I had a wonderful 4th of July reflecting and
discussing how fortunate we are to live in this great nation of America, in
spite of all its ongoing problems, and its more recent polarization. This past week has been a major turning
pointing for solar energy in California, and is likely to set precedent for the
rest of the country.
The Southwest suffered through an incredible heat wave,
which now appears to be subsiding.
Energy pundits were predicting disaster in the state; the two reactors
at San Onofre were gone, one unit at Diablo Canyon developed a weld crack and
was shut down, and low precipitation in the winter diminished available
hydropower. The loss of some 4000MW of
electricity would plunge the state into blackouts, brownouts…industry, people
would suffer. It didn’t happen! The availability, pricing, and dispatch of
electricity is a very complex process, but here are a few things to consider.
The Cal ISO is responsible for keeping the electrons flowing
in the wires. The System Status page on
their website is crucial to understanding what is going on. http://www.caiso.com/SystemStatus.html
shows electricity use for the entire day. At night, use is low, hitting a low of
24,000MW around 4am. The peak usually
occurs around 4-5pm, and is normally around 34,000MW. When it is really hot, for the few weeks out of the year,
the peak can reach 44,000MW, mainly due to air conditioning, as it did earlier
in the week. This demand has to be met, but here are a few key points in this
equation. There was a 20%
buffer…available electricity, which can be called upon when needed. In the case last Tuesday, the amount of
electricity available at peak was 55,000MW, 11,000 more than what was
needed or used. These small generators
are called “peakers” and are usually small jet turbines that can be turned
on/off in a matter of minutes. They are
expensive to run because they only operate for a short period of time when fuel
costs are at their highest. http://www.lasvegassun.com/news/2013/jun/29/peaking-units/#axzz2XiYZW5H3
The main point is that we have a lot of generating
capacity that is unused during most of a 24 hour period and during most
of the year…all there to meet the peak demand when it is hot because the sun is
shinning.
Scroll down the page, and look at the renewables
contribution to the demand. The state
has about 2000MW from utility grade solar, and an estimated 1500MW from
small-scale rooftop systems. This made
up for the loss of nuclear electricity, and because the fuel is free,
was actually cheaper than running the natural gas peakers.
Solar is too expensive!
How often have we heard that?
How do we quantify the economics of solar…nuclear…any kind of
energy. That is a great mystery, but
the basic economic principles account for Capital investment (design and
construction costs), O & M (cost of fuel, operation, and maintenance), End
costs (dismantlement, waste disposal, etc), and Profit (utilities are
guaranteed a profit after they have paid taxes, insurance, depreciation, public
programs, advertising, etc, etc.).
Solar has very low O&M costs (the fuel is free), minimal End
costs, but has had high Capital costs.
All that is rapidly changing.
The recent rash of bankruptcies in the solar manufacturing industry
worldwide has been due to dramatic reduction in the cost of the final
product…the PV cell. Major blame can be
placed on China for “subsidizing” their solar industry, and now dominating the
global solar market.
Here are some quotes from recent reading:
“The EIA
has historically overestimated the cost of renewables, and underestimated
the cost of conventional fuels. The new 50-MW Macho Springs solar plant under
construction by First Solar in New Mexico will deliver power for $50.79/MWh
(that’s 5 cents/kwh) under its Power Purchase Agreement (PPA), and other US
solar projects have come in this year in the range of $70
to $90/MWh.”
“The price of power in the Mid-Columbia was $18.85 per
megawatt hour last year (mainly due to cheap hydro), but Energy Northwest’s
nuclear power cost was about $47.30 per megawatt hour, said Robert McCullough,
of McCullough Research.”
“EIA suggests a minimum cost for
advanced nuclear of $104.40, an average of $108.40, and a maximum of
$115.30/MWh.” PG&E’s Diablo Canyon
nuclear electricity was 14 cents/kwh back in 2000 during deregulation…that
ultimately resulted in their bankruptcy.“Three or four years ago, the solar industry was targeting one dollar per watt costs in 2013; today we are at 50 cents per watt.”
“The cost of photovoltaic solar panels is expected to drop to 36 cents per watt by 2017”
Today, solar is almost cost-competitive with grid-tied electricity, not only here in the US, but in Germany, Spain, and Italy, and soon in most parts of the world. The key to its deployment is POLITICS and not economics.
Again,
California leads the way. “This week,
Los Angeles started the biggest urban rooftop solar program in the country,
with the goal of powering 30,000 homes. [LA
Times]” “The California Assembly
Utilities and Commerce Committee overwhelmingly approved SB
43, a groundbreaking new program that would give millions of Californians
who currently don’t have access to renewable energy the opportunity to use 100%
clean energy for the first time.” These
are major steps to empowering the up-coming solar revolution.
Up to now,
there have two kinds of solar deployment.
Large-scale utility grid projects have been constructed out in the
deserts feeding solar electrons into our wires. True, these have been expensive, and have required a new learning
curve for their integration into the system.
The other type of solar system has been on the roof of the individual
homeowner…some providing stand alone power, and many being grid-tied, feeding
electricity back into their local grid.
Most of these are/were expensive, required subsidies to make them
affordable, and were limited to appropriate rooftops and clientele.
A new
third type of solar system will be somewhere in the middle…accessible to the
majority of residents wanting to use solar energy, but more importantly, now
being able to do so with the fuss and mess of having to do it yourself;
or if you are a renter; or if your don’t have the right kind of south facing
rooftop. Suppose you have $10,000 and
you want to invest that money in a social and environmentally responsible
instrument. You could put that money
into a company that is installing a large solar system on the roof of a local
warehouse. You either get electricity
credit for what is produced, or get a payout from the sale of that electricity
on the grid. Most small systems today
have a 7-8 year payback (that’s a 10% return on your money). Larger systems are cheaper, and with the
costs coming down, your investment will generate more interest than what is
available in most saving accounts or CD’s.
You’re investing in a product that is necessary, and has value; and you
will hopefully be bypassing the big-business big-money energy mentality that
has worked so hard to strangle renewables for decades. Their fight is now becoming more desperate,
but their economic argument is slowly fading towards extinction.
The
potential for smaller, local solar deployment is enormous. Manufacturing jobs, installation jobs, sales
and financing jobs, less costs and more efficiency for maintaining the huge
grid system, less CO2 and other environmental problems…on and on.
Besides
the political blockade, there is a major issue/obstacle with solar…the sun
doesn’t always shine. We do have
solutions for storing renewable energy, which is crucial for our future…more on
that later. But for now, we need to value
the solar electricity that we can easily harness…a value that soon, even the
fiscal conservatives will see as a money-making opportunity.
Apple (one
of the world’s biggest companies) is heavily investing in solar, primarily as a
means of reducing peak demand for the massive air conditioners they are running
at their server sites in Nevada and North Carolina. This will save them money, reduce the strain on the grid, and
more importantly, provide a huge push for solar from the “big-money”
players.
Power to
the people! The best is yet to come.
Some
interesting reads if you wish to follow up on this discussion.
1.
Apple’s
solar projects http://lasvegas.cbslocal.com/2013/07/02/apple-to-build-massive-solar-plant-to-power-data-centers/
2.
Heat wave
in California http://www.csmonitor.com/Environment/Energy-Voices/2013/0701/Heat-wave-tests-California-power-grid.-Why-no-blackouts-so-far
3.
Excellent
energy article in Time magazine http://business.time.com/2013/06/27/grid-politics/
4.
The “hard
energy boys” strike out http://www.dailykos.com/story/2013/06/23/1218301/-ALEC-Strikes-again-by-Resolving-to-Free-Electrity
5.
Even Jim
Cramer is beginning to see the light…just wait.. http://www.thestreet.com/story/11911544/1/solar-scores-a-big-win-over-nuclear.html?cm_ven=RSSFeed
6.
It’s the
economy…jobs… http://www.latimes.com/business/money/la-fi-mo-green-jobs-20130319,0,2962980.story
7.
Cost of
solar http://www.pv-magazine.com/news/details/beitrag/deutsche-bank--sustainable-solar-market-expected-in-2014_100010338/#axzz2LyRXuVHd
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