Energywise

The latest bad news today is First Solar's announcement that it is cutting its global workforce 30 percent and shutting down its European operations based near Frankfurt. "After a thorough analysis, it is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable," said First Solar's interim CEO and chairman Mike Ahearn.

In the latter part of 2011 there was a surge in solar installations, with a U.S. cash grant program set to expire at the end of the year and European subsidies scheduled to be cut sharply "across the board," as Lux Research put it in a recent report, "Market Size Update 2012: The Push to a Post-Subsidy Solar Industry." This year Lux expects global installations to be flat, totaling 26.9 GW, compared to 26.5 GW in 2011.

It's a grim prospect for any solar company based in North America or Europe that is battling fierce competition from China, even when such companies are doing much of their production overseas. Yesterday, SunPower announced it was closing one of its two plants in the Philippines. That leaves the company, headquartered in San Jose, with two plants, one in the Philippines and one in Malaysia. The plant it’s shuttering is the oldest of the three, and the decision to close it is connected with SunPower's effort to focus on production of higher-efficiency solar cells.

Four years ago, when the industry was abuzz with talk of a "photovoltaic Moore's law," SunPower and First Solar, based in Tempe, Ariz., were considered the star performers among U.S. PV manufacturers.

Photo: courtesy of SunPower

Hats off to the Gray Lady, a.k.a. The New York Times, that much maligned relic of the pre-Internet world.  Yesterday it held a one-day conference devoted to "Energy for Tomorrow" that was exceptional in every way. With moderators drawn from the paper's star columnists and reporters, and 37 expert panelists ranging from U.S. Energy Secretary Steven Chu to IEEE Executive Director James Prendergast, the meeting developed a small set of well-selected themes and delivered a powerful message. A special energy section appearing in the paper the same day both couched and amplified what the conference had to say.

The message in a nutshell: Despite chronic concern about U.S. oil dependence and current concern about sky-high gasoline prices, basically the United States is awash in abundant and inexpensive energy resources. And what that implies in this faltering and fierce global economy is that the United States is at a significant competitive advantage. These are the most important particulars:

• Natural gas. Not only is it available in super-abundance because of the revolution in hydraulic fracturing, not only is it steadily replacing dirtier coal in power generation, and not only is it poised to replace diesel in heavy trucking (as the President and T. Boone Pickens have proposed), Americans are buying natural gas at small fraction of what people are paying overseas. U.S. prices are now below $2 per million BTUs, the energy equivalent of oil at $12 per barrel. Natural gas bought in Europe, where it is usually linked to average oil prices in long-term contracts, is selling for four-five times as high a price as in the United States; and LNG delivered to Asia is seven to eight times more expensive.

• Petroleum. U.S. production, stimulated by high global prices, is up 20 percent from 2008; as a result of "tight oil" development in the Bakken Field formation, North Dakota has surpassed California as the nation's third largest producing state, as energy guru Daniel Yergin pointed out in the conference keynote speech. The United States now imports only about half its oil, down from two thirds, and only about a fifth of what it imports comes from the Middle East.  What is even more important and generally overlooked is that the United States is producing a much larger fraction of the oil it consumes than most of its major European and Asian competitors. Thus, although Americans are paying the high global price for the oil they consume, about half the proceeds are going to American producers, not to producers overseas.

• Wind. The unsurprising expert consensus is that it is no longer an "alternative" or exotic or niche resource; it's plain and simply one of the major sources. Lester Brown, founder of Worldwatch and the Earth Policy Institute, where he is president, noted that 8 gigantic wind farms with capacities in excess of 10 GW are now under construction in China—as big or bigger, even taking intermittency into account, as large coal-fired and nuclear power plant complexes. In Germany, said Brown, several of the northern states are generating 40 to 60 percent of their electricity from wind. The implication is that the United States, where development of offshore wind is only barely beginning, has enormous untapped resources. In most of northern Europe, where the wind revolution started in the 1990s, most of the attractive on-land sites are occupied; in the United States, with many fine sites available, wind development will be cheaper in the next years.

Solar energy got relatively short shrift at the conference, and most of the attention it did get was in a disputatious final session devoted to renewable energy subsidies. The Solyndra bankruptcy and the ongoing solar shakeout naturally shadowed the proceedings. But on the bright side, low-cost Chinese production—however disruptive—has brought down the cost of photovoltaic arrays enormously; and, as IEEE’s Prendergast observed, the United States has relatively huge untapped solar resources, big enough in principle to meet all its energy needs.

All of this is not to say, of course, that challenging decisions are absent. As natural gas and wind displace coal in the United States, for example, the country will be tempted to start exporting large quantities to China; but in light of coal's high carbon content and ill effects on public health, is that a desirable thing to do? Similar concerns hang over the development of Canadian oil sands, which is why a go-ahead decision of the hugely controversial XL Pipeline is hanging fire.

But dilemmas like that arise from a plethora of blessings, not a shortage thereof. Basically, the abundance of relatively inexpensive energy resources is going to be a major U.S. strength in the coming decades. According to a Citigroup report cited in the Times special energy section yesterday “as many as 3.6 million new jobs might be created by 2020 thanks to the energy boom. The current trade deficit might fall by 60 percent by the end of the decade from today's level … and the dollar could appreciate by as much as 5.4 percent as imports shrink." Citigroup’s Ed Morse, a long-time leading oil industry analyst, told the Times that North America has the potential to become a "new Middle East."

The BBC reports that the British government is launching a revised program to encourage development of carbon capture and storage technologies (CC&S). It plans to dole out a billion pounds to selected projects, in the expectation that the CC&S industry will be delivering £ 6.5 billion in economic benefits by the end of the next decade. An earlier attempt at this kind of program was a complete bust,  with all nine initial contestants withdrawing their bids, most recently a project run by Scottish Power at its Longannet station in Fife.

According to the BBC report, sharply escalating costs of the proposed projects was the reason generally given for pull-outs.

The new program is somewhat broader than the first, in which only post-combustion carbon capture technologies were eligible. Now pre-combustion approaches also can qualify, notably oxy-combustion or oxy-fueling, a relatively dark horse technology that has been slowly gaining ground on the outside track. The Swedish national utility Vattenfall demonstrated oxycombustion at its Schwarze Pumpe lignite-fueled plant in eastern Germany, and last year the Department of Energy switched gears, picking oxycombustion for its proposed FutureGen demonstration, ditching IGCC, up to then the front-running technology.

An advisory body for Japan’s powerful Ministry of Economy, Trade and Industry (METI) has endorsed a tripling of the capacity to pass power between Japan's otherwise estranged AC power grids: the 50-hertz AC grid that serves Tokyo and northeastern Japan, and the 60-hertz grid that serves western Japan. This frequency divide has complicated efforts to keep Japan powered since the March 2011 earthquake and tsunami -- a task that keeps getting harder with the inexorable decline in nuclear power generation (at present just one of Japan's 54 reactors is operating).

Bridging the AC grids is also seen as crucial to Japan's emerging post-Fukushima energy policy, which emphasizes reliance on wind, solar, and other renewable sources of electricity. 

METI's panel agreed that transmission operators should double Japan's east-west exchange capacity from the 1040 megawatts running currently to 2100 megawatts by 2020, according to the Tokyo-based Yomiuri Shimbun newspaper. This would require the addition or expansion of solid-state high-voltage direct current (HVDC) converter stations that break down AC power from one grid and synthesize a new waveform to pour it onto the other grid. It could also entail "beefing up" the transmission line feeding the converter stations, writes Yomiuri.

The panel also proposes government incentives to encourage the addition of another 1000 MW of exchange capacity, as well as additional HVDC transmission cables to expand renewable power exports from wind-rich Hokkaido in the northeast down to Japan's main island. 

While this week's proposal marks a dramatic increase from a 300-MW exchange bump proposed by industry officials in the wake of the Fukushima Dai-1 reactor meltdowns, the 2020 timing is far too slow according to some Japanese power experts. "The industry is still very conservative," is how an executive for a major Japanese power engineering firm responded to the proposal in an email exchange with Spectrum.

One intriguing note buried in the Yomiuri report states that the panel, "also agreed the government should play a larger role in building and maintaining power cable networks between different service areas." What sounds like a fairly tepid suggestion is potentially subversive when seen within the context of a debate raging in Japan today over the future of the ten regional utilities that hold an effective monopoly on power generation, transmission and distribution.

Japan’s Federation of Electric Power Companies, which represents the 'Big-10' utilities, says power industry reforms should promote competition and increase consumer choice, but keep generation, transmission, and distribution together. As federation chair Makoto Yagi put it in a February press conference in Tokyo, only the vertically-integrated utilities' “collective strength" can "ensure a stable electricity supply.”

Advocates of renewable energy see things differently, viewing the Big-10 as a barrier to the expanded grid interconnections required to share highly-variable renewable energy across wide areas. Those same interconnections inevitably weaken the hold of monopoly utilities by enabling competing power to enter their territory. 

What is clear is that the Big-10's hold on Tokyo is already weakening, making wholesale deregulation of the power sector look possible. "I haven't felt this optimistic about Japan for years," is how Andrew DeWit, an energy policy expert and utility critic at Rikkyo University, put it in my report this week for Technology Review magazine on Japan's renewables potential.

DeWit credits part of the deregulatory impulse to popular disgust with TEPCO, the utility that operated Fukushima Dai-1. But the bigger impulse, he says, comes from the government's premium-pricing scheme for renewable power that former Prime Minister Naoto Kan pushed through the Diet last year. The mandated prices, known as feed-in tariffs, are to become effective in July. "Maybe I'm just getting too little sleep due to deadlines," jokes DeWit, "but this approach looks to make deregulation palatable to interests, like farmers, who have always stood against deregulation because they had nothing to gain."

One evening decades ago, when the atmospheric chemist Sherwood Rowland returned home from a long day at the lab studying chlorofluorocarbons (CFCs), his wife asked him how things were going. He replied that his work was going well "but it looks like the end of the world.” He was referring to his experiments showing that CFCs could break down high in the atmosphere when bombarded by sunlight, setting off a chain of reactions that could consume the ozone layer protecting earth's inhabitants from deadly UV radiation.

In 1974 Rowland and Mario Molina published an article describing the scenario. At first it seemed hard to believe, to put it mildly, that a substance found ubiquitously in everything from spray cans to air conditioners could be destroying a vitally needed part of the atmosphere. But two years later a National Academy of Sciences panel declared the research sound, and within a decade field meteorologists determined that atmospheric ozone has decreased 35 percent in 20 years. In 1987, just 13 years after publication of the first seminal article, 24 leading nations agreed at Montreal on a plan to phase out use of CFCs.

Five years later, in Rio, nations adopted a treaty in which they pledged to prevent "dangerous" climate change. And five years after that, in Kyoto, they agreed on a phased plan to reduce greenhouse gas emissions, in which the advanced industrial countries would make scheduled cuts by the year 2012, the developing countries only later. Perhaps because the path to Montreal had been so surprisingly smooth and action pursuant to the Montreal Protocol so prompt, expectations about the Kyoto Protocol to the International Framework Convention on Climate Change were naive.

In hindsight, it is easy to see that the problem of climate change is much more complicated than the ozone problem, and that approaches to the problem would be much harder to define and justify. This is a dilemma the expert community still is struggling to address.

The pathway from a hairspray can to global ozone depletion—however counter-intuitive at first glance—was direct, unambiguous, and relatively easy to demonstrate once postulated and recognized. Greenhouse gas emissions, by contrast, affect climate in multifarious ways, with numerous positive and negative feedbacks that that are hard to scope comprehensively and easy to argue about.

The problem of ozone depletion could be addressed and solved simply by eliminating CFCs, at a readily definable cost. Global warming cannot be slowed  by just one expedient, and climate change cannot actually be stopped in the short or medium term. The nature and scope of the problem is open to debate, which implies that the costs of addressing it could range from modest to absolutely unaffordable.

Then too there is the profoundly divisive issue of who needs to get involved globally in finding solutions to climate change, and how. In the case of CFCs, they were widely used only in the advanced industrial countries, and so it was only necessary for those countries to agree on how to solve the problem. With carbon dioxide, the developing countries do not see why they should sacrifice growth prospects because of a problem largely created by the rich countries, and the rich countries do not see why they should take costly measures only to see their efforts undone by fast-growing emissions in the most rapidly modernizing poor countries.

My son, who is a college sophomore at a rather liberal-minded state university, tells me that a fatalistic attitude toward climate change has settled in among his fellow students: Since we can't actually stop global warming, why spend lots of money trying to merely slow it? Why not spend that money instead of things that can get fixed, and just get ready to adjust to climate change, however bad it turns out to be? This seems to me the nub of the political problem. Climate policy analysts need to better make the case for reducing the risks of climate change at costs that are not too onerous.

Rowland died on March 10, having been awarded the Nobel Prize for his pathbreaking work on CFCs with Molina and Paul Crutzen. Crutzen, despairing that the world will ever take effective measures to reduce greenhouse gas emissions, has become a crusader for climate modification.

I don't know about you, but I'm beginning to find the ongoing solar shakeout not merely disconcerting but positively scary. The latest solar victim, announced at the beginning of this week, is Germany's Q Cells. Just four years ago it was the world’s leading manufacturer of photovoltaics, and for two years after that it was high up in the top global ten. Then, middle of last year, as reported here, Q Cells had to lay off half its employees and radically restructure--a death rattle, it turns out. On Monday Q Cells announced it would be filing for bankruptcy.

If now, on top of brutal competitive from low-cost Chinese manufacturers and shrinking rich-country solar subsidies, oil prices were to take a plunge (as predicted by a minority school of thought among petroleum market experts) what was supposed to be the most sustainable of energy technologies may turn out to be utterly unsustainable.

The Q Cells headquarters building loomed rather prominently in Berlin's relatively low-rise skyline, which prompted me to snap the photo above during a visit to Berlin last October, with a feeling of foreboding.

Oh, Texans are strange. Just look at the fuels that they burn: Though gas is their brand, they bring coal from out-land, and their neighbors are happy all day.

That’s the message of a report just out by University of Houston professor Michael J. Economides and consultant Philip E. Lewis, “Texas Natural Gas: Fuel for Growth.” The report says that although the U.S. revolution in unconventional gas took off with development of Texas's Barnett Shale [highlighted in map] a decade ago, Texas oddly has been using less and less natural gas to make electricity while the rest of the country has been using more and more. The numbers are dramatic. Nationwide, the amount of electricity generated from coal dropped roughly 20 percentage points, from about 80 percent in 1995 to about 60 percent in 2011, while the gas-generated share climbed from about 20 percent to almost 40 percent.

In Texas, despite the superabundance of local shalegas, the trend has been almost the opposite. The gas share in electricity production, instead of increasing by 15-20 percentage points since 1995, has dropped a couple of points. And coal’s share, instead of shrinking by 15-20 percentage points, has contracted by only a few points.

What accounts for the anomalous Texas pattern? Economides, a prominent energy specialist, says he frankly isn’t quite sure. But he is inclined to think it is the usual story, where “energy companies will opt for the path of least resistance.” That is, rather than obtain the 600-800 permits they might need to build a new gas-fired generating plant, they prefer to just import relatively inexpensive coal-generated electricity from neighboring states.

The message of the Economides-Lewis report, which by the way was commissioned by the American Natural Gas Association (ANGA), is that Texas is unnecessarily exporting money to energy companies in neighboring states and foregoing tax revenues it would obtain if it made more of its electricity from fuels produced in-state. It estimates that the state gave up $4.17 billion in tax revenue it could have obtained from natural gas purchases between 2005 and 2011.

While I hesitate to cross swords with an eminent energy economist, especially one named Economides, I do have a few quibbles. The report would be more convincing, it seems to me, if it had calculated exactly how much Texas has paid to import coal-generated electricity from neighbors and had compared that with how much it would have paid to buy home-made gas-generated electricity instead. Ideally, the report would also have estimated the cost of building and amortizing additional gas generating capacity, though that admittedly would be very hard to do. Then too, the report rather glosses over the fast-growing share of wind in Texas's generating mix—the state after all is the country’s leading wind generator.

Nevertheless, the report’s targeting of Texas’s peculiar energy trends is by itself worth the price of admission--though, let it be said, the report is not posted on ANGA's website and appears to be available only as a pdf from the authors.

This week the U.S. Environmental Protection Agency issued long-awaited regulations governing emissions of carbon dioxide from fossil-fueled generating plants, as authorized by a landmark 2007 Supreme Court decision that found EPA could regulate carbon as a pollutant under existing clean air laws.

The regulations set a limit of 1000 pounds of carbon per megawatt-hour of electricity produced. That in effect means no new coal-fired power plant can be built without expensive carbon capture and storage technology, which almost guarantees no new coal-fired plant will be built in the foreseeable future. But the regulations apply only to new plants, not to existing ones or ones already in the works, and there's the rub. Because of a grassroots rebellion against coal, and because of plummeting natural gas prices, virtually no new coal-fired plants are being built anyway. So the regulations will have little or no impact, as EPA itself concedes--or even boasts!--in its press release.

"Even without today’s action, the power plants that are currently projected to be built going forward would already comply with the standard. As a result, EPA does not project additional cost for industry to comply with this standard," says the release.

In fact, U.S. coal-fired generating capacity has been essentially flat since 2007. Meanwhile, existing plants are being used less, as utilities switch to cheaper natural gas: Last year, the fraction of U.S. electricity generated from coal was at a 35-year low, down sharply at 42 percent from close to 50 percent a decade ago. Though some existing capacity is expected to be replaced in the next five years by more modern plants, net coal capacity is expected to shrink.

If EPA wanted to have a serious impact on greenhouse gas emissions from coal-fired plants, it would have had to apply them to existing plants--and they would have had to be costly.

It's difficult to escape the cynical conclusion that the EPA regulations are crafted to create the appearance of action without actually delivering action. That anyway is the conclusion being reached in some of the European countries that have made serious concerted efforts to cut their greenhouse gas emissions and have succeeded. In an editorial today, London's influential Financial Times said, "Whether by timidity or sabotage the EPA looks doomed to failure. If so it is the fault of Barack Obama, whose administration has devoted too little political capital and attention to a serious strategy for climate policy. The policy goal of cutting greenhouse gas emissions by 17 per cent from 2005 levels by 2020 remains theoretical. As so often in U.S. history, leaders have ducked the political fight to opt for a legal or administrative route."

Richard Yemm, founder of Pelamis Wave Power, the Scottish company that fielded the world’s first wave energy converter off the coast of Portugal in 2008, has been awarded the Saltire Prize Medal, “for his outstanding contribution to the marine renewables sector.” The Saltire prize is part of the Scottish government’s effort to publicize its “ambition to become the leading force in clean, green, marine energy,” says Scottish Development International’s Saltire Prize website. Scotland’s First Minister presented the award at the Scottish Renewables annual conference dinner in Edinburgh.

Yemm invented the so-called “sea snake” while working on his doctoral degree at the University of Edinburgh. To this point, his company has achieved several firsts. In addition to the breakthrough of generating electric power that was routed through an undersea cable to the Portuguese coastal town of Aguçadoura,  Pelamis is still the only company to sell wave energy converters to UK utility firms.

Pelamis's generator—three long canisters linked by hinged joints that push hydraulic rams that pump high-pressure oil through turbines inside the canisters—was first tested at the European Marine Energy Center (EMEC), which is located amid the Orkney Islands off Scotland's northeastern coast.

The UK created EMEC with an eye toward making renewables 20 percent of its energy mix by 2020.

It’s important to note that while the Saltire Prize medal is certainly an honor, it is no guarantee that Yemm and his company will ultimately win the £10 million Saltire Prize that will be awarded in 2017. To walk away with the money, a team will need to generate the most electricity beyond the minimum output of 100 gigawatt-hours over a continuous two year period using only the power of the waters off Scotland’s coast.

Yesterday, a year after the evacuation of tens of thousands of residents near Fukushima, I found myself driving on Long Island’s scenic North Fork, cursing the traffic on the ever-crowded Long Island Expressway and remembering the sad saga of the Shoreham nuclear power plant.

Upon completion of the plant in the early 1980s, at a site [photo above] near Brookhaven National Laboratory on the island’s north shore facing Connecticut, the county’s residents voted against allowing it to operate on grounds that they could not possibly be evacuated promptly in the event of an emergency. As public opposition steadily grew, to nearly 75 percent after the Chernobyl catastrophe in 1986, the state government ordered officials not to approve any utility-sponsored evacuation plan. That killed the plant, forcing Long Island to scramble for other energy sources. To this day, its residents pay some of the highest electricity rates in the nation.

Multiply Shoreham by 54, and that’s the situation the Japanese may be in. As of late April, when the country’s last two reactors not already turned off for inspections are shut down, all 54 will be out of action, leaving the country without 30 percent of the generating capacity it normally counts on.

In the next weeks, people living near the Oi reactor complex, which serves Kyoto and Osaka, will be asked by the Japanese government to allow the two newest of the four reactors to be restarted. They were the first reactors to have passed post-Fukushima stress tests and therefore make a good test case, from the government’s point of view.

What will make this an especially challenging case—and many to follow even more challenging—is that Japan is having to expand emergency evacuation zones, consistent with international norms.  That means the government almost certainly will have to allow wider groups of local populations to have a say in whether reactors restart.

Guidelines expected in April will stretch Japan’s current 10-kilometer evacuation zone for major accidents to 30 km.  But according to a Wall Street Journal analysis published this week, more than 7 million Japanese living within about 30 km of a nuclear plant “lack reliable means of being warned, evacuated or protected by medicine against airborne radiation.”

Because of the well reported historic coziness between Japan’s nuclear industry, regulators, and officials, it’s clear that many of the country’s existing rules are far behind international norms. It’s to be expected, accordingly, that utility representatives and regulators will face a lot of touch questions wherever and whenever authority to restart a reactor is sought.

In each and every reactor restart debate, human safety will be pitted against the prospect of higher electricity rates and greater likelihood of blackouts and brownouts. But Shoreham showed that in such situations, citizens sometimes opt to pay higher rates for long periods of times and suffer some inconveniences rather than live in fear that they and their loved ones would be unable to escape a nuclear catastrophe.