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Just Published on Grist: Piece on “Bill Gates and Our Innovation Addiction” March 3, 2010

Posted by Michael Hoexter in Climate Policy, Energy Policy, Renewable Energy, Sustainable Thinking, Uncategorized.
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The environmental news site Grist, has just published a piece I wrote that is a response to Bill Gates’ recent entry into the climate and energy discussion.

Check it out at:

http://www.grist.org/article/2010-03-02-bill-gates-and-our-innovation-addiction-a-recipe-for-climate/

Enjoy and comment if you like!

Michael

My New Post/Article on Post-Copenhagen Ethics March 3, 2010

Posted by Michael Hoexter in Climate Policy, Efficiency/Conservation, Energy Policy, Green Activism, Renewable Energy, Sustainable Thinking.
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Frustrated with the state of climate action both here in the US and at the COP15 meeting in December, I have been focusing on how to distill thinking about climate action to some simple rules.  I came up with a longer piece that builds on the work of Donald Brown at the Climate Ethics Center at Penn State University.

Since this is a long piece I have posted it in my “Energy and Transport Policy” section as a three part post starting from this page :

http://greenthoughts.us/policy/post-copenhagen/

I also have a PDF version here, which some may find easier to read or refer to.

Please read and comment!

Michael

Cap and Trade: A Tangled Web… A Project-Based Alternative – Part 4 November 5, 2009

Posted by Michael Hoexter in Efficiency/Conservation, Energy Policy, Green Transport, Renewable Energy.
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In the first two parts (part 1 and part 2) of this post, I discussed cap and trade as well-intentioned but a fundamental misapplication of the permit trading policy framework.  I also went on to identify 11 basic elements of any climate policy regardless of instrument.  In the third part, I describe a package of mostly familiar policies that integrated together will have a far more profound effect on emissions that the cap and trade system.  In this, the last part, I offer a second alternative to cap and trade which I believe is the most aggressive and secure approach to cutting emissions, though does not exclude elements of the package in part 3.

Project-Based Carbon Mitigation Policy (PCMP):  A Heterodox Climate Policy Framework

I’ve redesigned an approach that is not entirely new but has been sidelined in current high-level climate and energy policy discussions.  I’m calling it Project-Based Carbon Mitigation Policy– PCMP.  Instead of or in addition to starting with an abstraction like a carbon price, PCMP starts with specific large-scale regional, national or global projects that with greater than 95% probability will cut emissions substantially within the next few years; these projects implement technologies and processes that are known to directly replace fossil fuel use, directly reduce demand for fossil fuel or, with some agreed-upon degree of certainty, sequester carbon emissions. A goal and timeline are set for the reductions based on the implementation of that technology or process then PCMP reverse-engineers the economic and social policies that will enable the project to take place in a timely manner.  PCMP does not exclude nor discourage the use of abstractions like price mechanisms and society-wide or global targets but it starts with the security and relative certainty of projects that are technology- and process-based, supervised by some responsible party or regulator, and funded.   PCMP may end up being a route to a set of policies very much like the Comprehensive policy discussed in Part 3.  A PCMP policy approach also openly acknowledges the role of government leadership in achieving carbon emissions reduction goals, an attitude which has been shunned in recent history in the US and elsewhere.

Viewing projects as the fundamental element of policy also allows necessary supporting infrastructure that facilitate many types of emissions reduction to become the object and focus of high-level climate policy.  Build out of the electric grid and electrification of transport are key to a zero emissions industrial/post-industrial society though, due to the variable carbon intensity of electricity production their exact contribution as separate individual projects cannot be quantified.  A combined approach linking low- or zero-carbon electrical generation with electrification of transport would qualify as PCMP projects.

Carbon mitigation projects based on tested technologies and processes are the only assured means of cutting emissions, along with their supporting infrastructure.  Carbon pricing may influence projects to be initiated but the projects themselves are the primary building blocks of policy.  The focus on what might be called “secondary” or tertiary levels of climate policy has, in my observation, interfered with or at least obscured the importance of these primary on-the-ground projects.

The most directive end of the PCMP project spectrum would be a government program, funded by tax revenue, that uses “command-and-control”  to push through a project that is vital to our ultimate survival as a society implemented either by government contractors or via government employees.  On the other end of the spectrum in terms of directiveness are rulings, changes in tax law, and the institution of technology and process standards that will tweak existing market behavior.  A PCMP project will have a target emissions reduction by a certain date; optimistic goals should be shunned in favor of “worst case” scenarios to ensure that goals are met or exceeded.  Incentives should be aligned for the project leaders, whether they be public or private employees, if they achieve or, better, exceed emissions targets.

Many existing government programs in the area of environmental protection already are project-based policies in that an existing technology, set of technologies or process is chosen for implementation but, to date, not taking the next step to target specific carbon emissions reductions.   In the US, we have a number of house weatherization programs including a grant program for low-income homeowners and rebate programs for other homeowners.   To convert these into PCMP programs, one would need to make specific greenhouse gas mitigation goals and a timeline, tuning the policy instruments to achieve these reductions along the stated time line.  However, the notion behind the PCMP concept is that policies that support one or another project may be generalized to a sector-wide or economy-wide policy or have knock-on effects.  National policies or international agreements would be “reverse-engineered” to support key projects as priorities.

Project-based Policy, Infrastructure and Synergies between Technologies

The building of new infrastructure or its supervision, key to carbon mitigation, almost always falls to government, which undertakes the building of infrastructure on a project by project basis.  The emphasis on market solutions to climate change, which focuses on influencing the decision-making of individual market actors ignores the fact that most infrastructure is built by government planning and programs that anticipate rather than respond to economic demand.  One way to understand the sequence of events in  building infrastructure is perhaps best summarized by the line: “build it and they will come”.   Within this Hollywood formulation, what is captured is the ability of physical infrastructure to create or support markets as well as influence behavior beyond the influence of prices and goods for sale.

The carbon price signal, either the clear carbon tax version or the muddied cap and trade variety, will not by itself initiate the building of new infrastructure in a timely manner, especially if we consider the politically likely (low) level of the carbon price in the next few years.  Even if we look to the history of infrastructure for market behavior shaping infrastructure (“Go West, young man” and the US railroads), in the face of catastrophic climate change we are looking at an accelerated implementation of new infrastructure as replacements for serviceable but polluting infrastructure, requiring a pro-active government role that anticipates rather than responds to trends and price signals.

In addition, basing policy on or limiting policy discussion to carbon pricing alone has been a way to say:  “we don’t know what the solutions will be”.  However, besides ignoring the key role of infrastructure, this is, at this point in history, disingenuous and more importantly time-wasting.  As I have pointed out in two posts I wrote over a year ago, we now have about 24 technologies or processes that together could cut carbon emissions by at least 90%.  These technologies and processes ranged from CSP with storageinternetworked wind powerwith hydroelectric storagetransport electrificationafforestation, to even voluntary (partial) veganism.  Eventually much celebrated technologies like building-integrated photovoltaics will also play a major role.  Other, more “traditional” climate policies that may be established more generally like a carbon price may aid the implementation of a PCMP policy but the combination of a carbon price and PCMP projects will achieve emissions reductions most rapidly.  The project-based approach starts with a core of concrete intended outcomes in the way of realized projects but then welcomes and expects follow-on effects both from the realization of these projects and from the facilitating generalized policies like a carbon tax or fee.

Many of the gains associated with the most powerful of the 24 technologies, with a couple exceptions, are based on synergies between different technologies, not the solo implementation of those technologies.  The impact of electric vehicles on total emissions varies a great deal depending on the type of generation that is used in a particular area of the globe.    A carbon price will help urge this process on but will not of itself incentivize the creation of these synergies.

In renewable electricity generation there are some synergies between technologies, for instance between hydroelectric storage and wind power, which would need to be integrated in a planned manner across numbers of jurisdictions.  These synergies between technologies can only be realized rapidly via integrated resource planning with adequate financing.  Grid operators have already engaged in integrated resource planning anyway throughout the over 100 year history of the electric grid.  Linking this planning with carbon mitigation is a step towards the PCMP policy framework.

Prospective PCMP Projects (US)

PCMP Example #1: CSP with Storage

One of the few standalone, scalable renewable energy technologies that can directly replace fossil electricity generation one-for-one is Concentrating Solar Thermal Electric Power (CSP) with thermal energy storage (TES).  With sufficient transmission and judicious siting, CSP with storage could supply almost all the world’s energy using a small percentage of the area of the world’s deserts.   DESERTEC which is a large CSP investment and policy project for Africa, the Middle East, and Europe, could be configured as a PCMP with specific targets for replacing fossil generation.

The example PCMP project below applying CSP with thermal storage provides close to certainty in emissions reductions and can be accelerated with increased funding.  This contrasts dramatically with the lack of control over emissions under carbon pricing alone inclusive of cap and trade with its false “certainty”.  Effective carbon pricing would catalyze this type of development but would not “cause” it as would a targeted program focused on implementation of the technology.

CSP with TES – American Southwest/West of Mississippi

Region: 6 US States (California, Arizona, Nevada, Utah, New Mexico, Texas) – Replace Energy Production in 19 Western US States.

Emissions Reductions Source: Replace fossil electricity production by specified gas and coal power plants by 241 million MWh/annum by 2020 in the WECC, SPP, MRO and ERCOT grids (50% natural gas/50% coal) without addition of new fossil generation. By 2030 replace 1200 million MWh/annum fossil generation in NERC.

Technology: Concentrating Solar Thermal Electric Power with Storage (Capacity factors from 35% to 70%)  – 50GW installed by 2020, 250 GW installed by 2030 – mean capacity factor >50%.  Formation of CSP industrial base to replace fossil generation.

Target CO2 Emissions reductions from 2007 baseline: 181 million metric tonnes C02/annum by 2020, 905 million metric tonnes CO2/annum by 2030.

Finance mechanisms: guaranteed $.10/kWh rates (inflation adjusted) for 20 years for electricity sales plus $(2 + capacity factor/.25)/W (2010-2013), $(0.5 + capacity factor/.25)/W (2014-2017), $(capacity factor/.50)/W (2018-2020) innovation grant funded through carbon tax/fee (adjusted for the effect of the 30% Investment Tax Credit).  Favorable tax treatment for mothballing and early retirement of fossil generation.

Project Team: US DOE responsible leading industry stakeholder committee (US EPA, Fish and Wildlife, plant developers, utilities, grid operators, state and local political leaders, environmental advocates).

Supporting national and international policies:

  1. Carbon tax/fee facilitates implementation.
  2. Infrastructure: Renewable energy “smart”/supergrid
  3. Guaranteed Rates for Renewable Energy
  4. Contracting with Stakeholders for Greenhouse Gas Reduction Targets
  5. Special Master to Determine Compensation for Retired or Semi-retired Fossil Power Plants
PCMP Example #2:  Combined Renewable Energy Power Plants

A combined renewable power plant connects a diverse set of renewable generators that together produce electricity according to the demands of grid operators and ultimately grid users.  More complex than CSP with storage, this technology is still emerging though simply a matter of organizing existing technologies via smart, renewable-energy oriented transmission network.

Combined Renewable Power Plants – US

Region: All US States (can be generalized to almost any region of the world)

Emissions Reductions Source: Replace fossil electricity production by specified gas and coal power plants by 241 million MWh/annum by 2025 in NERC grids (50% natural gas/50% coal) without addition of new fossil generation. By 2035 replacing 1200 million MWh/annum in NERC.

Technologies: Wind, Solar (CSP, PV), HydroelectricGeothermal, Marine/Wave Energy, Biomass, internetworked generators to load centers, “smart” grid management technologies.

Target CO2 Emissions reductions from 2007 baseline: 181 million metric tonnes C02 by 2025, 905 million metric tonnes CO2 by 2035.

Finance Mechanisms: Bundled wholesale feed-in-tariffs with performance bonuses based on load-responsiveness of combined renewable power plants.  Amount of tariffs as yet undetermined and would vary with renewable resource intensity.

Project Team: US DOE responsible leading industry stakeholder committee (US EPA, Fish and Wildlife, plant developers, utilities, grid operators, state and local political leaders, environmental advocates).

Supporting National and International Policies:

  1. Carbon tax/fee facilitates implementation.
  2. Infrastructure: Renewable energy “smart”/supergrid
  3. Guaranteed rates for renewable energy/feed-in tariffs
  4. Contracting with stakeholders for GHG reduction targets
  5. Special master to determine compensation for retired or semi-retired fossil power plants
PCMP Example #3:  Home Weatherization

The US Department of Energy has a goal of weatherizing over 1 million homes as part of the 2009 American Recovery and Reinvestment Act, a.k.a. the 2009 stimulus package.   This investment of $8 billion dollars is divided between $5 billion for grants via the states to weatherize homes of low-income homeowners and $3 billion dollars for rebates to other homeowners for weatherization upgrades to homes.  The low-income grant program will limit grants to $6500 worth of work per home.

A review of the standard weatherization packages in 2002, indicates that the full package that would cost in the area of $5000-$6500 could cut from up to 7.5 metric tonnes of carbon emissions per year per house in high emissions/high heating demand areas like the Midwest, in particularly inefficient houses.  In areas with lesser heating and cooling demands,  like the Western US, the savings would be maximally 2 tonnes for an inefficient older, small single-family dwelling but the price tag would only be in the order of $2500/home.

However looking at the components of these packages there are certain measures that have much higher carbon reduction return on investment than others, most notably air sealing, programmable thermostat installation, water heater resets, low flow shower heads, and compact fluorescent lighting.  An additional reduced package of these high impact measures would cost from $1000 to $1500 per home leading to emissions reductions of about 2 metric tonnes on average, to as many as 3.4 metric tonnes.  It is possible to design then a “rapid” first-pass program of reducing emissions that would triple or quadruple the number of homes visited per unit expenditure.  Later, a second program could revisit these homes to address the remaining issues like inefficient refrigerators, furnaces, insulation and water heaters that have substantial returns in reducing carbon but are more expensive.

In a few years time, we may have better measures based on among other things passive house technology, which may enable “deep energy retrofits” of existing houses that enable greater energy and emissions cuts with similar or lesser investment.  In these cases, PCMP projects such as this one can revise their targets upwards.

Accelerated Home Weatherization Program with Carbon Targets

Region: All US States (start with high heating/high cooling areas)

Emissions Reductions Source: Reduce domestic combustion of fuel oil, natural gas, reduce domestic demand for electricity, especially at baseload.

Technologies: Building envelope air sealing technologies, insulation, high efficiency fluorescent lamps, refrigerators, water heaters, furnaces, programmable thermostats.

Target CO2 Emissions reductions from 2007 baseline: 60 million metric tonnes by 2020 from 30 million homes, 120 million metric tonnes by 2030 from 60 million homes.

Finance Mechanisms: Tax revenues fund low-income homeowner/renter grants (up to $6500 per home) and consumer rebates for energy efficiency upgrades.

Project Team: US DOE and state weatherization programs, utility officials.

Supporting National and International Policies:

  1. Carbon tax/fee funds and facilitates implementation.
  2. Contracting with stakeholders for greenhouse gas reduction targets
  3. Decoupling investor-owned utility income from energy sales
  4. National and state mandates for energy efficiency
  5. Green building and energy efficiency certifications/standards

A PCMP project once it is approved, organized and financed can move immediately to the generation of detailed design, operational plans and the begin of construction or implementation. The reverse engineering portion comes in figuring out how to get to the point where the technologies or processes can be implemented.  The key difference between a PCMP (aided perhaps by other policies) and a policy that essentially remains entirely agnostic about solutions is that a PCMP adds a stated intention and tasks a skilled project team to achieve a concrete material change in the processes that generate greenhouse gases.  Then policy is built partially around that intention and the project team that is tasked with realizing that intention.

The PCMP approach is I believe the most aggressive and gives those who will be ultimately held responsible for protecting the climate, the world’s governments, maximal ability to accelerate efforts if needed.  To achieve the very ambitious 350 ppm goal and follow  the “Emergency Pathway”, the PCMP approach would have the best chance.

Good Intentions Alone No Longer Suffice

Cap and trade has been a convenient mechanism for politicians to avoid fundamental but necessary conflicts while giving themselves and others the impression that they are “doing something” about climate change.  As the first international climate policy, it has attracted a community of people that have seen it as the sole alternative to inaction, therefore undeservedly has become a magnet for the good intentions of both the uninformed and the somewhat-better informed.  The “cap” is a reassuring physical metaphor that suggests a level of control over emissions which, as I have demonstrated, the policy itself undermines.  As cap and trade appears to address 5 of the 11 domains of climate policy, it is seductive for politicians to try to set up a “one stop shop” as a means to address the climate and energy problem.

However, there are much better policy frameworks out there of which I have shown two examples.  Cap and trade’s fatal ability to insulate the ultimate decision-makers from the process of pushing for emissions cuts on the ground can be avoided in a number of ways.  Above, I demonstrated a project-based policy framework that I called PCMP, which builds policy from the ground up and puts at the center the key role of developing zero-carbon infrastructure in addition to price-based instruments that influence investment and behavior.  Or, in part 3, I showed how  it is possible to implement a nine-part composite of simpler but synergistic policies that is more flexible, will be more effective, and ultimately more comprehensible to the public at large than cap and trade.  Crucially this set of policies does not give away or obfuscate governments’ responsibility to protect society and the environment.

The cap and trade policy is a twisted remnant of a political era in which government was supposed to pretend that it wasn’t really government.  It has fooled no one except some of its supporters.  Government must be decisively and centrally involved in the implementation of carbon policy and there must be a rapid re-discovery of the value of good government in leading society through difficult times.  Furthermore cap and trade as an instrument contains within it an open invitation for corruption and “capture” by powerful financial interests with few incentives to make concrete investments in the energy or land-use future.  Any effective climate policy must establish clear guidelines and openly acknowledge government’s supervisory role in the transition to a new energy economy.  I wish there were more shades of grey in this regard, but there aren’t.

No set of policies is, however, a magic bullet if there is not strong popular support for decisive action on climate and popular acknowledgement of the necessity for government’s leadership role.  As it currently stands in the United States, the public still is woefully misinformed about climate, with for instance, a prominent pair of columnists for the New York Times perpetuating “global cooling” myths in their latest book.  Against this background, climate policy appears to be a partisan affair rather than actions of the human community as broadly defined as possible that are based on our best science.  If cap and trade is presented as the only alternative, this further undermines the cause of climate action and government responsibility because of the fundamental flaws in the policy.  The equation of cap and trade with good intentions on climate action must be irrevocably broken.

Ultimately, political leaders must campaign with passion for the future of our planet and our societies, with empathy for the economically downtrodden and dispirited, informing the public about the alternatives available to minimize the impact of our two century fossil fuel bacchanal.  Within the context of a better informed citizenry, only then can an effective climate and energy policy truly take effect, though the time to start on both campaigns is now.

The Renewable Electron Economy XIV: Renewable Energy Finance and Feed In Tariffs March 17, 2008

Posted by Michael Hoexter in Efficiency/Conservation, Energy Policy, Renewable Energy, Sustainable Thinking.
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In the last couple posts in this series, we’ve established that in industrial economies, price expectations for energy are low for fundamental economic reasons (mechanical work must displace human labor or animal work) but that in the US and Canada, these expectations are further depressed by low population densities, in many locations extreme ambient temperatures and temperature swings, and a preference for “big” vehicles and buildings. All of the latter mean that more mechanical or thermodynamic work needs to be done by energy-consuming machines to reach a desired outcome. As petroleum prices soar, we are starting to feel the pinch of an economy based on exhaustible fossil fuels, priced well below their actual costs for too many years. The direct and indirect subsidies to fossil fuel extraction and overuse were part of the now somewhat outdated Cheap Energy Contract that holds governments and energy regulators responsible for keeping energy prices much cheaper than actual costs, especially if we take into consideration the environmental and climate costs of fossil fuel combustion.

The expectation that energy be cheap and our heavy reliance on these massively subsidized but polluting forms of energy, present special challenges for the building of a new clean energy system. Transforming the energy business involves building large amounts of infrastructure that must be financed either through tax revenues (thereby subsidized by other parts of the economy) or private investment that is paid back through consumer payments for energy or energy-related goods or services. If the prices of the latter must be low, private investment will not be commensurate to the task as investors will have few chances to see their money again with a reasonable return. If additionally there is an anti-tax bias in the country, there will be few funds available from public coffers to finance infrastructure.

The major costs of renewable energy, especially renewable electric generators, are the initial capital costs of the generators, transmission lines, and the clean energy storage devices we will eventually need to balance energy flow on the grid. The fuel is free renewable energy flux but as we have learned, that flux is, in the case of the most plentiful forms (wind and sun) not of such a high power density, so renewable energy technologies must take in a wide cross section of that flux to come close to matching the output of conventional generators using more compact fuels. This means building many capture devices and large storage devices. “Many”, “large”, and “new” mean a greater initial capital investment to match our current power needs, front-loaded costs that must be paid over time.

The critical importance of increased energy efficiency in this equation is reducing at some point in the future the overall societal need for capital investment in future clean generators as well as being able to throttle back now on existing fossil generators and the development of new polluting generators.

Existing Clean Energy Finance Mechanisms

If the Cheap Energy Contract is becoming difficult to sustain for a whole host of reasons, alternative society-wide economic agreements about energy finance are still in flux. There are a number of contenders, none of which have fully established themselves in an era of dwindling fossil resources and increasing carbon constraint. Many are “end runs” around existing social agreements about energy pricing and the building of new infrastructure.

No (Energy) Social Contract, No Subsidies

Some players on the energy market (many of whom believe they represent the lowest cost producers) claim that regulations and government subsidies raise the cost of energy. These energy free marketeers echo sentiments of libertarian (a.k.a. neo-liberal) economists who believe that less regulation automatically leads to markets determining the least expensive price for energy by competition. A totally unregulated market in energy would not price in the cost of pollution including carbon emissions. Some green-inspired market advocates then would allow a cap and trade system to assign a cost to carbon emissions without other new regulation or government subsidy.

Carbon Pricing

After Kyoto, groups of regulators and activists worldwide have been working towards assigning a price to carbon emissions that may have the effect of driving energy markets towards cleaner solutions. Within this general model there are two contending groups: one that believes the carbon price should be set by a cap-and-trade system that determines the carbon price by the balance of supply and demand for pollution permits and the other that believes that a carbon tax or fee set by regulators is more efficient. In either case, the price on carbon will at least start driving energy users towards more efficient use of expensive energy. It is doubtful that at this point in time, regulators will set or engineer the carbon price to be so high as to advantage some of the currently more expensive renewable energy solutions in a purely economic comparison. At very high carbon prices, great economic pain would be inflicted for a number of years as low carbon alternatives to our current energy conversion system would take a while to develop and represent singly and together large capital investments. Those who hope to rely solely on carbon pricing tend to downplay the historical benefits that fossil energy producers and fossil electric generators enjoy representing and benefiting from as they do decades of sunk costs and subsidies that most carbon pricing systems are not designed to account for; therefore they can act as a catalyst but only at very high levels will switching to renewable fuels appear high on the agenda.

Tax Credits

The American renewable energy industry has some large wind, geothermal and solar projects on the ground because of tax breaks that large institutional energy investors have benefited from on and off over the past couple decades. The ITC or Investment Tax Credit allows investors to write off 30% of their investment from their taxes while the PTC or Production Tax Credit provides investors in certain mostly renewable generators a few cents tax credit that adds up to a substantial incentive. The ITC and PTC were cut out of the Energy Bill of 2007 and are now again up for a vote and potential veto by President Bush. As a form of renewable energy finance, the ITC and PTC have been effective for those renewable energy projects that have won power contracts with utilities and can otherwise compete on cost inside US utilities’ generation portfolios. The tax subsidies have worked best as supplements to other forms of subsidy and pro-renewable regulation.

Tax subsidies have proven to be politically vulnerable because they are a form of indirect subsidy that are difficult to understand or empathize with for the average voter. Furthermore the benefit of these subsidies has accrued in the US disproportionately to larger renewable projects. The current funding plan to reinstate the ITC/PTC pits the renewable energy industry and its Congressional supporters directly against fossil fuel companies and their allies that has led to the current political fight over reinstating the tax credits, the outcome of which will be decided soon.

Direct Subsidies

US, Japanese and European governments have long funded research into renewable energy through various national labs and grant programs. In addition, some demonstration or early commercialization stage power plants have received grants as a way to reduce risk and help obtain additional private funding. While the US has not under the current administration directly funded the building of new power plants, the European Commission has issued grants to help build new solar power stations in Spain.

As I noted in my post introducing the Cheap Energy Contract concept, there are green energy supporters who believe that massive pre-commercialization subsidies either from the side of government or grants/investments from private sources will create revolutionary cheap renewable energy technologies. Shellenberger and Nordhaus see government investment in renewable energy research as key to what they have named their book and think tank, a “breakthrough” in clean energy generation costs. Google’s RE<C strategy sees private investment as a partial or complete replacement for government subsidy to the same end.

Both direct and indirect subsidy by government requires at some point tapping into revenue from taxes, either revenue diverted from existing budgetary items or revenue from new taxes.

Rebates

Some financial subsidy to renewable energy takes the form of upfront payments upon the purchase of a renewable generator, mostly small generators for homes or businesses. The California Solar Initiative is the largest example of a rebate program but other US states have had similar rebates. Funds for these payments usually come from the electric rates paid by all ratepayers within a region or they could also be paid through tax dollars. While these programs in combination with tax breaks have been able to stimulate solar development, there are reports that these programs are overly bureaucratic and are not stimulating enough renewable energy development. The advantage of a rebate program for residential customers and small businesses is that it lowers the upfront payment and lessens “sticker shock”.

Renewable Energy Quota Systems

Certain states in the US and various European countries have adopted requirements that utilities generate a certain percentage of the electricity they sell from renewable sources by defined target dates. Renewable Portfolio Standards or RPS laws assess fines to utilities that do not achieve these goals. With the RPS, a utility is supposed to find the “least-cost” renewables though there are some RPS laws that stipulate carve-outs for particular local resources, requiring that a certain percentage of the RPS be wind, solar, etc. By arrangement with regulators, utilities should be able to recover any disparity in cost between the renewable resources and regulated generation rates though this is not necessarily a part of the RPS law’s intention: the notion being that in the requisitioning and bargaining process the cost of the renewable generator will be brought down in price to levels close to the (mostly fossil) market rate. RPS laws are present in some US states, varying from levels such as California’s 33% by 2020 to as low as 5% in some states. Some states are allowed to fulfill their RPS requirements by buying green energy certificates from outside the state.

Without carve-outs for particular resources or technologies, RPS statutes drive utilities to buy energy from the currently most mature, least expensive technologies, usually onshore wind. The quota does not place the positive motivation for achievement within the actors who make the crucial decisions, the utilities, who are put in the position to avoid a penalty rather than gain a reward. Some leaders of utilities with a better regional energy mix, with a keener business sense, or with ethical motivations have taken a somewhat more inspired and creative approach to the RPS mandates than others. As RPS’s are based on achieving a standard level, overcompliance is not necessarily rewarded.

Renewable Energy Certificates/Green Power Marketing

RPS’s and voluntary carbon offset programs are often backed by “green tags” or REC’s (renewable energy certificates). These certificates are a way for investors in renewable energy to make additional money in excess of the wholesale electric rate they earn by selling the green “attribute” of generated power to third parties not involved in the power sales transaction. RPS standards that allow the purchase of RECs are big stimuli to what is called sometimes “Green Power Marketing”, i.e. the selling of RECs. These tradable certificates are the closest thing to a “free” market in renewable energy; notably they are a derivative of the energy itself, traded on an auxiliary market rather than a payment for energy delivered.

Feed-in Tariffs: A New Energy Contract?

With the exception of carbon pricing, in the US system some combination of the above are currently operative, yet there is growing interest in feed-in tariffs, a system that operates on different principles than each of the above. The reason for this interest is that for most concerned policy makers and renewable energy activists who take the threat of global warming seriously, transition to a Renewable Electron Economy is not happening fast enough. Many states are lagging in achieving RPS goals. The general agreement that a move to renewable energy is advisable has not been backed up with policies that enable effective action. Because of rapid rates of installation of renewable generators, people are looking to the example of Germany and Spain, where feed in tariffs have been most successfully established. Germany more than doubled the amount of renewably generated electricity on its grid from 2000 to 2007 (6% to 14%) while Spain has moved up to become the number two producer of wind electricity and is leading the fast growing solar thermal electric industry.

Feed-in tariffs represent a “New Energy Contract” in that they are a social agreement that re-prices energy to allow a transition to a higher proportion of renewables in the electric system. Feed-in tariffs are performance-based incentives that pay premium per kilowatt-hour rates to renewable generators to compensate them for early adoption of new cleaner technologies. Feed-in tariffs in their most successful forms are priced to reflect the cost of generation plus a reasonable profit. The point is to help jump-start the renewable energy industry by rapidly creating economies of scale in the manufacture of technologies like solar panels, wind turbines, solar thermal collectors or geothermal exploration and well-drilling. Furthermore the stable return on investment for generators reduces the finance costs for projects, which ordinarily are very high for new riskier ventures. FITs are a form of open 10 to 20 year power purchase agreement for qualified generators in distinct categories. Grid access and payment are guaranteed for generators that meet whatever the qualifying criteria that are set in the feed in tariff law. The costs of the feed-in tariffs are borne by all ratepayers in proportion to their electricity use and in Germany currently account for 3% of electricity expenditures by consumers. A rate-pooling mechanism across the widest possible rate-base is desirable to spread the costs among the beneficiaries as we all benefit from increased use of renewable generation.

As an example of a FIT menu of tariffs, in Germany the 2009 onshore wind tariff is 8 eurocents/kWh, offshore wind 14 eurocents, large solar PV farm 35 eurocents, small roof-mounted PV 45 eurocents, hydroelectric 4 to 7.5 eurocents depending on size, biomass 8 to 10 eurocents with a 2 eurocent bonus for innovativeness or district heating, geothermal ranging from 7 to 15 eurocents depending on size. Tariffs can vary depending on the strength of the renewable resource as well as on the size of the generator itself. A full menu of feed-in tariffs can extend one or two pages at most, detailing distinct classes of generator by size or location.

One difference between feed-in tariffs and other policy instruments is that feed-in tariffs can operate almost entirely as a standalone policy alternative, depending on a few social institutions for their effective growth. Feed-in tariffs benefit from a financial system that recognizes feed-in tariffs, is prepared to offer low interest loans based on the security of the tariff, and also allows mutual fund-style joint investment in renewable generators, allowing small and large investors to participate. Unlike tax based systems in the US, the funding for feed in tariffs runs largely through the private economy; emphasis is placed on the bankability of a project under the tariff system. Funding for a solar installation on a home or apartment building can become as simple as getting a car loan, while funding a large renewable installation will after financial due diligence enjoy the interest rates usually accorded the lowest risk business loans. Feed-in tariffs are successful because when priced right they are a strong incentive and design the electricity market to prioritize increasing the proportion of renewable generators. They also incentivize the project builders and owners themselves, those who make the decisions to site and buy renewable generation technologies. Yet they also put pressure on plant developers to efficiently design, situate and maintain their generators as payment is contingent upon producing electricity.

Historically feed-in tariffs of any sort were actually first formulated in the United States in 1978 with PURPA which required utilities to buy energy from renewable generators at the “avoided cost” of fossil generators. PURPA was implemented differently state by state and had a mixed history of success in helping the US renewable energy grow. PURPA also was criticized by some as expensive in an era of low natural gas prices as well as lack of acknowledgement of the cost/benefit ratio of renewable generators. In California, the first generations of wind turbines and some early solar installations have their roots in California’s implementation of PURPA.

German legislators from Left and Right in the 1990’s arrived upon feed-in tariffs as a way to promote local and regionally produced green energy and protect it from lowball pricing by the German utility industry. A product of the collaboration between the very conservative CSU and the Greens, the original tariff was a guaranteed per kilowatt hour wholesale price to small hydroelectric plants, wind generators and solar installations. In the year 2000, the pricing formula of cost plus a reasonable profit was instituted in the first German Renewable Energy Law (EEG) to further promote the development of economies of scale in a wider range renewable technologies. The new law introduced the concept of “degression” which means that future manufacturing efficiencies are forced by reductions in the per/kWh cost each successive “class year” of generators. The German law is considered an unqualified success for the German renewable energy industry that now employs approximately 210,000 people in a country of 82 million people. In a country without the traditional large hydroelectric resources of its more mountainous neighbors in the EU, Germany now generates 14% of its electricity from renewable sources with the goal to reach 25-30% by the year 2020.

Some critics of feed-in tariffs claim that they are not competitive or market-based but analysts of these tariffs point out that they are just different market design mechanisms than other renewable promotion mechanisms. Feed-in tariffs shift competition from between merchant generators or project builders to competition within each technology type between technology companies. The lowest cost/highest return technology will get more business as projects built with that technology will be able to make more money.

The nomenclature “feed-in tariffs” is considered to be not very descriptive nor euphonious, so people have suggested a number of alternatives. A leading US feed-in tariff advocate and consultant, Paul Gipe prefers “advanced renewable tariffs” which distinguishes older “feed-in” arrangements to the grid from the second generation of tariffs. U.S. Representative Jay Inslee has called them “Clean Energy Buy Back” in his recently introduced national legislation.

Spanish Innovations

Both Germany and Spain have had a great deal of success with feed in tariffs but actually implement them differently. Germany have fixed tariffs that are determined using the formula average project cost plus reasonable profit and a fixed reduction of the tariffs for each generation of generators to pressure the industry to become more efficient. The Spanish have added to this a market option that can allow generators to make more or less money than a fixed tariff depending on the momentary demand for electricity and therefore its market price.

In many countries now with partially or completely deregulated electricity systems, wholesale electricity generation prices are determined either in anticipation of or by the minute-by-minute balance of supply and demand. There are also markets for additional services that help stabilize the grid. In Spain renewable generators are being encouraged to participate in these markets by being able to opt into these markets while still enjoying some bonus for their clean, renewable attributes.

In the Spanish system then, every year generators can choose whether they want to be compensated with a constant, German style tariff or operate by what they call the premium tariff system. In the premium tariff system, a generator can be compensated either a little less than or somewhat more than the fixed tariff for their technology depending on the market price of electricity at the time of generation. In the case of concentrating solar power or solar thermal electric, in Spain a generator can chose to be compensated at a fixed rate of 27 eurocents per kWh or be compensated somewhere at a rate between 25 and 31 eurocents depending on the market price of electricity at the time of generation. The latter scheme is more remunerative for a solar technology and may also incentivize the use of thermal energy storage to take advantage of late afternoon and evening peak demand. Most generators in Spain opt for the market option as it generally pays off. The Spanish system also allows the tariffs in existing agreements to be adjusted by as much as 2% a year to reflect inflation or changes in cost. Furthermore, in Spain, generators over a certain size are required to forecast their output to grid operators or be penalized.

The Spanish premium tariff system is then designed through successive generations of installations to gradually bring renewable generators into a wholesale electricity market where time of use and other services to the grid and electricity consumers will become the basis for payments in the future once cost parity between conventional and renewable generators has been reached.

Pre-conditions for a Successful Feed in Tariff System

If feed-in tariffs are the most successful system for accelerating renewable energy deployment, what conditions need to be present for these policy instruments to actually work?

1. Social acceptance and enthusiasm needs to be widespread for transitioning from fossil to renewable sources of energy, allowing marginal increases in electricity cost in exchange for cleaner energy. Some social and political patience will be essential in meeting inevitable challenges and adjustments required to work out the nuances of any new program.

2. The tariffs should be set at a price that compensates plant builders for their costs plus a reasonable profit

3. The tariffs need to be guaranteed for a period of time (10 to 20 year contracts) that assures return on investment and the law itself should be in effect for as much as a decade or longer to create a more stable investment climate for renewables. If some technologies no longer require this protection they can be phased out of the coverage of the tariff sooner than other technologies.

4. A tariff law that encompasses a wide variety of technologies helps balance the strengths and weaknesses of each generating technology. Including residential, community and wholesale generation technologies will help push renewable energy development on all fronts.

5. Tariffs should “degress”, go down in price, with each successive class-year of generators to encourage early action and increases in industry efficiency. A feed-in tariff system will become obsolete when costs are brought down and prices for fossil fueled generation inevitably rise.

6. A pooling mechanism for sharing costs of the tariffs should be instituted and spread across as wide rate base as possible. Within that rate base, costs need to be shared equitably.

7. Resolving physical or social barriers to energy development such as transmission or assessment of environmental impacts should be standardized, transparently negotiated with all stakeholders, and compressed in time given the urgency of increasing the proportion of renewably generated electricity in the generation mix.

8. Energy investment should be open to and remunerative for all types of investor through both cooperative and large corporate investment vehicles. In deregulated markets, barriers to utilities investing in generation directly need to be amended to allow utilities to profit from feed-in tariffs alongside other investors.

9. A financial system that recognizes the value of the tariff’s purchase agreement and loans money accordingly is key; sometimes public lending institutions can pioneer lending for early projects to demonstrate the viability of the system to private-sector banks.

If the above conditions are present or can be created, success with a feed-in tariff system is highly probable. If the groundswell in the US continues apace we may very well see successful feed-in laws on a local or national level within the next few years.

Defeat of Tax Credits/Bali — A Day of Shame for the US December 14, 2007

Posted by Michael Hoexter in Green Activism, Renewable Energy.
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By a single vote, the Senate today failed to pass the tax credit package for renewable energy.

http://www.renewableenergyaccess.com/rea/news/story?id=50843

There are dinosaurs still alive in the US.

To those who contacted their Senators/Congresspeople…thank you!

Also, the news from Bali is not good either.

Just as the old energy economy has relied on massive subsidies and favorable policy conditions to continue to mine and drill for fossil fuels around the world, the building of a renewable electron economy is going to require a policy environment that adequately prices in the externalities of climate, geopolitical uncertainty, and environmental degradation into markets.  We in the US are continuing to lag behind other countries in taking steps to re-orient ourselves.

We have just taken a step back, but maybe this is an occasion to re-group and connect with the American people about the value of renewable energy and investment in our common future.  From this may come a determination to create policy that is more durable and more transparent to everyday people, so lawmakers can no longer play with our common future without repercussion.

The Renewable Electron Economy Part IX: What is Renewable Energy Anyway? December 9, 2007

Posted by Michael Hoexter in Renewable Energy, Sustainable Thinking.
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I’ve been posting on the Electron Economy/Renewable Electron Economy for the past 9 months but have been relying on the Justice Potter Stewart definition (“knowing it when I see it”) of renewable energy. Most people tend to define renewable energy by listing certain natural resources: “Oh, its wind, solar, geothermal, wave, tides, etc.” Some hopefully more illuminating definitions do exist: a Google Web search reveals the following range:

I think it is possible to come up with a more rigorous, more specific definition that gets closer to the reality of renewable energy, even though there will always be an element of complexity and imprecision in the definition.

Interactive Definitions of Energy

Renewable energy is one of a group of terms that you might call interactive definitions of energy: energy as it matters to people, not the energy concepts that are usually taught in basic physics and chemistry classes.

Pure physicists have no use, for instance, for the concept of “primary energy”, which is useful in power engineering and energy economics. “Primary energy” means the type and amount of energy or fuel that needs to be input to produce a certain finished “secondary” energy product. Coal, natural gas, or uranium can function as the primary energy to produce electricity and crude oil or tar sands can function as the primary energy for finished petroleum fuels. Renewable fuels can function as primary energy too: incoming sun, wind or water falling can be seen as the primary energy for electricity or bio-energy. The efficiency of an energy conversion process is measured by how much of the incoming energy is converted to the useful output form of energy (secondary, tertiary, quaternary).

The “primary”-ness of primary energy has only to do with the fact that this is the form in which humans first find the energy resource. It is an interactive definition of energy; in pure physics the only primary energy is that of the Big Bang 13 billion years ago. In the practical world, humans are interested in energy as a resource not as simply an object of scientific study.

The assessment whether something can function as primary energy, an energy resource and furthermore what type of resource it is, renewable or non-renewable, is an interaction between the human variables and the natural or given variables. People need to have discovered or invented a technology to convert primary energy into a usable secondary form and the energy needs to in some way improve upon human beings natural capabilities.

To make a clear definition of naturally occurring energy types, it helps to differentiate a few concepts in interactive energy, the energy that matters for human use.

Energy Flux, Energy Stores and Energy Events

To arrive at a more precise definition of renewables, I’ve worked out three broad categories that differentiate energy in relationship to human use and timescale: energy flux, energy stores, and energy events.

  • Energy flux is good scientific concept that describes the flow of energy or matter in any number of different ways. Flux is the Latin word for flow but flux has the advantage of not have the concrete image of a flowing liquid or river associated with it. Fluxes can come and go. Gravitational and electromagnetic fields can be described as having a flux. Material in a liquid or gas can be described as having a flux or flow rate. Best of all, the strength of energy flux can be measured in watts per square meter: energy flow through a cross-section of space. Energy flux is not necessarily constant but can vary over time. Energy flux can be naturally occurring or manmade (light from a bulb, for instance).
  • Energy stores are what they sound like, a place or substance where energy is stored. An energy store is only an energy store (for human use) if humans have a technology to convert the store into useful energy: uranium 235 is only an energy store if people have a nuclear reactor and uranium 238 would only be an energy store if there is a fast neutron reactor and a fuel reprocessing cycle. The total mass-energy of a substance, i.e. the “E” in E=mc^2, is a huge number but is not an energy store as we humans do not yet have the technology to completely annihilate matter into energy. All energy stores are potential energy but not all potential energy can function as an energy store (think of rocks on the tops of mountains, for instance). Energy stores allow people to time the energy conversion to approximately when or exactly when the energy use is required; they are also exhaustible. Energy stores can be natural or artificial, the latter being “energy storage”. Energy stores can be measured in units of energy like joules, BTUs, kWh, barrels of oil equivalent etc.

  • Energy events are irregular but not necessarily uncommon events with a strong energetic dimension like lightning, hurricanes, tornadoes, earthquakes, volcanic eruptions even meteor impacts. People cannot count on energy events happening though some are more common than others; they are however very important for the history of the earth and life. Energy events tend to have a disruptive effect upon human plans and occupy a disproportionate place in our imaginations and mythology. Energy events are not as important in defining useful energy types as they are, as yet, not useable by human beings. Energy events can theoretically be measured in units of energy (joules, etc.) and also as a function of units of power (watts, etc.) over time.

While these concepts might seem abstract I’ll demonstrate below how they can be used to define renewable and non-renewable energy.

Characterizing Energy

Non-renewable Energy

  • Fossil Fuel – All fossil fuels are energy stores given our current technology. We have the technology to tap into the energy of most fossil fuels and can time the release of their energy according to our timetable.
  • Fissionable Fuels – Uranium and plutonium can both function as energy stores with current technology. We have the technology to time the release of their energy, though they are not as responsive to control as fossil fuels

As non-renewable energy is exhaustible, it makes sense that it functions as an energy store.

Renewable Energy

  • Solar – Solar energy is natural energy flux from the sun in the form of electromagnetic radiation measurable in watts per square meter. On earth’s surface it is periodic, variable but consistently available within the course of days, weeks and months. The energy is not exhausted by use.
  • Wind – Wind energy is also a recurrent natural energy flux, measurable in w/m2 and variable over time. Wind energy is derived from solar energy flux that replenishes wind energy. Theoretically one can capture 100% of the energy of wind in a given place but it will return with sufficient atmospheric heating.
  • Hydropower – hydropower is a recurrent natural energy flux, potentially measurable in w/m^2 that is often paired with an artificial energy store. It is dependent upon two opposing natural energy fluxes, solar radiation (water evaporation) and earth’s gravitational field. In the era of fossil fuels, hydropower has been easily integrated into our energy system because it so readily lends itself to artificial storage (dams).
  • Biomass – biomass functions a natural energy store that is replenished by renewable energy flux (solar energy) but limited by availability of water and the fertility of the local soil. People and other living things compete for the energy contained in biomass so its usable energy content can deteriorate quickly depending on local conditions. Biogas and biofuels, both derivative of biomass can also function as energy stores. The energy content of biomass can be measured in joules, BTUs, etc.
  • Wave – Wave energy is recurrent natural energy flux derivative of wind energy occuring on the surface of bodies of water. Though measureable in watts/m^2, it is better measured by watts/m wavefront, as most energy is contained at or near the surface.
  • Tidal – Tidal energy is recurrent periodic natural energy flux derivative of the interaction of the gravitational field (also energy flux) of the moon and the earth. With a tidal barrage, tidal energy can be stored. It can be measured in watts/m^2

While the above are fairly easy to characterize the two below are a little more controversial and complicated:

  • Geothermal – Geothermal is a complex phenomenon derivative of radioactive decay of elements in earth’s core, mantle and crust that heat rock and water in the crust. A geothermal well taps into a combination of geothermal heat flux from the mantle and crust and stored heat in the rock that is slowly replenished by heat flux through the rock. There is controversy about whether geothermal is renewable because the rate of heat extraction by people sometimes exceeds the rate that it is replenished by heat from the surrounding rock and the mantle below. Geothermal is both an energy store and energy flux. Geothermal energy is expressed both as a rock temperature (which could be converted into joules) and as a heat flow in watts/m^2. Geothermal energy flux can also diminish or stop in a given location as conditions change in earth’s mantle.
  • Ocean Thermal Energy Conversion (OTEC) – OTEC has not yet been commercialized but uses the difference in temperature in tropical ocean waters between the surface water and deep water to run a heat engine. OTEC could be considered “cold mining” of the deep waters and the question remains whether warmer water will cool and sink fast enough to replenish water extracted from the depths: whether the downward flux replenished the stored cold of the deep water. There may be serious climate consequences if deep water gets too warm because of this type of cold extraction. In the current terminology, OTEC taps into an energy store that may or may not be replenished by natural energy flux within a human usable time scale.

Defining Renewable and Non-Renewable Energy

Using these categories, one can define non-renewable energy more easily than renewable energy.

“Non-renewable energy sources are energy stores with zero or a minute rate of replenishment relative to its depletion by human beings. Most non-renewable energy sources are converted to usable energy by thermal or nuclear reactions. Non-renewable energy sources have stored the natural energy flux of Earth’s biological and geological past or of the formation of elements in the early history of the Universe”

Renewable energy on the other hand, appears both as natural energy flux and as an energy store. It is interesting to note that the types of renewable energy that, in the course of the 20th century were most well integrated into the customary energy mix (hydroelectric, geothermal, and biomass) are both either energy stores or have traditionally been integrated with an energy store.

Here is a hopefully more rigorous if somewhat long definition of renewable energy that only resorts to using a list in the second sentence:

“Renewable energy sources are types of natural energy flux useful for human ends regularly occurring on or near Earth’s surface and, additionally, useful natural energy stores that are replenished by natural flux within the timeframe of conceivable human use. All known renewable energy sources originate in, or are close derivatives of, electromagnetic radiation of our Sun, the Earth’s and Moon’s gravitational fields and heat radiating from earth’s interior. Renewable energy sources are practically inexhaustible though some sources such as geothermal and ocean thermal energy conversion may become locally depleted by human use at a rate that exceeds replenishment by natural flux.”

I believe the first sentence is sufficient but the next sentences add a little more detail.

A Paradigm Shift in Power Engineering

Have we learned anything by drawing the distinction between energy flux and energy stores? One pattern that becomes very clear is that conventional energy system is heavily dependent and focused upon energy stores. The ability to time the release of energy from coal, natural gas, uranium, petroleum, dammed rivers or biomass has been a key support for how we manage our energy system and the electric power grid. We can call this the conventional energy paradigm, where energy is defined as a stockpile of fuel in tandem with the appropriate energy conversion devices.

If we are going to build a renewable electron economy, there needs instead to be a focus on how to capture and monitor the strongest or most readily available renewable energy flux and also how to supplement this with non-polluting energy stores where possible. The management of an electric grid with renewable energy flux means investment and innovation in three areas: energy capture devices, storage devices, and more sophisticated natural flux monitoring. The latter has been used already for demand forecasting (weather effects power and energy demand) but now it will also forecast supply, doubling or tripling its importance in the equation. This means more collaboration than ever between meteorology, geology and power engineering. It also means a paradigm shift in how the managers and planners of the electric system and grid discuss energy: changing from the relatively static world of naturally occurring energy stores to deal with the dynamic world of energy flux will take time, effort, and innovation.

‘Nuther Action Alert for US Readers: Renewable Energy Support December 4, 2007

Posted by Michael Hoexter in Efficiency/Conservation, Green Activism, News and Events, Renewable Energy.
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Luckily, and in part through the work of Nancy Pelosi, the Renewable Energy provisions have gotten back into the Energy Bills and now it’s time for Congress to vote on them.  What is contained in these bills is the bare minimum support that renewable energy projects need in the form of tax credits and a national Renewable Portfolio Standard.

http://capwiz.com/re-action/issues/alert/?alertid=10616351&type=co

Solar Nation, the activist organization in favor of solar energy, has a neat little gizmo that sends the letter of support to your congresspeople.   It’s just about a minute of your time to keep the US, kinda sorta in line with the intentions that most of us have to depend more on renewable sources of energy.  We are lagging many of our European friends in this regard, so we need all the help we can get.

The Renewable Electron Economy Part VIII.2: The Electric Farm – 2 November 30, 2007

Posted by Michael Hoexter in Green Transport, Renewable Energy, Sustainable Thinking.
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In Part 1 of this post, I started to construct a scenario where a medium-sized farm would do most or all of its work using electric farm equipment. This model of a farm had 1 large tractor with 250kW(335 hp) maximum power output and 4 smaller tractors with 50kW (67hp) maximum power output (though working at 50% power on the peak energy day). I started to sketch out what would be the electric power demand on the peak day of the year and how many battery packs and battery pack exchanges (assuming that a quick battery exchange system was part of the tractor design) would be required to fulfill that demand within a workday of 10 to 14 hours. I have put to one side claims of companies that suggest that they have high energy density ultracapacitors that can charge and discharge very rapidly (EEStor for one). If such ultracapacitors were more than vaporware, a recharge tender vehicle rather than a battery exchange tender would be preferable as tons of batteries would not need to be changed in the field during the workday.

I figured that on this day all tractors would be required to do work for 10 hours and that the large tractor would work at 100% power while the 4 smaller tractors would work at 50% power. Road vehicles do not operate at anywhere near maximum power for most of the time they operate, so farm vehicles in certain tasks (deep plowing in particular or driving a heavy piece of machinery through its power take off drive shaft) are mass energy and power consumers. The diesel equivalent of the large tractor might consume 150-200 gallons of diesel fuel in a 10 hour day if it worked continuously at maximum power.

In actuality most farm tasks do not require maximum power but some do, therefore the variations in power among the tractors even on this peak energy use day. I assumed that half the weight of the tractor could be battery weight as the electric motor would be much smaller and lighter than the equivalent diesel motors it would replace. I assumed the total weight of these tractors would be the same weight as fully ballasted diesel tractors of a similar power rating. Using current lead-acid technology, there would need to be many battery exchanges with the high power tractor operating at full power all day (13 exchanges) but less with smaller tractors working at half-power (3-4 exchanges). Using current lithium-ion technology, there were much fewer if any battery exchanges per workday but of course much greater expense to purchase the battery packs using approximate pricing for 2007.

A table of the calculations for this scenario can be found here.

Charge Infrastructure

The type of battery makes a big difference in the amount of in-field battery exchange required and it also makes a difference in the size and power of the available charge infrastructure. We will assume that the tractors can plug in and recharge their onboard batteries at the same rate as battery packs on the external charger.

The charger and spare battery packs would be installed inside a vehicle-accessible shed or barn, especially in colder and wetter climates; in warmer, drier climates, a open shed with a roof may be sufficient. The battery tender or tractors would need to be able to dock on the recharge racks and have access to the batteries so that the battery enclosures or transport sleeves could interface without unnecessary lifting of the tonne or half-tonne battery packs. The battery packs might be stored on recharge racks with fittings that allow easy lock and release of the packs by horizontal sliding on rollers. A hydraulic mechanism might push and pull the packs in and out of the charge racks into either the battery tender or the tractors themselves.

The number and size of the farm’s battery inventory would depend in this example on the battery technology (lead-acid and lithium ion), its quick-charge potential, and the power of the charge unit. We will assume that all batteries, battery packs and vehicles have the power electronics and wiring to allow complete recharge within 60 minutes, which is within the claims of makers of the current generation of nanostructured batteries. Let’s say the charger operates on a 480V 220 amp circuit with a 106 kW power capacity. This means that the charger can recharge 4 of the lead-acid (25 kWh) packs per hour or takes a little over 70 minutes to recharge one of the 125 kWh lithium ion packs. In my calculations, I’ve allowed for there to be three times as many offboard as onboard lead acid batteries, with a one to one ratio for lithium ion packs as they carry more charge and therefore last much longer in the field than the lead acid packs.

Battery Inventory

The all-electric farm, in order to handle a total peak day energy use for the 5 tractors of 3.5 MWh (3.5 million watt hours) would use an electric tender vehicle (a specially designed truck with cranes or hydraulic battery pack tubes that remove and “inject” battery packs into the tractors or the charger stand) that also uses the same type of battery packs as an energy source to do the work of exchanging and carrying the heavy batteries to and from the charger to the tractors in the fields. I have assumed that the battery tender would need 25 kWh of energy to do one complete exchange whether for a smaller or a larger tractor (though in reality there would be somewhat less energy required to exchange 2.5 {small tractor} rather than 8 {large tractor} tonnes of batteries). The farm total, for all mobile uses, will have energy needs that vary then from 3.55 MWh for lithium ion to the much higher 4.225 MWh for lead acid, the difference being made up by the 25-29 battery exchanges performed by the battery tender with the lead acid batteries versus 2 exchanges with the lithium ion battery packs.

The farm’s battery inventory will vary by number, weight and cost of batteries, depending on battery chemistry, given that we are planning for 3 times the number of offboard charging batteries for the lead acid chemistry while just a one-to-one ratio for the lithium ion batteries. The battery packs in this scenario are either one metric tonne (2200 lbs) or a half tonne, for either chemistry. The large 250kW tractor would carry 8 metric tonnes while the smaller 50 kW tractors would carry 2.5 metric tonnes of batteries (we will assume that the larger tonne-sized packs are exchanged on the smaller tractors rather than a single half tonne pack).

As the lithium ion batteries on the four smaller tractors do not need exchanging on our peak day, we will only allow for a single tonne-sized battery pack to remain in reserve for these tractors. The 250kW tractor is working at peak power all day in this peak energy day scenario (on other days, the smaller tractors might work harder and therefore use extra batteries that on the peak day are used by the larger tractor) so requires reserves for all 8 of its battery packs. We are then looking at 12 metric tonne-sized battery packs off the tractors on the chargers with 18 metric tonnes of battery packs on the tractors. The tender requires one metric tonne sized battery pack to do its work (more than enough for 2 battery exchanges). We are then looking at 31 metric tonnes worth of lithium ion batteries for the entire farm distributed in 29 tonne-sized packs and 4 half-tonne packs with a total capacity of 3.87 MWh. Assuming an energy density of 125 Wh/kg (the energy density of the Tesla motors ESS) and a 2007 cost of $.48 per Wh, the 2007 battery cost for the lithium-ion based farm would be $1.857 million dollars.

The battery inventory picture is somewhat different for the lead acid battery-based system. More exchanges, more offboard battery reserve, and lower energy per unit weight means greater total battery inventory tonnage to supply the tractors and a much harder working battery tender. The onboard battery capacity for the 5 tractors will be 450 kWh and offboard will be 1.35 MWh. The battery tender will need to carry two tonnes of batteries for its own use in order to be able have the energy to do 25kWh battery exchanges and exchange its own batteries after pretty much every exchange (the capacity of the lead acid pack is 25 kWh). The battery tender would need to work at a frenetic pace all day to be able to effect 25-29 exchanges. Offboard, then there would need to be 60 tonnes of batteries on the charger and onboard 20 tonnes on the 5 tractors and the battery tender for a total of 80 tonnes of batteries. Despite the increased tonnage of batteries needed, the 2007 cost of the lead acid battery inventory is relative to the cost of the lithium ion battery inventory, favorable: with lead acid batteries at $.12 per Wh and 25 Wh/kg, the 80 tonnes of batteries with a capacity of 2.00 MWh would cost just $240,000. The lower capacity requirement and therefore much lower than 1/4th the total cost of the lead acid batteries is due to the more complete usage of the lead-acid capacity through more battery exchanges; in the lithium ion scenario there is excess battery charge both on the battery charger and onboard the smaller tractors.

Farm Energy Requirements and Renewable Energy

One of the major advantages of using electricity is that it is a highly flexible energy carrier that is particularly suited to using renewable energy as its primary energy source. In addition electric motors are about 3 times as efficient as internal combustion engines, and have high torque at low rpm, perfect for farm work. On a given farm there may the opportunity to use wind, solar, biogas, or waste biomass to generate electricity, beyond the use of the latter two to generate process heat for crop drying and barn-heating. Before we design any renewable energy systems for the electric farm, we first need to determine what are its overall energy requirements. As this is an idealized scenario we are free to make assumptions that would need in the future to be modified by more accurate statistics and real-world prototyping of a renewable and sustainable farm energy system. We will assume that non-mobile energy use on a farm is one-third of mobile farm energy use, which is slightly higher than the 20% of farm energy that was delivered in the form of electricity in 2002.

We have found that a lead-acid based battery-exchange system will require more battery exchanges which on our peak day scenario leads to a total mobile energy usage for our electric farm of 4.225 MWh while for the lithium-ion based scenario the usage is 3.55 MWh, barely over the energy needed by the tractors themselves. For the sake of simplicity, we will take a value in the midpoint between these two numbers and divide it by 3 to arrive at an average daily mobile energy use on a farm, which we will say is 1.4 MWh. We will assume that tractors are used 200 days/year, so annual mobile energy use for the farm will be 280 MWh. If non-mobile use of the energy on the farm is 1/3 of that of mobile usage, then we come up with 450 kWh/day, and assuming that stationary systems must operate 300 days/year we come up with annual non-mobile energy usage of 135 MWh. The proportions and total amounts of these figures will vary greatly depending upon the type of agriculture that is being practiced on the farm, the amount of on-farm processing that goes on, the climatic zone, and the types of crops. Using this scenario we come up with a total yearly energy requirement of 415 MWh.

What size of renewable energy system would deliver this amount of energy per year to the farm?

While in reality, to supply this energy, farms will have access to some combination of wind, solar and biomass energy, as well as grid electricity, we will design this model electric farm using solar arrays for comparative purposes to show how much farm land would be needed to generate the energy needed. While often, solar systems tied to the electric grid are sized to cover the energy costs rather than the actual site energy needs in kilowatt hours, here I will size the system to produce enough energy to cover all on-farm energy needs, assuming that the utility will credit the farmer for excess production. In net metering schemes, the electric utility credits a customer who uses a solar array to generate electricity at the daytime rate that is higher than average per kilowatt-hour costs. So solar arrays are sized to zero-out the bill, even though often this means that in net energy terms, the customer is using more than they are producing. Net metering does not allow system owners to make money from their installation, only to cover costs. The goal here is zero net energy.

A small innovation in the area of switches might take advantage of the PV solar array’s DC output, which is the same current type that batteries need. Sending current through an inverter to transform it to AC can lose from 4 to 8% of the energy. Ideally, a solar array on a farm with high battery recharging requirements would have a smart switch that directs current to the charger or to the grid depending upon the state of charge of the battery packs. For the purposes of this simplified model we are assuming negligible inverter losses in outputting AC to the grid.

To generate 415 MWh per year, the size of solar array depends on where the farm is located and what type of solar array is chosen. In agricultural settings, a typical larger array is mounted on the ground if there is not sufficient space on top of farm buildings. Arrays are usually mounted at a fixed angle to maximize production while minimizing the land footprint, while larger arrays sometimes use a motorized tracking system to follow the sun from east to west every day. Rob Erlichman of Sunlight Electric counsels agricultural customers to use a 10 percent fixed tilt or less to cut down on valuable land usage (higher tilt angles require substantially more spacing between them. Alternatively, arrays mounted on livestock-proof racks at sufficient height would allow grazing and sun shelter for animals below the solar array. In California’s Central Valley, an array rated at 200-250 kW could generate 415 MWh of energy per year. An array such as this would occupy anywhere from 1 to 3 acres depending on the spacing and the angle of installation of the units. In the Northeast an array of around 275-325 kW would be required to generate the same amount of power.

Photovoltaic arrays are very handy sources of power but remain expensive because of a shortage of crystalline silicon. On the other hand, the purchase or long-term lease of a solar array (or wind turbine) locks in energy prices (payments on the purchase of the array as the sunlight is free) for a period of at least 20 to 30 years, when fossil energy and grid electric prices will no doubt rise. Current costs for crystalline silicon PV arrays are somewhere in the area of $8/watt with the additional costs of $1 to $2 per watt being incurred for more distant connections to the grid. Taking a middle course of $9/watt for 2007, the array in California would cost before rebates $1.8 to $2.25 million and assuming a rebate of $2.5/watt, $1.3 to $1.6 million net. In the Northeast, the larger array required would cost from $2.48 to $ 2.92 million at current prices. We would expect pricing in 2009 to be significantly less, when more silicon production capacity is online. Cost projections by manufacturers of new thin film materials, like Nanosolar’s Powersheet, are hoping to reduce the cost of panels to $1/watt or less that may yield installed costs of less than $3/watt. Installations with these less expensive materials may occupy a larger footprint depending on their efficiency which is sometimes half that of the more expensive crystalline silicon arrays.

A farm with these energy and equipment requirements will probably occupy several hundred acres depending of course on the type of agriculture and crops. The solar array, depending on where it is installed and whether the land it occupies can be used for other uses, will use less than 1 or maybe 2% of the farm’s land. Generating electricity on the farm may not be the most efficient use of the footprint of the farm, especially if the farm contains no marginal or unproductive land. On the other hand, using farm buildings or pasture for energy production will duplex energy use upon the primary use, reducing the energy generation footprint to near zero.

Summary and Evaluation of the Electric Farm Concept

Farming will remain dependent on petroleum derivatives or biofuels with questionable environmental effects and efficiency until farm equipment manufacturers apply contemporary and near future electric vehicle technology to tractors, harvesters and other powered farming implements. Somewhat ambitiously, I have taken on a moderately difficult farming task, a peak energy use day on a middle sized farm, to see whether currently available electrical power systems might be able to handle the task requirements with no revolutionary technology breakthroughs.

Working through this scenario has yielded a number of crucial results.

  • Lithium ion batteries, now revolutionizing electric vehicle development, also would make a huge difference in high-energy, high-power requirement farm tasks. Because of the five fold advantage in energy content of these batteries versus lead acid, it may be possible to forgo the use of a battery tender and in-field battery exchange: of the 5 mobile farm vehicles, only the large tractor working constantly at full power all day required 2 battery exchanges, leaving the battery tender idle most of the day. While not ideal, it would be more economical for the tractor to travel back to the battery charger for an exchange even though it would interrupt work flow for perhaps 45-60 minutes twice during the peak-use day. While I haven’t worked out a price for the battery tender, eliminating this aspect of the farm’s workflow would be a large savings; all farm vehicles would either refuel directly from a high voltage charger or by exchanging batteries directly at the charge stand. By contrast lead acid batteries would either require multiple battery exchanges during busy workdays or curtailment of energy intensive tasks.
  • As energy dense as lithium-ion batteries are in the battery universe, lead acid remain by contrast extremely affordable. The 80 tonnes of lead acid batteries might cost around $240,000 while the 31 tonnes of lithium ion batteries might cost $1.9 million. Despite the tonnage of lead acid batteries required and the frequent changes, they cost in this scenario less than 1/7th of the lithium ion battery cost, because, in part, we have allowed spare lithium ion capacity in this scenario.
  • Reducing the power and energy requirements of farm tasks, especially as designed for electricity-powered machines, remains an area of huge potential savings and triple bottom line benefit. No- and low-till agriculture has been a big success as they both save energy and preserve soil integrity. Future modifications of farm tasks may allow farmers to produce as much food with less energy expenditure, less environmental damage, and lower capital expenditures on overpowered machinery.
  • Speculative high energy density ultracapacitors (read the always optimistic EEStor) would if their claimed attributes are real have a revolutionary impact on mobile re-charging of farm vehicles via a re-charge tender vehicle.
  • Reducing peak energy needs, at planting, at harvest, or during other energy-intensive tasks, will have a crucial effect on capital expenditures for energy storage or energy conversion devices. The experience of utility companies in instituting demand response programs may in part translate to helping farmers shift tasks to avoid excess capital expenditures, though the unique needs of plants, animals and the ecosystems in which they live may not be as flexible as commercial and industrial utility customers.
  • Land area required to generate electricity for the farm on the farm was calculated to show symbolically how the use of power implements need not require massive inputs of energy from outside the farm. The land area requirements for an on-farm solar array would under all but the most land-constrained and energy intensive farming conditions be negligible if electric farm equipment is used.
  • At least in the beginning, the capital investment in electric farm equipment is going to be substantially more expensive than that in its diesel brethren, especially if the more energetic lithium ion batteries are used. The lead acid tractor system (5 tractors plus spare batteries) with battery tender, would cost substantially more than 5 diesel tractors of the same size. A 330 hp diesel tractor costs around $200,000 USD while a 65 hp diesel tractor costs maybe $50,000 USD: just the batteries alone for the 5-tractor group would cost $240,000 USD. Despite this expense, costs of lead acid battery driven tractors will be within the same order of magnitude as diesel tractors, especially when the relative simplicity of their drive systems are taken into account. With lithium ion batteries, the costs at the present time are multiplied by sevenfold over the lead-acid option and probably 10 times the cost of the diesel tractor.

Energy Paths to a Sustainable Agriculture

The often-overlooked area of agricultural energy may yield a key area for developing large-scale battery powered or grid-optional work vehicles. In the early 20th Century, over a period of decades, agriculture in industrialized nations became dependent upon fossil fuels; it will not be easy to wean agriculture and by extension our civilization off its dependence on these fuels to produce food. While current arguments about agriculture focus on the size of the farm, its use of toxics, diversity and regional appropriateness of food species and its proximity to its market, the Electric Farm concept is applicable to almost every size of farm, from the market gardener to the largest agribusiness, no matter what their cultivation practices and proximity to markets. Despite the focus on energy here, I hope that all food businesses will continue to move towards sustainability in the use of inputs other than energy.

Analysis of the Electric Farm concept has highlighted some key areas where agriculture can move to greater sustainability and minimize energy and climate risk.

Reduction of Farm Energy Requirements

The movement of the last few decades towards low- and no-tillage farming is a bright sign pointing towards the future of farm energy use. Plowing/tilling the soil has been historically one of the most energy and power-intensive farm activities, for which first animal power was used and in the last century fossil fuel powered tractors. No-till and low-till farming was originally paired with increased use of chemical inputs to control weeds and pest formerly controlled by turning the soil. There are now efforts underway to develop organic no- and low-till techniques; previously organic agriculture has substituted physical and therefore energy intensive methods for chemicals.

Agricultural scientists and farmers might be able to work together to further reduce energy use by developing agricultural machines and implements that use energy more efficiently. Electric farm implements will have greater flexibility than fossil fuel driven implements as electric motors are much easier to scale to the appropriate size and power for a task. Furthermore, automated and robotic farm equipment may facilitate the development of new, more energy effective farm tasks that are less disruptive to the farm ecosystem.

Plug-In, Battery-Exchange Serial Hybrids

The all-electric farm may be a vision for a time in the future when batteries or ultracapacitors increase in energy density and down in price: to bridge the gap, it may be necessary to reduce but not eliminate dependence upon fossil fuels by using flexible fuel electric vehicles. The ultimate flex-fuel farm equipment that would minimize fossil fuel inputs would be a serial, battery-exchange, biofuel-capable hybrid tractor or harvester. Such a machine would be able to use grid electricity, charged batteries, biofuels and petroleum to do farm work. An internal combustion engine or a fuel cell would generate electricity for the electric traction and implement drive motors when the substantial batteries, charged from the grid or from local farm generators, are exhausted. The amount of onboard batteries would be limited by weight considerations and cost but these batteries could also be exchanged as in the Electric Farm scenario.

The addition of an electric generator to the battery-exchange electric tractor outlined in the scenario allows for a significant reduction or elimination of off-board battery inventory as tasks that require more energy can supplement battery energy with biofuel or fossil energy. Lead-acid or lithium ion battery capacity could be sized for all-electric use for 60-80% of farm tasks, reserving fossil or biofuel to cover peak energy use. The cost of the generator, fuel tank and its mount would be small in comparison to the overall cost of the tractor or several battery packs.

Commercialization of Electric Farm Equipment

A market for electric farm equipment will emerge in ethically motivated agricultural concerns that have lower daily power and energy requirements for one or more of their tractors. In addition, air quality regulators in intensive agricultural areas like California’s Central Valley may offer incentives to develop zero or near-zero emissions agricultural equipment.

Initial models of electric farm equipment will probably be serial plug-in hybrids with lead acid batteries at a size that will offer most of the functionality of a 40 to 80 hp diesel tractor. Because of cost concerns and the lesser emphasis on weight reduction in tractors than in road vehicles, lead-acid batteries will be an early choice. Generators for this equipment may be either gasoline or diesel engines capable of using biofuels.

Machine designers may start by mimicking the functions of internal combustion tractors but soon realize that electric drive offers additional flexibility that will lead to a new “no-compromise” farm vehicle that can do more than the equivalent traditional tractor. Another path to commercialization may be for equipment manufacturers to start by building small multi-use vehicles like electric ATVs and garden tractors like the Elec-Trak and gradually build up power and functionality as demand arises. With substantial decreases in cost for lithium ion or other high energy-density mobile electric storage, electric farm equipment will gain greater applicability as most farm tasks will be able to be achieved without emissions, especially when paired with renewable energy.

To speed commercialization efforts, a zero-emissions agriculture consortium could be formed by equipment manufacturers, farmers, farm advocates, inventors, engineers, and agricultural scientists which might help develop a research and development program. This program will help locate the most promising niches for growth in this area and best address issues of farm productivity, energy efficiency, and ecological sustainability as regards farm machinery and mechanization.