OGPSS - The ARPA-E 2012 Awards

The Department of Energy has just announced the projects that have been selected for funding in the next round of the ARPA-E program. (This is the Advanced Research Projects Agency-Energy, first funded in 2009, to, inter alia, "focus on creative “out-of-the-box” transformational energy research that industry by itself cannot or will not support due to its high risk but where success would provide dramatic benefits for the nation".) There are some 66 projects on the list, which is broken down into eleven different focus areas. These are the technologies that the ARPA-E program is betting some $130 million on, as sources of future energy supply or savings. It is worth taking a quick glance through the topics to see what is considered important and likely of success.

The two largest areas of funding are Advanced Fuels and Grid Modernization, both of which get around $24 million or 18% of the pie. This is split among 13 fuel projects, and 9 grid-related projects. With the growing supply of natural gas that is coming from the developing shale gas reserves in the country, it is perhaps no surprise to see that methane conversion to liquid fuel captures the largest part of the fuel funding this year, being the theme of nine of the awards.

The largest of the fuel awards goes to Allylix a company that specializes in terpenes, and who is tasked with turning these into a viable aviation fuel. Specific genes needed for terpene production are extracted from a biosource, and then optimized for use in a yeast host. The optimization is an engineered change that can increase product yield several hundred fold (according to their website). From that point there is a fermentation process, and then a recovery and purification of the liquid fuel, which is stated to be already commercially viable.

There is only one algae award this year, to Cornell for $910 k, and they will look at using light fibers in a small reactor as a means of improving economics. After having looked into this process I am prone to disagree that smaller is better (if you are going to generate hundreds of thousands of barrels a day you need large systems, and anything on a smaller scale is hardly worthwhile). Further there are issues with engineered light paths, but they will no doubt find those out as they carry on with their work.

The “different” program in this effort is for $1.8 million which is being given to Plant Sensory Systems to develop a high-output, low-input beet plant for sugar production.

There are just two awards for Advanced Vehicles, one to Electron Energy Corp to produce better permanent magnets that don’t rely on rare-earths, and one to United Technologies to improve efficiency by using laser deposition of alternate layers of copper and insulation in a new electric motor design. This will also reduce rare-earth dependence. They roughly split $5.6 million.

The $5.3 million for improving building efficiency goes to California, and is split with two awards to Lawrence Berkeley and one to Stanford. Each has a project on using coatings to alter the thermal transfer to the buildings and cars, while Lawrence Berkeley also gets almost $2 million for modeling studies of building heat losses.

The $10 million for carbon capture is split four ways, with two awards (to Arizona State and Dioxide Materials) for electrochemical systems that will generate new fuels from the carbon dioxide output of power plants, while the University of Massachusetts at Lowell is developing (for $3 million) a catalyst that will also combine sunlight, CO2 and water into a fuel precursor.

The fourth award is to the University of Pittsburg (at $2.4 million) for a way to thicken liquid CO2 either as a way of improving EOR, or as a substitute for water in hydrofracking. I can’t quite see the advantage of a thicker fluid for use in EOR, since the hope, surely, is to have a very low viscocity fluid that can more easily penetrate into the formation and mix with the oil, but the application in fracking is intriguing.

The emphasis with the investments in Grid Modernization (the co-largest topic) is on improving switchgear (five awards). In addition there are two awards for modeling, one on improved instrumentation and one to Grid Logic ($3.8 million) for developing a new super-conducting wire for power transmission.

There are two awards, both for $2 million, in the “Other” category. One is to MIT for a water purification system, wile the other is to Harvard. This latter is for a “self-repairing” coating that can be applied to water and oil pipes to reduce friction and thus lower pumping costs. The old fall-back on this was Teflon, which could be very effective, but any particulate matter in the fluid will erode this over time, so the “self-healing” aspect could be worthwhile, since it might allow a much thinner liner.

The $18.76 million for Renewable Energy projects is distributed to wind, sun and water energies, with two projects in waves where Brown University will be building a new underwater wing to capture flowing water energy, and Sea Engineering, who will be developing a better buoy for acquiring data for tidal energy potential assessment. Wind is down to a two projects, one, which seems a bit regressive, is to GE who will develop fabric blades for wind turbines for $3.7 million. A similar amount is going to Georgia Tech to develop a vertical axis turbine. The remaining six projects deal with solar power of which the most interesting, perhaps, is that at Cal Tech which is going to look into splitting light into its different color bands (think prism) before using them to improve device efficiency. We have seen that converting white light electronically to the narrow optimal color band can have dramatic effects on improving algae growth rates, for example, but it requires a bit more refinement to achieve the narrow division than, I suspect, will be possible optically.

The section that will invest $12 million in Stationary Energy Storage is funding 8 projects looking at different battery technologies. The largest investment ($4 million) is going to Alveo Energy, which has an intriguing entry in Find the Company. It was apparently only founded this year. The technology that it is chasing involves using Prussian Blue dye as the active ingredient in the battery.

The other “out of the ordinary” award is to Tai Yang which is affiliated with Florida State University. Superconductivity Center. The $2.15 million award is to develop a method for storing energy in a high-power superconducting cable.

Pratt and Whitney get two of the three Stationary Generation awards, the first for $650k is to develop a continuous detonation gas turbine, while the second, for $600 k is for work on an ultra-high temperature gas turbine. The University of North Dakota gets the third award to look at developing air cooling for power plants.

The $9.5 million for Thermal Energy Storage is split five ways, with three awards for the development of power from the waste heat in existing systems, one to the NREL for a solar thermal electric generator, and one to Georgia Tech for a solar fuels reactor using liquid metals.

When it comes to finding answers to Transportation Energy Storage the Agency is committing $15.3 million to seven projects. Six of these deal with battery development. (A123 Systems who previously received a $249 million federal grant to develop electric car batteries recently went bankrupt.) Two of the awards, to Georgia Tech and to UC Santa Barbara will seek to combine super-capacitor design with battery capabilities, while the Palo Alto Research Center will use a printing process to construct batteries.

Ceramatec is being funded, at $2.1 million, to develop a solid-state fuel cell using low-cost materials.

There is a clear change in emphasis from earlier years reflecting, no doubt, the results from ongoing research, as well as the obvious change that the current natural gas availability is allowing in developing technical advances for the future. It should, however, be born in mind that while some of these will likely prove to be quite successful, it will still take perhaps a decade before any of them can be anticipated to have any significant impact on the market.

Rising Energy Prices and their impact

As the United States continues through the interminable process that will end with the national elections in November, the continued poor state of the economy is playing an increasing part in the debate over the likely outcome. What seems to have slipped from the discussion, however, is the contribution that energy costs are making in their impact on the different economies around the world including that of the United States. That awareness is becoming more evident in the UK, particularly in the debate over Scottish Independence. The recent Uswitch report notes:

Energy bills have more than doubled in the last 8 years – if this trend continues bills could reach £1,582 a year by 2015 and £2,766 by 2018. But almost six in ten people (59%) say that energy will become unaffordable in the UK if the average bill hits £1,500 a year, with the average household bill today already £1,252 a year.

Yet the increasing reliance on “green energies” in the United Kingdom, and particularly Scotland, are already recognized as leading to major current and future cost increases, with consequent impacts on the strength of the economies that they support.

Figure 1. Relative energy sources for Scotland and the UK in 2010 (Scottish Government)

 The growth of renewable energy in Scotland has been remarkable over the past decade, and has received consistent support to grow beyond the current levels. The major growth has been in the use of wind turbines, which – as I saw in a recent trip to the UK, are now more prevalent than ever. (And, more encouragingly, were also turning in greater proportion than I had seen in the past).

Figure 2. Installed capacity for renewable energy in Scotland through 2010 (Scottish Government)

  Current plans and projections would increase capacity from the roughly 4.4 GW shown above to a total of 28.8 GW being possible with pipeline and projected other projects. And in 2010 Scottish turbines produced more power from turbines than from hydro power for the first time.

Figure 3. Scottish electricity from renewables by source (Scottish Government) 

 Of these, however, only 3.3 GW have progressed beyond the planning stage. Yet, given that renewable sources have supplied nearly 20% of the need at present, this suggests a much greater role in the future, with less need for more conventional fossil fuels. Currently Scotland gets most (around 75%) of its electricity from five power stations, there are the two coal-fired power stations at Longannet and Cockenzie, one gas-fired station at Peterhead, and two nuclear power stations at Torness and Hunterston. These stations will be phased out as the transition to greater reliance on “wind and wave” with a target of 16 GW to be contributed in 2020.

Figure 4. Path to a Scottish Renewable Energy Future (Scottish Government ) 

 (A. Deployment projection based upon an extrapolation of the annual deployment levels experienced in 2007-08. 

B. Deployment projection based upon an extrapolation of the annual deployment levels experienced between 2009 and the start of 2011. 

C. Deployment projection, based on Scenario B above, adjusted for the improvements in the planning/consent system that were introduced in recent years but which have not yet impacted upon actual deployment rates. 

D. The 100% target line is a straight line extrapolation between current installed capacity and the estimated levels of capacity required to achieve 100% of gross consumption from renewables in 2020. 

This hypothetical line is incorporated to identify and acknowledge the scale of the challenge. In reality, it is recognised that deployment will not follow a straight line and would be expected to accelerate towards the latter part of the decade, particularly given the potential magnitude of offshore wind deployment.) 

 The political beliefs of the Scottish National Party (SNP) now in power, which include a desire to reject nuclear power and move to greener sources of electricity is, however, bumping up against the realities of cost and practicality. The Institution of Mechanical Engineers in the UK has released a report that concluded:

The Institution’s findings suggest that the original renewable energy target split for Scotland of 50% electricity, 11% heat and 11% energy for transport, making the overall 20%, and subsequent revision of the electricity generation target to 100%, did not appear to be supported by a rigorous engineering analysis of what is physically required to achieve a successful outcome in the timescale available. 

During the research for this report, First Minister Alex Salmond announced that the Scottish Government had increased the overall percentage target for energy from renewable sources to 30% by 2020. In light of this report’s analysis, this aspirational target appears to represent an ambition that cannot be justified from an engineering perspective.

The Scottish Government has responded, in part, by emphasizing the goal of reducing energy consumption in the country by 12% by the year 2020. Yet significantly raising energy costs and demanding that society reduce demand are not obvious ways of immediately stimulating economies to return to national prosperity. About 750 million British pounds (BP) ($480 million) worth of power came on line in 2011, but the investment required to meet targets in the future will be much higher. The estimated cost for the next 17 GW of capacity is $70 billion (46 billion BP). The Scottish GNP runs around $225 billion (145 billion BP) and there is increasing question over the ability of the country to be able to attract the funding needed to achieve its targets. 

 Yet the concern that worries me more as these debates continue is that while an increasing reliance on renewable energy sources may well be politically promoted, the financial and technical ability to reach those goals is becoming increasingly unavailable. (See particularly the IME report). For, while the focus of the debate remains on that side of the supply, the construction of alternate power sources to meet the anticipated demand are not being properly addressed.

 In Scotland there is now talk of a new coal-fired power station at Grangemouth following the cancellation of a carbon capture and sequestration project at Longannet. The Cockenzie coal-fired plant will close next year, though there are hopes that it might be replaced with a natural gas-fired plant. But these things take time to permit and construct, and should the required pace of renewable sources falter, then the conservation of energy that the Scottish Government would like to see as a voluntary activity might come to be an involuntary need instead, with consequent significantly more severe impact on industry and the Scottish economy. 

 Why is this relevant to the American election? Well unfortunately, though at a slower pace, there seems to be a similar argument being made in the United States to speed up the phase-out of coal-fired power, as perhaps evidenced by the recent decision to close the Big Sandy coal-fired power plant in Kentucky, under EPA pressure. There is a presumption in discussions of the future energy costs for the country that cheap natural gas will be an easy replacement for coal. However, much of that future relies on the low prices of natural gas, and as Chesapeake are finding, just because there is a market, does not mean it is a profitable one. You can’t make up the difference between producing natural gas for $5 a thousand cu ft (kcf), and selling it at $2/kcf by increasing the volume that you sell, and thereby realize a profit. When all the dust settles it is likely there will be less natural gas on the market, at a greater price, but that is a different story. For now one can only be concerned that the failure to recognize that energy prices are playing their part in restraining national economies seems to have become a neglected part of the national discussion, which is a pity – both in Scotland and in the USA.

Looking back at 2009

This has been an interesting year to look back on. The change in the Administration and the difference in outlook that they bring to many of the concerns that I write about have altered the way in which the future will evolve. That evolution is still continuing, but there can be no doubt that the key committees in the Congress are now led by folk that do not look particularly kindly on the historic producers of fossil fuels. Yet the path forward for the alternatives, power from renewable energy, is not necessarily going to be that certain either. That was brought home just recently with the move by Senator Feinstein to protect portions of the Mohave Desert from future construction. This limits some of the areas in which solar farms had been planned, though clearing some of the legislative hurdles for others. But the legislation (which would apparently affect some 19 applications) is a sign of the debates to come, as the land needed for renewable energy is discovered to have other potential uses or benefits, that will make the search for available space that much more difficult.

And it is not just in California, there are debates in other states, including Wyoming.

As a result, 23 percent of Wyoming's winds that are class 4 or higher -- and about half or more of developable class 6 and 7 winds -- are in core areas. And in July, the state put those winds off-limits by essentially banning big wind farms in core areas. Many in the wind industry see it as devastating. The Interwest Energy Alliance -- a trade group -- said the ban could have "a deleterious effect on renewable energy development" across the West, and that it could kill the development of 10,000 megawatts of wind in Wyoming.

Though there are some sites that appear less controversial than others.

He takes me on a tour in a big white truck, making me wear a hardhat because turbine blades can throw chunks of ice. From the top of a hill, as a bunch of antelope amble nearby, Anderson points southward through the forest of windmills to a huge plume of steam that marks the Dave Johnston power plant. Then he motions to the earth all around where we stand. The wind farm sits on the reclaimed remnants of an old, giant coal mine; all this land was once torn up, gouged by draglines, its carboniferous bounty burned in the plant down below. "We wanted to take a coal mine," says Anderson. "And make it useful."

Yet as these debates continue, there seems to be little recognition of the needs that the future will bring, that are not being prepared for. Nor is there much recognition of the problems in getting power from where wind can generate electricity to the places where it is needed (particularly those states that have mandated high levels of renewable energy into their mix in the nearer future). For while wind turbines can generate money for the landowner, there is much less for the farmer who lets a transmission line across his land, who only gets a single payment.

The cap-and-trade legislation may not, in the end, make it through the Senate, and thus may die for this Congress, but it has made it difficult to justify investment in coal-fired power stations, when the rules that will govern their use are not clear. And while the EPA has adjudged carbon dioxide to be a pollutant , it has yet to write the rules under which plants that produce carbon dioxide will operate. (Remembering of course that each of us is also a generator). As a consequence some 100 or more power plants have been put on hold until the situation becomes clearer. But given the challenges that will likely come to the legislation (there is some question, for example as to whether they can limit the application of legislation to plants that produce more than 25,000 tons for example), the delays in planning for construction of future power plants are likely to continue, and perhaps grow worse.

The new Administration does not see much in the short-term that will cause energy supply, whether crude oil or electricity, to be a problem. The Secretary of Energy, through the research and funding that they have produced over the past year, is looking at more distant options for generating power than meeting any proximate needs. Unfortunately, coming from California, where it was easy to mandate a reduction in coal-burning in the state when the power could be generated alternately from coal-burning plants in Utah, does not work as well when the entire country becomes subject to the legislation, and such an alternative no longer exists.

Among other news of the past year that make my list of major stories I would count two more. They don’t seem to have caught as much attention of folks such as Robert Rapier who has a different list, but one of them is listed in the page that Platts had for their survey. The first (and that listed by Platts) is the continued collapse of the oil production in Mexico. While this has significant impact to the United States (which is now going to have to find alternate sources for the Mexican oil it was importing from fields that are now running dry, particularly Cantarell) the impact on Mexico’s deficit has been to drop the deficit off a cliff. For the USA it is going to be increasingly difficult to find that alternate supplier. China has increased their purchases from Saudi Arabia by more than 12% this year (to 800,000bd) and has signed agreements to take this over 1 mbd next year. With non-OPEC production having peaked, it is only the surplus production in the OPEC countries that keeps the world in balance, and the size of that “cushion” is something that we debate. (I am less optimistic than some others).

The other event was the opening of the gas pipeline from Turkmenistan to China. Again it is feeding fuels that were, at one stage, available to the West, to a new customer, itself growing in demand, and with a considerable scope to increase market purchases in the years to come. The glut in natural gas that we currently see will not I suspect, last as long as it is currently projected, and that will open a different can of worms.

But all these stories from the past aside, I do wish you all a Successful and Prosperous Year, that brings you Happiness and Joy, and not too many snow storms.

Wind in the Rockies is expensive

Government policy can, once decided, be implemented by a combination of laws and financial incentives/disincentives among other means. Thus, for example, when trying to change the ways in which America gets power, the government can limit the amount of coal burned, both by direct fiat, and by making it too expensive (through the cost of permits). The former limit will be established through the caps on the production of GHG, assuming that there is no immediate vast investment in sequestration. There is a fair amount of debate over whether the financial incentive will be through a direct tax or the more indirect route of charging for allocations. Having heard Congressman Waxman’s aide at the EIA meeting, I believe the decision is long over, and that, if anything does come out of this Congress it will be the cap and trade model that will be used.

That having been said, since the nation is growing in numbers, even if per capita use is held constant (as it has sensibly been in California) any reduction in fossil fuel use will need to be replaced with an alternative. At present the most widely touted of these are wind and solar, and the high costs of solar mean that, for many utilities seeking change, wind has been the choice, but even this is, in some cases, proving to be too expensive an option.

Wind farms are becoming more obvious around the country, and their message is strengthened with a steady campaign of adverts. T. Boone Pickens is seen more as a savior than as a salesman. And the Secretary of the Interior currently is pointing out that there is sufficient wind available to replace all the coal-fired power stations in the country. But under all the hype, and after the cranes have come and gone, the change in energy source has to make economic sense. Wind farms will only be established where there is a credible likelihood of their making money for the investors that raise them. The current comments of the Secretary come as hearings get under way around the country.

Salazar said ocean winds along the East Coast can generate 1 million megawatts of power, roughly the equivalent of 3,000 medium-sized coal-fired power plants, or nearly five times the number of coal plants now operating in the United States, according to the Energy Department.

Salazar could not estimate how many windmills might be needed to generate 1 million megawatts of power, saying it would depend on their size and how far from the coast they were located.

Mark Rodgers, a spokesman for Cape Wind, which wants to build a wind farm off Cape Cod, Mass., estimates it would take hundreds of thousands of windmills. The average wind turbine today generates 2 to 5 megawatts per unit, he said.

This is the first of four hearings, and focused on the East Coast. But the potential states most likely to benefit can be judged from the DoI plan to create Regional Energy Permitting Centers.

To expedite production of renewable energy on public lands while protecting land, water, and wildlife, Secretary of the Interior Ken Salazar today pledged to create four Renewable Energy Coordination Offices, one each in California, Nevada, Wyoming, and Arizona, along with smaller renewable energy teams in New Mexico, Idaho, Utah, Colorado and Oregon.

You may note that these are all in the West.

While the numbers quoted are large, and the potential benefits of moving to renewable energy are continually being cited, the underlying realities of getting a good return on the investment, at a lower cost than the alternative, is being kept quiet. Unfortunately, as an article in USA Today notes, even with the best will in the world, those benefits don’t always happen. And, in the case of Durango, CO, the utility is moving back to coal, from wind.

For two years, the city of Durango, Colo., bought electricity for all its government buildings from wind farms. The City Council ended that program this year, reverting to electricity derived from coal-burning plants and saving the cash-strapped city about $45,000.

The Durango plan has its roots back in 2007 when the city made the move to wind energy.

Green power currently constitute(d) about 10% of city power purchases. The extra the city pays for green energy will add about $120,000 a year to its electrical bill officials said. But the extra cost will be offset by an energy audit aimed at cutting power consumption. With the wind power option, electric customers pay $1.25 per block of 100-kilowatt-hours in addition to their regular rate. The extra that consumers pay for their power funds investment by power producers in alternative-energy sources such as hydropower, solar and wind. But electricity from all sources flows on the same line. In 2006, Durango used almost 8.15 million kilowatt-hours of power at a cost of $779,000.

At the time, as you may notice, the city recognized that the renewable energy would cost more, but felt that it could make up the difference with improved efficiency. Which is the same sort of argument that we are now getting from the new Administration.

Although the above cite is recent, the change actually occurred last December.

City Manager Ron LeBlanc recommended the city stop buying power from renewable energy sources when it became necessary to cut the 2009 budget by more than $500,000. The city council approved the budget, including his recommendation, earlier this month.

The La Plata electric association charges 80 cents more per 100 kilowatt hours for electricity from solar and wind power. LeBlanc says that adds $45,000 to the city’s annual electric bill.

La Plata does not generate the power itself, but is passing along a program from Tri-State.

The LPEA Green Power program was initiated in 1998 when Tri-State – from which LPEA purchases its power – responded to requests by its member systems, to include a green power option as part of its available resources to end-use consumers. Because of this program, LPEA customers who request purchase of green power receive it at LPEA’s cost from Tri-State, $1.25 per 100 kilowatt-hour block per month. Purchasing one block of Green Power costs consumers less than $.05 per day. To date, LPEA is among the leading purchasers of Green Power in Tri-State’s 44-member cooperative system, supplying nearly 800,000 kilowatt hours of Green Power generation each month.

Tr-State had lowered their costs to 80 cents in January, 2008. . However the company has also carried out an Integrated Resource Plan (IRP) looking at future energy supply, based on anticipated need. That plan concluded:

Tri-State proposes to develop and own two new 700-megawatt supercritical coal-based units at the existing coal-based, 360-megawatt Holcomb Station in western Kansas. The efficient units would include best available control technology to minimize air emissions and activated carbon injection to minimize mercury emissions. The IRP clearly reinforces the need for the first 700-megawatt baseload resource in 2012, which is when Tri-State first unit at Holcomb Station could be online.

Since the first Holcomb unit cannot be brought on line until 2012, Tri-State is left with a significant deficiency in both capacity and energy during the interim period; and its options are somewhat limited. For modeling purposes in this IRP, it is assumed that Tri-State will install combustion turbines (CTs) as soon as possible and purchase energy from the market. However, there are many other options available to Tri-State.

These are the coal-fired power plants that then-Governor Sibelius vetoed three times, with part of her argument being that more than 80% of the energy they would produce would be exported. Which leaves one wondering where the power will come from for Durango, since I am presuming that the turbines are gas-driven, and thus too expensive.

(Um! Yes I know that Durango said that they are going back to coal, and have so moved, but Tri-State still has their supply problem, or will as soon as the economy picks back up without the new stations they were relying on.)

2009 Energy Conference - Renewable fuels

The renewable energies panel was moderated by Michael Schaal of EIA, and again took the form of a panel sitting around a table chatting. The panel each gave a short presentation and that took up most of the time before a short discussion.

Andy Arden of the National Renewable Energy Lab spoke mainly about the production path for ethanol, since the future supply of gasoline is likely to be flat, and ethanol provides therefore the only path to growth. He anticipates that with a 7% growth in use each year, the contribution from this fuel will grow from 2% to 15% of the total. A considerable part of the ultimate expansion in supply is to come from cellulosic ethanol, and the assumption, since companies are now constructing pilot and production plants, is that the techno-economic analyses are now coming up favorable. This is needed given that the target for that milestone is 2012, for it to be cost competitive, and that by 2022 the yield needs to be 21 billion gallons. The enabling bill has set specific targets for production after 2012, and all that is needed (ALL ??) is for the process to become cost effective.

The problem with that goal now is likely to be a lack of available credit, given the financial condition.

In the division of tasks for the National Labs, NREL deals with the thermo and chemical treatment of the biomass, INL and ORNL are responsible for the biomass production (including such examples as poplar). There is a concern however over logistics and an understanding of the issues of both quality and quantity. Because of scale issues in the economics of these plants a 5-mile gathering radius is too small, but as one goes to a larger harvesting radius then the costs of the harvesting, transport and storage also begin to factor into the equation (see the story from Dubuque). The resulting ethanol has to live within a price spread that makes it viable, which is thought to be around $2.50 as an equivalent price to gasoline).


Unfortunately the long-term numbers are not inspiring for ethanol, it is the current “biofuel du jour” mainly because it only “requires only one miracle to work” while some of the alternatives require several. And so there is a need to look beyond ethanol, to those technologies that, usually based on bacteria, will generate other fuels generally through aqueous phase reforming. One that I had not heard much of before was dark algae, which is a form of algae grown in the dark, that feed on sugar. Companies to watch in these areas are Virent, but the challenge will always be in the provision of an adequate feedstock at an acceptable price.

Matthew Hardwick of the Renewable Fuels Association lists 26 cellulosic programs, but things arre changing, since now credit is hard to come by and this is a capital intensive industry. He felt that the EPA models that consider ethanol were too low when it came to judging it against a carbon production standard, and felt that it was less of a polluter than it was painted to be. But there are other constraints, such as water and land use, that are only now becoming evident as plans to scale up production start to be put in place. And in developing the market forward, there is a blend wall that comes into play at 10% of the fuel market. This will hurt the ability to meet the target goals since they require that ethanol surplant gasoline at levels above 10% of the blend. The hope, therefore, is that EPA will change the mix max to 15% with the target of using an E50 by 2015. However once the mix gets to 12% engines will need to be changed to effectively use the new blend.

Denise Bode (who is the voice on the video at the American Clean Skies website, though is now with American Wind Energy) talked about the benefits of the coming growth in Wind Energy. Though did recognize that there are some concerns about transmission to get it where it needs to be.

Bryan Hannegan of EPRI spoke more from the point of view of the utilities, and noted that renewables still have a long way to go to ramp up to the levels of scale of production that are needed. He quoted a fiure of $27 a ton for carbon credit (allowance) that comes in in 2015, as being part of the models that they use for prediction. In their models gas prices float in the $4.95 to $7.95 range. But in looking at a goal of 35% of the national energy coming from renewables by 2050, there are some things that still must happen. Bear in mind that for that much penetration the renewable source must replace some of the existing legacy systems that are well established, and paid for. Without that there is not enough market for the growth.

He sees wind being the initial market penetration, penetrating even into the Tennessee Valley where there isn’t much wind, and a lot of competition. He had some land use and water concerns over biomass, though this will also be a big player by 2050. From the generation stations there will then be the need for transmission and linkage into the coming smart grids and those also are questions not yet answered. The EPRI position is spelled out in a report available on the EPRI website. He noted that just using natural gas as a fall back when the wind does not blow will put too high a demand on dedicated gas turbines, and that just relying on the grid being big enough so that the wind will be blowing somewhere might be a little optimistic. In the end he felt that to meet the carbon goals the country will need to do more than just rely on the renewables.

It was further noted in the discussion that less than half of the country could name a renewable fuel. And we need to avoid complacency over energy supply when business returns to normal.

P56. Pick Points

I see that Jerome is a little upset with the NYT story about coal and renewable energy costs. In the story the question is raised as to how much extra the average consumer is willing to pay to switch from coal to renewable fuels. There are several aspects to the story – the first is that the Administration can raise the relative cost of burning coal by imposing some additional cost for generating carbon dioxide (whether by tax directly or through cap and trade). The second is that, by regulation, it can make it so expensive to build a new coal powered station that the alternatives become more attractive. Or, by driving improved efficiency and conservation (especially in a time of recession) it can lower the need for additional power. However if costs are raised, then the utilities will pass these additional costs on to the consumer, and as I have noted before, running as the candidate who doubled electricity costs is not a sure election ticket. The article does, however, question the veracity of some of the estimates for coal-fired power

One big question is how much it currently costs companies to produce coal-fired energy, and the answers are often colored by ideology or self-interest. Companies that sell coal or rely on coal-fired electricity often pick a low number; environmentalists cite the indirect costs to society, like strip mining or spills of coal ash. And since the electricity industry became more competitive, the utilities, even municipal ones, have become more secretive about their costs.

Yet if the backup power to wind is natural gas (and most new power stations are planned to be fueled that way) and costs pick up around the end of they year, then the combined cost of new power generated that way will still argue for coal.


The debate between natural gas and coal continues in Mississippi where utilities with underutilized gas production are arguing against a new coal fired power station. At the same time there is a claim from Canada of a process that can burn any coal to generate electricity with a negative carbon dioxide balance. The Canadian Government is investing in ways to improve carbon capture

In the world of oil and gas pipelines there continues to be the sound of change, if not yet the certainty. The Nabucco pipeline (the one that will bring natural gas to Southern Europe without going through Russia) is getting some favorable publicity with the anticipation of an intergovernmental agreement in June to get the program running. However some of the gas is anticipated to come from Azerbaijan and the Shah Deniz field, and that production is being delayed. Stage 2 of the program is being delayed from 2013 to the 2014-15 time frame, though given the potential current glut in natural gas as more LNG tankers become available, this may be smart timing. It could also use another pipeline, the Turkey-Greece-Italy one, rather than Nabucco, since Azerbaijan is on the west side of the Caspian and thus does not have to go through Russia.

Nearer home there is a question as to whether the natural gas pipeline through the Mackenzie Valley might be built before the Alaskan natural gas version. ConocoPhilips thinks they are ahead. There is not, however, universal support for new pipelines north of the border. China, meanwhile has signed a deal, which gives it the natural gas production off-shore Burma, as well as a pipeline to deliver it.

It is a little hard to grow the feedstock for conventional corn ethanol in Alaska, but a more traditional fermentation near Governor Palin’s home has created “Permafrost” (which is a vodka). The Mt Redoubt volcano continues to rumble nearby, and snow was used to help Anchorage airport remove ash and get the place back running after the volcano had gone through a total of 18 eruptions (The snow helps hold the ash together, so that it can be moved by plow). There are some oil storage facilities in the area that might be threatened.

Kansas is coming out of a record year for oil and gas production with production valued at $6.58 billion. This was up 10% over 2007, with most of the gain coming from oil. Unfortunately thefts of power (electricity and natural gas) are also up. The story is unlikely to be repeated this year, as the national rig count drops below numbers last seen in 2003. The question becomes when this decline will be seen in a production drop, given the short lives of most wells these days. The article suggests before the end of the year. In Colorado, where much production drilling has occurred, the rules are being tightened to include the Colorado Division of Wildlife in those deciding on new oil and gas location assessments. At the same time two new gas-powered plants are moving forward in the region.

Looking at alternate energy New Jersey is moving ahead with solar generation that will develop 42 MW of solar power by 2012. Meanwhile India appears to be opening up as a market for the technology. This goes beyond just building PV cells in country, a new plant will increase one companies production from 12 – 42 MW, The new Solar Cities Initiative will ultimately affect 60 cities, but will soon start with 2, including Nagpur.

Wind Energy, however, to return to Jerome’s topic, is becoming more recognized as the renewable to beat. The report by the Royal Society for the Protection of Birds (RSPB) this week stated

The RSPB believes wind energy has an important role to play in tackling climate change. Consequently we only oppose those windfarms that pose a significant threat to wildlife.

The title “Positive Planning for Onshore Wind,” also suggests the bent of the report – available as a pdf of 57 pages.

37. Pick Points

Half-a dozen or so stories of interest:

Since reconvening in Juneau last month, Alaskan lawmakers have been looking to the natural gas fields in the Brooks Range foothills to deliver gas to Alaskans by 2014. There has not been a lot of exploration for gas in the region to date, more for oil. The sort of country they are talking about is dramatically photographed. There are also plans for more wells north of Prudhoe Bay. Getting Alaska’s natural gas down south is something that will come up when President Obama goes to Canada this week. However there is some concern that the current glut of natural gas, from the shales around the lower 48, might make the project unwanted for a decade or more. Pipeline companies are therefore looking at a gas pipeline from the Rockies to Chicago, for example and there are plans for a new pipeline up into the region where the gas from the Marcellus shale is coming on line. Now as long as we can keep them running . . . .

The Nevada Governor is seeking to have bonds for power-line construction become tax-exempt. This is needed since new lines to areas where sun and wind are available are often not where folk are. At the end of last month the Public Utility Commission in Texas, without that incentive, gave 7 utilities pieces of a $5 billion package to bring Wind Energy from West Texas to Houston and North Texas. And as I noted last week, the “Green Power Express” is planned to bring wind power from the Dakotas to Chicago. With the right incentives it is claimed that the lines can be in within two years. Last Monday NV Power postponed plans to build a new 1,500 MW coal-fired power plant in Nevada, but still plans on putting in the transmission lines, though now for wind. At present a renewable energy line would be less expensive. However Gristmill would rather reduce costs by putting smaller power generators nearer users – the only snag being that you have to build the generator where the wind blows. And an environmental group in California has suggested that the power plant may not be needed, if there is sufficient improvement in energy efficiency, more renewable resources used, and more natural gas plants. The postponed coal plant may, in the interim, be replaced with a smaller gas-fired plant. It is a locally popular decision.

Cellulosic ethanol has a pilot plant running that is producing 20,000 gallons a year of ethanol from corn cobs. In defining this step forward it is noted that

With a few key technology improvements, the United States could do even better, creating up to 90 billion gallons of ethanol by 2030, enough to meet one-third of the nation’s transportation fuel needs,

GM is already on board with plans to boost production of cars that can use E85. There is some concern, however, that too much emphasis on biofuel crops could come at the expense of the rainforest. And the cellulosic plant that had been planned for Grand Junction, CO has been put on hold, due to the economy. (One of the partners is Suncor). I made a list of plants that were in planning or process earlier, but this one, which was announced in October, was not on that list. At present the economic floor price for ethanol, at the pump, is considered to be $1.50 a gallon, without taxes, and if gas is selling for less than $2.65 a gallon with tax, it will undercut the sales of ethanol. Last week the average price of gas was $1.93, while that for ethanol was $1.65. However, while some are working on making the fuel production more economical, there is also work going on to make ethanol engines better.

Hopes for increased oil production from Iraq have been the base for a number of studies that decry worries of oil decline. Yet all is not well in that region of the world. There are concerns in Parliament about the current state of the oil contracts. Yet the Government is proposing to further sweeten the deals with outside companies in order to boost output further. Certainly production is increasing and hopes to meet domestic demand this year, while exports rose to 1.81 mbd in December, the highest in 5 months, their target this year is 2 mbd of exports. Iraq has signed a deal with Iran whereby it will send crude to Abadan and receive refined products back. They will also jointly exploit some common fields.

OPEC, in general, now believe that they have roughly stabilized global oil prices with their latest cuts, although there will still be some instability because of the way in which stockpiles are being manipulated. There are currently 70 – 80 million barrels (one day’s global need) on tankers held offshore. With tanker numbers rising, as demand falls, there may be more floating storage coming on line, just when it is not needed. However, if oil prices don’t pick up soon, then OPEC may decide to cut more production at their March meeting. At 26.33 mbd in January, their current output is still 1.5 mbd above the target. (This excludes Iraq), although the OPEC Sec-General says that only a 600,000 bd cut is needed for balance. And this is the season where some refineries go into maintenance mode., which may last a little longer this year.

Gazprom announced Friday that its oil production last year was down 5.8%, that will likely be hidden this week, as the company will celebrate the opening of the LNG plant at Sakhalin Island. While the first shipment is publically expected in March (it was supposed to be tomorrow), local news suggests that it won’t be until April. Gazprom is also increasing their investment in refining, and hope to attract almost as much investment this year as last.

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.

Natural Gas and Wind Energy

Today was the Natural Gas Weekly update and this contained, again, no really startling news. The gas in underground storage was a little above average, blamed on some unseasonably warm temperatures and the drop in demand due to the recession. The EIA also released its annual reserves report for 2007, including crude oil, natural gas and other liquids in storage. It also released the Short-Term Energy Outlook. Both shale gas and coal bed methane now make up a significant part of the inventory.

The current NG prices vary around the country:
(Source EIA)
Although the Agency does not yet put out a weekly report on renewable energy, it does provide a wind map of the country that I have already used (the second of the two following). They are based on ranking available wind power in one of 7 categories:
(Source EIA)

If there is no color then the wind has no value. Normally it has to be over 3 to be useful. In one map they look at Federal Land and its potential (the grey is Federal land, the blue and pink are areas with suitable wind within 20 miles of a power line but rated relative to whether they are (blue) or are not (pink) on Federal land.).

While a more generalized wind map, from the NREL, would give:

P20. Pick Points

Half-a-dozen or so stories of interest.

So is the Russian:Ukrainian story over for another year, or ten? Certainly it has lost the press coverage, but there will remain caution until the gas finally arrives. But one part of the deal is that RosUkrEnergo will be cut out of the action. Gazprom is reported to have set 0700 on Tuesday to resume supplies However it is estimated to take another 36 hours before gas will make it to Western Europe. The domestic situation in Ukraine is a little more complicated, since the coal and steel plants (that heavily use Russian gas) are in the east of the country, which has been a strong Russian supporter. But the gas problem has alienated some of the region, even though it is leading to a potential increase in the use of coal, which is locally mined. (pdf). The mines also contain natural gas, and this can be recovered as a separate fuel. (pdf), and such work appears to be under way.(pdf)
Here is the beginning of my post.
The British – oops! – Scottish coal industry has started to move into profit, after having been in the red a year ago, Scottish coal mining has become profitable. This occurred as sales dropped from 3.1 million tons to 2.9 million, and is encouraging the firm to open new and some old sites, though all will be surface mines, or opencast. The market will now be able to use 4 million tons/year, and so the prospects for a new deep mine at Canonbie are looking up. (Small personal note – back over a hundred and twenty years ago my ancestor was blacksmith in that village. It is a beautiful setting).

Speaking of coal there is a strange story up in Alaska about the power plant and a utility company.

I had mentioned the other day that CNG prices had gone up in Pakistan, the result has been that out of 250 stations in Rawalpindi and Islamabad that sold the fuel, over 150 were not in the cities and some 400 were out in the region, and those who had CNG were only working limited hours . It freed taxi drivers to raise rates. But it also appears that there were differences in the rates in different cities, and though the lack of supply was blamed on low gas pressure price may have also played some part. The current situation seems to be getting worse.

Speaking of reviews of the situation Energy Shortage points to a broad review of the problems that Nepal are having with hydro-electric power generation.

Investors seem to be pulling back from wind power investments, just as the plug was pulled in Maine, so it appears that the large London Array project, some 341 turbines which would generate some 1,000 mW of electricity, and which Shell backed out of, is now being reconsidered by the Abu Dhabi State owned Masdar company, again because of questionable economics. Though the drop in steel prices might help. Apparently wind driven power generation is still costing three times that of a conventional gas-fueled station, though how long that will last is likely a Russian decision.

As usual there are more stories at the Energy Bulletin and Drumbeat at The Oil Drum.