everyone else that has been growing for more than a decade (recall the “occupy” movement that started in 2011).
One of the contributors to this gap has been the increasingly obscene amounts being paid to corporate executives.
When I started working for Gulf Oil in the 80’s (one of the most profitable oil companies in the world at that time) the CEO of the company made something like 30-40 times the lowest paid worker stocking shelves in a warehouse or answering the telephones at the reception desk.
In the world of 2015 someone performing the lowest paid jobs for a company like that makes about $20,000 (or less) and CEO’s now regularly make $10,000,000 or more. That’s a multiple of 500.
Just last year Yahoo paid out a record $110 Million to executive Henrique De Castro. What incredible feat did he accomplish to deserve such a generous award? He was so bad at his job that he was fired after just 15 months.
I would attribute this rampant escalation in executive compensation to the growth of Mutual Fund ownership of the economy.
Mutual Fund managers rarely look past the last few quarters of results and really don’t have much interest in the long term viability of a company. They have been completely “hands off” when it comes to senior management. At some point the boys in the executive suite figured this out and started giving themselves massive raises and bonuses.
Initially they were probably somewhat surprised that there was no push back but now it is simply accepted that precedents set by the last insane salary increase at one company should be replicated by any company that wants to remain “competitive”. Sort of like elite athletes salaries except that in the world of sport athletes actually have to perform to keep getting their contracts renewed.
The other and perhaps even more disturbing trend is that increasing automation in every field is putting more and more power and control into the hands of those that can afford the tools that are used to replace human labour.
The story that got my attention in this regard was the recent announcement regarding the development of a robotic brick-laying machine. It is not surprising that such a machine could be built. In fact it was inevitable. But what this demonstrates is that even skilled labour jobs are not immune to automation.
It has often been said that technology does not eliminate jobs but in fact creates even more jobs. In my experience that is only because technology when first introduced doesn’t really work very well. Once it becomes mature there are very negative impacts on employment levels.
My father was an underground miner working for INCO in Sudbury Ontario. In the 1960’s INCO employed 17,000 workers. Today that number has dropped to less than 5,000 and the company produces more nickel than ever. Automation and robotics have replaced more than 7 out of 10 workers. Is that is a bad thing? I don’t think so. Those jobs were dirty, dangerous, and dull. But it makes you wonder what jobs will be left when robotics and artificial intelligence reach their true potential in perhaps 30-50 years.
Does anyone doubt that self-driving cars will be the norm within 20 years? There go all the taxi, bus, and truck driving jobs. The result should be more efficient and significantly safer travel and transport – that’s a good thing, right?
If you can imagine self-driving cars then isn’t it realistic to think that airline pilot jobs and many similar highly skilled jobs will also disappear.
You might counter that there will always be jobs where human intelligence and analysis will be required. Maybe that’s true. But back before computers were mainstream could anyone have imagined that a machine could defeat the most talented chess players in the world? And what about that 2011 episode of the game show Jeopardy where IBM’s Watson easily defeated two former champions.
I foresee the day where you walk into a neighbourhood medical clinic and stand in a booth where you are subjected to a full body scan involving multiple sensors. Within seconds a computerized diagnosis would be provided that will be much more accurate than human doctors could possibly come up with.
The widespread deployment of these advanced technologies will require energy – a lot of energy. I have written about many energy storage technologies on this blog and I am absolutely certain that one or more will become economical within the 30-50 year time frame. At that point it will be possible to generate all the energy we need and more from wind, solar, hydro, hydro-kinetics and geothermal sources at very low costs. Abundant energy will also mean abundant water because desalination of seawater will become viable.
In a world where robots and artificial intelligence have come to dominate large parts of the economy how does a social structure based upon humans earning a living by “working” continue to function? The short answer is “it doesn’t”.
Over the next 30 years structural unemployment will creep continually upward. Unemployment rates of 20%, 30% or more will become the norm. It will make no difference how well educated, motivated, skilled, or industrious young people are. They will not be able to compete with either automation or older, more experienced workers. The inevitable result will be social unrest at a scale not seen since the 1930’s. The “Occupy Movement” was only a dress rehearsal.
I don’t think this is a disaster in the making. Society will evolve in order to adjust to the new reality. But evolve it must and the sooner we accept that and start heading in the right direction the better. Allowing the wage disparity to continue to grow is exactly the wrong direction.
As the work available for humans decreases there must be a corresponding reduction in the amount of time that each individual is expected to work. A shorter work week, a higher minimum wage, and better benefits for part-time workers are not luxuries that we as a society cannot afford. These are evolutionary changes that must take place in order to maintain social order.
Personally I feel that shared ownership provides one opportunity to address both the executive compensation issue and the more equal distribution of wealth. Democratically controlled organizations, be they credit unions, co-ops, or not-for-profit organizations such as auto clubs providing insurance and even car-sharing services would never put up with outlandish executive compensation packages. And the one member, one vote structure of these organizations allows individuals to share equally in the responsibilities and the economic benefits that are the reason these organizations exist.
I’m sure that some people will consider this vision of the future to be radical and alarmist. It certainly will be different. I just don’t see any other way that things can turn out over the long run. And organizations as credible as the World Economic Forum and Oxfam seem to agree.
19-Oct-15: Update – Apparently $10+ million severance is “standard in almost every public company in every industry”
The proposed purchase of Hawaiian Electric Industries (the electrical utility for most of the Hawaiian islands) by NextEra will trigger a payment of $11.6 Million to Connie Lau, the CEO of HEI.
Maybe I’m crazy but it would seem to me that a “golden parachute” of that magnitude would be a very compelling incentive to do the deal whether or not it is in the best interest of Hawaiian utility customers. When this payment was questioned at a Public Utility Commission hearing Ms. Lau made the comment that this type of severance was “standard in almost every public company in every industry”.
I believe that many, many decisions impacting our economy are now made purely for the personal gain of executives. The poster child for that contention is Joseph Cassano who many analysts have identified as the architect of the speculative derivative trading that resulted in the financial crisis of 2008. During his 21 years with AIG he received compensation of $315 million and even after the dire consequences of his actions became apparent and he was forced to retire he continued to receive a consulting fee of $1 million per month.
I recently returned from a three week vacation in Northern Europe and during my visit I made a point of trying out the bike share/rental opportunities in a few different cities. In a previous blog post I mentioned using the bike share system in Chicago. In 2014 I was also able to try out a very similar system in Toronto. I think that after this last vacation I am getting a good sense of what works and what does not work so well with these systems.
Oslo, Norway. I think that the Oslo system would work very well for local residents who can purchase a smart card for the season for 150 Norwegian Krone (currently about $US 18). For tourists like myself the system does not work well at all.
First problem: getting a smart card. These are only available at the Oslo Visitor Center in the east part of the city center. And the smart cards must be returned to the same location. They also cost 100 Krone (about $US 13) per day which is a little expensive for this kind of service.
There are more than 100 bike stations throughout the city but sadly none at the Maritime Museum/Kon Tiki/Fram location which is where I wanted to go. I had to drop off the bike at the Viking museum about a 15 minute walk away.
My final complaint – no bike locks. This is very typical of bike share systems and frankly this is a big problem. Not being able to comfortably leave your bike for even a few minutes to make a purchase or grab a quick snack is a real drag. You end up spending more time trying to find a nearby bike station than you would making the stop. There are a few systems that do provide bike locks and it is a major advantage as far as I am concerned.
Port of Nynashamn, Sweden. After cruising for 9 days and having visited 6 cities we were feeling like a relaxing day when we got to Sweden. As a result we did not go into Stockholm. Instead we enjoyed some of the best desserts ever at the Jannis Cafe after which we burned a few calories biking along the waterfront.
Bike rentals in Nynashamn are through one of the two tourist offices – one at the waterfront at the foot of Centralgatan and the other further east near the industrial port. The staff at both offices were incredibly helpful and the bikes came with built-in locks and helmets. At about $US 2.40/hour these bikes were also relatively expensive but gave us the freedom to explore this charming little port. The short ride over to the outstanding Nynäs Havsbad Spa is very rewarding even if you don’t go for a sauna or massage. Watch out for the troll under the bridge.
Copenhagen, Denmark. Of course we had to try biking in the bicycle Mecca of the world. In our case the hotel we were staying at had rental bicycles so that was easier than using the pedal assist electric bike rental service which is also somewhat expensive at 25 Danish Krone (currently about $US 3.75)/hour.
Most of the streets in Copenhagen have bike lanes which are physically separated from sidewalks and the street by a small ledge with the result that you are never jostling with automobile or pedestrian traffic. The sites in central Copenhagen are easily reached by bicycle and getting around on two wheels is definitely the right way to see the city.
Both the rental bikes we used and the rental electric bikes come equipped with the same kind of “clasp” locks that we had seen in Sweden.
Paris, France.The Paris bike sharing system is very heavily used by locals and tourists alike. That is a good thing and a bad thing.
Getting a bike is very easy. You go through the menus on the screens at any bike station, swipe your credit card, and the system provides you with an ID number and requires you to select a PIN number. For the duration of your pass you just enter the code and PIN to unlock a bike.
One thing I loved about the bikes in Paris is the built in cable lock. That allows you to feel comfortable leaving your bike while you pick up some croisants or better yet some very affordable French wine. It is a simple system with a key to lock and unlock and I wish more bike-sharing systems offered this feature.
In Paris the cost for bike-share is 1.7 Euros for 24 hours or 8 Euros for a week. Those prices are as good as I have seen anywhere.
Like most true bike-sharing systems (Chicago, Toronto, London England) you only get to use the bike for 30 minutes for free. If you keep the bike longer than 30 minutes you pay an additional fee. In the case of Paris it is 1 Euro for the first additional 30 minutes, 2 Euros for the 2nd, 4 Euros for additional 30 minute periods. That means that if you keep the same bike for 2 hours you would end up paying additional fees of 7 Euros – not so cheap. But the whole concept of bike sharing is that you keep the bike for as little time as possible – essentially to get from “A” to “B”, then return it to a bike station so that someone else can use it. If you need a bike for a longer trip you can just park the first bike at a station and take a second and so on – in theory at least.
But that does raise one issue that can make bike sharing a very frustrating experience; bike stations that are full.
Bikes tend to accumulate at tourist sites in the early part of the day. I first encountered that problem in Chicago at the Field Museum. In Paris I encountered full bike stations on several occasions. The operators use trucks to haul bikes away from popular destinations but that seems to be a somewhat unreliable service especially in Paris.
So what do you do if you encounter a full bike station? In Paris you can enter your ID and PIN and get an additional free 15 minutes if the station is full. That may or may not be enough time to get to the next bike station on your route and that station could also be full. The struggle to find a spot at a bike station can get pretty annoying very quickly.
One thing you can do to reduce (but not eliminate) the “full bike station” problem is to pay for one more bike than you actually need. At 8 Euros for a week that is a small price to pay in Paris. With that approach if you encounter a full bike station along your planned route then you can just check out a bike using your “surplus” ID and PIN then check in the bike that is reaching its 30 minute limit.
If the bike station nearest your final destination is also full then you are still hooped. You can use your “surplus” ID and PIN to get an additional 30 minutes free rather than the 15 minutes you could get normally. But you would still have to just wait around and hope that someone shows up to take a bike leaving a spot open for you. If you are traveling with a group the wait to get enough empty spots is unpredictable and in the meantime precious vacation time is wasted.
There is a free mobile phone app (most bike-sharing systems have one) that lets you monitor the bike stations to find one that is not full. If you have a local SIM card or a good roaming plan that is an option. But the status of a bike station will change very frequently as bikes come and go so even that option does not provide a lot of certainty for planning purposes.
Given how busy bike stations can get in Paris would I still recommend using the system? Absolutely! Despite a few short waits to return a bike I never really experienced a serious problem and it was a gas to bike through the narrow streets of Paris. Motorists and pedestrians alike are used to dealing with the shared bikes (although they may not like them) so I never felt that I was in an unsafe situation despite not having a helmet.
London England.The bike sharing system in London is also heavily used. In fact, the website claims that there are more than 10,000 shared bikes available at 700 locations in the city.
A bike-sharing plan can be purchased at any bike station and costs 2 pounds stirling (currently about $US 3) for 24 hours. Additional fees of 2 pounds/30 minutes apply if you keep a bike longer than 30 minutes.
One minor annoyance with the London system is the requirement that you swipe your credit card to identify yourself every time you want to take out a bike. In my case I was traveling with a group and we put all the bicycle rentals on one credit card. That meant that we had to be together to get bikes and there were a few times when that wasn’t convenient. Having a code (Chicago, Toronto, Paris) provides a more flexible approach.
As with many systems the London bikes do not have locks and they also lack the baskets that Paris bikes were equipped with.
After this last trip I am now addicted to bike sharing. In many cities, especially in Europe, riding a bike is literally the fastest way to get around. That means that you can see more in less time which is awesome. Much as I also really enjoy walking in these cities it can get pretty tiring and hard on the feet. Biking for part of the way provides some relief.
If you have considered using bike-sharing but are nervous about traffic I would recommend that you give it a try. In the cities where there are bike-sharing programs everyone is getting used to pesky tourists that flip from street to sidewalk whenever it is convenient. If you want to enhance your experience take along a small backpack, lightweight cable lock and helmet.
I haven’t posted anything to the Black Swan Blog for 8 months. One reason is that I have had a few other projects that have really monopolized my time. But the other reason is that I usually write blog posts in response to something that interests me in the world of renewable energy. Frankly, not much has been happening since last summer.
I was pretty certain that Texas would be encountering severe problems because of the fluctuations in their wind energy generation. In fact, they had no problems at all last summer. That was helped by the addition of 1.3 GW (Net of reductions) of Natural Gas plant capacity (according to the December, 2014 Report on the Capacity, Demand, and Reserves) and a maximum peak demand of only 66.5 GW in August 2014 as compared to a peak demand of 67.25 GW in August, 2013 and an all-time peak of 68.3 GW in August, 2011).
I did find it interesting to note that ERCOT has now redefined the peak capacity percentages for wind resources. This is essentially the percentage of nameplate wind capacity that can be relied upon during peak demand times. Based upon 6 years worth of data and a large installed generation base this value is 12% for onshore resources in the summer, 19% for the winter. For offshore resources the values are 56% in the summer and 36% for the winter. Unfortunately the vast majority of Texas wind farms are onshore and peak demand is in the summer.
Some of my most popular blog posts have been about the experience with renewables in Hawaii and on that topic there have been a number of interesting developments. In many ways, at least with regards to solar energy, Hawaii is on the bleeding edge with regards to dealing with the opportunities and the problems associated with incorporating large amounts of solar energy into their utility grid.
The issues I had raised in an earlier post have started to reach a critical stage. The “success” of the rooftop solar program has brought many of the circuits in the state to the point where they are at risk of becoming unstable, possibly leading to failures or equipment damage. As a result new permit requirements have been put in place and in the last quarter of 2014 there was a dramatic drop in the number of rooftop solar installations, continuing a trend that started in January, 2013 (Note: I am not a big supporter of rooftop solar even in Hawaii for a number of technical and social equity reasons that I have discussed previously. The law suit between Solar City and the Salt River will determine whether or not a fixed infrastructure charge for solar panel owners will hold up in court).
In another blog post I was very critical of the Hawaiian Electric Company’s approach to renewable energy. It seemed to me that they didn’t have a realistic plan and were basically completely lost with regards to creating a sustainable energy environment. So it was no surprise to me that the company was sold to NextEra in December, 2014. NextEra brings economic clout and a track record of successful renewable projects to the Aloha state utility but will also bring a focus on the “bottom line” that was missing.
Meanwhile, Kauai Island Utility Co-op (KIUC) is taking what I believe is a much different and better approach to the development of solar power. A major focus has been on utility-scale solar installations. In December, 2012 the largest solar installation in Hawaii came on-line in Port Allen. On a sunny day the 6 MW facility is able to provide almost 10% of Kauai’s daytime energy needs.
KIUC recognized that solar power output can vary by as much as 70-80% because of passing clouds. As a result the Port Allen facility was designed to have a large battery backup component that could compensate for short-duration power drops. Through real-world operational experience they found that their initial battery configuration could not stand up to the rapid cycling experienced when trying to stabilize solar power. As a result the utility is replacing the lead-acid batteries in the initial configuration with lithium-ion batteries.
KIUC has not been deterred because of the operational problems it has experienced. The utility is taking the sensible position that these kinds of issues can be expected when trying to really push a new technology. They are in the process of commissioning an addition 24 MW of utility-scale solar which will provide up to 80% of Kauai’s daytime electrical needs. And if the new batteries prove to be cost-effective the utility can start to extend the impact of the solar array by releasing stored energy to the grid in the late afternoon and early evening.
As far as I am concerned KIUC is on the right track. Now if only they would combine a Concentrated Solar Plant with their PV installations they could provide solar power 24 hours a day as they do at the Gemasolar plant in Spain.
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