For Utilities, Reality is a Jolt

July 29, 2014

Rebecca Smith of the Wall Street Journal has consistently been delivering the unwelcome news for electric utilities about changing times, and this morning she’s done it again.  I won’t often recommend a Murdoch paper as a resource, but do read the whole thing at the link if you can. It’s darkly comedic, for example:

Sherry Pfister, a retiree who once worked at the Palo Verde nuclear power plant 45 miles west of Phoenix, says she didn’t hesitate to lease solar panels for her home in Waddell, Ariz., and says the panels have cut her utility bill by a third.

“Why isn’t everybody doing it?” she wonders.

Turns out that growth in the economy no longer requires growth in the electricity sector.  One  CEO marvels, “It’s a new world for us.”

As the video above shows, that new world of decoupled growth and electricity began in the 1970s.  But Utility Executives have never been hired to be forward thinking.

Perhaps that will change sometime soon..

Rebecca Smith in the Wall Street Journal:

When customers of American Electric Power Co. AEP +2.69% started dialing back on power consumption in early 2009, company executives figured consumers and businesses were just pinching pennies because of the recession.

Five years and an economic recovery later, electricity sales at the Columbus, Ohio-based power company still haven’t rebounded to the peak reached in 2008. As a result, executives have had to abandon their century-old assumption that the use of electricity tracks overall economic conditions.

Utility executives across the country are reaching the same conclusion. Even though Americans are plugging in more gadgets than ever and the unemployment rate had dropped at one point to a level last reported in 2008, electricity sales are looking anemic for the seventh year in a row.

Sluggish electricity demand reflects broad changes in the overall economy, the effects of government regulation and technological changes that have made it easier for Americans to trim their power consumption. But the confluence of these trends presents utilities with an almost unprecedented challenge: how to cope with rising costs when sales of their main product have stopped growing.

Sales volume matters because the power business ranks as the nation’s most capital-intensive industry. When utilities are flush with cash, they buy lots of expensive equipment and raise dividends for investors. When they’re selling less of their product, they look for ways to cut or defer spending. Regulators typically allow utilities to charge rates that are high enough to cover their basic expenses, but that doesn’t guarantee them strong profits.

Utilities typically need to expand sales volume by 1% or more a year just to maintain their expensive, sprawling networks of power plants, transmission lines and substations, says Steven Piper, an energy analyst for SNL Energy, a research company.

“That’s where the existential crisis is coming from,” he adds.

Existential is right.  It’s a bit surreal that these guys have been so slow on the uptake. This (relatively)  recent AP article gives a hint why things are so dire.

AP:

NEW YORK (AP) — The average amount of electricity consumed in U.S. homes has fallen to levels last seen more than a decade ago, back when the smartest device in people’s pockets was a Palm pilot and anyone talking about a tablet was probably an archaeologist or a preacher.

Because of more energy-efficient housing, appliances and gadgets, power usage is on track to decline in 2013 for the third year in a row, to 10,819 kilowatt-hours per household, according to the Energy Information Administration.

That’s the lowest level since 2001, when households averaged 10,535 kwh. And the drop has occurred even though our lives are more electrified.

Here’s a look at what has changed since the last time consumption was so low.

BETTER HOMES

In the early 2000s, as energy prices rose, more states adopted or toughened building codes to force builders to better seal homes so heat or air-conditioned air doesn’t seep out so fast. That means newer homes waste less energy.

Also, insulated windows and other building technologies have dropped in price, making retrofits of existing homes more affordable. In the wake of the financial crisis, billions of dollars in Recovery Act funding was directed toward home-efficiency programs.

BETTER GADGETS

Big appliances such as refrigerators and air conditioners have gotten more efficient thanks to federal energy standards that get stricter ever few years as technology evolves.

A typical room air conditioner — one of the biggest power hogs in the home — uses 20 percent less electricity per hour of full operation than it did in 2001, according to the Association of Home Appliance Manufacturers.

 

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52 Responses to “For Utilities, Reality is a Jolt”


  1. Utilities typically need to expand sales volume by 1% or more a year just to maintain their expensive, sprawling networks of power plants, transmission lines and substations, says Steven Piper, an energy analyst for SNL Energy, a research company.
    “That’s where the existential crisis is coming from,” he adds.

    Existential is right. It’s a bit surreal that these guys have been so slow on the uptake. This (relatively) recent AP article gives a hint why things are so dire.

    But Peter, your vision of the future involves massive transmission of power from far-away generators when local RE runs short.  You are cheering the deliberate economic destruction of the very industry you need to accomplish your avowed goal.

    You cannot build a working system on a contradiction.


    • I don’t follow your logic, engineer. Right now the theory is to REDUCE the need for massive fossil-fuel-based generators, not totally replace them and the idea is to cut down on the use of fossil fuels, but not totally eliminate them. So where is the contradiction? This fallacy is a major talking point of the climate deniers.


      • The cheerleaders are all rah-rah about gutting the entire utility business model, aren’t they?  So how do you expect to have a (much more powerful) long-distance transmission system if the entities which own and operate it have been bankrupted by policy?

        Right now the theory is to REDUCE the need for massive fossil-fuel-based generators, not totally replace them

        As I keep trying to get you folks to acknowledge, we need something like an 80% cut in CO2 emissions by 2050.  If that doesn’t mean totally replacing the carbon-emitters, how are you going to get to 80%?  (I think we need something like 120%, because I think Bill McKibben is right:  We need to get down to 350 ppm, pronto.  That means going carbon-negative.)

        So where is the contradiction?

        Again, when your model assumes that nightfall in Michigan will get electric backup from Texas wind farms, you need a massive expansion in the transmission business.  You can’t do that by eliminating the return on those assets, as e.g. net metering does.

        This fallacy is a major talking point of the climate deniers.

        You might have noticed that I’m anything but a climate denier (I tangle with them regularly).  Further, it’s not a fallacy; there are a lot of false claims on both sides that have nevertheless been elevated to shibboleth status (contradict one and you’re out of the club), and they serve as attack points for the opposite side to help stalemate any move to real action on GHG emissions.

        As examples of shibboleths, look at how Greenpeace is writing Patrick Moore out of its history because he dares to support (gasp!) nuclear energy.  If GP was serious about the climate it would accept some possible hazards to humans so long as their impact on ecosystems was minimal (which it is, even at Chernobyl).  But GP remains dogmatically anti-nuclear.

        • ppp251 Says:

          I don’t know how is in US but in EU transmission operators are not the same companies as electricity generators. Transmission costs are separated from energy costs (they are in different categories in monthly bill). A lot of transmission is publicly owned, but there are some companies who build for example HVDC line and make profit from trading which uses this line.

          It’s the EU law that forbids generators to own transmission lines.

          So if that’s a problem in US then maybe some regulatory changes will be needed.


          • The local generation and distribution companies have to be profitable, because they’re the ones who pay for long-distance transmission.  Destroying them brings down the entire grid.

          • andrewfez Says:

            I have a few shares of a limited partnership stock called QRE. It takes over old wells that Exxon et al. don’t want anymore because they are less profitable. It also builds gas pipelines, and I get paid a royalty every month for the use of those pipelines.

            If someone will create a grid MLP where i get paid per volume of electrons going through a transmission line, I will invest in it. Something like that, which may garner a similar level of risk as a traditional utility (i.e. low risk), would be a big hit right about now, as the S&P500 plunges through it’s 50 day moving average.

            ——————————————————————————-
            *Looks like QRE was too good to last: it’s getting bought out by another MLP. You find a hidden gem; then eventually everybody else shows up to the party….


        • “Engineer” your post represents a lot of muddle headed thinking, with all kinds of assumptions.

          Utilities aren’t the only source of CO2. How about mines burning underground? If we put out those fires, how much CO2 would be reduced? Mines are burning underground in the US and China to name two countries. Think that’s trivial?

          Transportation is another source. How long can the US continue with its automobile based transportation system? CO2 production? How about the resources (not to mention CO2 production) required just to maintain the car based infrastructure?

          How about the clearing of forests? How does that affect CO2? Put a stop to that and how would CO2 levels be affected?

          And that stupid remark about nuclear. We’ve had two major nuclear power accidents (that we know about) with huge catastrophic consequences. “Some possible hazards”? Is that why no insurance company will insure them? Is that why they need massive government subsidies? How many people would have to die to get your attention?

          We don’t have to destroy utilities, which you are implying has to be done to get substantial reductions in CO2 production. There are plenty of other sources that can and should contribute.


          • “Engineer” your post represents a lot of muddle headed thinking, with all kinds of assumptions.

            Speaking of muddle-headedness, you have just violated two requirements of the rules for rational discussion:  you attempted to introduce a new point (coal-seam fires) without resolving the one at issue, and you put it in without any evidence that it makes a difference.

            Go to the back of the line.

    • Jon Torrance Says:

      “things are so dire” does not equal “cheering”

  2. Daniel Simon Says:

    I think he is cheering the utilities coming to terms with reality.


    • Forcing utilities to buy power at full retail price instead of making self-generators pay the same capacity fees as commercial operations isn’t “reality”, it’s policy.

      If net metering users were considered commercial operators and billed at the commercial rate schedule, the utilities would no longer be forced to buy power at retail to re-sell (minus system losses) at wholesale.  But the “wonderful economics” of a rooftop solar system selling at 13¢/kWh vanish when that price falls to 4.3¢ with a peak-demand charge added.  If that’s “killing solar”, it was the straight economics all along.

      • Gingerbaker Says:

        Straight economics? Seriously??

        Solar should have to compete head to head with fossil fuels which dump their external costs onto the public, which have enjoyed decades of huge public subsidies? Solar should not be subsidized even though AGW will kill us all?

        You talk a good game, E-P, but then you always poison the well with your “straight” economic comparisons and your assertion that fossil-fuel power generation will always be needed.


        • Trying to avoid conceding the point by changing the subject AND putting words in my mouth.  Sleazy of you.

          If you seriously want to fix the problem with external costs, bill for the external costs.  For example, a $20/ton tax on CO2 on a coal-fired generator emitting 900 gCO2/kWh adds 1.8¢/kWh to the cost.  Do the economics of solar really work if you sell at 6.1¢/kWh instead of 4.3¢?  No?  Then perhaps you’ve gone down the wrong road, picking a technology that just plain costs too much to actually solve the problem.

          I know that POV is very unpopular here.  The attitude of the “renewables” camp is close to “we have the solution, and the problem will be cut to fit it.”  But Procrustes failed as an innkeeper for a reason.

          • Gingerbaker Says:

            How many times does it need to be said?

            This is not a discussion about economics. There is no future with fossil fuels. They are finite. They produce CO2, a compound we can not afford to put into the atmosphere for the next two millennia.

            No one knows the true external cost of fossil fuels. MIT says it is $1240 Trillion by year 2100 alone. Trillion. You think that is represented by a $20/ton tax? You think they included species diversity in that calculation? The price of the lives of millions of people? It is to laugh, if crying wasn’t certain.

            A new paper by Jacobson says the cost to power California by 2050 with all carbon-free renewables would be $1.1 trillion. Guess what – no baseline natural gas plants needed – imagine that! According to you, that’s impossible. $1.1 T – More than payed for by the benefits of pollution-free power generation.

            You have the gall to call me sleazy while you quip that solar is “the wrong road” and is too expensive, based on your so-called analysis. You are really starting to lose all credibility with me.

            One more time since you refuse to answer the question – why should we not subsidize the living shit out of solar, wind, tide?

      • Daniel Simon Says:

        “Forcing utilities to buy power at full retail price”

        HolySmokes! Talk about historical rewrite!

        First of all, utilities can damn well install solar on customer roofs if they want to.

        Net Metering became a policy because it could be accomplished within the capability of utility metering and billing software of the 1990s (generally written decades earlier), and utilities “knew” that solar would never amount to anything serious, and because solar pioneers knew that solar offsetting peak demand (cleanly) should not be priced the same as the dirtiest base-load.

        “If net metering users were considered commercial operators…”

        Not sure I understand this point, are you saying that if retail net metering customers got to pay the lower commercial customer rates there would be no net metering? I think every retail customer would go net metering even if they did not produce a milli-volt of power (for the better rates).

        “the “wonderful economics” of a rooftop solar system selling at 13¢/kWh vanish when that price falls to 4.3¢ with a peak-demand charge added.”

        So you object to distributed peak power production getting a distributed price, and would rather see peak power production get paid off-peak wholesale base-load rates? Please explain.


        • Daniel – Thanks. Well said. What the *^(*^ are we talking about solar getting the rates a regulator generator would get and ignoring solar’s obvious peaking power value? You nailed it. Peak power is worth way more. A certain someone is talking endless nonsense. A peak power charge added to solar providers? Solar power providers charged more for providing power at the peak demand hours of the day? I would say thats an outright utility ripoff of solar providers. What kind of humpty dumpty Alice in Wonderland logic is this where FF peak plants get many times the average rate, but solar gets an added charge for doing so?


    • The utilities buy wholesale, sell retail logic argument contains the hidden assumption that solar only gets the average rate. Even utilities pay higher rates for peak generation. Solar is just that. There are other fallacies. There is far too much concentration on the amount paid when most of the time there is no amount paid. That leaves the argument with, well what should the trade be for daytime (peak demand) hours versus night time (off peak demand).
      Its already established that conventional peak generator get higher payment. Solar should also get peak demand rates. The argument that solar unfairly forces non solar customers to pay more, misses the fact that solar lowers the electric rates for all. Next years electric rates are based on this years peak demand. Why? Because this years peak demand determines next years capital expenditure for generation, distribution, and transmission. Further, if the solar generator uses less transmission, and (studies show) sends most of its power to its neighbors (avoiding long transmission costs) then who should pay whom? Seems like the most logical thing is to pay the utility for the short haul transmission system, with the larger part of that cost borne by the non PV user. Amounts should be payed for long distance transmission, commiserate with the amounts of long distribution used or spared by the user. In the case of distributed solar, long distance transmission is reduced, not increased. Distributed PV that lowers transmission, distribution, and peak generation should warrant reasonable and just compensation.

  3. Gingerbaker Says:

    “Right now the theory is to REDUCE the need for massive fossil-fuel-based generators, not totally replace them and the idea is to cut down on the use of fossil fuels, but not totally eliminate them.”

    That’s not my theory. And it is not the theory Of Jacobson and Delucci:

    Click to access JDEnPolicyPt1.pdf


    • My theory is to entirely get rid of the dirty, dangerous, and depleting fossil fuel sources. No other way to effectively deal with climate change. If the first step is to reduce fossil fuel use, fine. But the path needs to be for elimination.

      • jimbills Says:

        Certainly, but I often wonder if we realize how entirely enmeshed fossil fuels are with our current way of life. They’re in everything. We built this economy and all this technology, transport, products, and food systems on them.

        There’s no way to achieve a 100% elimination in anything near a reasonable time frame in a growing world economy AND keep that economy functional. A slow and steady 100% replacement MIGHT be possible if we had political consensus on the national and international levels, but it would take at least 5 decades if we were completely committed (subsidizing the bejeebers out of renewables and putting them in massive quantities wherever we can, building nuclear, jacking up carbon prices, inventing replacement techs for many agricultural and industrial uses, swapping out an entire global transport fleet, cutting meat production, stopping deforestation, mandating much of this action against very powerful vested interests – to name a very partial list).

        We aren’t even on that track, though. At our best case, we’re attempting reduction instead of elimination, and a very slow reduction at that, according to our actual actions in the highly developed nations only – all the while easily offsetting those reductions with growing fossil carbon use in the developing world.


        • Start with base energy. If you still need fossil sources for raw materials, fine. Figure a way to chemically crack it without burning the stuff. In any case, it’s pretty clear we’re not so reliant on the ‘magical fossil fuels’ as many imagine. They’re more a resource curse than anything else.

          • jimbills Says:

            They are more a curse than anything else, true. But I think we have an over-abundance of wishful thinking about their role in modern society and a dire lack of realism regarding their replacement. We need that realism to make adequate judgments for their replacement.

            I know this is an unpopular thing to say. But let’s look at it briefly.

            About 1/3 of carbon emissions are electricity generation, 1/3 are transport, and 1/3 are industrial and agricultural. We also have deforestation and land use to contend with.

            Just talking base energy, or electricity plus transport, which is 2/3 the problem minus deforestation and land use:

            Transport: in a best case scenario with total commitment, with all the infrastructure built alongside it, with the technology and resources to do it, it would take us at least 20 years to swap out our vehicle fleet. We’d have to do this worldwide simultaneously to meet that 20 year goal. Right now that’s impossible, though, as we don’t have anywhere near the capacity to begin that replacement. So, best case, let’s say we can really start it in earnest in 10 years. We also need to figure out air flight, and we aren’t close to doing that without biofuels, which use a massive amount of fossil carbon in their production.

            Electricity: nuclear does have a better track record in quickly replacing fossil fuels, but I really think we’re going to have a mix of renewables and nuclear in the future. Right now in the U.S. about 2/3 of our electricity is from fossil carbon. We need to replace all that plus meet normal growth, and then we need to at least double that to meet the added demand from the transport sector. We also need to figure out storage, which presumably the transport sector would assist. We also need to completely re-vamp and strengthen the grid. If someone really thinks this can be done in less than 30 years in just the U.S., they’re smoking something pretty strong. This does not include factoring in the political mess that exists in our country, plus the worldwide dramatically growing use of fossil carbon.

            The other 33%: Now, we need to tackle industrial and agricultural. There’s some recent news about beef production:
            http://www.smithsonianmag.com/science-nature/beef-uses-ten-times-more-resources-poultry-dairy-eggs-pork-180952103/?no-ist

            We need to create new ways to produce steel and cement. We need to continue to invent and implement new means for all our plastic manufacturing. We need an entirely new way to create most of our pharmaceuticals and clothing. We need to invent and replace our entire system of pesticide and fertilizer manufacturing. Again, this is a partial list. As we’re doing these things, we need to grow while not increasing our land use and deforestation.

            All these things must be done globally. All the expenditures to do so must factor in expanding debts and debt maintenance, and we need normal growth to do that.


          • Taking down 2/3 of the problem is a huge improvement in our situation. Dealing with agricultural CO2 is primarily a matter of disincentivizing meat consumption. If the world went vegan, we’d cut our agricultural land use by more than half and cut out the lion’s share of CO2 from agriculture. About the same could be achieved if humans went back to consuming about the same amount of animal related products they did in paleo times — about one portion per week.

            Ray’s crash program note is not irrelevant, as you seem to think. Large scale government action could solve the problem much more rapidly than even 30 or 40 years. It would take a crash response, rationing, shifting a good portion of the population to 90% biking/public transport/work at home miles while the ff vehicle replacement program got underway. Of course, in the market dominated, laisser faire world we live in now, these concepts are alien. But would such a program work if effectively implemented? Absolutely.

            Even a program of carbon pricing and cap and dividend would have a rapid result (note that carbon emissions based ag falls neatly under any carbon pricing scheme), though not so rapid as a crash action.

            It’s not that these programs don’t work. They work very effectively. And that’s why they are so vehemently opposed by the interests that haven’t adapted to a no carbon emissions future.

            So the constraint is primarily political with profit seeking special interests slowing down or attempting to eliminate any government policy action. Which is why the political clout of these agencies must be reduced, ignored, or somehow ameliorated by adaptation and inclusion into new modes. Otherwise, they are the rock in the road.

            Again and again, we’ve proven that it’s not a question of can we do it, it’s a question of will we do it. And the longer we delay, the more unnecessary harm we lock in.

            Now how would such programs work on the ground? At first, it’s likely that only a block of countries effecting these policies could be formed. But if such countries could coordinate trade policies along with international diplomacy, they could exert pressure on the carbon bad actors. Informally, we already see this ongoing at the international finance level as the world bank withdraws from new coal plant financing. Broader policies could include carbon taxation at the point of import and export. This would raise the price of carbon even for those importing countries lacking an internal pricing scheme. For exporters, the pressure is to reduce demand. So the marginal price drops, resulting in less exploitation.

            Would this result in severe pain for sets of industry based on fossil fuel? Yes. And that is the crux of the political problem we face now. In other words, it’s not likely that the south is going to go down without a fight once you begin the process of freeing the slaves. And this is the barrier, the most difficult practical barrier. But one that must be crossed.

          • jimbills Says:

            Robert – I didn’t think Ray’s comment was irrelevant. But I thought it was like comparing a Kwanzaa hut to the Burj Khalifa.

            No country anywhere in the world has managed more than a 50% reduction in carbon emissions, and some have tried quite significantly for decades and with dedication. France and Sweden come the closest. Studying their history reveals about a 33% drop when they de-carbonize their electricity. This took them 10-15 years of a crash course replacement program. Their charts then show a steady decline of around 33% to 50% reduction over 2-3 decades – probably the result of mass transport improvements, taxes, and efficiency measures.

            Both of those countries are a fraction of the size and complexity of the United States, and both of those countries started with a much lower per capita energy consumption than we have now. The United States, concurrently, is a fraction of the size of global consumption. Carbon use rises dramatically in developing economies. The OECD makes up about 1/6th of the world’s population.

            All of the measures you describe would help, yes. We’re nowhere near political consensus to enact even the simplest of those, though. Australia recently dumped a very weak carbon tax – they couldn’t even maintain that for more than three years.

            Even though the programs you mention would help, with 100% commitment in the public and government, we’re talking maybe a 50%-70% reduction in just the developed countries. At crash course speeds, we might manage it in 3-4 decades. In the meantime, the rest of the world continues developing and takes over the lead completely in carbon emissions.

            We severely underestimate the difficulty in doing this. Thinking that we’ll maintain growing economies AND reduce carbon emissions in just the OECD by 50% by 2050 is incredibly optimistic. Thinking we’ll maintain our economies AND eliminate our carbon emissions by 2050 is a complete fantasy.


          • Jim —

            Your continued trivialization of Ray’s, entirely relevant, comment perplexes me. An apple is an apple. An emergency response is an apple. We haven’t yet tried apples or emergency responses.

            All the policies you describe are what I would call ‘toe in the water’ approaches. None looked to eliminate carbon emissions across the board. They only looked for long term reductions. And guess what they got… Long term reductions.

            The slow and steady approach is obviously not the right approach for carbon reduction. We’ve used a feather where we should have used a scalpel. Now, we may need a hammer.

            If you suggest that we cannot continue to attempt to tickle carbon emissions to death, then I agree with you. That policy doesn’t work. We need stronger policy.

            And it is here we come to why Australian carbon policy was rolled back — not that is was unsuccessful, but that it was entirely too successful and certain political interests (of the neanderthal kind) got up in arms. They won through the usual combination of media dominance and dirty tricks. Now, they’re rolling back Australia’s carbon policy advancements. Small surprise.

            As I said before, the south will not give up its slaves without a fight. You say the slaves cannot be set free. I say, set them free and see what happens.

          • jimbills Says:

            The solutions I mentioned were in my first comment to you here (7/29 at 5:02 pm). I’m not discussing solutions on my other comments – I’m trying to get you to see the immense difficulty in eliminating carbon from our economy, even with complete commitment.

            But yes, I agree, FIRST we need complete commitment. I’m on board. Where’s the rest of the world?


          • Divided.

            So go out and help get the rest of the world on board, then. We need all hands on deck!


          • Jimbills – you need to look at the US actual nuclear build out track record. It grew at about 10 % per year for about a decade, maybe a bit more. That nowhere near the growth rates of wind and solar. Wind is over 20% and solar over 40%.

        • rayduray Says:

          Hi jimbills,

          Re: “but it would take at least 5 decades if we were completely committed….”

          I’m reminded of how long it took the Roosevelt Administration to transform the auto industry in Detroit into America’s arms builders. This was a matter of months, not decades.

          http://teachinghistory.org/history-content/ask-a-historian/24088

          America has the ability to transform the economy in the blink of an eye, but it clearly lacks the will to do so.

          • jimbills Says:

            Ray, I’m surprised you’d compare WWII arms manufacturing in an existing industrial base with complete global fossil carbon replacement. It’s like comparing an amoeba to a blue whale. But yes, THEN add what actually exists in this country politically. We have bitter fights about adding a few percentage points of renewables.

          • andrewfez Says:

            At one point in WWII the US spent 40% of its GDP on defense items and operations. That’s the equivalent of 6 or 7 Trillion dollars in today’s terms.

            Say Wind costs $1/W; there’s 1,000GW of wind nameplate for 1 Trillion dollars; not bad.

            I would go for efficiency, whose max draw is $50/MWh on a LCOE Chart: The US uses 4 Billion MWh per year. So theoretically, if there were no diminishing return on efficiency, the entire problem can be solved for $200 Billion dollars. Obviously there is some diminishing return aggregate function, so let’s, out of pure ignorance of the function, say that we can become 30% more efficient for $1 Trillion, as a guess.

            And so on…….


          • What I’m seeing is closer to $1.3 per nameplate watt for wind.  Then you have the cost of new transmission lines to ever-more-remote sites (because the good nearby ones were built up first), which can roughly double that.  So, $2.6 per nameplate watt installed.

            But we’re not done yet!  At a capacity factor of 33%, you are up to $7.8 per AVERAGE watt.  And on top of this, you still need large amounts of conventional generation for reserves, regulation, voltage support and everything else.

            We can contrast this with the first-of-a-kind EPR at Olkiluoto.  At 1660 MW nameplate and an estimated €8.5 billion, it will cost on the order of €5.2 per nameplate watt.  Further, it can be expected to run at 100% during peak demand seasons.

            There are two EPRs under construction at Taishan, expected to cost half as much as the uhits at Olkiluoto and Flamanville.  The construction schedule is 46 months, and China has a record of bringing projects in on time.  However, the last thing I can find about Taishan Unit 1 is that primary circuit welding was completed in December 2012.


        • jimbills – are you sure there is no way for it to happen? Look at Arizona. That looks like 0 to 1000GWhrs in one year. Solar. There is a reason utilities are yelling please stop. Their business model is collapsing. Thats the whole point of this article. Its not cheerleading their demise, its noting it. And if you look at the curves (and read the article it comes from) you know why Peter is reporting it.
          Its news. Real big news. And the reason many people don’t know it is because its happening so incredibly fast that its like a fast moving downpour thats a mile away and is about to hit in a minute. It has not hit every state yet. What Peter is saying is, “hang on, its about to hit”. And that is not a comment on whether it will save the world or anything else. Its just telling the news about energy and related topics of concern to CCers. A small balance to the endless smear campaigns of FF PR tanks.

          Then there are EVs.
          http://cleantechnica.com/2014/07/28/electric-vehicle-revolution-nigh-infographic/

          The adoption rates of these things is a error function curve erf. Once they reach an economic point of advantage, the change is rapid. That is what Peter is talking about with cell phones. They don’t totally eliminate land lines or pay phones, but they drastically reduce the use of the previous technology.

          • jimbills Says:

            Arizona, first off, is one of the best states in the United States for solar. They are perfect for it. Secondly, that 1000 GWh in 2013 was added to a previously existing 1000 GWh, and both combined is STILL provide just 1.85% of electricity generation in Arizona:
            http://en.wikipedia.org/wiki/Solar_power_in_Arizona

            Arizona is mostly nuclear and coal. Third, that 2% of electricity generation by itself is already causing grid concerns (as reported here) and political fights over taxing solar. Fourth, that 2% is just in the electricity generation segment (so it’s really like taking away 0.66% of fossil carbon use). Fifth, Arizona is projected to nearly double its population by 2050, greatly increasing its energy consumption:
            http://www.workforce.az.gov/population-projections.aspx

            I’m not saying solar or EVs won’t make dramatic gains in the future. I’m saying there’s a long road ahead of us for 100% replacement. It will take many decades, and that’s with total commitment from the public and government and a heck of a lot of luck – a lot of unlikely factors have to be realized together at once.

            BTW, mobile phones date to WWII, but the first 1G cell phone was introduced in 1979. 1979 to now equals 3.5 decades. And cell phone adoption does not equal fossil carbon replacement. That’s a whole other ballgame.


          • Jimbills – all true, except it don’t understand why the graph starts at 0 when you say it doesn’t. Probably a definition thing. Utility PV has been around for a while there. The point that Peter makes is that adoption is rapid at the tipping point. No matter what happens, we are in dire straits with GW and nobody knows exactly what will happen. I get your 100% replacement comment. From where we stand today, I prefer realistic assessments of the way forward. The first 30% penetration does not require radical change. We should set our sites on immediate goals. We have not done enough yet to that end. I prefer a pragmatic approach that says, slow down consumption by increasing conservation and efficiency. If we can drastically reduce carbon to less than 10%, while keeping consumption flat, that would be an accomplishment. Progress is started in electricity, but outside of high gas prices reducing driving, the transportation sector is the worst offender. As one reader pointed out, and yourself, EVs are not the only game in town. High speed rail is another. So is public transit, bicycling, etc. we do need massive adoption of all of them.

          • jimbills Says:

            Chris – we’re in alignment with what needs to be done. You’re one of the few people here saying that we have to cut consumption at the same time as building out replacement, which I completely agree with. But you’re still grossly underestimating the difficulty of this.

            The first 30% DOES require radical change, at least for us. We’d have to update our entire grid, invent/produce/implement storage solutions on a massive scale, and place solar and wind everywhere we can. On top of that we’d need the political consensus, which we’re nowhere close to achieving. This doesn’t happen in 10-15 years for us. 30-40 years is a best case.

            “If we can drastically reduce carbon to less than 10%, while keeping consumption flat, that would be an accomplishment.”

            Holy knuckles, man, that’s about as large an understatement as I’ve seen in a while.


          • Hi Jimbills. I get misunderstood. Stating that we should ban all coal is an equivalent of the generals command to attack a heavily defended enemy. I hardly expect the soldiers to think lightly of it. But a general can not be weak kneed. It’s the beginning of the war. If it looked easy, it wouldn’t be a war. You used the analogy and I like it. Strap on your helmets gentlemen.


          • Actually, the first 30% does not require massive change. Look at Iowa. It was so rapid nobody noticed and it was out in the farms where no one really saw it. Still don’t. There were not a lot of power lines that needed to be added. Texas has more wind, and badly needed transmission upgrades. Still, nothing there is five decades worth of change. And there were no massive disruptions. So no, I don’t think the first 30% is the hard part. We have plenty of real world proof of that. No, I think the next part after 30% is where it gets interesting. It will be upon us sooner than anyone realizes. And while all this is happening, the transport sector is much more important. How the utilities could have been so cool to this opportunity is beyond me. The transport sector is where we are really behind. The plans are to put in a rail system, but this takes time. I think the biggest impediment to changing the system is FF subsidies. If the true costs of FF are incurred, the shift will be much more rapid. I will say it right out. Forget carbon tax. Repeal FF subsidies. Now. Yes, I know its impossible. So what. Start now. We need to put our shoulders behind this. The FF companies will hate it. I am not interested in their best interests. Neither are they interested in the “common good” of the world.

    • andrewfez Says:

      3 wheeled vehicles from Elio are coming out next year. They’ve already launched an ad campaign on facebook and youtube:

      84mpg gas engine
      $6,800 for the new car
      Can go 100mph
      90% American made or something like that:

      http://www.eliomotors.com/

      If they do good, Honda should raise their their 2 door, 70mpg Insight they had back in the early 2000’s from the ashes.


    • robertscribbler – the journey of a thousand miles begins with the first step. First FF are reduced, then they are eliminated. They are compatible goals.

  4. rayduray Says:

    For the kids he lectured at UC-Irvine about climate sanctity, Mr. Obama, “There You Go Again” 🙂

    Naked Capitalism Headline: “Obama Leasing Millions of Gulf Acres for Offshore Oil and Gas Drilling”

    Article: http://tinyurl.com/otxovuw

    The gulf between Obama’s rhetoric and the reality of his policy decisions is making the Grand Canyon look like a wrinkle on a gnat’s nose.

    “There You Go Again, Mr. President” http://www.youtube.com/watch?v=Wi9y5-Vo61w


  5. Seems like this is just a recycled story from last week, worded differently. That is to say, the story we had about “efficiency.” The USA, it is claimed, has become at least twice as efficient in generating dollars of GDP per unit of energy. And yes, you are right, it started with Ronald “morning in America” Reagan. We’ve got all kinds of “economic growth” on paper, the economy has especially been “booming” since 2009.

    Meanwhile, almost all American manufacturing jobs have been sent to China and elsewhere, never to return. The stockmarket is setting new record highs, but more Americans than ever are living on food stamps, living in mom & pop’s basement, or living in their car, working minimum wage if working at all, recent college graduates are buried in debt, you’ve got cities like Detroit which are bankrupt and other cities where potholes don’t get repaired, libraries close, bus service is curtailed, shopping malls abandoned, beggars fight for turf at the freeway on ramps, and so on. The one bright spot in the economy is the prison industry, as the USA puts more people behind bars than any other country, including China, despite China having over four times the population. But it’s a good thing, because now we’ve got prison labor – no need to speak to an Indian in a Bangalore call center because your local state penitentiary is now supplying the labor (solves the whole problem of understanding those funny Indian accents).

    Yeah, booming economy. Well, the CEOs of the Fortune 500 are doing well. Their biggest problem seems to be finding hanger space to park the LearJet or a pier for their latest yacht.

    When you’ve got an economy based on nothing but paper frauds (correction, “digital frauds” – no need to print money now when you can make it on a keyboard), you can create lots of dollars of GDP with very little energy. In fact, takes so little energy that you probably CAN run the economy on wind and solar. The peons living under the freeway underpass collecting bottles and cans to survive don’t consume electricity – they are enjoying a green lifestyle. Looks like another successful example of “alternative living.”


  6. Minnesota state concluded that utilities should pay retail and gave the reasons why.

    We just got a CC on the value of solar. Minnesota state found solar was more valuable than the standard retail rate and Skip Pruss detailed the reasons. Why are we going backwards on that? Those reasons and that conclusion appear reasonable and well founded.

    1. Displaces electricity, fuel savings
    2. Capacity value
    3. Peak demand, which is worth more than average retail.
    4. Avoids distribution, transmission, and generation, saving capital
    5. Defers distribution, transmission, and generation until better solutions can be found.
    6. Avoids blackouts, – makes the grid more resilient.
    7. Locks rates in – a hedge against rising conventional costs.

    The reduction in blackouts has been noted and posted by CCers recently. Texas, California, and South Australia are places with peak summer demand problems that have subsided since the introduction of solar.

    https://climatecrocks.com/2014/06/28/the-weekend-wonk-skip-pruss-on-the-value-of-solar/

  7. adelady Says:

    Right now in the U.S. about 2/3 of our electricity is from fossil carbon. We need to replace all that plus meet normal growth, and then we need to at least double that to meet the added demand from the transport sector.

    The US could start by catching up to the rest of the world a bit more quickly with energy efficiency requirements and labelling on household equipment. (I can’t claim much virtue here. Being from Australia our emissions are just awful by any objective standard – no matter whether you look at the whole economy or the average household.)

    Fortunately the U.S. is beginning to narrow the gap with Europe on energy efficiency as it follows the example of California, which has an average annual per capita electricity consumption of about 7,000 kilowatt hours compared with about 6,000 for Germany and about 13,000 for the rest of the U.S.

    http://www.europeaninstitute.org/EA-January-2013/perspectives-energy-policies-in-the-united-states-and-europe-divergence-or-convergence.html

    Though I think it’s not just the appliance standards. It would also require a fair bit of retrofitting houses and business premises in the USA to get anywhere near Europe’s lower consumption for heating and cooling buildings. Getting hotels to control airconditioning in vacant rooms might be among the lowhanging fruit that someone can pick.

    The picture of the USA’s problem in facing this would look very different if they were working from the same base as Europe. It’s going to look like a big task just to get down to reasonable use within buildings, then there’s all the public transport and urban design issues to get on top of. With or without a WW2 style effort, it can be done.

    We’ve just made it much harder for ourselves by putting it off for 30 years.


  8. Utilities should be developing a model that promotes energy sharing through a better, smarter grid and foresees the need for EV charging. Right now, utilities have not yet taken advantage of these opportunities and have not fully supported EV charging.
    http://www.greentechmedia.com/articles/read/utility-industry-group-calls-electric-vehicles-our-biggest-opportunity


  9. Here is the real deal on utilities and the reality of reduced consumption combined with the advent of rooftop solar. Utilities unwisely invested in large base load thermal power plants against a trend towards reduced consumption. That left them with a large surplus of excess consumption. Stranded assets. Nobody forced them to. It was a bad decision. Now they want ratepayers to pay for the mistake.
    http://cleantechnica.com/2014/07/30/real-cause-overcapacity-dud-investments/

  10. climatebob Says:

    What worries me is that the executives of the electric power companies do not know what to do about the future. The big area for growth is in transport which is largely powered by oil and this is a diminishing resource thith a volatile price. They should be investing in railways and urban transport systems to secure a future. http://www.climateoutcome.kiwi.nz/clean-energy-alternatives.html


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