Take Big Bites – Chew Carefully, But Not Too Much

The following post is largely a product of a hilarious (fabulous) conversation I had in July with a friend and fellow graduate student at UT, Emily Grubert.

Today’s energy is HUGE. When discussed, we use terms like…

Megawatts and Megawatt-hours

Quadrillion BTU’s

Mountain-top (not hill-top) Removal

Thousand short tons

Trillion Cubic Feet (TCF)

Seemingly small changes in our energy systems result in huge changes – lots of money, lots of area, lots of time.

Lets run through a quick example –

If the total summer peak demand (the most energy used at any instant in time during the summer) in the area overseen by the Electric Reliability Council of Texas (ERCOT) – about 85% of Texas – increased by just 1%, state utilities would need to build new power plants to meet 634 MW of additional demand.

Why 634 MW?

On July 19, 2009 a record setting summer peak was 63,400 megawatts (MW) or just over 63 gigawatts (GW) was reached in the ERCOT system. ERCOT is responsible for ensuring that future peak demands in the system can be met by keeping excess capacity – called a reserve margin – in the system. This “excess” capacity makes it possible for the system to meet increasing demand, even when plants are taken offline for maintenance, etc.

A 1% increase in this peak demand would create a need for 634 MW of capacity.

Breaking this down into $$, this 634 MW of capacity would cost:

$1.1 Billion – if we use wind power ($1,750,000 per MW of capacity)

$602 Million – if we use natural gas ($950,000 per MW of capacity)

$3.2 Billion – if we use nuclear power ($5,000,000 per MW of capacity)

That’s a LOT of money – with only a 1% increase in demand.

FYI – This summer (on August 10, 2010) the summer peak demand in the ERCOT system reached an all time high of 63,830 MW – a 0.7% increase.

When discussing the country’s energy challenges, the scope is huge – the timelines long. Big changes are unlikely to happen over a period of years, much less months or days. Instead, the choices we make today are more likely to cause slow cascading effects – like a snowball rolling down a hill.

Facing these huge challenges and long timelines can be daunting, intimidating, and may quickly lead to discouragement and a feeling of being overwhelmed. At these times, it’s easy to jump toward the “solution” that appears to be the easiest or quickest – but these “solutions” are likely to be mere Band-Aids – temporary fixes instead of permanent solutions.

So what do we do?

My advice…

Take Big Bites

Chew Carefully

But Not Too Much

Take Big Bites

If we run from these challenges because of their enormity, we will not achieve our goals. Developing a successful strategic plan toward a sustainable energy future for our country will not be a quick process but we cannot let this intimidate us. We must take big bites – pushing ourselves further than we thought we could go. This is the only way we can achieve our goals and keep the bigger picture in mind.

Chew Carefully

But with big bites comes the risk of choking – of becoming overwhelmed with the tasks before us and eventually giving up. So, we must chew carefully – thinking through each motion and not pushing the process too quickly (resulting in a situation that relies on a quick Heimlich Maneuver to have any change at future survival).

But Not Too Much

While chewing carefully is important – chewing too much can cripple our ability to affect the changes we want. Waiting too long can be as detrimental as rushing.

36 Years Later – Nuclear Power Plant Opens in Iran

Thirty-six years after first starting construction, Iran has finally completed its first nuclear power plant. Built in southern Iran, the Bushehr Nuclear Power Plant is Russian-built. Its fuel will be supplied by Russian companies, that will also be responsible for removing used fuel rods from the plant.

Weatherization – Innovative Ways to Save Energy

Today, the Department of Energy announced $120 million in funding to support innovative weatherization projects. Funding was announced for some 120 projects – ranging from pilot programs ($30 million) to existing program expansions ($90 million) – under DOE’s Weatherization Assistance Program. The funding finds its roots in the American Recovery and Reinvestment Act.

In today’s announcement, Secretary of Energy Steve Chu also revealed that the Weatherization Assistance Program has weatherized more than 31,600 homes across the country.

The weatherization program under the Recovery Act is successfully creating jobs in local communities, saving money for families, and reducing carbon pollution across the country,” said Secretary Chu. “The funding announced today builds on the Department’s existing investments in energy efficiency to continue to expand and drive innovations in the weatherization program that will provide even greater energy and cost savings to low-income families. ~Secretary Chu, 8/19/2010

The program has also reached an “optimal” running rate – weatherizing approximately 25,000 homes per month. This summer alone, more than 80,000 homes will be weatherized across the country. (See the state breakdown of the homes weatherized through June)

POTUS speaks about green manufacturing

Check out the President’s speech, given yesterday in Menomonee Falls, WI, included talk about the importance of supporting and investing in clean energy manufacturing technologies. POTUS gave this speech during his visit to the ZBB Energy Corporation’s advanced battery manufacturing facilities.

A video of the speech can be found here.

Smart (and Stupid) Metering

Last week, Chris Mooney – co-author of Discover Magazine’s blog The Intersection – wrote a blog post about how electricity use is metered in his new apartment building. It’s a great example of our mixed incentives structure, which in many cases actually discourages conservation and efficiency.

So I’ve recently moved to Washington, D.C., and into a newish building. And I’ve been getting a utility bill with a rather large number being charged (on the order of $ 75 per month) for something called “HVAC,” or, heating, ventilation and air conditioning.

My inquiries into what this charge is for, and whether I can do anything to avoid it, speak volumes about the inefficiencies of our current energy system.

Turns out HVAC is calculated in the following way. There’s a total HVAC value for the building, and then an algorithm is used to apportion a supposedly fair fraction of the bill to each resident. The algorithm centrally takes into account  1) square footage of your apartment unit; 2) number of occupants. All of this is carried out by a sub-metering company, which then sends you the bill.

Let me acknowledge at the outset that I have no idea why things are set up this way–whether it is the choice of my building, or of some utility, or some other possibility. So I’m not laying blame. But I am interpreting the consequences of the arrangement–because as far as I can tell, the consequences are that there is absolutely no incentive for anybody in the building to save energy.

In fact, the incentive is probably the opposite–to blast cold air all the time. After all, you’re not really paying for it–your neighbors are.

In my case, I have a unit that gets no direct sunlight, so that even in this hot DC summer, the temperature remains about 75 degrees on average. Mostly, that’s fine with me, and I rarely use A/C. Furthermore, I travel a lot, and I turn everything off before I leave. So there will be a week or more at a time when there is no air conditioning at all being used in the apartment.

Up until now, then, I’ve been acting as a conscientious energy saver–a perfect little tree hugger. Up until now, I knew nothing about this HVAC business, or that my greenish behavior would have little to no effect on a key component of my energy bill.

But now that I do know, the question becomes, why be green? Heck, I’m tempted to start cranking the A/C. Everybody else in the building is, apparently. I’m no economist, but doesn’t this sound a bit like the tragedy of the commons scenario?

In fairness, I probably get a little bit of cooling from the A/C use of the other apartments, even if my A/C remains turned off. That’s probably worth taking into account. And maybe I’ll want more HVAC in the winter than I do in the summer, due to my lack of sunlight (though I doubt it).

Still, I don’t think these considerations outweigh the fundamental inefficiency and perverse incentives of this situation.

Now multiply my experience by the number of people living in buildings employing a similar sub-metering scenario (I have no idea how many there are, but somebody out there does). My guess is that you will end up with a very large inefficiency and dysfunctionality in our energy economy–a lot of waste, and a lot of discouragement of energy conserving behavior.

Smart metering, anyone?

Investing in Clean Energy Technology – The next big policy battle with CA’s Prop 23

A good article was published yesterday by greentechmedia on the topic of clean energy investing in the United States. Written by the co-chairman of the board of the Clean Economy Network Educations Fund, the article provides some enlightening commentary on the state of cleantech investing now that carbon cap-and-trade has (seemingly) died – for this year, at least.

Will California’s carbon regulations die with federal cap-and-trade ambitions?

Now that Harry “Lucy” Reid has pulled the climate legislation football away at the last minute, cleantech investors can be forgiven for taking a big sigh and forgetting about climate policy for a while.  After all, until a couple of years ago most cleantech VCs were adamant about purposefully ignoring policy efforts and effects, because of the randomness factor it would imply for their investments.  Of course, with a more supportive administration and supposedly looming national climate legislation many VCs have ended up spending much more time on policy work and visits to Washington, DC than they’d expected to.  And so it wouldn’t be surprising to see these investors take the opportunity to step back from all that mess, to wait and see what happens at the Federal level over the next few months.

This feels like the “story-of-our-lives” with the Washington election cycles. A constant push and then pull-back or ebb-and-flow approach to planning and investment strategy that results in often inefficient overspending by companies at one point, followed by a sudden reduction in funding corresponding to the election cycles. With this approach, predictability isn’t a part of the landscape – and this lack of predictability makes companies uneasy about investing in long-term R&D projects.

Last year, I was talking with a friend who works for an energy company that would likely overhaul its business practices for R&D investments if carbon cap-and-trade were to pass in the Senate. This type of legislation would provide certainty in a market where there is currently huge uncertainty over when or how the United States will choose to regulate carbon dioxide emissions. What the company needed was certainty before making the choice to increase their investments in R&D.

The fact that cap-and-trade might have died in DC (for now) has already caused ripple effects on more than cleantech investing. Lets take California, for example…

But one other big mess is still looming, on the opposite side of the country from Washington, DC.  In California, Prop 23, an effort to roll back the state’s landmark climate law AB32, is on the ballot in November.  And the silliness is already in full swing (carbon emissions aren’t “pollution”, really?).

Prop 23 aims to suspend California’s 2006 global warming legislation (AB32) and brought the fight against carbon dioxide emissions being classified as “polluters” front-and-center. If carbon dioxide emissions are no longer classified as pollution, then regulations placed on “major polluters” (for example – power plants, refineries) could not be used to reduce carbon dioxide emissions.

The damage to the cleantech industry if Prop 23 succeeds would hit more broadly than just in California, according to one report by the Clean Economy Network.  Since California is such a major economic market, environmental regulations introduced in California tend to impact markets even outside of the state — witness how California’s auto emissions standards and goals have impacted automaker fleet efficiency efforts over the past few decades.  Besides, so much of the US cleantech industry and venture dollar pool is based in California to begin with.  Certainly, Prop 23 is already introducing regulatory uncertainty to the market across many cleantech sectors, and as mentioned in my last policy-related post, such uncertainty is damaging by itself.

California is a sort of test-bed for United States environmental and energy efficiency regulations. The state is home to the Rosenfeld effect, aggressive building standards that require attention to energy efficiency, and the most aggressive transportation emissions regulations in the United States. The choices made in California have long influenced decisions in Washington, and it should be no surprise that the reverse is also true.

It’s unclear how Prop 23 will fare.  On the one hand, early polling suggested that Californians were against it (ie: for keeping AB32 in place).  On the other hand, the ad campaigns are just getting started, Prop 23 has some deep-pocketed proponents, Californians have a history of simply voting in favor of ballot props, and it’s a non-presidential election year with a big backlash against incumbents and any and all regulation…

If Prop 23 passes it will mark a pretty big setback for the US cleantech industry.  On the other hand, if it’s defeated it will be a compelling example of the cleantech industry teaming up to win over public sentiment in favor of supportive policies.  So with the US Senate increasingly looking useless on energy and climate issues, even being across the country in Massachusetts it looks like this California ballot initiative is something I personally will start spending more time on.

Smart Refrigerators

Sometimes the best solution is the low-tech one…

The refrigerator sitting in your kitchen (or garage) today likely requires on the order of 600 W (watts) of dedicated power to keep your milk fresh and ice cream frozen. This dedicated power (your refrigerator is usually on all the time) is responsible for a significant portion of your monthly electric bill (13.7% in the average U.S. household).

According to an e-mail sent yesterday by Brewster McCracken, Executive Director of the Pecan Street Project, new “smart” refrigerators need only 10% (60 W) of the power required for a standard refrigerator. This savings is in part due to sophisticated technologies – but a large part of the savings is due to more simple solutions like better insulation and cooler lights.

The new smart refrigerator exemplifies the opportunities that exist NOW to save energy in our homes and offices. Improved insulation, solar screens, or even creating a shady spot for your air conditioner to sit in can result in significant energy savings for low costs. In fact, energy efficiency projects are quoted at a cost of $350 per unit of capacity (kW) avoided, while new power plants cost at least $900 per unit of capacity (kW) installed.

Sometimes the best (cheapest, easiest) solution is the low-tech solution.

CleanTX Forum: Natural Gas and Clean Energy – Friends or Foes?

On Thursday, Aug. 12th the CleanTX Foundation will host a CleanTX Forum titled Natural Gas and Clean Energy – Friends or Foes? at Austin City Hall on 2nd Street. Moderated by Dr. Michael Webber, from UT’s Mechanical Engineering Department (he is also my advisor), this forum will include seven panelists:

• Paul Ballentine: CNG Analytics
• Michelle Foss: Center for Energy Economics
• Paul Wilson: East Region Operations VP, TX Gas Service
• John A. Satterfield: Director, Environmental & Regulatory Affairs, Southern Division, Chesapeake
• Amy Hardberger: Environmental Defense Fund
• Karl Rabago: Austin Energy
• Gregory Kallenberg: Producer/Director, Haynesville Shale

Pre-registration is $15 ($25 at the door) and you will be able to purchase a Haynesville Shale DVD for an additional $10.

Oil spills around the world

Assuming that BP’s static kill operation continues along its promising trajectory, the oil leak that spewed crude into the Gulf for over 3 months will be completely sealed in just a few days. According to the most recent estimates by federal scientists, this leak resulted in a total unplanned release of (almost)

5,000,000 barrels

210,000,000 gallons

This crude oil flooded into the Gulf of Mexico as the result of the April 20 explosion on the Deepwater Horizon oil rig that was followed by 86 days of continuous oil flow into the water before the leak could be brought under control.

In response to the spewing oil, BP and the U.S. Coast Guard have used many technologies used to contain, control, and remove oil from the Gulf’s waters in an attempt to minimize the lingering negative impacts of this leak on our environment. These technologies have included skimmers, dispersants, and centrifuge systems that required high levels of man-power and capital investment. They have been unable to prevent all of the damage that normally comes with an unnatural spill into delicate ecosystems – but these technologies have perhaps prevented some of the worst impacts.

We are lucky in the United States to have the technology, money, and will to use these technologies to clean-up and contain our mistakes. In other nations, oil that escapes during the drilling process is left to contaminate surrounding ecosystems and water resources without any clean-up attempts. In Nigeria, this rogue oil becomes a commodity for local entrepreneurs who recognize the value in this fuel. Countless people have been killed in the collection and processing steps, but the potential gains keep them coming back for more.

This behavior likely results from the extreme poverty found in this region, which has not recognized significant benefits from its position as the world’s 5th largest exporter of oil. Most Nigerians live on less than $2 per day – meaning one barrel of crude oil (at $60 when sold abroad) is more than a month’s wages. Illegal refineries that have popped up throughout the nation process close to 100,000 barrels per day – fed by theft from tankers and oil spills that do not receive the attention and action seen in the United States.