The new documentary written and produced by Jeff Gibbs and promoted by Michael Moore has certainly generated a lot of heat. If we could tap into that effectively we might solve humanity’s energy crisis.
As someone that has been blogging about alternative energy and sustainability for the past 8 years I feel I have a very keen appreciation of both the points made in the film and the reaction of the outraged critics who have attacked it quite viciously.
As with all Michael Moore documentaries the film does take an extreme view which is not completely supported by the facts on the ground; but it has at its core enough kernels of truth to hopefully make people think. That’s what Michael Moore’s all about.
For example, in perhaps his most famous documentary was there any logical reason for him to drag two victims of the Columbine shooting that had bullets embedded in their bodies from that horrendous tragedy to a K-mart to claim a refund by trying to “return” the bullets? Of course not. But did that sequence make us think about the morality of selling ammunition in a department store to anyone with a 10 dollar bill or a credit card? Did it make us think, just for a moment, about what share of responsibility the merchants that profit from selling the weapons and ammunition for those weapons have when they are used to perpetrate senseless acts of violence?
In my viewing of “Planet of the Humans” there are three central themes presented.
The environmental movement is misleading the general public with regards to how effective available green energy technologies such as solar and wind are when it comes to weaning an industrialized society off of fossil fuels.
The environmental movement has become entangled with various billionaire investors/supporters as well as the industrial complex that has grown up around manufacturing and installing solar panels and wind turbines and companies that consume vast amounts of fossil fuel energy to transform corn into ethanol or chop down and burn forests to create biomass energy.
That the only way to prevent the destruction of the planet and to reverse climate change is for humanity to drastically reduce its energy consumption. “Green” energy is not a solution. Green energy is not even “green” when full cycle costs are properly accounted for.
If one accepts the conclusions of the film then the future looks pretty much hopeless. And I think a brutally honest assessment of where we are at with the development of alternative energy sources and energy storage systems might justifiably lead us to that conclusion. But that is not where I land on this issue.
With regards to claims that the popular media and literally thousands of “green energy” and environmental web sites publish overblown and hysterically inaccurate claims of alternative energy success, I say “guilty as charged”. I myself have identified many such claims and, unlike the film, I provide data that proves they are inaccurate or, at best misleading. Examples would be exaggerations about the impact of wind energy generation in Denmark , statements that confuse “nameplate”capacity with actual production of electricity and praise for the success of the German Energiewende.
Transitioning to a sustainable energy environment will be hard work. Really hard work. And we will need every Dollar, Pound, Euro, Yen and Yuan to be applied in the most effective way possible to have any hope of achieving this goal in the next hundred years.
In 2016 Bill Gates announced the creation of the Breakthrough Energy Coalition with a great deal of fanfare and optimism. He declared that there were many different paths that might lead to sustainability.
Three years later, having focused his very considerable intellect and support resources on the problem he had become much less optimistic. In a video posted in November, 2018 the interviewer made the following comment;
“a lot of people are very optimistic as you know with wind and solar, the renewables cost coming down, the batteries cost coming down – you think that’s enough?”.
Gates’ response: “That’s so disappointing!” He went on to explain just how far we are from workable solutions. Orders of magnitude. The entire interview is definitely worth watching.
My concern has always been and continues to be that commentary that blames governments for not just getting on with the deployment of readily available and effective “green” technologies misses the point entirely. There are no readily available and effective “green” technologies that can replace the combustion of fossil fuels in our steel plants, electricity generating stations and automobiles. There are solutions. Some of them are even readily available. But they are not effective in terms of the long game.
Is widespread deployment of solar and wind technology going to reduce the real time consumption of fossil fuels to generate electricity? Yes – considerably. No argument there.
Considering all of the fossil fuel inputs to manufacture, transport, and install those technologies is there a net reduction in greenhouse gas emissions? Much more difficult to assess but I believe that there is a significant net benefit.
Will the deployment of these technologies allow us to fully retire all fossil fuel based electricity generation? No chance. Not now. Not anytime in the next 3-4 decades.
As noted by the film and in most discussions about the intermittency of renewable energy sources the availability of incredibly cheap, reliable, and massively scalable energy storage systems is the key. If we had storage most of the other problems go away. Unfortunately there are no such systems available.
To provide a sense of what is required using current NREL estimates the cost to provide battery storage to replace the nighttime output from a relatively small 180 MB electricity generation plant would be on the order of a billion dollars. And that doesn’t include the cost of the solar or wind inputs required to charge those batteries.
Having said that I for one believe that we can develop energy storage systems that will meet the criteria of incredibly cheap, reliable, and massively scalable. But it will take a dedicated, generously funded and globally coordinated effort to do so – the clock is ticking.
The second theme of the movie calls into question the motivations of the environmental movement in general and specific organizations such as the Sierra Club or the 350 Organization. I do not agree with those criticisms.
Those organizations may exaggerate the value of the solutions they promote but they do not exaggerate the dangers of continuing with “Business as Usual”. Having identified technologies such as solar and wind that they believe can help us transition to a sustainable society it only makes sense that they be aligned with business interests that are implementing those technologies. The fact that those same business interests profit from the promotional and educational activities of organizations like the Sierra Club does not diminish the value of those activities. The fact that those same business interests may donate to environmental groups does not, in and of itself, corrupt those groups.
From what I have seen, the people working for environmental groups, whether as paid staff or on a volunteer basis, are motivated by a love of this planet and by fears regarding the environmental legacy we will leave for future generations. They may have too much optimism about the progress we are making and they may not appreciate all of the challenges that have to be overcome but I believe their intentions are good and their work is commendable.
Michael Moore and producer Jeff Gibbs are not distancing themselves from the environmental movement or specific “green” organizations. In a response to criticisms of the movie Michael states that he continues to have “huge admiration for all our fellow environmentalists” and states that “its only your friends that can tell you when you’re messing up.” That response is also very worthwhile watching in its entirety.
With regards to the third theme of the movie I would agree that conspicuous consumption is a big part of the sustainability problem but I do not agree that discussions about restricting population growth make any sense at all. Many if not most environmentalists and environmentally focused organizations understand the importance of and promote the traditional three “R’s”. Reduce, Re-use, Recycle. And everyone accepts that the first “R” is the best “R”.
There are many initiatives at every level of society, both in developed and developing countries that are aimed at making progress on the three “R’s”. Do we still have too many dollar stores where inexpensive products are purchased in many cases only to be thrown away within a relatively short period of time? Absolutely yes! Do we allow the cheap price of goods from far off sources blind us to the negative environmental impacts of transporting consumer goods half way around the planet? Yes we do. But are we making progress on developing new recycling techniques, reducing packaging, banning single use plastics and in many other areas? Yes we are.
I hope that conversations triggered by “Planet of the Humans” will end up making people somewhat more cautious with regards to the solar and wind technologies that are currently the only “green” technologies really getting much attention. I hope they will come to the conclusion that other more consistent technologies such as geothermal and hydro-kinetics and geoexchange need a closer look. Most importantly I hope that those conversations lead to a clear understanding of the need for a much more effective global effort to develop innovative energy storage solutions. If any of those things happen then the film will have served a useful purpose in my opinion.
For my thoughts on how to transition to a truly sustainable energy environment you can check out my Sustainable Energy Manifesto.
The criticisms of “Planet of the Humans” have stated that the information presented in the film is either false, out-of-date, or irrelevant. That is simply unfair and untrue. Here are some of the key points made by the film that need to be considered carefully:
Biomass is big and bad – in practice most biomass plants burn wood products including fresh cut trees. Why does the film “obsess” about this? Josh Fox for example states that biomass is not a significant component of the energy mix and that it is “inconsequential” and not worthy of analysis. Here is a graphic from the ren21 network which does the most comprehensive assessment of renewable energy that I know of:
The graphic labels aggregate several energy sources but the text of the report clarifies that “In 2017, modern bioenergy contributed an estimated 5.0% to total final energy consumption.”
Clearly biomass represents a significant proportion of global “renewable” energy. As such it is definitely worth taking a hard look at. The film does incorrectly suggest that Bill McKibben still supports biomass. In his response Mr. McKibben provides evidence that he is now opposed to biomass. But he came to this conclusion relatively recently, starting with an article published in September, 2016. The ironic part of this criticism of the film is that 350.org and the Sierra Club are now frequently and vigorously opposing the use of biomass – just as the film does.
Solar and Wind have to be back-stopped by fossil fuel plants – this is absolutely true. Germany has spent hundreds of billions of Euros implementing solar and wind – now equal in nameplate capacity to all the fossil fuel and nuclear plants in the country. And yet they still burn enormous quantities of coal to generate electricity and have only recently made a commitment to phase coal out by 2038. And even that plan requires that some truly reliable and renewable energy source becomes commercially viable before then.
The tiny Spanish island of El Hierro, home of an “experiment” attempting to have electricity generation be 100% renewable, has more than double the capacity of hydro and wind needed to meet peak demand. And yet in more than 5 years the longest period of time that the island could run 100% on renewables was 18 days. The diesel generator is required almost every day.
It is also true, as stated in the film, that running fossil fuel plants as “spinning reserves” is less efficient and results in proportionately more CO2 emissions.
Assertions by organizations like Apple that they are running on 100% renewable energy are false – Apple and other organizations that claim to be running on 100% renewables are connected to the same grid as everyone else and they run on the same mix of electricity generation sources as everyone else. There is absolutely nothing special about their facilities. Their claim is based upon an accounting sleight-of-hand whereby they purchase renewable energy or sponsor the building of renewable energy sources that are equivalent to the energy they use.
The problem with these statements is that they make people think that it is possible to run a large organization 100% of the time on renewables. It is not possible and there is absolutely no pathway to get to that result. There will be dark, calm nights, especially in winter, when no amount of solar and wind generation assets will meet electricity demand.
Some green energy advocates will suggest that battery developments are going to make energy storage cheap and effective. That is not the case. A recent announcement by California utilities that they would be spending $1 billion on batteries made headlines. But the quantity of battery storage being discussed, the largest in the world by a wide margin, could meet average California energy demand for about 5 minutes.
We as humans consume too many resources and capitalism’s growth requirements are unsustainable – Critics of the film have very unfairly accused the film of recommending population control and have gone on to accuse the producers of being racist as a result. This is simply not true. The film does call for a reduction of consumption of all sorts and I personally have a hard time arguing with that. Surely it is clear to everyone, especially in the developed world, that we purchase and often prematurely dispose of far too many consumer goods. The statements regarding the demand by capital markets for continuous growth in corporate revenue and earnings resonate with every investor.
The film does raise a question regarding how many humans can this planet support and at what standard of living. That is not suggesting population control but rather is asking if perhaps we are reaching the limits of sustainability.
Obviously if we all live with less then the planet can support more people. So to me this speaks more to the need for the people of the developed world to reduce their consumption of energy and goods, for us to share our wealth through increased foreign aid and more liberal immigration policies, and for us to adopt a “one world” vision in everything that we do.
Did the film get some things seriously wrong? I would say that the suggestion that wind and solar do not result in net reductions in CO2 emissions is wrong. But the identification of processes such as mining and smelting which cannot be reasonably accomplished using renewable energy today as serious issues related to the production of wind and solar technology is accurate.
The bottom line is that we are not addressing the climate crisis in any meaningful way. To take one quote from the ren21 report (page 17);
“Despite progress in renewables uptake, energy efficiency and energy access, the world is not on track to meet the targets of the Paris Agreement or of Sustainable Development Goal 7. Global energy-related carbon dioxide (CO2) emissions grew an estimated 1.7% in 2018 due to increased fossil fuel consumption.”
Taking some time to reconsider the strategies and technologies that have been at the heart of efforts to achieve a sustainable society is not a bad thing. That is what the film tries to do, albeit in overly dramatic fashion.
Article regarding PG&E Mega Battery system with 1.2 GH-Hours capacity
Posted in Uncategorized at 10:18 pm by Administrator
Due to a technical issue with my web site Google is currently directing searches for “Better Known As Beaver Lake” (which is another site I maintain on a volunteer basis) to this blog. The proper link is www.betterknownasbeaverlake.org.
The California Energy Commission is proposing changes to building codes that would require the installation of roof-top solar panels on all new buildings starting in 2020.
Here are the top 5 reasons that mandating roof-top solar for new residential construction in California makes no sense whatsoever:
1) Roof-top solar installations are much more complex and expensive than utility scale solar installations. Far more time is spent getting set up, rigging safety harnesses and moving racks and solar panels up to the roof than is spent actually mounting the solar panels. Electrical connections are also significantly more expensive requiring inverters at each home.
2) Roof-top solar installations are far less effective than utility scale solar installations. The roof pitch and north-south orientation of a roof is never ideal in terms of collecting the most solar energy. Houses are often surrounded by trees, hills, or high buildings which further reduces the solar energy captured especially in the morning and late afternoon. Utility scale solar panels are usually mounted on racks which move to follow the path of the sun resulting in much greater capture of available solar energy.
3) When solar panels are installed on a house the local electrical utility has to upgrade the equipment in the neighbourhood in order to handle the bi-directional flow of electricity in a system that was designed to distribute electricity, not collect it. Because the residents with the solar panels are actually spending less for electricity (and often actually collect money from the utility for electricity generated by the solar panels) the cost of these upgrades must be born by people that have no ability to install solar panels: renters, those living in apartment buildings, and those on fixed or low incomes.
4) The average life of a roof in California is about 20 years. That means that the entire installation of solar panels will have to be removed and replaced as part of the roof replacement. Solar panels do lose efficiency over time so that it would probably make sense in most cases to simply redo the entire installation which will be even more expensive than the initial installation because of the need to remove and dispose of the old panels.
5) California already has a lot of solar energy developed to the point where the excess generation at mid-day is becoming a problem. The only solution to that problem, and therefore the only way to make effective use of further development of solar energy, is the implementation of large scale energy storage systems. Whether that energy storage is through the use of batteries, pumped hydro storage, molten salt, or some technology that has not yet been commercialized, storage at individual homes will be dramatically less efficient and more costly than centralized energy storage.
Geoexchange – a Far Better Alternative to Address Climate Change Concerns
There is an alternative that would provide far more benefit in terms of reducing energy demand for the entire life of a building and which would address climate change concerns far more effectively. That technology, already in widespread use, is termed geoexchange (implemented using geothermal heat pumps).
Geoexchange uses the constant temperature of the ground at depth to provide both heating and cooling of a building using approximately half the energy required by traditional heating and air conditioning systems. The cost of installing a geothermal heat pump would be a fraction of the cost of installing solar panels and geothermal heat pumps cut electricity demand in the late afternoon and evening – the peak demand times when California is still dependent upon fossil fuels and nuclear to provide power for lighting and air conditioning.
In cooling mode geoexchange takes advantage of the fact that the earth at depths of 50ft is much cooler than the air temperature.
In heating mode geoexchange takes advantage of the fact that the earth at depths of 50ft is much warmer than the air temperature. One of the most widespread ways to heat buildings is through the burning of natural gas in traditional furnaces. Natural gas is a fossil fuel and heating buildings using that energy source emits enormous amounts of carbon dioxide. Geoexchange, on the other hand, uses the earth as a heat source and heat sink to heat and cool buildings with no combustion of fossil fuels and no carbon dioxide emissions.
Geoexchange systems are integrated internally within the building so they do not have to be touched when roofs are replaced or other renovations to a building take place.
Reducing the energy requirements of a building using geoexchange, better insulation, and a host of other net-zero technologies is a much better approach than generating additional solar energy at mid-day which has to be stored or curtailed because there is no demand for it at the time it is generated. If California law-makers are serious about addressing climate change concerns, requiring geoexchange for all new buildings is the single most cost-effective measure they could ever introduce.
Many advocates of renewable energy point to Germany as the example of how to transform a large economy away from fossil fuels and therefore reduce carbon dioxide emissions. I have questioned the validity of that argument in posts in the past and the results from 2017 haven’t changed my opinion one bit. There are a lot of complexities in analyzing what is happening in Germany but the bottom line results are not very encouraging as far as I am concerned.
Here are what I would consider to be the “headline” numbers for Germany:
11% The reduction in fossil fuel consumption to generate electricity over the past 15 years
Since the beginning of the Energiewende in 2003, and despite hundreds of billions of Euros in subsidies and the second highest retail electricity rates in Europe to support those subsidies Germany has managed to reduce the consumption of fossil fuels very little.
9% The reduction in CO2 emissions from electricity generation over the past 9 years
Despite having deployed the third largest fleet of wind turbines in the world (behind only China and the U.S.) and despite having the third largest solar capacity in the world (behind only China and Japan) the German electricity generation sector remains, by far, the largest source of CO2 emissions in the country. In fact the modest reduction that has been realized in this sector is primarily due to a shift from coal-fired to natural gas-fired fossil fuel generation.
0% The reduction in CO2 emissions from all sources over the past 9 years
The modest reductions in CO2 emissions realized in the electricity generation sector have been completely offset by increases in Transport and Manufacturing. There is no possibility that Germany can meet its stated CO2 reduction targets for 2020. In fact, any further reduction in nuclear power generation will guarantee that German CO2 emissions increase.
Complete destruction of a rational import/export market in the regional grid
At the beginning of the Energiewende Germany was neither a net exporter or importer of electricity. At times of higher demand in Germany electricity was imported from neighbouring countries and at times of lower demand in Germany electricity was exported. This is a normal characteristic of a healthy regional grid where resources can be shared as needed. Gross German imports and exports were about 40 TWh each.
As more and more wind and solar was developed in Germany the sad reality of non-dispatchable resources started to become evident.
Solar and wind energy was forced onto the regional grid at random times when those resources were available without regard for whether or not there was any demand. Even ramping dispatchable generation up and down in order to try and match renewables was not enough (and, in fact, caused enough damage to one of Germany’s largest nuclear plants to force it to shut down). Only one option was left – export the excess electricity to Germany’s neighbours whether they needed/wanted it or not.
Over the years this trend has gotten worse and worse to the point where, in the last two years, virtually all additional wind and solar capacity additions have translated directly into increased exports.
Adding more solar and wind generation is no longer displacing any fossil fuel or nuclear generation in Germany itself. It may make for nice green-washed headlines (“Renewable power hits record high in Germany in 2017!”) but it won’t help Germany reduce its dependence on fossil fuels in any significant way. And in the meantime the impact of Germany’s “success” has created what Dr John Constable has described as a “curiously distorted market” in the Euro zone.
Even with 100% excess capacity Germany continues to need imported electricity
When the Energiewende began Germany had electrical generating capacity of about 100 GW from “conventional” generation sources including small amounts of hydro and biomass and, in addition, about 15 GW of Wind. By 2017 “conventional” generation capacity was still at about 100 GW but the nameplate capacity of wind and solar in Germany had grown to match that value. In other words, with electrical demand remaining flat since the beginning of the Energiewende there is now theoretically more than double the capacity needed to generate electricity in Germany.
And yet Germany still imported 30 TWh of electricity in 2017, down only 25% from when the Energiewende began.
How is that possible?
Once again, the non-dispatchable nature of wind and solar provides the answer.
On cold, calm winter nights no wind or solar energy is available (it should be noted that the high pressure systems that produce really cold weather are characterized by calm winds which I used as the basis for my post “The Fright before Christmas“).
Has the Energiewende been a success? I would have to say “No”
The German approach has done more to identify what doesn’t work than it has illuminated the path to a future powered by sustainable energy. Germany has essentially exhausted the capacity of the entire European grid to absorb uncontrollable wind and solar generation. That means that no other large country in Europe can do what Germany has done. Even within Germany itself the problems are now recognized and major reforms are under way – reforms that will inevitably slow the further development of wind and solar energy sources.
Massively scalable and incredibly cheap energy storage systems are required to deal with the intermittent and variable nature of wind generation, which has to be the primary source of energy in the mid and northern latitudes. Why only wind? Because at those latitudes peak electricity demand is in the winter when very little solar energy is available. And that peak demand will only grow more extreme as we go through the necessary transition to stop burning natural gas to heat our buildings.
I believe that the kind of energy storage systems that we need can be developed but they will require a lot more funding and support than they get today. There are other initiatives that can help as outlined in my Sustainable Energy Manifesto.
The development of renewable energy sources is taking place in all regions of the world and now attracts well over $200 Billion in investment annually.
Note: Figures in this blog post were adjusted on December 1, 2023 to reflect the increase in capital cost for the Site C dam (to $16 Billion). In addition, the calculations regarding the number of solar panels and associated costs that would be involved to generate the equivalent amount of electricity were changed to use cost and production data from the Sun Mine in Kimberley now that almost 2 years worth of actual data is available.
$55/MW-Hour
This is the most likely multi-generational cost of electricity from Site C. That should be compared to the $68/MW-Hour paid for Private Power Purchases that BC Hydro was forced to negotiate with for-profit companies. For a full discussion of how this number was calculated see my previous post on LCOE for hydro projects.
54 TW-Hours
This is the total annual electrical generation from existing legacy Hydro assets in BC. Site C will add 5 TW-Hours.
4.6 Billion liters
Amount of gasoline consumed in BC each year
=41 TW-Hours
additional generation which will be needed when all cars and trucks are electric (a certainty over the next 50 years)
5 Billion Cubic Meters
Annual domestic consumption of natural gas in BC
=52 TW-Hours
additional generation which will be needed when we stop burning fossil fuels to heat homes and businesses
13 Million
Number of solar panels that would have to be installed in BC to generate the same amount of power as Site C (assuming Site C has a capacity factor of 60% which is probably an under-estimate)
$13 Billion
The cost to install those solar panels – and we still would have no power at night and the panels would have to be replaced in 25-30 years.
700
Number of wind turbines that would have to be installed in BC to generate the same amount of power as Site C
$4.4 Billion
The cost to install those turbines which would have to be located on pristine mountain-tops causing significant habitat destruction – and we still would have no power on the frequent days when winds are calm across BC. Note also that the best wind resources in the province are on the north section of Vancouver Island and Haida Gwaii. Installation of a larger number of wind turbines in these areas would likely encounter significant protests from environmental groups.
8 Minutes
The length of time that the largest battery complex in the world could produce electricity equivalent to the output from Site C
In Conclusion
If we think we’re going to need additional electricity capacity in the future why wouldn’t we build Site C now when interest rates are low? Do we think construction costs are going to decrease in the future?
Site C is the best renewable energy option for BC for today
… and for future generations
Posted in Uncategorized at 10:52 pm by Administrator
One of my pet peeves has been a metric with the glamorous acronym LCOE which stands for Levelized Cost of Electricity. This is the “go to” number when evaluating electricity generation sources and comments about solar and wind reaching “grid parity” relate to this measure.
My annoyance comes from comparisons of LCOE for solar (PV and thermal), wind, and hydro which truly is like comparing apples to zebras. In a recent publication by the respected Energy Information Agency the following figures for Total System LCOE were presented in Table 1b;
Wind: $64.50
Solar PV: $84.70
Solar Thermal: $235.90
Hydroelectric: $67.80
These figures are similar to others I have seen published in many places and they have never made any sense to me.
My parents had a cottage on Lake Agnew in Ontario which was formed by the building of the Big Eddy dam in 1929. There are 5 other smaller dams within a short distance and I know that they are all still operating and producing significant value for their owners. Several are more than 100 years old and will not be decommissioned in the foreseeable future.
So it is clear to me that these dams produce the least expensive electricity that can be generated from any source. Why then is it that LCOE values for hydro are not dramatically less than other renewable sources?
After some investigation it has become clear that this is an issue that has a lot more to do with politics and “spin” than it does with anything meaningful. And the same problem applies to any capital intensive project that has a very long service life (for example, solar thermal with molten salt storage which has a major advantage over solar PV because it can generate electricity 24 hours a day to meet peak demand).
In this post I will focus on the “Site C” dam in British Columbia, currently under construction. For this particular project is is possible to say that the LCOE is $164/MW-Hour or $31/MW-Hour – neither statement is factually wrong but one is more realistic and more likely than the other (Note: all figures in this blog post were updated Dec. 12, 2017 to reflect an increase in the estimated capital cost for the dam – from $9.1 Billion to $10 Billion).
The large discrepancy in LCOE values demands an explanation.
The major factors underlying this wide variation in values for LCOE are the cost of capital, the time period being considered, and the forecast capacity factor for the dam.
Anyone that has purchased or has considered purchasing a house understands that the longer the amortization period the more you will end up paying for your house. If you paid your mortgage off in 20 years at a 6% interest rate you would end up paying about 1.8 times the purchase price (the total interest paid would amount to about 80% of the purchase price). If you paid the mortgage over 35 years at a 6% interest rate you would end up paying almost two and a half times the purchase price (note that I use 6% as the interest rate = discount rate because that is the BC Government mandated rate for assessing large capital projects).
Given that reality why would anyone choose a 35 year amortization period rather than a 20 year amortization period? Why? – because longer amortization periods require lower monthly payments. As a result there is always a trade-off between what a house purchaser can afford to pay each month and how much they will spend in total to purchase the house.
So imagine if you paid off your house over 70 years. Most houses are still being used for at least that length of time. Many houses in Europe are hundreds of years old. Choosing a 70 year amortization period would reduce your monthly payments even further but at a 6% interest rate you would end up paying over 4 times the purchase price for your house. That doesn’t make sense and banks don’t offer mortgages for more than 35 years.
But that amortization period is exactly what is used in the most commonly published LCOE values for Site C.
Now you might wonder why BC Hydro would choose that approach when it clearly results in the highest total cost for the Site C dam. Well, if you need to present the lowest LCOE during the amortization period then longer amortization periods give you lower numbers. That doesn’t make sense but the optics are better.
For example, if you used a more realistic amortization period of say 30 years the LCOE during that 30 year period would be around $138/MW-Hour. That is not a very attractive number. It also does not reflect the true cost of electricity that will be produced from this dam.
In order to understand the true long-term LCOE it is necessary to consider the period of time after the capital cost for the dam has been paid off (end of the amortization period) until the end of life for the dam.
How long will the Site C dam be in operation? There are many hydro dams in the world that are more than 100 years old and operating just as efficiently as when they were constructed. Personally, I think most of these dams will be in operation in a thousand years. Why wouldn’t they be? (the Cornalvo dam built by the Romans is over 1,800 years old!).
However, projecting service life beyond 100 years is a bit speculative so let’s leave it at 100 years. That’s what BC Hydro has done in published materials for Site C.
If a 70 year amortization period is used then the only costs for the dam over the last 30 years are operating and maintenance expenses which are very small compared to the capital cost. Although it is again highly speculative to try and forecast O&M expenses 70 years from now reasonable guesses result in LCOE values of $5-10/MW-Hour. Combining the costs during and after the amortization period for the Site C dam results in LCOE values of around $75-90/MW-Hour.
But what if a more realistic amortization period of 30 years is used? BC Hydro could easily borrow that amount on capital markets or issue bonds with that type of maturity. In that case the LCOE during the first 30 years (assuming 6% interest/discount rate) would be $138 but the LCOE taken over the full 100 years would be about $45/MW-hour. That’s a much more attractive number.
It will likely even be better than that.
The LCOE values quoted so far have been based not only upon 6% interest rate but also using a capacity factor of 55%. That is to say that the dam would only produce 55% of the electricity that it is capable of producing. The capacity factor will depend upon demand and water conditions.
Within the next 100 years all automobiles will almost certainly be electric drive which will significantly increase electricity demand in the province. But we also need to stop burning natural gas to heat our homes and businesses. The renewable alternative is heat pump/geoexchange technology which requires considerably more electricity than traditional heating systems. Burning huge quantities of diesel fuel in our railway locomotives also doesn’t make a lot of sense if we are trying to de-carbonize our economy. Electrification of the railway system will add another significant new load on the electrical system.
Finally, if Alberta follows through on its commitment to eliminate burning coal to generate electricity then there will also be additional demand on BC hydro power as a balancing resource for wind farms. Taking all these new system loads into account and barring a drought it is conceivable that the capacity factor for the site C dam could increase to as much as 75%.
And what about interest rates for a large loan? BC Hydro would be able to obtain capital at the most attractive rates possible for a loan of the size required for Site C. BC Hydro could issue a Site C 30 year bond at a rate of 4.5% which would be competitive with other high quality debt instruments.
Using an interest/discount rate of 4.5%, an amortization period of 30 years and a capacity factor of 60% would yield LCOE of about $36/MW-hour over 100 years. In my opinion that is the most realistic and likely LCOE for the Site C dam.
The tables below provide other values which indicate the sensitivity to amortization period, interest/discount rate, and capacity factor.
It it clear to me that hydro, amortized over a reasonable period, is by far the least expensive renewable resource available. More importantly, hydro power is available when it is needed each and every day because of its ability to follow system load. The only other renewable technology that can do that is geothermal and it is not available in most geographic areas (hydro-kinetic turbines would also be able to provide that kind of reliability and that technology deserves R&D funding and other financial supports).
For solar PV and wind it would only be reasonable to add a significant additional cost for energy storage or some other reliable generation source to provide power on calm nights. Those critical additional costs are conveniently ignored when comparing LCOE values for solar, wind, and hydro. As a result claims of “grid parity” for solar PV and wind are nonsense. Solar thermal with molten salt storage, on the other hand, is becoming a reliable and cost effective generation source in subtropical regions as demonstrated by a recent project by Solar Reserve being built in Chile.
One final note. It can be argued quite reasonably that those of us who will “shuffle off this mortal coil” before the Site C dam has been paid for will never see the benefits of the low cost power this dam will generate for decades or perhaps centuries in the future. So be it. We have, without question, enjoyed and will continue to enjoy some of the world’s lowest electricity rates because of the investments made in dam construction decades ago. As far as I am concerned I can imagine no greater legacy for our children and grandchildren than a source of clean, renewable energy that will last for their lifetimes and beyond.
these new system loads into account and barring a drought it is conceivable that the capacity factor for the site C dam could increase to as much as 75%.
And what about interest rates for a large loan? BC Hydro would be able to obtain capital at the most attractive rates possible for a loan of the size required for Site C. BC Hydro could issue a Site C 30 year bond at a rate of 4.5% which would be competitive with other high quality debt instruments.
Using an interest/discount rate of 4.5%, an amortization period of 30 years and a capacity factor of 60% would yield LCOE of about $36/MW-hour over 100 years. In my opinion that is the most realistic and likely LCOE for the Site C dam.
The tables below provide other values which indicate the sensitivity to amortization period, interest/discount rate, and capacity factor.
It it clear to me that hydro, amortized over a reasonable period, is by far the least expensive renewable resource available. More importantly, hydro power is available when it is needed each and every day because of its ability to follow system load. The only other renewable technology that can do that is geothermal and it is not available in most geographic areas (hydro-kinetic turbines would also be able to provide that kind of reliability and that technology deserves R&D funding and other financial supports).
For solar PV and wind it would only be reasonable to add a significant additional cost for energy storage or some other reliable generation source to provide power on calm nights. Those critical additional costs are conveniently ignored when comparing LCOE values for solar, wind, and hydro. As a result claims of “grid parity” for solar PV and wind are nonsense. Solar thermal with molten salt storage, on the other hand, is becoming a reliable and cost effective generation source in subtropical regions as demonstrated by a recent project by Solar Reserve being built in Chile.
One final note. It can be argued quite reasonably that those of us who will “shuffle off this mortal coil” before the Site C dam has been paid for will never see the benefits of the low cost power this dam will generate for decades or perhaps centuries in the future. So be it. We have, without question, enjoyed and will continue to enjoy some of the world’s lowest electricity rates because of the investments made in dam construction decades ago. As far as I am concerned I can imagine no greater legacy for our children and grandchildren than a source of clean, renewable energy that will last for their lifetimes and beyond.
I have complained previously about the misrepresentations published about renewable energy. In most cases the authors just seem to be so overcome with excitement about some new milestone achievement so that they lose sight of the big picture. But I recently ran into a post from 2016 that demonstrates more clearly than anything else I have read just how foolish these articles are.
“Renewable energy sources, taken together, covered 32.5% of German electricity consumption in 2015, while lignite provided only 26%. Since 1990 the electricity output from renewables has risen tenfold to last year
Going on 4 years ago I wrote two blog posts outlining what I thought were the best case and worst case scenarios for the five years from 2013-2018 in terms of developments in renewable energy. Given recent events in the United States I thought it might be interesting to revisit those posts and see where we stand at the 80% mark.
In terms of the “best case” scenario I think it is fair to say that essentially none of the good things I had hoped for have come to pass.
I wish I could say the same about the “worst case” scenario.
2013: I was concerned that there would be a major grid failure in Texas because of the variability of wind generation. That didn’t happen and the Texas grid has been remarkably stable despite some growing pains and the necessity to build a lot of new transmission capacity. The 18 GW of wind capacity in Texas has been stabilized by more than 5 GW of new Natural Gas generation commissioned since 2013, a lot of it in the form of Peaking plants that can respond to the variability of wind generation.
However, the situation did come to a head in South Australia in the fall of 2016 where a large regional blackout was blamed (rightly or wrongly) on a rapid change in wind generation. Independent System Operators such as AEMO and ERCOT in Texas are very concerned about grid stability and continue to take steps such as authorizing the building of new natural gas fired plants to address any concerns. However, that stability will become ever more difficult to protect as more and more renewables are added to the mix. This article by Gail Tverberg provides one of the most comprehensive summaries of current and predicted problems that I have come across.
2014: I suggested that the defeat of Angela Merkel in the general elections could result in a serious slowdown of the Energiewende. As it turned out Merkel was re-elected but the slowdown is happening regardless. Solar panel installations have slowed dramatically as shown by the graph below.
Limitations have also been put on further development of wind energy and there is even the possibility that a significant number of existing turbines will be scrapped by 2020.
In my worst case scenario I warned that the development of solar energy technology in Spain was at risk. Very sadly in my opinion the advances made by Spain with Concentrated Solar Power installations, which can provide power in the late afternoon and into the night using molten salt storage, have come to a halt. The burden of subsidies that were used to support this development as well as the deployment of a large amount of wind generation have simply become too great. Although Spain continues to generate an impressive percentage of total electricity demand from Wind and Solar very little new capacity is being added as of 2017.
The last issue I discussed for 2014 was the probable closure of many coal-fired plants in the U.S. Moth-balling of coal-fired plants has taken place at a steady pace since 2013 due to concerns about CO2 emissions and the cost of meeting MACT regulations. Firm reserve capacity has not declined as quickly as I feared because there has been a “dash to gas” with the prolonged period of low natural gas prices.
2015:
In my “worst case” post I stated that even relatively minor levels of roof-top solar panel generation would cause so many problems in Hawaii that measures would be taken to end net metering which would effectively end the solar “boom” in the Aloha State. Those concerns have largely been realized. Solar permits have continued their downward trend, reaching new lows in January and February, 2017. Net metering has been stopped which I believe was necessary. There is the potential for roof-top solar installations in Hawaii to stagnate or actually decline as roofs have to be replaced and the economic value of solar panels in Hawaii does not justify the cost of re-installation.
2016-2018:
In 2013 I felt that the cumulative impact of the short-sighted development of wind and solar would lead to major grid issues throughout North America by 2016 and would force major policy changes and the rapid development of natural gas fired peaking plants. That hasn’t happened yet. What I failed to take into account was that there was already enough firm capacity in the system to meet peak electricity requirements including a healthy reserve before the development of renewables began. As a result adding wind and solar has just produced a situation where generation far exceeds demand at mid-day and during very windy conditions in many areas.
That cannot continue.
As Germany has demonstrated so well, coal-fired plants and natural gas-fired plants cannot be run profitably if they are only able to sell electricity when winds are calm and there is little sunshine. Economic pressures will mount, plants will close, reserves will reach critically low levels.
The path taken by Denmark and Germany has also effectively “poisoned the well” for the rest of Europe. Germany and tiny Denmark use the European grid as a dumping ground for renewable energy at mid-day in the spring and summer and anytime when winds are strong. Conversely, Denmark and Germany import energy like there’s no tomorrow when winds are calm at night. Germany’s neighbours are now moving to build a technological “wall” around the country that was once part of the stable foundation of energy generation for the continent.
What’s the Bottom Line?
Unfortunately I would have to conclude that we are measurably closer to the situation pictured above. The German Energiewende is grinding to a halt despite the constant greenwashing and attempts to minimize the growing problems. Solar is near its deathbed in Hawaii and other states such as Arizona and Nevada are following the same path.
Energy storage is the problem. Energy storage has always been the problem. That’s why rural electrification wiped out the windmills that were once commonplace on prairie farms.
But the good news is that energy storage is the only problem. With reasonably priced energy storage we could save up solar and wind energy when it is available and use it when we need it.
Energy storage should have been the first problem we tackled, not left as a “homework” assignment to be completed at a later date. And I believe there is still plenty of time to develop workable energy storage solutions. But to do that we have to stop this senseless outpouring of public funds to support further wind and solar developments. And to get politicians and funding agencies to make the necessary policy changes the general public has to come to understand that the current approach has absolutely zero chance of being successful.
The lobbyists for the wind and solar industries are not being truthful. Very sadly they have many allies in the form of well-meaning green energy advocates who fail to acknowledge that the development of wind and solar without energy storage is a fool’s errand. It will certainly make a lot of people rich but it will not transition our economy to use sustainable energy.
There are a few voices that are saying, in effect, the renewable “emperor has no clothes”. Euan Mearns, Gail Tverberg, Paul-Frederik Bach – I would like to think that I myself am on that list. We are not pro oil & gas, we are not anti-renewables. Quite the opposite. We are simply trying to point out, through thoughtful, objective and evidence based analyses, that renewable energy development is not headed in the right direction.
In 1881 French engineer Ferdinand de Lesseps, emboldened by his successful construction of the Suez Canal, initiated excavation of the Panama Canal. Eight years later the company sponsoring the project went bankrupt. About $400 million (in 1881 dollars!) vanished, poured into the muddy channels of the Culebra Cut and Gat
As anyone who has read some of my blog posts knows I do not believe that we should be basing our transition to a sustainable energy environment on the need to moderate climate change. I’m not convinced that eliminating the burning of hydro-carbons altogether would make a huge difference to what our planet is doing.
But having worked in the oil & gas industry for more than 25 years and despite the current glut of oil on world markets there is one thing I am quite sure of. We will run out of hydro-carbons that can be economically extracted in less than 100 years – I might even see a significant shortfall of world production and as a result much higher prices within my lifetime.
It would be reasonable to argue that predictions of “peak oil” have consistently been incorrect as higher prices and more sophisticated technologies have helped maintain production levels. But hydro-carbons, and crude oil in particular, are finite resources and they will eventually run out. As a result I have done some analysis of how much of a problem that could be and how quickly we need to address the problem.
First things first. How much energy is the world currently using and what fuels are meeting energy demand?
Trying to find accurate and consistent numbers on global energy consumption is much more difficult than it should be. I was struck more than once by the obvious bias towards inflating the impact of renewables and their role in meeting global energy demand. This is a phenomenom that I have identified in a previous post.
One good source that provides an overview of global energy use is the U.S. Energy Information Agency. Figure 1-5 from the International Energy Outlook 2016 provides data from 1990 onwards with forecasts to 2040.
The table below displays the data from this report for 2015, converted from Quadrillion BTU to TW-Hours.
Liquid Fuels/Oil
Coal
Natural Gas
Renewables
Nuclear
Total
55,599
47,116
37,673
20,548
7,689
168,625
I always like to have multiple sources for information, especially when there are unit conversions involved. The following sources provide confirmation for the EIA report figures.
Oil:Bloomberg quoted an International Energy Agency figure for demand in 2015 of about 94 million barrels/day (bpd) which translates into about 58,293 TW-Hours which is within 5% of the figure provided by EIA. BP pegged the average amount as 92 bpd which would amount to 57,066 TW-Hours, even closer to the EIA figure.
Coal:Enerdata lists 2015 coal production as 7,800 Megatons which translates into 46,084 TW-Hours, very close to the EIA figure.
Natural Gas:BP listed Natural Gas production as 3,500 Billion Cubic Meters in 2015 which translates into 36,606 TW-hours. This figure is also close to that presented by EIA.
Combining these figures yields a figure of 139,742 TW-Hours for hydro-carbons compared to the EIA figure of 140,387.
Nuclear: Multiple sources including the World Nuclear Association and the Shift Project list global nuclear power production at about 2,400 TW-Hours rather than the 7,689 TW-Hours presented by the EIA. The EIA report itself presents 2,300 TW-Hours as the proper figure for nuclear generation for 2012 in Figure 1-7.
The source of the discrepancy is the difference between “Total Primary Energy Supply” and “Total Final Consumption”. “Total Final Consumption” discounts the energy used in generation, distribution, and conversion before reaching its final end user. Because hydro, wind, solar, and biomass all deliver electricity or heat to end users these sources are not impacted. Fossil fuel energy sources and nuclear are very significantly impacted. For example, in burning coal or consuming uranium fuel in a nuclear reactor to generate electricity more than 60% of the energy content of the fuel is lost as heat and through the limitations of thermodynamic engines. Therefore 7,689 TW-hours of uranium derived energy are consumed in nuclear plants to deliver 2,400 TW-hours of electricity to consumers.
Renewables: This is the category which has the most confusing and difficult to confirm backup data.
The best source of information regarding the complexities involved with renewables is the Ren21 network. The Global Status Report published by the group in 2016 and weighing in at 272 pages, is a great reference document although it also confuses matters a bit. The confusion comes because this report uses percentages of Total Final Consumption rather than actual consumption.
Using a global Total Final Consumption figure of 102,000 TW-Hours for 2015 (implied by the percentages for hydro and nuclear and roughly confirmed by the figure of 9,300 Mtoe on page 28 of the IEA Key World Energy Statistics) figure 1 of the Global Status Report can be reworked to present actual consumption rather than percentages, as shown below.
The aggregate figure of 19,692 matches the figure presented for renewables in the IEA report (20,548) quite closely. From the REN21 report almost half of this “renewable” energy is in the form of “Traditional Biomass” which represents the “use of fuelwood, animal dung, and agricultural residuals in simple stoves with very low combustion efficiency” (Note 12, page 201), primarily in undeveloped regions. Although this energy source is technically renewable it is certainly not one that we would want to increase or even maintain decades into the future. In fact the REN21 report points out that as the economic circumstances of a population improves these “Traditional Biomass” energy sources are replaced by the burning of hydro-carbons.
The largest category under “Modern Renewables” is “Biomass, Geothermal, Solar Heat” a large portion of which is produced in Combined Heat and Power (CHP) installations such as those common in Denmark. The economics of CHP plants are being under-mined by subsidized wind and solar power in many jurisdictions and as a result growth in this energy source will be severely constrained in the future.
The second largest category under “Modern Renewables” is hydro. Hydro has many very positive attributes including very low generation costs over many decades. It is a fact that almost all of the large installations developed in the last 100+ years continue to operate efficiently and reliably today. However, increasing environmental scrutiny and few remaining sites with significant potential will severely limit hydro growth in the developed world. There is significant potential in the developing economies but any new hydro power sources in those countries will be used to serve increasing domestic demand.
So in the end the job of replacing fossil fuels will come down to wind and solar (and hydro-kinetics and geothermal if they ever get the support they deserve).
The hype around wind and solar is amazing and very deceptive. It was extremely difficult to find reliable figures regarding actual generation from these sources although there was no problem finding hyperbolic statements about additions to wind and solar capacity. But commonsense tells us that because a solar panel can deliver 1 KW of energy between noon and 1 pm that does not mean that it can produce 1 KW of energy 24 hours a day, 365 days a year. Germany, with the second largest build-out of solar power in the world reports that solar generation over the course of a year is about 11% of installed capacity. Worse still, generation in the peak demand periods during the winter is almost zero.
Things are not much better with wind – maybe worse. Although wind generation continues to grow, availability of wind at peak demand times is unpredictable and inconsistent. On a cold, calm night in Northern latitudes (where more than 50% of the world’s population live) we will continue to be 100% reliant on fossil fuels until cheap and reliable energy storage solutions are developed.
But let’s assume that energy storage solutions can be developed sometime in the next few decades. How much wind and solar generation will be needed and how much will the development of those sources cost?
From the figure above wind and solar currently represent about 1.4% of the “Total Final Consumption” or about 1% of the “Total Primary Energy Supply”. According to REN21 the contribution of Fossil Fuels towards the “Final Total Consumption” is over 78%. A transition to 100% renewables will inevitably involve significant transmission and energy storage losses but for the moment lets ignore those. Therefore in the best case scenario wind and solar will have to increase by a factor of 78/1.4 = 55.7.
The development of wind and solar generation has been taking place aggressively since about 2004 when Germany started providing significant financial support for its Energiewende. Since then the world has invested more than $US 2.4 trillion in the development of renewables.
While it is true that the cost of renewable generation has decreased significantly during that time I would argue that the need to provide energy storage solutions and vastly upgraded transmission systems will more than make up for those savings. There will also be difficult challenges around replacing transportation fuels and finding new source materials for plastics and the many other products based upon petroleum feedstocks.
As a result the probable cost for the energy transition in constant 2017 dollars will be on the order of 2.4 * 55.7 = $US 134 Trillion. I think it will actually be much higher than that. That scale of investment would require that the world triple its current level of investment in renewables and maintain that higher level of investment for the next 100 years.
The next question is, do we have a hundred years to make this transition? I don’t think so. Peak oil is coming. That is inevitable. The date that peak oil will happen is the subject of heated debate. Some argue that oil production will start declining within a decade, others that production declines will not begin for many decades. Many major oil producing countries are already well past “peak oil” production.
Personally, I believe that a growing resistance to “fracking”, the rapid decline rates of tight reservoirs, and increasing demands for oil in developing economies will result in a permanent shortfall in oil production vs. demand by the middle of the century.
In a very thoughtful and I believe accurate article Robert Rapier postulates that peak oil is dependent upon price to a large extent. Higher prices allow the use of more expensive exploration and production techniques which bring to market supplies that were previously uneconomic. A graph from a 2008 publication serves to illustrate how unconventional sources may begin to play an important role in future years.
However, there will come a time when the input costs required to bring new production on stream exceed the value of that production. After that point in time oil production will decline monotonically.
In the decades leading up to that milestone event it will become more and more expensive to find and develop oil and gas resources which will lead to higher prices for fossil fuels. That reality will provide more incentive to develop renewables but it will also consume more and more of the world’s GDP to keep the hydro-carbon based economy functioning. So at a time when the world will need to spend ever increasing amounts to develop renewables and potentially on climate change mitigation measures rising energy costs will become a serious problem.
What’s the bottom line?
In order to transition away from a hydro-carbon based economy before oil and Natural Gas either run out or become prohibitively expensive the following must happen;
1) Investment in the development of renewables must ramp up to approximately triple what it was in 2016 and stay at that level for the next 100 years.
2) One or more very inexpensive and reliable (for decades) energy storage systems must be invented and deployed at a scale completely unimaginable today. To get an idea of how challenging that may be I invite you to read Euan Mearn’s analysis of the storage requirements to backstop wind in the U.K.
3) Peak Oil must occur after a significant percentage of the needed renewable generation is in place. It has taken 15-20 years to get to 1.5% of “Total Final Consumption”.
4) Global “Total Final Consumption” cannot increase or at worst must increase very slowly so that additions in renewable generation can displace fossil fuels. Inevitable increases in the energy consumption in developing economies must be offset by reductions in the energy consumption of developed economies.
Sounds tough, doesn’t it? But who among us doesn’t like a challenge?
And it could be worse. Consider the scenario described in this clip from Ghostbusters!
I think I will sign on to be one of Elon Musk’s first Martian colonists.
Unit Conversions
Oil: 92 BOE per day -> 33.58 billion BOE per year -> 57,066 TW-hours
@enrgy_manifesto
