Smaller Faster Lighter Denser Cheaper: Book Review

Smaller Faster Lighter Denser Cheaper
How Innovation Keeps Proving the Catastrophists Wrong
by Robert Bryce
Public Affairs, 2014 (400 pgs.)

 Robert Bryce is optimistic about our energy future, and indeed, the future of humanity. His books and op-eds are carefully researched and clearly written. Bryce does not claim that every problem will have a technological fix, but our frequently-successful search for such fixes have led to a world in which more people are living longer and healthier lives.  For example, in 1970, the average life span in the least-developed countries was 43 years. In 2011, the average for those same countries was 59 years.  Almost everywhere in the world, literacy is up, mortality  and maternal mortality is down, and lives are longer and better.
       
 In this book, Bryce shows that this happy result is a direct consequence of our human quest to achieve more results while using less resources.  In other words, we seek to do our work in ways that are “Smaller Faster Lighter Denser Cheaper.”  His book covers some of the same ground as his earlier book, Power Hungry.  In this book, he expands the scope to fields beyond energy.

Some of the areas that he describes are familiar to all of us: the fact that computers are smaller is no surprise to anyone.  But other aspects of “smaller faster” were new to me.  For example, in poor countries, cell phones can encourage commerce. In Africa and Afghanistan, most people do not have bank accounts. The ability to buy goods by cell-phone has increased commerce and partially disabled corruption.  (The account is held by the cell phone company, and there are kiosks for people to deposit or withdraw cash.) In one case, Afghan policemen, paid through their cell phones, thought they had gotten a major raise.  Actually, the policemen were merely getting their full pay, without their superiors skimming about 30% of their cash payments before the policemen ever saw the money.

In expected ways, and in surprising ways, the world of making things smaller, faster, lighter, denser and cheaper has led to unprecedented prosperity and health.  For the energy to power this world, Bryce recommends the N2N plan described in Power Hungry:  Use natural gas (N) while building advanced nuclear (N).  I would amend this slightly to be sure to Keep Existing Nuclear while building advanced nuclear, but his basics are correct.

Some parts of the book are painful to read.  The title of one section is pretty direct: “Biofuels are a crime against humanity.” Government and academic reports question both  the practicality and the morals of biofuel production. Using land for biofuels increases the cost of food, increases the volatility of food prices, decreases the ability of poor nations to import food, and indeed, decreases our ability to feed the poor and hungry.

With many examples, Bryce shows that moving to low-density “renewable” energy would be a step backwards for human health and happiness. His analysis of McKibben’s “Energy Starvation” plan is well-referenced and scathing.

I hate to say that anything is “required reading” for everyone, but I strongly recommend that people in Vermont read this book.  Why Vermont?  Well, right now, Vermont has an official state energy plan that claims we will reduce statewide energy use by more than  1/3 by 2050.  Further, the state of Vermont “plans” to have 90% of the remaining energy come from renewable sources by 2050.  The energy plan admits that renewable sources are not as dense as  conventional sources, and that the ridges planned for wind turbines are important wildlife and watershed resources.   The Vermont plan is the opposite of N2N.  The Vermont plan is not about making things smaller, faster, lighter, cheaper.

Will Vermonters allow this plan continue to be our state plan, in which everything is justified on the basis of “low greenhouse gases”? Are we going to use the “Energy Starvation” plan proposed by those who hate nuclear energy (which also produces no greenhouse gases) and who also don’t seem to care very much about wildlife habitat?  Or will we take some reasonable version of N2N, choosing dense, relatively low-emissions energy sources.

Will Vermont continue to move to Smaller, Faster, Lighter, Denser, Cheaper, as humanity has always aimed to do?  Or will we go backwards? It’s up to us, right here in Vermont, to choose a happy and prosperous future.  Let’s not mess it up.

- Review by Meredith Angwin

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This review appeared in the February newsletter of the Ethan Allen Institute.

While you are looking at the newsletter, let me also recommend Willem Post's article Abandoning Low Cost Hydro for Costly Renewables.   Vermont is buying less power from Hydro Quebec, perhaps in the hope of building yet more instate renewables.

Wind Turbine Construction Slows: Guest post by Willem Post

This guest post by Willem Post appeared as a letter to the editor in our local paper, the Valley News.  (I have a subscription, but the letter may be behind a paywall for most people.)  Post has allowed me to republish it in this blog.

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To the Editor:

Things are looking up. There is a major slowdown in wind turbine construction all over the U.S.

In the first quarter of 2013, only 1.6 megawatts of wind turbine capacity was built and in the second quarter, zero was built. The main reason is the expiration of the Section 1603-c program at the end of 2012, which gave federal cash grants of about 30 percent of the project capital cost to wind turbine project developers.

This infusion of cash grants to Big Wind under the American Recovery and Reinvestment Act of 2009 changed the economics of the industry overnight. Projects that made no economic sense became viable with the cash grant (Lowell Mountain, etc.) In many cases, applications were rushed to take advantage of the cash grants before deadlines. The industry’s project pipeline was emptied, rushed to approval and built by the end of 2012.

During the cash grant program period, about 30,000 megawatts of new wind turbine capacity was built, more than doubling U.S. wind turbine capacity. The U.S. had never experienced that rate of growth with just the production tax credit (PTC).

With domestic, abundant, low-CO2 emitting (compared with coal), no-particulate emitting, low-cost natural gas , and continued flat demand for electricity, it’s no surprise the cash-grant-induced wind turbine bubble collapsed and will likely push installations back to mid-2000s levels, or less, if the PTC is finally allowed to expire after 24 years.

If extended, the PTC, set to expire at the end of 2013, will offset above-market wholesale prices for wind energy, but will drive just moderate levels of wind turbine capacity growth.

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Willem Post is a frequent guest blogger on this blog.  His most recent post was Off-Shore Wind Versus Nuclear. Another recent guest post is Wind in Vermont is Oversold.  Many of his posts appear at The Energy Collective, where he is a high-ranked blogger.

Off Shore Wind Versus Nuclear: Guest Post by Willem Post

Off Shore Wind Versus Nuclear: Guest Post by Willem Post

AWC Schematic, from their website

Introduction by Meredith Angwin

Atlantic Wind Connection (AWC) plans to enable the Atlantic Coast to use off-shore wind efficiently.  As their website says:

The Mid-Atlantic region offers more than 60,000 MW of offshore wind potential in the relatively shallow waters of the outer continental shelf. 

The Atlantic Wind Connection (AWC) backbone transmission project is an essential foundation to this new industry.

Evaluation by Willem Post

Trans-Elect and Atlantic Grid Development are the Atlantic Wind Connection, AWC, project developers.

When completed, the AWC will be able to carry as much as 7,000 MW of offshore wind energy to consumers along the US East Coast.

With a project plan that envisages construction extending from 2016 - 2026, the developers intend to build out the offshore transmission backbone in five phases at a total expected cost of $6.311 billion. The capital cost of the IWTs (Industrial Wind Turbines) would be 7,000 MW x $4.2 million/MW = $24.53 Billion, for a total of $35.7 billion

Energy production would be 7,000 MW x 8,760 hr/yr x CF 0.40 = 24.53 TWh/yr
http://cleantechnica.com/2013/01/17/atlantic-wind-connection-chooses-new-jersey-for-phase-i-offshore-transmission-backbone/

For comparison: The capital cost of 7,000 MW of nuclear plants (7 standard 1,000 MW plants) would be about $28 billion and the energy production of would be 7,000 MW x 8,760 hr/yr x CF 0.90 = 55.20 TWh/yr; more than twice the production at much less capital cost. They could all be built in about 10 years, thereby reducing CO2 much sooner than the IWTs which would take 20 years.

Completing the project would enable transmission of renewable offshore wind power to consumers in NY, Pennsylvania, NJ, Delaware, Maryland, Washington D.C. and Virginia.

According to a project analysis performed by IHS Global Insight, the AWC transmission backbone would be able to deliver:

3,417 MW of electrical power to NJ (44% of AWC’s total capacity);
1,015 MW to Delaware (13%);
1,013 MW to Maryland (13%)
2.297 MW to Virginia (30%).

Based on the above, it appears the energy cost of the IWTs will be at least 20 c/kWh and of the nuclear plants about 10 c/kWh, per EIA/US-DOE

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About Willem Post

Willem Post is one of the most-read bloggers at The Energy Collective.  He has a B.S. and M.S. in Mechanical Engineering, and also an MBA.  He designed systems and evaluated costs for utility systems and large buildings.   He is an internationally recognized expert on the economics of wind power.

Post is a founding member of the Coalition for Energy Solutions, and an occasional guest blogger at this blog, for example, his November 2012 guest post: Wind in Vermont is Oversold.

Renewable Subsidies for the Rich: Guest Post by John McClaughry

Renewable Subsidies for the Rich by John McClaughry

Renewable electricity costs from two to five times (depending on the technology) as much as electricity from the New England grid, generated by natural gas, hydro, coal, and nuclear. Therefore no utility would rationally buy it but for an astounding assortment of subsidies and mandates.

Consider just these: The federal investment tax credit subsidizes 30% of the capital costs of small scale solar photovoltaic and wind projects. Some investors may also claim a 50% first year depreciation bonus, plus five years of ordinary depreciation of the remainder, regardless of the actual lifetime of the equipment. Wind generated electricity on any scale earns a 2.3 cents/kWh federal Production Tax Credit.

The Vermont legislature has added to this cornucopia a 7.2% investment tax credit for small wind and solar PV electricity produced from commercial properties. The Clean Energy Development Fund, until it ran out of money, also added 45 cents per residential installed watt for solar panels (40 cents per watt for commercial and industrial projects).

The legislature has also required Vermont utilities to buy solar PV (up to 2.2 MW) and small wind electricity (up to 100kw) at prices up to five times the wholesale price available on the New England power grid.  In an effort to lure enough new investors to stay on target toward the 127.5 MW program goal, the PSB has now pushed the feed in tariff rate for new solar PV projects up to 25.7 c/kWh for the next 25 years; and to 26.2 c/kWh averaged over 20 years for small wind.

To summarize: governments shower lucrative capital and operating subsidies on wind and solar entrepreneurs, then force the utilities buy their electricity at up to five times the New England wholesale price for 20 to 25 years, charging the extra cost to their ratepayers. What a sweet deal!

Willem Post of Woodstock is a retired electric engineer whose career took him all over the United States and Europe. One of his hobbies is running calculations on the economics of energy, especially renewable energy.

Post describes a $10.5 million 2.2 MW solar PV facility in White River Jct., created by high-income Boston investors. About 15 acres of topsoil and trees were cleared, leveled, and shielded by an eight foot high fence. The facility almost certainly features Chinese-made solar panels and German-made inverters. It will generate electricity only when the sun is adequately shining, which is about 35% of the hours of the year. The expected annual generation is 2,755 MWh.

Under the legislature’s feed-in tariff law, the Public Service Board mandated that Green Mountain

Power write a check to the investors each year for 25 years in the amount of $661,415.  Since the cost to GMP is about four times the cost of electricity from the New England grid, the utility will charge its customers $509,840 a year more than they would otherwise have had to pay for grid power.

The generous tax benefits appeal to people in the highest income tax brackets. In 2011 the Shumlin administration made it even more attractive to the rich by allowing them to take half of the lifetime projected tax benefits from the Clean Energy Development Fund as an upfront grant, an option eagerly taken by 64 of the first 68 investors in the program.

The state’s Comprehensive Energy Plan of 2011 recommended adoption of a Vermont Renewable Portfolio Standard, by which utilities would be required to increasingly higher percentages of their electricity from renewables (including HydroQuebec). Achieving this goal would mean that ratepayers would be hammered all the harder, while the investors pocket even greater profits. Nice.

Last spring the House was about to enact a Renewable Portfolio Standard. At the last minute Shumlin, an erstwhile advocate, instructed the House not to do it. We don’t know why he suddenly got cold feet, but 14 of the 29 states with RPS laws are currently watering them down.

That suggests that a lot of voters forced to pay for the renewable mandates have discovered that they are a very bad deal – unless they have allowed people like Peter Shumlin and Bill McKibben to terrify them about the Menace of Global Warming, which has disappeared since 1999.
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John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org). I am a director of the Energy Education Project of the Ethan Allen Institute.


This article first appeared at Vermont Digger
http://vtdigger.org/2013/04/15/mcclaughry-renewable-subsidies-for-the-rich/

Wind in Vermont is Oversold. Guest post by Willem Post.

Since I recently posted a video on Vermont wind, I thought it would be good to follow that post with a more technical post on the subject.  Luckily for me, Willem Post had just sent me an email about wind energy in Vermont. Here is his email, which he kindly turned into a guest post for this blog.

For a more complete version of this information, I recommend Post's letter to the Public Service Board in favor of Vermont Yankee.  A copy of this letter was published in True North Reports today, and contains more detailed information on capacity values (different fro capacity factor) and so forth. 

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Industrial wind turbine (IWT) facility developers usually use estimated capacity factors (CFs) of 0.32 - 0.38 for IWTs on 2000-ft high ridge lines. These CFs are used to obtain financing from banks and investors, approval from government regulators, and to"sell" the project to legislators and the public.

The estimated CFs are based on proprietary wind testing reports that are sometimes given to the PSB, if requested, but not to ordinary, tax-paying citizens. This serves to keep people ignorant regarding wind energy.

Real world experience shows these CFs usually are overestimated, not just in Maine and Vermont, but elsewhere as well.  See below.

However, by law, the quarterly production data must be reported by IWT facility owners to the Federal Regulatory Energy Commission, FERC.

Below is a URL with quarterly production data reported by the IWT facility owners in Maine. The results are dismal, much less than the estimated CFs used for "selling" the project.

It is clear that these heavily-subsidized IWT facilities on 2000-ft high ridge lines are not economically viable, not even with the present huge subsidies.

http://www.windtaskforce.org/profiles/blog/show?id=4401701%3ABlogPost%3A43514

Maine is not the only entity with such poor results. I have a spreadsheet showing the 2006 - 2011 average CFs for Germany (0.187), Denmark (0.251), the Netherlands (0.228), the US (0.289), Texas (0.225), Ireland (0.283), New York State (0.249).

How Is This Relevant to Vermont?

GMP will likely NOT rue the day it spent $160 million to put 63 MW of these IWTs on the Lowell Mountain ridge line, plus about $10 million, required by ISO-NE, for equipment to integrate the variable wind energy to the grid. GMP was going to place the burden on the other energy suppliers to the grid, but the ISO-NE follows the "user pays" rule, well familiar to all utilities, including GMP. Not a problem for GMP; it just rolls its extra cost into rate schedules.

GMP will charge ALL of its additional costs to the captive rate payers in its service area, 70% of Vermont households and businesses, which are already stressed, because of the Great Recession, AND rising prices of goods and service, AND stagnant/declining real household incomes since 2007, AND a near-zero-growth economy, AND financing heavily-subsidized RE follies.

Whereas, GMP may have been grossly misled and engaged in self-deception, it certainly had the resources to determine the facts before proceeding, unlike legislators and lay-public.

Independent energy systems analysts, with decades of experience, had advised against the Lowell Mountain IWT facility, but were shoved aside, ignored, even belittled.

Laurel Mountain Wind WV
from vawind.org

Other Choices

GMP could have started with one 3 MW IWT to see how it would perform, but that was not impressive enough, as multi-millionaire Governor Shumlin wanted to proceed as quickly as possible, build as many IWTs as possible, destroy as many ridge lines as possible, to get as much state and federal subsidies as possible for Vermont's wind energy oligarchy, which consists mostly of multi-millionaires in the top 1%. It appears the Northest Kingdom area of Vermont has been targeted for several new IWT facilities, in addition to the ones on the Sheffield and Lowell Mountains.

New England annual average grid prices are about 5 c/kWh, nearly unchanged for the past 3 years, and likely to stay that way, because of a long-term, abundant, domestic supply of natural gas.

Hydro-Quebec energy is available under long-term contract at about 6 c/kWh. It is steady, CO2-free, available 24/7/365, rain or shine, windy or not windy.

Vermont Yankee's energy is available under long-term contract at about 5 - 6 c/kWh. It is steady, CO2-free, available 24/7/365, rain or shine, windy or not windy.

Lowell Mountain energy, heavily-subsidized with state and federal subsidies, is available at about 10 c/kWh, per GMP. Its cost would be about 15 c/kWh, unsubsidized, per US-DOE, not counting the extra costs of grid modifications and wind energy integration to the grid. GMP will just roll its extra cost into the rate schedules of already-stressed households and businesses.

When the Wind Blows and When It Doesn't Blow

In New England, with fair-to-good wind conditions only on 2,000-ft or higher ridge lines, about 30 percent of the hours of the year, near-zero wind energy is produced, because wind speeds are insufficient (less than 7.5 mph) to turn the rotors, or too great for safety, as during stronger weather fronts or tropical storms, such as Sandy and Irene, passing over the ridge lines.

About 60% of the wind energy is produced during about 30% of the hours of the year, mostly at night, and mostly during winter. During summer, with peak demands, almost no wind energy is produced. When IWTs produce near-zero energy, they draw energy from the grid.

Wind energy is variable and intermittent and requires quick-ramping gas turbines to operate in part-load-ramping mode, i.e., ramp down with wind energy surges and ramp up with wind energy ebbs to maintain a stable grid. This requires extra fuel/kWh and emits extra CO2/kWh, and causes extra wear and tear on equipment.

Snow 
Winter nights have high wind energy
but low demand for electricity

At greater annual wind energy percentages on the grid, these extras mostly offset what wind energy was meant to reduce, i.e., wind energy is not a viable CO2 reduction technology, and it acts as a disturber of the grid which makes the grid less efficient and less stable, and it is very expensive.

The above indicates, there are many hours during a year when near-zero wind energy is produced. Therefore, almost all conventional generator units would still need to be kept in good operating condition, and staffed 24/7/365, and fueled, to serve the daily demand when near-zero wind energy is produced.

See below URLs which have had about 10,000 views till now.

http://theenergycollective.com/willem-post/61309/lowell-mountain-wind-turbine-facility-vermont
http://theenergycollective.com/willem-post/71771/energy-efficiency-first-renewables-later
http://theenergycollective.com/willem-post/84293/wind-turbine-noise-and-air-pressure-pulses
http://theenergycollective.com/willem-post/89476/wind-energy-co2-emissions-are-overstated


About the Author

Willem Post is a member of the Coalition for Energy Solutions, and an internationally-known expert on wind energy.  He also proved his good taste by choosing to live in the town of Hartford, Vermont. 

Rally in Support of Nuclear Power and Vermont Yankee

Rally in Support of Nuclear Power

For Immediate Release:

Contact Meredith Angwin

Meredith@ethanallen.org

802-291-9172

Early in the morning of September 12, local supporters of nuclear energy will rally near the Brattleboro Courthouse to show support for continued operation of Vermont Yankee power plant. At 9 a.m. that morning, hearings will begin in Federal Court on the lawsuit between the State of Vermont and Entergy. Among other things, Entergy contends that Vermont has attempted to regulate the radiological safety of Vermont Yankee, in direct defiance of federal law.

A group of people supporting nuclear power will be near the Courthouse that morning. The group includes members of the Ethan Allen Institute Energy Education Project, the American Nuclear Society Vermont Pilot Project, and the Coalition for Energy Solutions. We will be there to support continued operation of Vermont Yankee power plant, a plant that produces one-third of Vermont’s electricity with virtually no emissions. Many of the members of our group have advanced degrees in engineering, chemistry and physics. We will be happy to answer questions about nuclear energy. However, we are not there to argue with dedicated nuclear opponents. We will avoid confrontations and name-calling, which are both unfortunate tactics of some plant opponents.

This rally is not planned by Entergy or sponsored by Entergy. However, any Entergy employees who decide to join us are very welcome.

Participants will include:

• Meredith Angwin, director of the Energy Education Project of the Ethan Allen Institute
• Dr. Robert Hargraves, energy educator at Dartmouth ILEAD and advanced reactor specialist
• Willem Post, well-known energy commentator on The Energy Collective: conservation advocate and wind critic
• Richard Schmidt, nuclear engineer and advocate for small-scale solar

All these people will be available for on-site interviews.

http://www.energyeai.org/

http://www.coalitionforenergysolutions.org/

http://ansnuclearcafe.org/2011/08/08/old-tactics-new-approaches/

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This is a press release I sent to friends and to Vermont media yesterday. I look forward to seeing people at the rally!

I am trying to get a headcount. If you are coming to the rally, I would appreciate an email. Also, I can tell you a little more about our plans in a return email. Meredith@ethanallen.org

Nuclear opponents have all sorts of rallies: it is about time that pro-nuclear people had some!

Also, a big thanks to Rick Maltese at Deregulate the Atom, for posting the press release at his website.

Map from United States District Court website As usual, click to see a larger image.

Lowell Mountain Wind Turbine Facility in Vermont: A Guest Post by Willem Post

The Lowell Mountain Wind Turbine Facility, proposed for the Northeast Kingdom area of Vermont, has encountered much resistance, but Green Mountain Power (GMP) vows to complete the project despite objections. The politics are clear (follow the tax dollars) and many locals feel they are not being heard. Meanwhile, the wind farm energy is included in the future projections for electricity in Vermont.

Today, Willem Post has graciously shared his review of the Lowell Wind Farm with us. His most recent guest blog at this site was Subsidies for Wind and Solar. His posts are frequently featured at The Energy Collective.

Lowell Mountain Wind Turbine Facility in Vermont

by Willem Post, 14 June, 2011

The GMP-instigated 63 MW Lowell wind turbine facility with (21) 3 MW Danish wind turbines stretched along 4 miles of ridge lines has nothing to do with community-scale wind, everything with utility-scale wind. GMP is using blatant PR to soft-soap/deceive Vermonters. It is a capital intensive (63 MW x $2,500,000/MW = $157.5 million, excluding grid modifications), highly visual (410-ft tall wind turbines), noisy wind turbine facility that is proposed to be built on environmentally-sensitive ridge lines. It received a Certificate of "Public Good" from the Vermont Public Service Board, a mostly political entity.

The Lowell wind turbine facility would produce just a little of expensive, unreliable, intermittent, variable wind energy (63 MW x 1 GW/1,000 MW x 8,760 hr/yr x CF 0.30 = 165.6 GWh/yr, or about 2.76% of Vermont’s 6,000 GWh/yr consumption). This energy has near-zero dispatch value to grid operators, such as ISO-NE. For at least 10 percent of the year, the wind speeds are too low to produce any wind energy. Most of the wind energy is produced in irregular, varying, sporadic spurts at night during the winter.

Carbon Dioxide and Wind

The project has nothing to do with reducing CO2 emissions or generating wind energy. Most of the CO2 emissions that wind energy was meant to reduce is offset by the increased CO2 emissions due to the inefficient operation of the gas-fired balancing facility, as shown by my paper on Wind and Carbon Dioxide at the Energy Collective.

For the same capital cost a new 60% efficient combined cycle gas turbine facility in base-loaded mode at rated output would produce:

($157.6 million/$1,250,000/MW) x 1 GW/1000 MW x 8,760 hr/yr x CF 0.90 = 993.4 GWh/yr

or about 16.5% of Vermont’s 6,000 GWh/yr consumption. This would be more than 5 times as much electrical energy per invested dollar.

Let's look at some of the advantages of such a gas-fired facility:

• No grid modifications would be required
• No inefficient operation of gas-fired wind energy balancing facilities would be required,
• Visual impact would be minimal
• The plant takes up only a few acres
• The electrical energy produced would be low cost, steady, reliable and dispatchable.

Job Creation and Wind

The Lowell wind turbine facility job creation is largely a mirage. The facility will temporarily employ a number of people during the construction phase for about a year. During the next 20 years, just a few people will be permanently employed to perform operations and maintenance. An enormous waste of capital to create just a few permanent jobs, as shown by this Vermont Department of Public Service study.

Following the Money

The project would not be built if there were no subsidies equivalent to at least 50% of the capital cost. Without subsidies, the wind energy produced would be at least $0.15/kWh delivered to the grid, significantly higher than New England average grid prices of about $0.055/kWh.

The project has everything to do with grabbing as much federal subsidies as possible and "coursing" them through Vermont's economy for the short-term benefit of the well-connected few . The beneficiaries include high-income, non-Vermonters looking for tax shelters and foreign companies supplying wind turbines. The long-term economic expense (higher electric rates) will be carried by the many.

Wind and Subsidies

Over the past 10 years, the subsidies for wind turbine facility owners have become so excessive that facilities are built in marginal wind areas, as on most Vermont ridge lines. Other facilities are being put in place before building infrastructure to transmit the wind energy to population centers, as in the Texas Panhandle. These wind facilities are built just to cash in on the lucrative subsidies.

Here is a partial list of subsidies:

• Federal grant for 30% of the total project cost which also applies to Spanish, Danish, German and Chinese wind turbines thus creating jobs in those nations instead of the US. These nations would not dream of passing a law to benefit US wind turbine companies.
• Federal accelerated depreciation allowing the entire project to be written off in five years which is particularly beneficial to wealthy, high-income people looking for additional tax shelters.
• Federal production credit of $0.022/kWh of wind energy produced.
• Owners of wind turbine facilities receive Renewable Energy Certificates (RECs) which they can sell on the open market. The RECs are subsequently bought by polluting companies that find it less expensive to buy the RECs than clean up their pollution.

The federal government and state legislatures are pressured to provide increasingly greater state subsidies to politically well-connected renewables vendors, developers, financial entities (such as Goldman Sachs on Wall Street) and their high-income clients who use them for tax shelters.

Wind Turbines Circumvent Environmental Protection

State legislatures and state government agencies are pressured to pave the regulatory ways to essentially circumvent state environmental and quality of life laws. Pro-forma hearings, usually required by law, are held to create a semblance of democratic process. These hearings effectively are rubber-stamp approvals of pre-ordained decisions.

Update: A popular post by Post! Turns out that Rod Adams also posted this as a guest post (longish story about how we both managed to post it the same day), and a revised version of the post is now up at The Energy Collective.

Vestas Wind Turbine from Wikipedia

Austrian Wind Turbines on Ridge, from Wikimedia

Guest Blog by Willem Post: Subsidies for Wind and Solar

Guest blog by Willem Post

Today's Valley News (my local paper) contained a front-page article: Is the Home Solar Market Dimming? The article was by Chris Fleisher, an excellent business writer, and included a picture of Kimberly Quirk, a local engineer who owns the Energy Emporium in Enfield, New Hampshire. I have known Kim for several years, and have the greatest admiration for her knowledge and her store.

The article had a picture of Ms. Quirk in her super-insulated basement, but very little else about conservation. Willem Post wrote this guest post in response to the Valley News article.

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The March 6th, 2011, Sunday Valley News article Is Home Solar Market Dimming? describes that the future of PV solar looked bright until about 2008. Then the Great Recession began to bite. Many households in the top 5% of income, who had been benefiting the most from the generous PV solar subsidies, decided to be less green as there was less of the green stuff in their financial accounts.

Vermont had a substantial amount of funds in the Clean Energy Development Fund (CEDF) but it was decided to rapidly spend most of it (lest legislators would raid that kitty for other "worthwhile" state programs) on subsidies of up to $250,000 per project for wind turbine and PV solar systems. The politically well-connected received most of the subsidies for commercial projects (groSolar recently sold its residential division), leaving not enough for no-political-clout households.

The CEDF has about $800,000 left. Vermont Yankee had been required to kick in about $6 million per year since about 2002, but with the prospect of that plant closing that source of funds will disappear.

A CEDF Funded Project

For example, the CEDF provided a $250,000 subsidy to the Bolton Valley Ski Area so it could install a 100 kW, Vermont-made, wind turbine for $750,000; it has not been not operating for at least a week, even though there was plenty of wind.

According to Bolton Valley's website, the wind turbine generated 204,296 kWh from October 2009 to-date, about 17 months. Capacity factor is (204,296 kWh/1.4 years)/(8,760 hr/yr x 100 kW) = 0.17.

The web site has extensive information on the turbine. The wind turbine was sold to Bolton Valley on the basis it would produce 300,000 kWh/yr, for a capacity factor of 300,000 kWh/yr/(8,760 hr/yr x 100 kW) = 0.34. It is somewhat like selling a car and telling the new owner it will do 34 mpg, whereas it actually does only 17 mpg.

Icicles and the Use of Taxpayer Money

It is a travesty to waste scarce taxpayer money on projects of dubious value considering the many low-income households "living, i.e., freezing their toes off", in leaky, drafty, under-insulated single and doublewide housing all over the Vermont.

There are icicles hanging off almost ALL roofs in Vermont. The icicles mean that heat rises through the openings in the ceiling of the house, moves through the poor insulation into the attic, warms the roof, melts the snow to water which runs down to the colder eaves where it refreezes and forms an ice dam. Then the water backs up, forms a puddle, goes under the shingles and into one's living space.

How about a 30% subsidy for insulating houses, instead of the comparatively measly PACE program where households that borrow money to install energy systems have to pay back the loans with interest? (Note: Vermont's PACE program is described in the Valley News article. PACE stands for Property Assessed Clean Energy, and is a way for homeowners to borrow for energy improvements.)

Keeping the Subsidies Predictable

The end of the current funding from the CEDF was discussed extensively in the Valley News article. The concern was that on-again, off-again subsidies would not encourage the renewable industry. Rep. Margaret Cheney is a member of the House Natural Resources and Energy Committee. What are Cheney and her cohorts cooking up to bring subsidy predictability back?

The Committee is considering flat fee of 55 cents per month for households and a higher fee for businesses. These fees will be added to the electric bill. Note the fee for businesses is not specified. Will it be on kWh consumption? Will funds raised from households be allocated to households and funds raised from businesses be allocated to business? The idea is to start the fee low and jack it up later, as was done with the Efficiency Vermont fee (a quasi-state agency reporting to the Public Service Board. The head count at Efficiency Vermont is well over 175) which started at about 2% and is now about 5% of monthly electric bills, or $60/yr.

Energy Independence?

The Valley News story ends with this quote from Rep. Cheney:

“We need to become independent from out-of-state energy sources,” she said.

Cheney looks forward to the day Vermont becomes independent from out-of-state energy sources, such as Hydro Quebec which supplies about 30% of Vermont's power. However, many in the legislature look forward to closing Vermont Yankee which supplies about 35% of Vermont's power; both reliably provide low-cost, CO2-free, 24/7/365, steady power. Cheney has not taken a position on Vermont Yankee. Last year, around the time of the vote, she said that she would prefer to vote after tritium investigations ran their course. She said, however, that if she were to vote right at that moment, she would vote against relicensing the plant. (The House did not vote last year on Vermont Yankee. Only the Vermont Senate voted.)

Efficiency

I think Cheney should forward to the day Vermont is really serious about energy efficiency.

Energy efficiency will have a much bigger role in the near future, as energy system analysts come to realize that tens of trillions of dollars will be required to reduce CO2 from all sources and that energy efficiency will reduce CO2 at a lesser cost and more effectively.

Energy efficiency projects

• will make the US more competitive, increase exports and reduce the trade balance.
• usually have simple payback periods of 6 months to 5 years.
• reduce the need for expensive and highly visible transmission and distribution systems.
• reduce two to five times the energy consumption and greenhouse gas emissions and create two to three times more jobs than renewables per dollar invested; no studies, research, demonstration and pilot plants will be required.
• have minimal or no pollution, are invisible and quiet, something people really like.
• are by far the cleanest energy development anyone can engage in; they often are quick, cheap and easy.
• have a capacity factor = 1.0 and are available 24/7/365.
• use materials, such as for taping, sealing, caulking, insulation, windows, doors, refrigerators, water heaters, furnaces, fans, air conditioners, etc., that are almost entirely made in the US. They represent about 30% of a project cost, the rest is mostly labor. About 70% of the materials cost of expensive renewables, such as PV solar, is imported (panels from China, inverters from Germany), the rest of the materials cost is miscellaneous electrical items and brackets.
• will quickly reduce CO2 at the lowest cost per dollar invested AND make the economy more efficient in many areas which will raise living standards, or prevent them from falling further.
• if done before renewables, ENERGY EFFICIENCY will reduce the future capacities and capital costs of renewables.

I look forward to the day when Vermont is serious about Energy Efficiency.

Wind Turbine from Wikimedia

German PassivHaus thermogram (house on right, with low thermal leakage) from Wikimedia.

Photovoltaic Feed In Tariffs in Germany and this country

Today we have a guest blog by Willem Post, on the economic dangers of uncontrolled Feed In Tariffs. Willem is a strong advocate of efficiency and warm, tight houses, rather than Feed In Tariffs for photovoltaic.

Willem Post, Bob Hargraves, Howard Shaffer, Peter Roth, Steve Fox and I are all members of the local group, Coalition for Energy Solutions. Willem has both an MS in Mechanical Engineering and an MBA. He has many years of experience in financial estimation and oversight of large energy projects. The Coalition For Energy Solutions Research and Reports page includes links to many of Willem's reports, including the complete, longer version of this current post on Feed In Tariffs. This is his second guest post for Yes Vermont Yankee. His first guest post was Solar and Nuclear, Economics and Land Use.

Update October 27:

This guest blog by Willem Post is also featured at Energy Collective

Energy Collective also features a recent post by Geoffrey Styles: German Solar: Too Much of a Good Thing?

Impact of Photovoltaic (PV) Solar Feed In Tariffs in Germany

by Willem Post; 19 October, 2010

Introduction The purpose of this study is to show the impact of the PV Solar feed-in-tariffs, (FITs) in Germany. Germany has the largest installed base of grid-connected PV solar systems in the world about which much data is available. For that reason, Germany was chosen for this study.

Development of the Photovoltaic Industry in Germany

Top Ten Countries Using Solar Power

Prior to 2000, PV solar FITs did not exist and there were almost no PV solar systems in Germany. Germany’s annual PV solar capacity factor for true-south-facing, fixed-tilt, correctly-angled systems is about 0.115, which makes it a very poor candidate for unsubsidized PV solar power.

By 31 August, 2010, German households and businesses had installed about 525,000 grid-connected PV solar systems with a total capacity of 14,680 MW. These were installed due to the subsidies and generous FITs that started in 2000.

The FITs are lucrative for the households and businesses with grid-connected PV solar systems. They can sell all of their PV solar power to the utilities at generous FIT rates for 20 years from date of installation. The average FIT rate was $0.54/kWh in 2009. These same homes and businesses buy power for their own consumption from the utilities at about $0.22/kWh, for a gain of $0.32/kWh.

German utilities are allowed to include the additional costs of the FIT regime into their rate base. In effect, the few more wealthy households and businesses with PV are being subsidized by the many less wealthy households and businesses. At present, the renewables FITs add a few euros per month to household electric bills, more to business electric bills.

In Germany the generous FITs are available to all PV solar system owners, not just to a few lottery winners, as with Vermont’s FIT program for 50 MW of renewables. Germany’s lucrative FIT regime appears more democratic and inclusionary than Vermont’s.

Study Summary

The main results of the subsidies and generous FITs have been huge investments in PV solar systems and huge FIT subsidies paid to the owners of PV solar systems that produce just a very small quantity of variable, intermittent and expensive power and avoid the emission of a miniscule quantity of CO2.

• During the 2000-2009 period that FITs were in effect, Germany installed 9,830 MW of PV solar systems by the end of 2009 at a cost of about 9,830,000 kW x $7,000/kWh = $68.8 billion. The $/kW is somewhat lower at present.
• For the systems installed during the 2000-2009 period, the FIT amount that has been paid by utilities for the PV solar power fed into the grid from the start of 2000 and that will be paid until the end of 2029 has been estimated at $73.2 billion (2009$).

Ruhr Economic Papers Study

• Germany’s installed power plant capacity is about 135,000 MW and its peak power demand is about 100,000 MW. Its power production was 594,100 GWh in 2009, of which PV solar power was 6,578 GWh, or about 1.1% of Germany’s production.
• In 2009, 2.48 billion euros, or $3.54 billion, was paid by German utilities for the 6,578 GWh PV solar power produced by an effective installed capacity of 5,950 MW (start 2009) + 1/2 x 3,880 MW (added in 2009) = 7,890 MW. The 2009 average FIT was about $3.54 billion/6,578 GWh = $0.54/kWh. In 2009, the average wholesale rates at which German utilities buy and sell were about $0.058/kWh for base load power and about $0.075/kWh for peaking power.

Solar Energy presentation by German PV firm

Germany electricity prices by leading German energy firm

In 2009, Germany’s PV solar capacity factor was 6,578 GWh/(7,890 MW x 8,760 hr/yr) = 0.095. The low capacity factor may indicate the PV solar panels are aging, dusty, partially shaded by trees, partially snow-covered, etc., and, as about 80% of the PV solar systems are roof-mounted, many roofs may not be true-south-facing and the panels may not be correctly angled.

If we assume PV solar power is produced from 7 AM to 5 PM, then the average level during these ten hours was 6,578 GWh/yr x 1,000 MW/GW x 1 yr/(10 hr x 365 days) = 1,802 MW, an insignificant level compared to Germany’s peak demand of about 100,000 MW.

Study Analysis

Variation of PV Solar Power

The sma.de website displays a graph of the real-time PV solar power production in Germany during each day of the year. The methodology of determining the display is explained in the website.

http://www.sma.de/en/news-information/pv-electricity-produced-in-germany.html

Meanwhile, the Alliance for Renewable Energy shows 14,680 MW of PV solar was installed as of 31 August 2010, which means 14,680 MW - 9,830 MW (end of 2009) = 4,850 MW was installed during the first 8 months of 2010, or about 606 MW/month.

This rate of installation is more than twice as high as the rate in 2009, because the FITs will be significantly reduced in 2011 making it less lucrative to own a PV solar system. Installations planned for 2011 are being shifted to 2010 to beat the FIT reduction deadline. For comparison: US total installed PV solar was 1,256 MW pus 397 MW of concentrated solar power at the end of 2009. In contrast, 600 MW of solar are being installed in Germany each month. (U S. solar numbers from Willem Post spreadsheet.)

The sma.de website linked above shows the PV solar power production from the 14,680 MW of PV solar systems reached a maximum level of about 5.3 MW (36% of installed PV solar capacity), 3.6 MW (24%) and 7.0 MW (48%) at about 12 noon on October 6, 7 and 8, respectively.

The website shows that maximum outputs at 12 noon vary from about 20% (2,936 MW) to about 60% (8,808 MW) of installed capacity during the summer and from about 10% (1,468 MW) to about 30% (4,400 MW) of installed capacity during the winter.

Daily Power Demand

The Tagesgang website displays a typical power demand curve for Germany. The curve shown below will vary somewhat during the year, but, to simplify the analysis, we will assume the curve is valid for all days of the year, which will not affect the conclusions of the study.

http://en.wikipedia.org/wiki/File:Tagesgang_engl.png

The website shows peaking unit operation from about 10 AM to about 2 PM which coincides with high levels of PV solar production. This means German utilities have less need for peaking units.

PV Solar Impact on Peaking Unit Operation

Peaking units usually are gas-fired, simple-cycle, gas-turbine generators. Their efficiency at full load is about 30%, or about 10,000 Btu/kWh, and at part load about 20%, or about 15,000 Btu/kWh. Peaking units usually operate at about 50% load otherwise they cannot modulate as needed by demand.

For this study, utility long-term gas contract prices are assumed at $4/million Btus.

As we know the total FIT subsidy paid in 2009, we can allocate a part of it to the 10 AM to 2 PM period and the rest to all other hours of of PV solar power production.

If we assume the average PV power output during the 10 AM and 2 PM period of each day of 2009 at about 2,500 MW and all of it is fed into the grid, then German utilities save about 2,500 MW x 1,000 kW/MW x 4 hrs/day x 15,000 Btu/kWh x $4/million Btu = $0.6 million/day in fuel expenses.

There are very little additional savings, because the peaking units are in service during other peak periods of the day (see Tagesgang website) when PV solar power is much less. The operating personnel are present whether the peaking units are operating or not.

In 2009, German utilities credited, as required by the FIT scheme, the monthly bills of the owners of PV solar systems on average about 2,500 MW x 1,000 kW/MW x 4 hrs/day x $0.54/kWh = $5.4 million/day for this 10 AM to 2 PM power, or 365 days/yr x $5.4 million/day = $1.97 billion for all of 2009.

The FIT amount credited for all other hours of PV solar power production was about $3.54 billion - $1.97 billion = $1.57 billion.

In other words, German utilities could have bought the PV solar part of the 10 PM to 2 PM peaking power for $0.075/$0.54 x $5.4 million = $0.75 million/day from the grid, instead of buying it from PV solar system owners for $5.4 million/day.

A drawback of the PV solar power during the 10 AM to 2 PM period is that it is variable from day to day due to cloud cover changes, which means the peaking power purchases by utilities will vary from day to day more so than if the peaking power had been bought only from the grid.

This average level of PV solar power will increase as more PV solar systems are installed. It will have an increasing effect on the costs of owning and operating spinning reserve power plants and on the costs of standby power plants and transmission and distribution systems.

PV Solar Job Creation

By the end of 2009, the German PV solar sector employed, directly and indirectly, about 65,000 people and the thermal solar sector about 15,000 people in production, distribution, installation and maintenance. Employment is higher in 2010, because the rate of installing PV solar systems has increased to beat FIT reduction deadlines. The sector would employ even more people, but because China is the low-cost PV solar panel producer in the world, most of the panels, at least 50% of the systems’ cost, are imported which creates jobs in China, not in Germany.

There are several German studies and at least one Vermont study that conclude jobs created in the PV solar sector reduce about an equal number of jobs in other sectors, because resources, due to subsidies, are shifted to the PV solar sector away from other sectors; i.e., there is no free lunch.

Vermont Renewable Jobs Study

According the Vermont Department of Public Service, VT-DPS, report The Economic Impacts of Vermont Feed in Tariffs, about $228.5 million will be required to implement 50 MW of FIT subsidized renewables for Vermont. (The renewables chosen by the lottery mentioned above). About 35% of that amount would be supplied by Vermont sources, the rest, mostly equipment, by non-Vermont sources. For example: PV panels from China and inverters from Germany are about 70% of a PV system’s materials cost.

The VT-DPS report states: “There would be a spike of about 550 short-term jobs during the 1-3 year construction stage which would flatten to a permanent net gain of 13 long-term full-time jobs during the operation and maintenance stage. In essence jobs are created in one sector (renewables) of the Vermont economy at the expense other sectors”.

It appears using scarce ratepayer/taxpayer funds for a government-subsidized, capital-intensive renewables program that produces just a little of expensive power and reduces CO2 at a high cost per dollar invested is NOT the jobs creation panacea so much talked about by proponents of renewables. If the legislature were to bless Vermont with more such ineffective programs Vermont would be in even deeper financial trouble than it is now. See below website.

Willen's earlier report on renewables, analyzing the Vermont FIT and lottery

http://www.coalitionforenergysolutions.org/renewables_are_expensive_an.pdf

A report on German Renewables by the German ministry of the environment.

Note: This post is a shortened version of Willem's complete report on Germany and feed-in tariffs. The complete report, posted on the Coalition for Energy Solutions website, includes a comparison with nuclear investment.

Conclusions

The study indicates the political decision of “going solar” in Germany is beyond reason with regard to economics, air pollution and global warming. It is an extremely expensive way to subsidize an industrial sector, create jobs and reduce CO2.

Because of the large gap between the FIT rates and utility electric rates, it is a no-brainer for German households and businesses to “go solar”, much to the delight of PV solar vendors, financiers and developers who call this (for them) a success. Spain is having a similar disastrous experience with its PV solar FITs.

If we are to slow down climate change at a reasonable cost, we must use technologies that provide the greatest reduction in CO2 per dollar invested. As a renewable, PV solar is among the highest in capital cost per installed kW and the lowest in power production and CO2 reduction per dollar invested.

Capital-intensive investments in inefficient PV solar systems that, without subsidies, have simple paybacks of 20-40 years divert resources from less capital-intensive measures, such as energy efficiency that, without subsidies, has simple paybacks of 1-5 years AND reduces CO2 more effectively AND requires no changes to the grid AND is INVISIBLE. Doing energy efficiency first and renewables later is a no-brainer. There is no money to do both at the same time.

The German government had budgeted a certain amount for PV solar subsidies for 2010. Because of the rapid rate of installation of PV solar systems this amount is depleted.

The German government, already under budget pressures, is finding it politically difficult to rein in the inefficient PV solar sector which will become more harmful to the overall efficiency of the economy as it gets bigger.

The German government, over much opposition, has decreased the FITs at a faster pace than originally planned, and is planning still faster FIT decreases, to slow the growth of the sector to a more affordable rate. There were FIT reductions of 10% on 1 January, 2010 and another reduction of 15% on 1 October, 2010. Additional reductions are planned for 2011. These reductions are on top of the scheduled reductions.

Supplementary Websites

http://uvdiv.blogspot.com/2010/02/german-solar-industry-protesting.html

http://www.renewableenergyworld.com/era/news/article/2010/05/germanys-solar-pv-industry-a-victim-of-its-own-success

http://www.coalitionforenergysolutions.org/power_capacity_and_producti.pdf

"Solar Tree" image from Wikimedia. Photo taken by Anna Regelsberger in Austria.