There has been a lot of chatter about feed-in tariffs lately as a way to jump start the solar industry in North America. Here are some recent news links.
The Ontario Power Authority said Friday it will not retroactively lower the price on the energy produced by individual land owners, mainly farmers, who have ground-mounted solar equipment and who applied before July 2 to get paid a premium for producing energy that is fed back into the hydro grid.
Salvador Guerra i Salamo can’t sleep at night. “I fear that I can’t pay back the bank loan. And this after I’ve honored my debts all my life,” he says as he walks through the 2.1-megawatt Riudarenes II solar park near the Catalan city of Girona, in which his family owns a stake.
His family has invested €7 million ($9 million) in solar parks, but now Spain’s cash-strapped government is contemplating steep cuts to subsidies for renewable power, even for plants already producing power. Investors in these plants thought subsidies had been guaranteed by the government. Such cuts could push small businesses like Mr. Guerra’s over the edge.
Feed-in tariffs are guaranteed payments (always higher than the market price for electricity) for the output of a certain type of power generating system connected to the grid, usually at the distribution level. For the most part feed-in tariffs are applied to small wind and solar installations at homes, farms and other businesses. They have been used as an incentive to development in European countries, most notably Spain and Germany.
Feed-in tariffs are popular with renewable energy developers and advocates but they are not always popular with electric ratepayers and their advocates. Because the prices paid for power under feed-in tariff programs are higher than the market price the programs represent a cost to the utilities that must then be recovered from their rate base. In short that means slightly higher electric rates for everyone else.
Higher electricity prices are always a tough sell. It’s even tougher to sell these types of ideas when the country is in an economic recession. So a lot of the talk about feed-in tariffs centers on the cost. Even in countries like Spain (see article above) where feed-in tariffs were popular for many years they are starting to cut their payment prices in order to save money during their own financial crisis.
It is important to note that feed-in tariffs are but one option for encouraging the development of small renewable power installations. Tax credits, grants and low-interest loans are some of the tools that have been used to foster the development of these resources. The Database of State Incentives for Renewables and Efficiency (DSIRE) is the best place on the web to get educated on the various programs that are available across the United States.
A recent story about how solar power plants are now more cost effective to build than nuclear power plants in Carolina has created quite a bit of buzz especially amongst staunch advocates of renewable technology. Here’s how the New York Times framed the issue on July 26th.
Solar photovoltaic systems have long been painted as a clean way to generate electricity, but expensive compared with other alternatives to oil, like nuclear power. No longer. In a “historic crossover,” the costs of solar photovoltaic systems have declined to the point where they are lower than the rising projected costs of new nuclear plants, according to a paper published this month.
Such a report might lead one to believe that it is more cost effective in the long run to build a solar power plant instead of a nuclear plant. While that might be the case in some instances in most scenarios it probably won’t be the case. Over the long run, when measured in cost per unit of output, nuclear plants are still less costly to consumers than solar power plants. There are a few reasons why this is the case.
The Cost of Land – Solar plants require about 5 to 10 acres per megawatt of capacity. So if you were to size a solar plant and try to make it equivalent in capacity terms to one nuclear generating unit you would need at least 5,000 acres. A nuclear plant could be built on a couple of hundred acres or less.
Actual Output of Power – Over the lifetime of a solar plant it will output far less electricity than a similarly sized nuclear power plant. A really good photovoltaic solar plant will offer a capacity factor of 15%, which means that on average you would get 150 megawatts of output from a solar plant. Nuclear plants have improved their performance in recent years to over 85% capacity factor, which means on average you get about five times the power from nuclear than you do from solar.
The Cost of Reliability – A solar power plant cannot replace a conventional power plant and still maintain or improve reliability of power delivery. This is due to the fact that you can’t really predict exactly how much output you will get from a solar plant at any given time. When electricity is at its peak demand for a day you may or may not have solar power available in order to help you meet that demand. So you still need other forms of more reliable supply to help meet that demand. Nuclear plants can replace other types of plants, particularly baseload coal plants, because there is a high level of certainty that the power from the plant will be available. So the cost of having to continue to use legacy generation assets must be considered.
Environmental Costs – The cost to the environment is in favor of solar plants, but not nearly as much as the margin between solar and fossil fuel powered generating facilities. They will use minimum water when compared with nuclear plants. But nuclear plants output no harmful emissions. And since nuclear plants also eliminate the need for certain older types of generation the environmental costs of nuclear could be seen as comparable to solar.
As you can see there are a number of strong arguments in favor of nuclear economics, especially when you consider power output over the long run. The Energy Information Administration currently estimates the construction costs of nuclear (on a national basis) as lower than solar photovoltaic by about $2,500 per kilowatt of capacity. Where the EIA does give solar an advantage is in the operations and maintenance costs of the solar facilities by $80 per kilowatt. In order to truly take advantage of those cost differences solar facilities would need to be able to scale up to much larger sizes than we are seeing right now. The baselines used by EIA compare a 5 megawatt solar photovoltaic against a 1,350 megawatt nuclear unit.
It’s true that there are other costs and pitfalls to nuclear projects that help to shrink the economic gap with solar power. The cost of all the needed approvals and permits for nuclear facilities continues to rise. The risk that the plant won’t ever get built, and thus all the upfront costs are lost is real. After all, a new nuclear facility hasn’t been constructed in the U.S. in over 30 years. In the past nuclear projects have been plagued by mismanagement and cost overages. But those incidents occurred at a time when the burden on the cost was borne by electricity ratepayers. In the era of competitive markets the shareholders of the companies that construct nuclear power will bear the majority of the risk. It’s also important to note that large solar facilities come with their own risks. Large solar power plant proposals for the California desert have been met with fierce opposition.
So is solar power cheaper than nuclear power? Perhaps in some circumstances but for the most part the answer is no. It is worth noting that after publishing their story on the cost of nuclear compared to solar in North Carolina the New York Times added an editors note to their article that includes the following statement.
…the article failed to point out, as it should have, that the study was prepared for an environmental advocacy group, which, according to its Web site, is committed to ‘‘tackling the accelerating crisis posed by climate change — along with the various risks of nuclear power.’’ The article also failed to take account of other studies that have come to contrasting conclusions, or to include in the mix of authorities quoted any who elaborated on differing analyses of the economics of energy production.
The Times’ editorial update highlights the importance of considering the many inputs and outputs that result from the construction and operation of power facilities. It’s a complicated subject. The information that is not presented is just as important as what is included in a particular study or report. Draw your own conclusions on the topic but I think that we have a ways to go before solar can truly challenge nuclear as a more economic source of electric power.
This is sure to stir up some controversy about the reliability of renewable energy. The following video shows a news report from Minnesota about 12 wind turbines that won’t operate in cold weather due to an issue with the hydraulic fluid. The Minnesota State Municipal Power Association paid $300,000 for each of the turbines. What an amazing and tragic oversight. The news report indicates that there’s a plan to heat the fluid but that would likely require the use of electricity or fossil fuels thereby negating the benefits of the turbine.
There’s a very good lesson to be learned here. As excited as people are about bringing clean, renewable energy to their communities they should always perform due diligence when evaluating clean energy projects or vendors. In Minnesota you would need to have absolute assurance that a system exposed to the elements (which I would imagine could get extreme in Minnesota in the winter) will perform in all weather conditions.
Bill Gates has a new website called Gates Notes where you can find out more about Mr. Gates, his charitable foundation and his thoughts on a variety of topics. One of the posts on his site is a podcast series on energy. There are four audio files in the series in both Windows Media and MP3 format. I’m currently digesting the content right now. For the most part it sounds like a lot of common sense coming from a person (obviously very smart) who has done plenty of homework on the topics discussed. I’ve linked to the MP3 versions of the files below. Have a listen and see what you think.
As I survey the clean energy landscape at the beginning of the new year I think about the prospects for technological milestones and breakthroughs in 2010. We’re coming out of a year where billions of dollars have been either granted or loaned to companies in the name of the next generation of clean energy. You name it and it was probably funded, or at least approved for funding, in 2009. Wind projects, biofuels, battery technology, fuel efficient motor vehicles, energy efficiency, enhanced geothermal, grid-scale energy storage and smart grid are some of the key technology initiatives that were funded. So there’s a lot of hope that we’ll start to see the fruits of this funding in 2010. Don’t count on it though.
When I think about 2010 it seems to me that this will be a year of waiting in the clean energy space. That’s not to say that major projects such as wind and solar farms won’t be completed in 2010. Many projects will be completed but it won’t be the tipping point year for many of the newer and most promising technologies. The reasons for that would make sense to most anyone who knows a little bit about the clean energy space. Take the funding for example. Once the press releases are a day old the hard work on many of these projects begins. After all, you don’t get a check from the Department of Energy one day and start building batteries the next day. Matching funds to meet the government requirements need to be finalized. Planning needs to take place. People need to be hired. Contracts need to be negotiated and signed. Those are just a few things that typically take place before a project begins in earnest. It’s a lot of work and it takes time. The bigger the project, the longer the lead time. And there’s also the matter of projects or technologies that are underway but will not meet expectations.
What follows is a summary of some key clean energy technologies and how they are likely to fare in the current year. Read the rest
Google has done a good job throwing mainstream media reporters off of the scent when it comes to their recent filing with the Federal Energy Regulatory Commission (FERC). The New York Times Bits Blog (which is a tech focused blog) seemed to take the following quote from a Google rep at face value.
“We want to have the ability to procure renewable energy to offset power usage of our operations,” said Niki Fenwick, a Google spokeswoman. Ms. Fenwick said that having access to more renewable energy could help the company fulfill its goal to become “carbon neutral.”
Well that’s what Ms. Fenwick said, but simply procuring renewable energy is probably not the end game here. Here’s why. In Google’s application they have applied to become a power marketer. That means they will be able to buy and sell electricity on the wholesale market. Okay, fine. But check out the following passage from the FERC filing.
In addition to engaging in sales of electricity that are unregulated by the Commission, Applicant proposes to act as a power marketer, purchasing electricity and reselling it to wholesale customers. Applicant may also engage in other, non-jurisdictional, activities to facilitate efficient trade in the bulk power market, such as arranging services in related areas such as transmission and fuel supplies.
That section of the filing clearly indicates that Google Energy plans to do much more than just purchase renewable energy. They plan to sell energy too. Later on in Section III, Paragraph D of the filing you’ll find the following statement.
Applicant requests authority to sell specified ancillary services that the Commission has authorized market-based entities to sell in the markets operated by…
They go on to list almost all of the organized electricity markets in the U.S. as places where they would like to sell ancillary services. For those not in the know, ancillary services involves providing services, such as energy reserves for example, to the electric grid that help to maintain the stability and security of the grid. We don’t need to delve too much further into the details of that to know that it goes beyond merely providing for Google’s own energy needs.
There are many options for Google Energy with respect to electric market participation if their application is approved by the FERC. It’s true that Google Energy could simply purchase electricity to meet their own needs and do nothing more. But Google could do that without becoming a power marketer. The filed application indicates that Google has even larger aspirations than just purchasing power from the markets. We’ll just have to wait and see.
There may not have been two phrases that garnered much more buzz in 2009 than “smart grid” and “cloud computing.” They have a lot in common too. Both refer to a collection of technologies that few people understand in depth. Both are understood to refer to forward looking, game changing technologies. And both have the potential to change the paradigms of their respective industries. Only one of the technologies (that would be cloud computing) is truly consumer focused at this time and although smart grid aspires to be a consumer focused technology it will likely have to piggy back on the cloud to get there.
The consumer side of smart grid involves meters that collect data on usage frequently and then make that data available to the consumer so that they can either manually or automatically (depending on how smart their appliances are) alter their electric usage during times of peak demand. That altered behavior will theoretically reduce the need for expensive and peaking generation that consumers pay for every day but only runs a few hours a year. As a result the system realizes both environmental and economic benefits. It sounds great but before the consumer can alter their usage patterns they need to get access to the data. That’s where the need for cloud computing architecture enters the scenario.
In the world of smart grid utilities will be storing much more data about customer usage than they do now. Most utilities currently take one reading of an electric meter for an entire month. With smart meters in place utilities will be storing thousands of readings a month for each meter. That means utilities will need lots and lots of databases (data centers actually) and applications to access and analyze that data. Computing power is going to be a big deal but it isn’t nearly the sweet spot for utilities. It should come as no surprise that computing giants like IBM, Google, Oracle and Microsoft are lining up to service utilities as they transfer to smart grid technology. So the data storage issues should be sorted out. Don’t forget about the customer though.
During his Presidential campaign President Barack Obama pledged, “…to transform our entire economy – from our cars and our fuels to our factories and our buildings.” In the last few months President Obama’s administration has made good on that pledge by unlocking billions of dollars in government coffers to benefit companies developing clean energy technologies in a wide variety of industries via stimulus grants and Department of Energy (DOE) loan guarantees. In fact, the DOE has looked more like the Treasury Department in recent months. Since the beginning of October the DOE has awarded well over $5 billion.
The dollars are flowing to companies large and small. Automotive start ups like Tesla Motors and Fisker Automotive, companies with little track record and no profits to speak of, have scored nearly $1 billion combined in guaranteed loans. Meanwhile established car companies like Ford and Nissan have been granted $5.9 billion and $1.6 billion respectively to further development of electric vehicles. That’s in addition to the government’s purchase of General Motors at a cost of tens of billions of dollars.
Outside the auto industry we’ve seen companies such as Solyndra, a solar power start up based in Silicon Valley that qualified earlier this year for a $535 million DOE loan guarantee. Prior to the loan guarantee Solyndra had been funded to the tune of $800 million in private venture capital financing. At the beginning of September the DOE also announced over $500 million in grants given mostly to large wind power developers. Since then many large utilities across the country have benefited from over $3 billion in smart grid stimulus awards. More recently the DOE has announced more than $600 million for energy storage projects.
If you look at the entire list of what has been funded so far you’ll see that no technology has been left behind. Electric vehicles, solar, wind, smart grid, geothermal, energy efficiency, energy storage and carbon capture have all received funding. Thus one of the biggest obstacles to the development of new clean energy technologies has been removed. The collapse of the credit markets and oil prices dried up the investment pot. But the U.S. government has stepped in to fill the vacuum. So companies now have access to the capital they need to develop better batteries, construct manufacturing plants, research future technologies and much more.
With the financing obstacle removed for many companies, the only thing that’s left for companies to do now is to deliver on their promises. Electric car manufacturers have promised affordable vehicles that eliminate (or greatly reduce) the need for gasoline use in day-to-day transportation. Solar producers have promised gigawatts of solar facilities across the deserts of the southwest and rooftops across America. Wind power developers have promised clean, reliable, emission free electricity with very low impact to the environment. Smart grid companies have promised a new age of energy information technologies that will virtually eliminate blackouts and give consumers unprecedented control over their energy use and costs. Geothermal developers have promised a vast supply of emission free, uninterrupted baseload power from deep below the surface of the earth. On top of all the promises we’ve heard many times over the past decades there is also the promise of millions of “green jobs” as a result of a new clean energy economy.
The billions of dollars in play right now may only represent a down payment on future possibilities for clean energy development in the United States. Results are important though. If you have an investor who throws in a million dollars most of the time they want to see some progress before they commit more money. In this case the investors are the American people who’ve heard promises about the benefits of affordable electric vehicles and solar technology for decades. If public support for new energy investment erodes in 2010, politicians, especially ones up for re-election, will get the message and adjust their influence accordingly. That’s why it’s so important that clean energy companies show that they can produce the technologies they have promised, with the benefits that they have promised, at a cost that the majority of the public can afford.
About a year ago we mentioned that Google was investing in an enhanced geothermal energy company called AltaRock Energy. In fact, both Google and the U.S. Department of Energy made significant investments in AltaRock’s plan to drill deep into dry but hot caverns in Northern California in a bid to, “…create an EGS reservoir that will drill below the permeable zone, stimulate in the contained zone with infrastructure in place, and increase power production.” In short, they wanted to drill several thousand feet deep, fill the hole with water then use the resulting steam to power a turbine that would create electricity. And while the beginning of the project was announced with great fanfare the end didn’t get nearly as much attention from Google or the DOE.
On September 2nd of this year the New York Times published a story titled, Energy Company Calls Halt to Drilling Project. The main reason the project was halted was due to the fact that AltaRock was unable to drill a sufficient hole, only going down about 800 feet from their starting point of 3,200 feet. In order to move forward the NY Times story states that the drilling needed to reach 12,000 feet. Concerns about the project were already inflated at the time of the shutdown due to the fact that a similar effort in Switzerland had been blamed for an earthquake.
At the time of the original announcement we had our doubts about the viability of the project.
EGS may be indeed be a viable clean energy generation technology. It is also a very a risky and expensive technology that yields its share of negative environmental impacts.
Unfortunately it appears that our instincts were correct. There’s no such thing as a free lunch in power generation. If you want to extract power from the earth the earth makes you pay a heavy price. In this case the price seems to have been too high for AltaRock, their investors and the State of California. AltaRock Energy indicated in their official press release that they continue to seek out other enhanced geothermal projects.
We are continuing with the development of our EGS technology and are currently evaluating a number of alternative well locations, at the Geysers and elsewhere for demonstrating this technology.
Courtesy of Jay Leno, this video provides a very detailed look at the Aptera electric vehicle. This vehicle is not a car. In California this vehicle will be registered as a motorcycle. It is a very cool vehicle, combining futuristic looks with ultra-modern technology. Is it practical? Definitely not. Is it safe? We’ll wait for the official crash tests.
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