Sunday, June 27, 2010

Northern Europe

Just took the family on a cruise in Northern Europe and the Baltics. It was all quite beautiful. However the coastlines of Denmark and Germany are quite literally littered with windmills. Personally, I don't mind the aesthetic, but people seem to have different takes on this.

Denmark get 20% of its energy from wind, but they also have the highest utility rates in Europe.

Helsinki was a particularly pretty city, and it was interesting to learn how the Finns kept the Soviets and communism at bay for decades. The Soviets basically tried to annex Finland during World War II when they thought no one would notice, but their efforts failed (other than winning a bit of land in the north). But for fans of irony, I offer you this: Finland's top marginal tax rate is 70% while Russia's is 13%.

Friday, June 4, 2010

Follow up Thought on Renewables

The case I laid out in the previous piece isn't ideological, even though some of you seem to be taking it that way. It's simply fact-based reasoning. The math of renewable energy is highly problematic.

There are investment implications to this that everyone should consider. Consider that the U.S., Europe, and Japan are functionally broke (see Currencies - the Race to the Bottom). Where do you think they will start cutting first? Yes, they'll have to start cutting entitlements, but that always leads to nasty street demonstrations (see: Greece). When politicians look at the cold hard facts, I think all the subsidies and tax breaks for renewables will end up on the chopping block. You may not like this fact, but you would probably like many of the other prospective cuts even less.

I had a meeting with a German bank about six months ago, and they said they had financing available only for Germany related projects...except for alternative energy, for which they had a huge financing appetite. This was a quasi-state bank, so the mandate was coming from politicians. Of such stuff bubbles are made.

Some European countries such as Spain, which went solar-happy, have already started to cut back. This counter trend will likely prick the investment bubble in alternative energy, which will once again have to make it on its own, non-subsidized, merits. I would be very leery of these investments right now.

Tuesday, June 1, 2010

The Idiot’s Guide to Why Renewable Energy Is Not the Answer

In the salons of the coastal elites, it is a given wisdom that renewable energy sources are “the answer” - the answer to perceived climate change, the answer to our foreign oil dependency, the answer to how to feel good about yourself…the Answer.
In Washington, politicians can’t throw tax breaks at people and businesses fast enough, prodding them to install all manner of solar, wind, and geothermal devices.
Indeed, these energy sources are seductive. The wind blows, it’s free. Harnessing it, while not free, is certainly clean. Good stuff. The sun shines on us, why not use it? And so on.
The problem isn’t that these energy sources are bad, per se. They’re not.  You’re probably thinking that I’m now going to tell you that the problem is economics.  Yes, there’s truth to that argument; most renewables aren’t economic without subsidies, which is to say they aren’t economic. But some of them are close, and getting closer, so let’s put this aside. Let’s assume they are all inherently economic and can compete on an equal footing with traditional energy sources.
The problem is capacity. Renewables will not – cannot – ever be more than a fairly small fraction of our energy consumption because of fairly mundane reasons like land capacity. For a great perspective on this, I highly recommend William Tucker’s book, Terrestrial Energy.
Let’s go through these one by one.
Wind Power
O-klahoma, where the wind comes sweepin’ down the plain…
Yes, it does, and T. Boone Pickens wants to build lots of wind turbines there to take advantage of America’s “wind corridor.” He sure sounds compelling in those ads, and wind power is certainly growing. Right now, there is about 30,000 MW of wind capacity in the U.S., up considerably from a few years ago. This is the equivalent of about 40 power plants. That’s nice, but it’s only about 1% of our electrical needs (and, obviously, a much lower percentage of our overall power needs).
Actually, 1% overstates things quite a bit. The real contribution of wind is much lower, because wind mills generate electricity only about 30% of the time. Wind just doesn’t sweep down the plain all the time. It also doesn’t always sweep when you want it to. For instance, peak electrical demand is in the summer, but this is when the wind doesn’t blow (much).
Why not store the energy then? You can’t, because the technology isn't there. This is one of the most important things to understand about our electrical grid; electricity must be produced when it is being consumed, and it is a balancing act. Produce too much, and you get electrical surges. Too little, and you get brown outs.
You can see why wind is highly inconvenient. You simply can’t control when you get it, and as a result, it would be impossible to run an entire grid on wind. In Denmark, they get about 20% of their power from wind, but they couldn’t do it without being heavily reliant on coal as the “stabilizer.” (The Danes have the highest electrical rates in Europe, but I know, I promised to assume economics away…)
With conventional energy sources such as coal, oil, and nuclear, the output can be controlled to match demand. I can hear what you’re thinking: so what’s wrong with simply using wind to augment the power supply? Nothing, except that it will never amount to much. This is where some very simple realities get in the way.

Wind turbines are becoming gigantic. The one above is the largest in the world and produces 6 MW of power (when the wind’s blowing). It would take 125 of these to approximate just one typical power plant. So, the question for all of us is, where you going to put these babies? They completely alter the visual environment, and they make noise. Oh, and they kill birds.
Ted Kennedy and Robert Kennedy Jr., committed environmentalists both, bitterly fought a plan to put a wind farm of the shore of Cape Cod. Their problem? They’d have to look at them.
Do you know where wind blows the hardest? Across the tops of mountain ranges. Are you prepared to look at turbines like these along the tops of mountains?
You can see the problem, and yet even if people came to terms with the aesthetics, you could put turbines everywhere and it still wouldn’t add up to much power. It would take over six hundred thousand turbines like the one above to supplant our current power plants, assuming the wind blew constantly. Since it doesn't, it would take over two million. Never going to happen.
Solar may be closer to the heart of the environmental movement than all others, but it, too, will never amount to a hill of beans. The story is similar to wind: solar just can’t do any heavy lifting.
At the equator on a sunny day, 950 watts of power shines down on a square meter. That’s about 9 light bulbs’ worth. There is no way, short of violating the laws of physics, to enhance that number. In the U.S., the number is more like 400 watts over the course of a sunny day. We’re down to 4 light bulbs. However, we cannot convert 100% of this energy into electricity. Current technology captures about 15%.  Half a light bulb, more or less.
If we covered  every roof top of every home in America with solar panels we could likely power the lighting needs of our homes, but only during the day when the sun is shining. During the night, when we actually need lights, panels are useless.
-->As with wind, electrical power can't be stored at large scale.
The basic problem here is that solar power isn’t very, well, powerful. Sure, you can construct huge arrays like this…

…but they don’t accomplish very much. For instance, let’s say you went really big, and you created a solar array somewhere in the U.S. the size of five hundred football fields (roughly a square mile). How much power would you get? The answer is roughly 150 MW, and only during the day when the sun is out. A typical power plant produces about 750 MW. So supplanting one power plant would require five square miles of panels. This is not compelling.
Supplanting our entire electrical supply with solar would require turning the entire state of South Carolina into one large solar panel. Or...maybe we should stick them out in the desert. Seems logical. Senator Feinstein has proposed paneling over 500,000 acres of the Mojave Desert. But again, we run into mundane practical problems, even before considering things like the environmental impact of covering that much land. When solar panels collect dust and grime, they lose much of their effectiveness, so they must be cleaned frequently. Where, exactly, are we going to get the water needed for cleaning in the middle of the desert? And who's going to be out there wiping down 500,000 acres of panels?

Furthermore, the more distant a source of electricity is from where it's used, the more of it you lose during transmission, as much as 50% over 115 miles. Not a lot of folks living near the Mojave. Feinstein is nuts.

Like wind, solar can be a marginally useful way to augment our power needs, but it will never be a significant contributor.
Hydro power is really another form of capturing solar power. The sun evaporates water and redeposits it in the form of rain. Some of this rain is at higher altitudes and flows in rivers to lower altitudes. Dam a river, let the water flow through turbines, and you have hydro power.
The Hoover Dam
Hydro was once a major power source in the U.S., but it’s now down to less than 3%. It’s clean, yes, but the problem is that most of the good sites have already been used, and it is unlikely that politics will allow for any new ones. Groups like the Sierra Club want to remove ones we already have, because they say spawning patterns for fish are interfered with.
There’s also the matter of space. The Hoover Dam created Lake Mead, which is 247 square miles. Can anyone imagine that such a project could happen today? Correct answer: no. Tolerance for any significant new dam project is probably around zero. Hydro power will only decline as a percentage of our electrical needs.
Whose bright idea was it (Jimmy Carter) to take one third of our nation’s corn crop to create fuel? I’m not pointing fingers (Jimmy Carter), but this was a bad, bad idea. For one, it has driven food prices higher since the price of corn flows through to all kinds of other foods (think things like fructose and cow feed). Higher food prices have actually led to riots in the third world (see: Mexican Tortilla Riots).
But, that aside, food just doesn’t store much energy, so you need a lot of it to get any results.  Right now, the one third of our corn crop we are allocating to ethanol offsets less than 3% of our oil consumption. Tucker estimates that if you allocated every acre in the United States to ethanol production – assuming it was all arable – you’d offset about one-sixth of our oil needs.
Thank you for playing. Next.
There's a big popular trend towards generating electricity (and home heating) by burning wood pellets. This is another innocuous idea, seemingly. Cut a tree, and another grows in its place. Environmentalists like burning trees because the released carbon is recaptured by the new trees that grow where the old ones were cut.
The problem, though, is the same as with corn: wood just doesn't store that much energy relative to its mass. To put it into perspective, one would have to cut and burn 56 million trees per year to match the output of one typical coal-fired plant. This is about 140,000 acres. If we replaced our entire power plant system with biomass, we would need to cut roughly 750 million acres of trees per year, or approximately one third of the land mass of the United States.
Once again, the simple math of it gets in the way of the best intentions.

Geothermal is mostly limited to places where magma comes close to the earth’s surface. In the U.S., this means California and Hawaii. California gets about 5% of its electricity from geothermal, which is great, but unless someone figures out how to tap much deeper magma sources, this is also a highly limited source of power.
-->Oh, and it smells really bad.
Sorry, I know all this is a big buzz kill for many of you. Believing in renewables is so comforting. It's also fool's gold.
Right now, the U.S. is getting about 6% of its overall energy needs from renewables. Given all the practical  constraints I've outlined, getting this to even 10% would seem remarkable, which leaves us with...conventional energy sources, specifically oil, gas, coal, and nuclear. They will continue to do the heavy lifting, and no amount of fairy dust will change that.
Not coincidentally, all four of these energy sources are continuously under fire from the enormously powerful environmental lobby. But frankly, until the Sierra Club, Earth First, and others come up with some solutions of their own, rather than just things they oppose, they have no credibility, at least not with me.  
A large part of the answer, it would seem, would be to scale up our nuclear capacity. It's great stuff, nuclear. A few grams of matter holds as much energy as hundreds of miles of forests, sunshine, or wind. It's clean, and there's now a fifty year operating history in the U.S. without a single fatality. France gets 80% of its power from nukes. We should be more like France. (Did I just say that?)

In the 1970s, the Three Mile Island incident and the film The China Syndrome happened almost simultaneously. The combination was enough to cement public opinion for a generation. For the left, the "no nukes" movement still has a warm and fuzzy resonance.  Some, though, are slowly coming around, because nukes don't produce greenhouse gasses. President Obama has even made some positive noises about nuclear power, so maybe there's hope.
Perhaps we need a movie about renewables. We could call it "The Inconvenient Math."