Monday, October 30, 2006
Energy is Cheap - futher reflections on the cost of energy
So what is the difference between me pushing my Honda Civic from Middleton Wisconsin to Mount Horeb Wisconsin and back (abougt 36 miles), and driving it at 65 miles per hour? Less than one gallon of gasoline. How much would I have to pay you to push my car to Mout Horeb and back? Much more than the cost of a gallon of gasoline. Maybe $1500 split among you and two friends.
As a measuring stick lets look at Floyd Landis’ energy output at the Tour de France. On his record breaking day (for which he was charged with doping) he rode 125 miles at 23 miles an hour. His total output during 5.3 hours of riding: about 1.5 kilowatt hours (kWh).
Madison Gas and Electric residential customers pay about 13 cents per kilowatt hour for their electricity during the peak of the summer. So the value of Floyd’s energy output is less than 20 cents. And that is for an amazingly hard day’s work.
The average daily household electricity consumption in Wisconsin is about 25 kilowatt hours. That would be equal to Floyd riding over 2000 miles for us per day.
If Floyd rides at that 125 mile Tour De France race every day of the year his energy output could either meet the electricity needs of the average home for about twenty days (about 500 kWh), or drive my Honda Civic about 2500 miles (about 55 gallons of gasoline). That effort would be worth $65 of electricity or $165 of gasoline. Meanwhile those corporate sponsors were going to pay him millions.
Most of us do not realize what amazing feats our society has managed with our amazingly cheap energy. What will we do once this cheap fossil energy is gone?
One more story. Last week I was driving down the highway at a respectable, and not very energy efficient, 75 miles per hour. Looming behind and gaining on me, was a huge Ford F350 pickup pulling a gigantic fishing boat. (That fishing boat will never go 75 miles an hour on the water, but it can on the highway.) Assuming they are getting ten miles per gallon it would take 270 Floyds to equal that F350’s gasoline use.
In the next generation oil and natural gas will be running out, and they will get more expensive. How much will you be willing to pay for energy?
Consider solar energy. It actually is not expensive when you realize the true value of energy. If my solar electric system lasts 20 years (it should last 40 to 50 years), my solar power costs 33 cents/kWh. That makes Floyd's effort worth about 50 cents of solar electric power. Still really really cheap.
At the Hybrid Car fest, in Madison, I learned that one kWh of power will propel a Prius about five miles. On a sunny day my little 1.25 kilowatt solar electric system makes enough power to drive a Prius (or Tesla) about 30 miles. That is about three times my average daily commute.
The Future of Coal
Almost 150 new coal fired power are planned for the US. Some feel that much of this is driven by the utility sector's desire to build plants before carbon trading becomes law. Remember, coal meets about 70% of Wisconsin's and the USA's electricity needs.
Here is the definition from the Wikipeda:
"Emissions trading (or cap and trade) is an administrativie approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. In such a plan, a central authority sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups that emit the pollutant are given credits or allowances which represent the right to emit a specific amount. The total amount of credits cannot exceed the cap, limiting total emissions to that level. Companies that pollute beyond their allowances must buy credits from those who pollute less than their allowances. This transfer is referred to as a trade. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions. The more firms that need to buy credits, the higher the price of credits becomes -- which makes reducing emissions cost-effective in comparison."
Carbon trading is already happening in Europe and legislation has passed in seven North East States and California. Trading on the east coast market will start in 2009 and in the Californian market trading will be fully implemented in 2012.
In Europe carbon dioxide has been trading for about $20 per ton. Every ton of coal fired releases about three tons of carbon dioxide (C becomes CO2). Any new coal generation above the carbon emission "cap" would have to pay about $60 for every ton of coal fired (today).
In the US coal currently costs about $30 per ton at the mine mouth (which is commonly located in the powder river basin of Montana). Here in, Wisconsin it costs about $60 per ton of coal - once all the other costs are added (mostly transportation (70% of the US's rail traffic is coal)). So the cost of the carbon emissions would about double the cost of coal in states like Wisconsin (today). Khosla says carbon trading will increase coal generated power prices by three to six times!
We often hear that the US has a 200-year supply of coal. What we do not hear is that the first coal to be mined is the easy cheap coal. We also do not hear that the 200 years is based on current consumption.
The U.S. Geological survey, according to Vinod Khosla, reported that only 17% of the US coal resource could be mined without significant increases in production cost. With all the new coal power plants that coal would last ten years. After that the cost of coal mining will increase quickly.
Coal is dirty fuel and a serious source of carbon doixide. If we think that global climate change has even a small chance of occuring than the world must reduce coal firing (the Chinese are very busy building coal fired power plants as well).
In Wisconsin, people purchase a home insurance policy primarily to cover major events, such as the home burning down. These major events have a probability of less than one in a hundred of occurring. Is the likelihood of global climate change greater than one in a hundred?
In Britian a report on global climate change was released today. Two quotes: "failure to tackle climate change could push world temperatures up by 5 degrees Celsius (9 Fahrenheit) over the next century, causing severe floods and harsh droughts and uprooting as many as 200 million people" and "Failure to act could plunge the world into an economic crisis on a par with the 1930s Depression..."
Vinod Khosla recommends (that like farmers) we pay coal miner not to mine coal. It may be one of the cheapest ways available to society to "sequester" fossil carbon.
Solar Power 2006 Conference
Thanks you U.S. DOE for sending me! Note, I run what used to be called the Wisconsin Million Solar Roofs Initiative.
Information about the conference can be found here:
I particularly recommend the webcasts of the Keynote speakers
check out Vinod Khosla
The conference had about 1500 attendees in 2005 and over 7000 this year.
Something happened in those 12 months. It is called the rebirth of the solar market place in perhaps the best of all places in the world for it: silicon valley California. In Silicon Valley they know silicon, they know venture capital, they know how to create new businesses, they know engineering and perhaps most importantly they know how to draw together the best minds in the world to meet technical challenges.
And the man behind it all - happens to be the "Governator". Yes, Arnold Schwarzenegger. He kicked started it all by creating a three billion dollar incentive program for solar electric systems.
I believe the Governator's investments in solar, green technologies in general and passage of California's carbon trading law, will be an economic boon to California. California now has a energy climate that the world will be forced to face in a few years. In those few years California's businesses will get a jump on most everyone else (like those of us here in Wisconsin).
Attendees of the Solar Power 2006 Conference tended to look like business people, including many bankers, and included large contingents from Germany, China and Japan. This is unlike the attendees of any other solar conference that I have attended over the last eight years: where the attendees tended to be older, more academic, and depressed that nothing was happening.