Friday, July 5, 2013

The Sun is Shining

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.
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.
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.
3.      Excellent energy article in Time magazine
5.      Even Jim Cramer is beginning to see the light…just wait..

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