Below are a few letters received at EnergyBiz Insider on topics that appeared in the past few weeks. They capture the essence of how many readers say they feel.
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Solar Systems Never Cheaper - September 16, 2009
I always enjoy reading the Insider so I was happy to see your piece titled "Solar Systems Never Cheaper" addressing the rapid decline in module prices our industry has seen in the last year. However, there were a couple of items in the piece that I thought were worth responding to for clarification.
First, I think it's worth pointing out that the solar "industry" should be seen as a value chain that extends far beyond upstream module manufacturers. It rightfully includes developers, financiers, EPCs, utilities, and IPPs who build, own, and operate PV power plants. While the decline in module prices may be an unwelcome trend to manufacturers, it has been positively received by just about everyone else in the downstream value chain. I think a better way to describe the current situation is that we're shifting to a phase of the silicon commodity cycle that favors developers and owner/operators over manufacturers.
At today's module prices, we can offer solar-generated electricity on terms that are now truly competitive. So it struck me as odd to hear you say that the "industry" was troubled by module price declines in much the same way it would be odd to hear someone say the energy industry might be troubled by declining natural gas prices. It all depends on where you sit in the value chain and how the change in a feedstock impacts your profitability.
The second item that I felt needed to be addressed was your assertion that module prices were "not coming down because manufacturers are increasing their efficiencies and improving their economies of scale." Modules are a commodity and their prices are clearly set by the dynamics of supply and demand. Over the past couple of years, generous feed-in tariff programs (particularly in Spain) created demand that allowed manufacturers to sustain high module prices. So you're right to point out that one factor in the current price decline is a reduction in global demand due to the pullback by Spain and the financial crisis has slowed construction and orders.
However, there have been significant changes to the supply-side of the equation as well. The reality is that the last few years' high prices concealed very real investments in efficiency and cost improvement by a number of upstream players -- not to mention a huge investment by silicon suppliers in increased capacity. The increase in manufacturing efficiency and capacity will inevitably result in an equilibrium price that is lower than it was in years past. In the current environment, only those whose cost structure is sustainable at today's prices will be able to grow and expand the market.
PV is not inherently expensive. Prices are receding because some overly generous incentives have been removed AND today's prices now reveal how low the real marginal cost of production has come as a result of investment and expansion. Those reduced prices are now fueling a massive surge of development behind the scenes that will soon result in much larger scale deployment of PV in the US. On balance, I think that's a very good thing for the U.S., for ratepayers and the "industry."
Arno Harris
CEO
RECURRENT ENERGY
Right-Sizing Nuclear Power - September 18, 2009
If it sounds too good to be true, then it usually is false.
Right-sizing of nuclear units is an update of 1960s plan for small reactors on barges to serve cities and coastal areas. Standard designs using existing technologies, no siting issues, construction and operating costs below large units and coal or gas units. The added promise of unlimited self-generating fuel is a new promise, but would seem to violate the rules of physics and commerce.
Sam Herndon
Do you think any developer could afford the rigors of licensing a small nuke? How much difference do you think would ultimately be involved in licensing a 100 MW plant as opposed to licensing say a 2500 or 3000 MW plant? Does anyone in the industry have any idea of the costs involved in just getting a nuke facility licensed even within a factor of 10? This was difficult 40 years ago. Does anyone think it would be less difficult or less costly today?
Joseph Langenberg
The other advantage of small nuclear reactors is that they are well suited to smaller economies.
For example when nuclear power has been suggested for New Zealand the response has always been that you need two reactors to keep one running while the other has down time and two standard reactors provide more power than we currently use -- in total.
These smaller modular reactors solve that problem by being smaller and modular.
This is a great advance for small nations such as the Pacific Islands, and remote areas within places like Australia.
Owen McShane
Director
Centre for Resource Management Studies
New Zealand
We have heard this before "power so cheap we will not have to meter it". Come on guys, every time the nuclear industry says it can build something for a given price the final price is one order of magnitude higher. Just look at the cost of the base-load plants estimated to cost $1 to $2 billion in the early Bush administration are now in the $8 to $10 billion range now and construction has not even started. The 100 to 300 MW plants will cost $3 to $5 billion each not $300 to $500 Million each.
If these right-sized plants are so cheap, why are the U.S. applications for bigger ones? I would think they would build ten on one site if the total cost was lower than one big. They understand economics I hope.
Fool me once shame on you. Fool me twice shame on me. This is voodoo. Let's not waste our time and research dollars on it and spend the money wisely on energy conservation and renewable energy.
Scott Greenbaum
In the 1980s, considerable R&D was funded by the DOE on a small modular high-temperature gas-cooled reactor (MHTGR), and done by General Atomics, GE, Bechtel, Combustion Engineering, Oak Ridge National Lab, MIT, and many U.S. utilities. Germany had a similar R&D effort.
Because of the use of helium coolant, silicon carbide clad fuel pellets and graphite moderator, the MHTGR could be operated at very high temperatures, e.g., 1000 C, much above the maximum operating temperature of a water cooled reactor, thus enabling high thermodynamic conversion efficiencies to electricity using steam or Brayton gas turbine cycles alone or combined, and many process heat applications, e.g., hydrogen production. It also exhibited inherent passive cooling for emergencies.
A construction design objective was to be able to make it in a factory, hence the term "modular." A regulatory design objective was to enable factory safety certification before the reactor was shipped to its site.
As someone who once took people on tours of an operating HTGR, I was particularly impressed by its radioactive cleanliness, a result largely because of the fuel pellet design and the use of the helium coolant. We could walk in street clothes anywhere in the reactor building even while it was operating, something that can't be casually done in other reactor concepts.
Merwin Brown, PhD
Director, Electric Transmission Research
California Institute for Energy and Environment
University of California
Woody Biomass' Potential - September 23, 2009
While there may be adequate wood currently available in many states at the current time, the central issue is that biomass combustion using wood is not carbon neutral, especially in a time frame that will make a difference to slow or improve climate change.
Burning wood is dirtier than burning coal -- per megawatt hour it releases more CO2, more particulate, and more NOx.
Moreover, every CO2 molecule in the atmosphere has the same effect as every other molecule, regardless of the source. Therefore, just because wood is a renewable source does not mean it is clean. The current science is overwhelming that in the first two decades newly planted trees do not sequester CO2 at a rate which "makes up for" the burning of mature trees/tree products. This has been clarified by the EPA on page 18899 of the Federal Register where the statement is made that "... half of all carbon currently emitted [and emitted in the future] will take hundreds to thousands of years to reabsorb."
Put another way while the CO2 reduction target for 2020 in the ACES bill is 17 percent, if biomass CO2 emissions continue not to be counted as is currently the case and is continued under the proposed legislation, the resultant CO2 emissions will change the cap reduction to less than 11 percent according to EIA data.
Incentivizing dirtier energy with billions of taxpayer dollars does not make sense.
At this point we would be better off burning coal and using the money under ARRA and in the 2005 and 2007 Energy bills, as well as the new proposed legislation, to further research into more durable wind turbines, more efficient/cheaper solar panels, and implementation of the smart grid.
Dr. Bill Sammons
Co-firing systems range in size from 1 MW to 30 MW of bio-power capacity. When low-cost biomass fuels are used, co-firing systems can result in payback periods as low as 2 years.
A typical coal-fueled power plant produces power for about $0.023/kilowatt-hour (kWh). Co-firing inexpensive biomass fuels can reduce this cost to $0.021/kWh, while the cost of generation would be increased if biomass fuels were obtained at prices at or above the power plant's coal prices. In today's direct-fired biomass power plants, generation costs are about $0.09/kWh. In the future, advanced technologies such as gasification-based systems could generate power for as little as $0.05/kWh. For comparison, a new combined-cycle power plant using natural gas can generate electricity for about $0.04-$0.05/kWh at fall 2000 gas prices.
Conversion of older coal plants to fire biomass offers viable and cost-effective alternatives to retrofitting FGD and SCR systems. For example, Ohio Edison Company, a subsidiary of FirstEnergy Corp., has agreed in a consent decree to repower the R.E. Burger Units 4 and 5 near Shadyside, Ohio with biomass fuel. The modified consent decree will substantially reduce emissions of SO2 and NOx from Burger's current levels and also reduce carbon dioxide (CO2) emissions from current levels by more than 1.3 million tons a year. Burger will be the largest coal-fired electric utility plant in the country to repower with renewable biomass fuels and the first such plant at which greenhouse gas emissions will be reduced under a Clean Air Act consent decree.
Dr. Richard W. Goodwin, PE
Environmental Engineering
Consultant
I agree with biomass being carbon neutral as opposed to coal, but why put the carbon back into the atmosphere? The use of hydro, solar and wind produce electricity without releasing carbon dioxide. We can argue the point that the fore mentioned renewables are carbon neutral as well. I like the potential of all renewable energy sources, but I would rather not do "in with the good, out with the bad"!
Kurt Branthover
Principal Engineer
PB Asia Ltd.
Promoting using biomass in a condensing power system at something less than 30 percent energy conversion such as this project is not the best use of this renewable, but not unlimited, resource. Sweden and the rest of Scandinavia realizes this, generating and using most of their biomass energy in pulp and paper mills and district heating systems, often connected together.
Society would be much better served by reserving wood-based biomass for 75 percent cogeneration or small heating systems in homes, schools or commercial business using high efficiency wood stoves or even higher efficiency pellet stoves.
Chuck Hartley, PE, CEM
Pursuing Intelligence - September 25, 2009
The concept is good but the cost is excessive. The Delaware Electric Cooperative sends out an email. This is simple and cheap thinking, not complicated and costly. The Delaware all-in cost of electricity is 40 percent cheaper than JCP&L in New Jersey.
Michael J. Edwards
Belyea Co. Inc.
With regards to the article "Pursuing Intelligence" dated September 25, 2009, I feel the biggest issue in "Smart Grid" development is the hard sell many AMR/AMI companies and interested parties are making for customer premise data exchange. Any logical person would realize that the few dollars worth of savings represented in customer premise solutions do not begin to justify the amount of tinkering you have to do with "smart appliances". I am not sure most Americans would spend more than a second on trying to save a couple dollars a month. Most don't even turn off many of the appliances that draw energy during their "standby" modes -- a significant chunk of the current demands on our systems. Never mind the cost to upgrade what might be a perfectly good appliance for one that is typically more expensive and will not be able to realize the additional cost in any savings it may provide.
What we have been missing as an industry is the fact that there is much to be gained by improving the overall performance of the energy delivery system. Where investments are most needed is in the automated control of voltage levels, VAR compensation, and even the balanced loading of stations and related equipment and transformers. Savings can be in the range of 10 to 20 percent which can often pay for simple projects within the first year of operation. Sometimes, by shooting for the stars, we are missing the beautiful clouds in the process. Small investments can often yield much greater returns.
I find it interesting that the consumers in Colorado are all of a sudden not registering any complaints for "low-voltage lighting issues". Perhaps this is due to the amount of education that may have gone into implementing the program rather than the program doing anything beyond ordinary. For instance, most "low-voltage" complaints in our local area were often due to a lack of understanding of how the system works and its capabilities. Often, the complaints were related to the normal operation of large appliances which will create a momentary low-voltage condition (visible through incandescent lights) due to the inrush current required to start the appliance. Lacking any data comparing how a simple educational program versus a "Smart Grid" program would have done, I find it hard to simply credit "smart technologies" for this change.
There is no question that adding intelligence throughout the system will yield a wide range of benefits. The question remains at what cost (or benefit). There are many utilities in the U.S. (mostly municipally or public-owned) that still don't have a simple SCADA system. Many cannot afford this type of investment yet people have sold them on customer premise technologies that should be the last item on the list of conservation strategies -- the payback is not as large as other automation strategies. At the same time, I believe much more significant investments in renewable technologies, feed-in tariffs, and other methods of encouraging conservation and alternative clean energy sources is sorely needed. These investments now will yield better pricing and improve technologies later.
In the meantime, the utilities will continue to focus on the flavor of the day -- how to communicate energy pricing to me. What I find interesting is that I really don't need the utility to send me a message of when the power is cheaper -- in fact, this is most often rather obvious -- in the middle of the night when nobody is awake or using anything -- the law of supply and demand. So, why would the utility want to spend hundreds on letting me know what is already obvious? Still, when it comes to doing the right thing for efficiency's sake and the environment, there will be some investment involved. I think the investment will be best done through retrofits during normal replacements (like from outdated equipment) and inclusion of the technologies on new installations.
Luis G. Vargas, Jr., PE
Sr. Director of Energy Services - Southeast Region
Engineering Director - Tampa Office
GAI Consultants, Inc.
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