May 29, 2009
Wind Drives Wholesale Electricity Prices Negative In West Texas

If this analysis is correct a market for buying transmission line access in West Texas sometimes drives electric power prices negative when the wind is blowing and local demand is lower than wind generation capacity.

A surfeit of wind energy is pushing down the price of all electricity. The real time price of electricity in West Texas, where almost all generation is wind, was negative for 23% of April 2009. The negative prices spilled over to the rest of Texas for about 1% of the month. This may be the future of the electric industry, with negative prices for a substantial amount of time each month.

I suspect the wind power generators have an incentive to drive power prices negative due to a production tax credit on wind power generation. The wind generators can not earn the tax credit unless they sell what they generate. So they pay to use the transmission lines so they can sell their electric power to more distant customers.

What I want to know about wind power and electric transmission costs: Will industries with high electric power needs migrate to where the wind blows strongest? Or will transmission line build-out enable the wind farms of West Texas to eventually sell their electric power over much greater distances? Does anyone understand the economics of electric power transmission lines? How much power gets lost per hundred miles and how much do the lines cost as compared to what the electric power costs?

Recall my recent post where I argued that electricity demand will dip when world oil production starts declining. I do not see electric power as supply constrained. The world does not face a general energy shortage so much as a liquid fuels shortage.

Troubles getting nuclear power plants built mean that wind power does not face much non-fossil fuels competition right now. At the same time, the economics of solar power continue to improve. For silicon-based photovoltaics the cost improvement is most dramatic. When the price for polysilicon crystal collapsed $450 to $100 per kg some analysts said that a further drop to $50 per kg would make silicon PV cost competitive with First Solar's thin films. Now polysilicon has dropped even further to $65 per kg and silicon PV is looking very competitive with thin films.

Checks also suggest six inch solar wafer prices (in the spot market) have declined to US$3.50/piece, implying that finished solar wafers are now < US$1/watt. Assuming US$0.80/watt for turning wafers into modules, we estimate $65/kg poly to yield modules at a cost of US$1.60-US$1.80/watt. And even a rather aggressive GM of 20% implies si-based manufacturers could sell modules at US$2.10 (or EUR1.62, assuming 1.3 F/X) and compete head-to-head with FSLR.

This is all still much more expensive than wind power. But in areas where the sun shines the brightest solar becomes competitive much sooner.

What I want to know about polysilicon prices: At $65 per kg can polysilicon producers expand production profitably? Or are they selling at a loss now once capital costs are considered? Anyone know?

Update: Also see Gail Tverberg's post on The Oil Drum: Some Cautionary Thoughts about Wind.

Share |      Randall Parker, 2009 May 29 02:06 PM  Energy Wind


Comments
Michael B. said at May 29, 2009 3:26 PM:

I don't know the answer to your question, but I do know that just because prices fall, doesn't mean producer costs have fallen. If the price drop is due to a drop in demand due to a leftward shift of the consumers' budget constraint (like for instance having less money to spend because of a bad recession and global financial crisis), then prices are likely to rise again when the budget constraint shifts back to the right (like when the economy recovers.)

Nick G said at May 29, 2009 3:48 PM:

just because prices fall, doesn't mean producer costs have fallen

In fact, producer costs have fallen. Polysilicon was in short supply, and so was selling at a very high premium. In the meantime, PV manufacturers were busily reducing the silicon required per watt, but they didn't have to reduce prices either, due to surplus demand.

Now, demand is in line with supply, and prices have started to realistically reflect costs.

Randall, transmission losses are low, on the order of 7% overall. I want to say that long-distance losses are 4-6% per 1,000 miles - see http://en.wikipedia.org/wiki/Electric_power_transmission . This gives 3%/1,000km: http://www.claverton-energy.com/the-future-of-electricity-liberalisation-long-distance-transmission-hvdc-and-supergrids.html

Nick G said at May 29, 2009 3:50 PM:

As far as economics go, I believe long-distance transmission is likely to be the way to go, except perhaps for the very heaviest users, like aluminum. I believe that recent CA and TX long-distance wind-power transmission projects have cost about $.25/nameplate watt, or roughly 10% of the cost of the project.

Randall Parker said at May 29, 2009 4:49 PM:

Nick G,

Do we really know that prices reflect costs? Or have prices overshot costs on the downside now?

Recent wind power transmission projects and their costs: You got any URLs for this? If not, keep an eye out for cost data. I'd like to know how much it will cost to transmit wind power over longer distances to reduce the intermittency problems with wind.

Wolf-Dog said at May 30, 2009 12:30 PM:

The Project Better Place calculated that in order to charge 300 million electric cars, the US needs to expand its electric grid capacity only by 6 %. Assuming that trucks and trains will also become electric, we can say that only a 10 % increase in the electric grid capacity will be enough.

http://www.betterplace.com/

In other words, by 2020 we can easily increase the electric grid capacity by 10 %.

Larry said at May 30, 2009 6:27 PM:

Business will relocate, but the power has to be predictable. Wind requires flow batteries or some other storage mechanism.

Mercy Vetsel said at May 31, 2009 8:58 AM:

Good analysis, but I don't think the world faces a liquid fuel crisis either. Once oil prices in the U.S. are sustained at $5/gallon or so, there are a lot of alternatives that make sense and methanol can be used a substitute for most of the uses of liquid fossil fuels.

Consider:

natural gas -> Internal Combustion Engine (ICE) (conversion possible, but not convenient)
coal -> Fischer-Tropsch -> gasoline
coal -> methanol -> ICE (conversion easy)
power (any source) + CO2 -> methanol

I know that many people want to lump the Peak Oil problem together with Global Warming, but the reality is that nothing being considered in Washington to limit CO2 emissions will have any substantial effect on the amount of CO2 based warming that happens this century. That's the consensus BTW, so don't please respond with a bunch of religious arguments over Global Warming! The notion that religious fealty is more important than the practical measurement of costs and benefits is what gave us mercury-laced seafood and all of the other benefits of glorious coal.

Take away Global Warming theology and Peak Oil is a very manageable concern that can be solved without any massive government crusades, Gaia Great Awakening or even dramatic changes to the American lifestyle.

-Mercy

P.S. A technology that would provide continuous electrical production so cheaply that it wouldn't make sense to keep operating the world's existing coal plants would make a substantial dent in CO2 production, but we're an order of magnitude away from that with most technologies.

Randall Parker said at May 31, 2009 9:39 AM:

Mercy,

I would like to know the costs of each liquid substitute. Show me recent estimates for costs of each of those substitutes.

One problem with natural gas to liquid: Natural gas's price has historically tracked oil's price with a time lag. A pair of economists at Rice University's Baker Institute have demonstrated this in a research paper. Natural gas can substitute for oil in many other ways.

So will natural gas prevent a gasoline price rise? The existing easier substitutions probably have limits. So eventually the demand for natural gas will spread to harder substitutions such as converting it to liquid.

Coal: I'd like to know the cost. Surely coal has the lowest cost per BTU. But coal's price went up with oil's price in 2007 and 2008. So we have a receding time horizon problem there too.

Electric power to liquid fuel by breaking water into H2 and O2 to bind H2 to carbon is the one I'd like to see prices for. I'd like to see the price in the form of kwh per gallon plus capital costs. The price per kwh will vary. But we can assume a range and derive a range of dollars per gallon. That's probably the long term ceiling price on gasoline and diesel fuel.

Nick G said at May 31, 2009 9:54 AM:

There are a lot of substitutes for oil. The problem is the lag times for building them up, as has been discussed here off and on.

There appears to be an enormous amount of unconventional natural gas in the US, if we're willing to pay up to roughly $10/MCF. That equates to roughly $70 oil, IIRC.

Coal's recent price rise was a short-term thing. The US has all the cheap coal we want (more than we want, really, for better or worse).

Electricity powered vehicles will cap transportation costs at something like the equivalent of somewhere under $100/bbl.

Here's an article that discusses li-ion battery manufacturing capex bottlenecks: http://www.forbes.com/2009/05/27/battery-enerdel-manufacturing-business-lithium.html . I'm sure this could be dealt with in the medium-term with clear public policy, but it's not an overnight thing...

Randall Parker said at May 31, 2009 10:15 AM:

Nick G,

Substitutes for oil: What are the liquid fuel substitutes?

What I'm most interested to know: what's the energy cost of starting with a different energy form to create liquid hydrocarbons?

A gallon of gasoline contains about 124,000 BTU of energy. There's about 3412 BTU in a kilowatt hour of electricity. So there's about 36.3 kwh in a gallon of gasoline.

What I'd like to know: If you started with lots of electricity to power a synthetic gasoline producing chemical plant how many kilowatt hours would you need to expend to produce each gallon of gasoline? 50 kwh? 100 kwh? That number times some number of cents per kwh (maybe 10 cents per kwh) plus some capex equals the upper limit for the long term price of gasoline.

Similarly, what's the energy cost of coal input to get a coal-to-liquid gallon of gasoline?

I would note in passing that the carbon in coal is not fully reduced. If you build a special high temp nuclear power plant that produces hydrogen, funnel that hydrogen into a plant that also takes coal as an input, then you can produce gasoline or other hydrocarbons without ever burning the coal.

Mercy Vetsel said at May 31, 2009 1:51 PM:

Randall wrote:
> I would like to know the costs of each liquid substitute.

Fair question. Here are the historical market prices for methanol:

http://www.methanex.com/products/documents/MxAvgPrice_April292009.pdf

The current price is $0.60/gallon and the peak was $2.50/gallon in Dec 2007 and Jan 2008 when the price spiked. When oil prices peaked in July of 2008, methanol was $1.58/gallon. Keep in mind that 1) this methanol is produced from natural gas and 2) methanol has only 1/2 the energy content of gasoline, but is used more efficiently 3) this price doesn't include distribution.

Back of the envelope, double the market price and it's apparent that it's comparably priced with gasoline even during the worst of the oil price surge.

Now, obviously natural gas prices would surge if global oil production plunged so the next question is how much does it cost to get methanol or gasoline from coal. The DOE pilot in Tennessee has proved the technical viability of coal -> methanol:

http://fossil.energy.gov/news/techlines/2003/tl_liqphasemethanol_success.html

However, apart from the estimates of $0.50/gallon provide at the start of the project, I haven't seen good cost estimates. The DOE is mainly concerned with producing "clean" or CO2-free coal, so the cost picture would obviously be better if the CO2 component were ignored.

This article offers a $15 to $30/barrel for Coal-to-Liquids. If that's not convincing, read the investor communications which show Sasol moving forward with CTL all over the world despite the lower prices.

http://seekingalpha.com/article/23025-sasol-and-the-liquid-coal-revolution

This 2007 study shows a more complete picture of CTL including the energy inputs and outputs:

http://www.npc.org/Study_Topic_Papers/18-TTG-Coals-to-Liquids.pdf

Coal to liquids is definitely cost competitive at current oil prices and Sasol continues to consistently and profitably convert coal to oil. The current prices and CO2 issue (Coal-to-Liquids produces more CO2 than normal oil consumption) mean that the U.S. probably won't get CTL plants for a while, but the economics and politics are such that CTL plants will be built in India, China and other parts of the world with coal reserves.

So that's really all there is to it. If oil production dropped in half tomorrow the progression would be:

1) extreme conservation measures
2) methanol and natural gas replacement and more hybrids and short-range (10 mile) PHEV's in the short term
3) coal to methanol and coal to syngas (same as natural gas) in the medium term
4) H2 fuel/cells in the medium to long term

The problem with EV's and longer range PHEV's is that the batteries are an order of magnitude too expensive and the fossil fuels -> wheels cycle isn't very efficient. If everyone went out and bought a Tesla or Better Place car today, we'd merely be implementing a much more expensive version of the Coal-to-Liquids approach to fueling cars.

-Mercy

Mercy Vetsel said at May 31, 2009 3:01 PM:

I should add that I'm considering the fundamental economics and not the way the government picks winners and losers. The $7500 battery tax credit is equivalent to paying for all of the gasoline a 40mpg gasoline car would use to go 150,000 miles.

So for these small cars the government subsidy is equal to the TOTAL COST of fuel over the lifetime of the vehicle. That's not tilting the playing fields so much as holding it up by one end and shaking.

For $7500, it would make sense to install a cistern on top of a car to collect rainwater if that's what the government thought you should do.

So obviously with Obama picking winners from the throne, the fundamental economics won't really matter. Of course, as demonstrated by the Ethanol disaster, the danger in not understanding the stupidity of the central government plan is that the central planners are fickle and subject to change based on the whimsy of the political winds.

-Mercy

K said at May 31, 2009 3:11 PM:

re: costs and prices.

Be cautious in assuming price indicates the cost of methanol. Maybe, maybe not. Determining a cost is hard. But for price you need only ask the seller.

If methanol is the only product the price will cover cost or production will be halted. But methanol is not made with no relationship to other products.

Consider the cost v. the price, of manure. Cattle produce a lot of it. But the desired product is meat not manure. The price of manure does not cover the costs of the cattle industry.

Fat Man said at May 31, 2009 9:01 PM:

I read the NYTimes article you linked above. I think that there is a lot less there than meets the eye. It rehashes a lot of the same old stuff.

The problem is that if the world is carbon constrained, our alternatives are nuclear, wind. and solar. I have not yet seen a study that fully specifies a system based on wind and solar. In particular, without having the cost of storage, spinning reserves that can cover intermittent supplies, and transmission from places where the sun shines and the wind blows to where power will be needed for minimal comfort during adverse conditions, we do not understand anything about the costs of alternatives.

Further, the anti-nukes are playing hide the ball (not that I have ever thought they operated in good faith). Of course there are cost over-runs. It happens in many big construction projects. However, the 10th, 20th, or 30th time a project is undertaken, over-runs will be less likely. If you can block repeated undertakings, you can frustrate the learning curve and maintain your story about cost over-runs.

K T Cat said at June 1, 2009 12:21 PM:

Mercy, that was the comment of the day. I'm going to post it on my blog in a little bit with credit to you.

Dave Perkins said at June 1, 2009 12:37 PM:

Liquid Fuel crisis? Only because leftists in developed countries, ours worst of all, REFUSE to permit what is now safe, clean and efficient drilling and production.

america has enough oil and gas under its own ground and nearshore to run itself for hundreds of years. But there's not been a congress willing to let it be done. And there won't be, for the foreseeable future.

Crisis, yes, but entirely manufactured by leftists. Liquid fuel is the simplest, easiest to transport, most economical form of energy in the world today.

Until leftists monkey with the supply deliberately, to cause alternatives to be more popular. Same reason the tax the hell out of the supply.

But until they invent GIANT batteries to store wind power over time when wind isn't blowing, wind doesn't have any common sense use except as temporary replacement of power output from plants which MUST REMAIN ONLINE in case the wind stops. Little to no savings there. Little to no pollution prevention there either except with nuclear, which the left ALSO will not permit.

Travis Monitor said at June 1, 2009 12:42 PM:

"Further, the anti-nukes are playing hide the ball (not that I have ever thought they operated in good faith). Of course there are cost over-runs. It happens in many big construction projects. However, the 10th, 20th, or 30th time a project is undertaken, over-runs will be less likely. If you can block repeated undertakings, you can frustrate the learning curve and maintain your story about cost over-runs."

This is all true. In the NYT article itself, it mentions that 22 of 45 projects had cost overruns. Ok, so 50%+ do not. These are cost-effective systems, and could and should be moreso with repeated builds. We could do a lot more to reduce complexity of nuclear power systems via research into new types of nuclear power plants, such as gas-cooled, or lead-cooled... but the govt is spending its money chasing windmills and solar dreams instead.

As for the question posted in the article ... "Or will transmission line build-out enable the wind farms of West Texas to eventually sell their electric power over much greater distances? Does anyone understand the economics of electric power transmission lines?"
- The Texas regulators (PUC) approved something like a $5 billion powerline buildout to support moving the wind power to central texas, to support about 14,000 MW

http://www.cnbc.com/id/25708335
- economics? We the ratepayers pay eventually ... this is another hidden cost of wind power, likely to get absorbed via layers of govt subsidy

Travis Monitor said at June 1, 2009 12:43 PM:

"america has enough oil and gas under its own ground and nearshore to run itself for hundreds of years."

Especially so, now that natural gas in shale has been discovered in Louisiana... it's a game-changer in terms of nat gas supply and demand for USA.

Other Larry said at June 1, 2009 12:53 PM:

Randall, you made a grave thermodynamic error, equating a BTU of hydrocarbon energy to a BTU of electrical energy. You can't get electricity from hydrocarbons at a 1:1 exchange rate (except with fuels cells that don't exist yet). 1:3 is more typical.

The other Larry got it right. Reliability is essential. The mistake that everyone makes is focusing on energy instead of power. If you can't store it, it's worthless. Wind will be too unreliable even for aluminum smelting. If the mill goes for more than a couple of hours without power, the pots set up, and have to be chipped out to the tune of millions.

Unreliable power isn't much more helpful to the grid, where it aggravates the peaking problem.

People need to understand that when you buy a kwH of energy, most of the money isn't for the energy.

BW said at June 1, 2009 12:57 PM:

Why is this a problem? When you buy electricity, you're just buying a bunch of electrons moving in a wire. A negative price for a negative charge sounds fair to me.

Mark Buehner said at June 1, 2009 1:33 PM:

Ultimately what will restrain solar and wind from being major players is the space they inherently require. It may seem like there is ample open space in the West to build, but just wait till somebody proposes actually building the kind of wind or solar farm it would require to power, say, 30% of Arizona. Suddenly finding state park sized areas of land not inhabited by endangered mice and flies becomes much more complicated. Senator Feinstein in California is already trying to block solar fields from potentially being built in Death Valley. If you can't build in death valley, you can't build.

Solar has more potential because you can do it small scale to offset the electricity consumers demand off the grid. But large scale wind and solar just eat up too huge chunks of real estate to ultimately become anything like 'The' answer. At least until we can get some giant solar panels into space anyway.

John Galt said at June 1, 2009 1:35 PM:

Randall: Two thoughts.

--It looks like you have not corrected for efficiency on your conversion. The most efficient power plants I've ever seen (combined cycle gas turbines, the Westinghouse 501H series) operate at about a 6.6 baseloaded heatrate, not the 3.4 heatrate you reference in your post. Diesels operate in the 18 - 25 Heatrate range, and I don't know what it is for gasoline engines, but it's probably worse than diesel. Note the 6600 heatrate is when they are operating at maximum efficiency, not ramping up and down.

--Re: Nat gas prices: I think that the historical relationship between nat gas and oil in the US has broken permanently. The difference between today and yesterday is that the US has an almost unbelievable amount of nat gas out there, primarily in shales (you're heard of Barnett, near Dallas, but there's the Marcellus in NY and PA; Haynesville in Louisiana; Woodford in OK and W TX; as well as shales/tight gas throughout the Rockies. The limiting factor is nat gas pipeline capacity and frac'ing technology (and possibly water).

Background: I worked for 6 years for a merchant generation company; and have been in the oil and gas business for the past 5 years.

MikeinAppalachia said at June 1, 2009 1:37 PM:

I would very much like to have some info on the "..special high temp nuclear power plant that produces hydrogen..". How does that work? Won't any old run-of-the-mill Nuke produce hydrogen with (hopefully) off-peak power? Or is the hope for a HTGR to be built for better fuel burn efficiency? What is there about a special high temp nuclear that aids in producing hydrogen?

Nick G said at June 1, 2009 3:31 PM:

John Galt,

Any thoughts about the long-run pricing of nat gas? I understand that unconventional gas is more expensive to drill: does it need $7-8/MCF to pay for drilling, as some suggest, or is today's much lower pricing sustainable?

Other Larry said at June 1, 2009 4:11 PM:

Mike, there are some proposed nuclear systems that directly produce H2 without electricity. Not ready for prime time. But many people think that commercial-scale electrolysis is a trivial problem, and it's not. Right now, we don't know how to make H2 from electricity on a commercial scale at reasonable efficiency.

Guest User said at June 1, 2009 4:15 PM:

Regarding the transmission question: There is no "fixed" limit per se on how far power can be transmitted, provided you are willing to pay for higher-voltage infrastructure or larger conductors in order to limit the maximum losses, but as some point you do get into the realm of diminished returns. 200 miles is a very long line and most are shorter, in part for maintenance reasons and in part because the grid has been built in layers of different voltages that need to be able to interface regularly in order for power to flow between generators and consumers operating at many different voltage levels, and ideally not too far away from each other in order to keep system losses low.

The design target for a line is usually to keep the losses at peak loading below 5%, which typically means ~3% at intermediate loading. For long distances it is quite common to use voltages of 345, 500, or 745kV. A relatively big line might be a 745kV system transferring 600MW a distance of 170 miles and shedding 24MW along the way (i.e. 600MW of power enters the line, 576MW is available at the destination, and 24MW simply heats the line or exits as corona discharge).

If the goal is to transfer very large amounts of bulk power to a distant load center in a point-to-point fashion, a high-voltage DC system (on the order of 1000kV with some exotic and expensive conversion hardware at each end) is preferred. These have traditionally been very specialized, although they may become much more common if we start covering sections of middle-of-nowhere desert with photovoltaic arrays.

Bill Woods said at June 1, 2009 4:43 PM:
"I suspect the wind power generators have an incentive to drive power prices negative due to a production tax credit on wind power generation. The wind generators can not earn the tax credit unless they sell what they generate. So they pay to use the transmission lines so they can sell their electric power to more distant customers."

It's not that they want to be paying people to take their power; they'd much rather be able to sell it for a few cents/kWh. But the PTC does lower their break-even price below zero.

See also http://knowledgeproblem.com/2009/02/13/negative-power-prices-ercot-w-2009-so-far/

John Galt said at June 1, 2009 5:43 PM:

Nick G:

This is still a developing story, but some of the basins may be profitable even at today's low NYMEX pricing. They are VERY expensive to drill, but some of the evidence I've seen indicates that the estimated ultimate recovery is very high.

I think that the future will hold pretty low gas prices, as people learn how to complete and frac these wells (both the art of how to frac based on the geology, and the science of developing the required technology). It will only get better, but based on the limited information that is available, I'm optomistic that many of these plays are profitable at today's gas price and today's technology.

I can't comment on gas-to-liquids or the wisdom of trying to replace 100 years worth of gasoline infrastructure with nat gas to facilitate passenger cars, but it seems to me that local delivery vehicles, buses, trains, perhaps even long-haul trucks among distribution centers (for example...Fedex or Wal mart) might be convertable.

RC Kip said at June 1, 2009 6:06 PM:

Thank you all, and Instapundit for the link. This is one of the best energy threads I've ever come across, readable from top to bottom (or, bottom to top in this case), and civilized. Great discussion, much helpful information.

Randall Parker said at June 1, 2009 6:10 PM:

Other Larry,

You need to read more carefully. You said:

Randall, you made a grave thermodynamic error, equating a BTU of hydrocarbon energy to a BTU of electrical energy. You can't get electricity from hydrocarbons at a 1:1 exchange rate (except with fuels cells that don't exist yet). 1:3 is more typical.

After I said a gallon of gasoline has about 36 kwh of energy I went on to speculate about how many kwh it takes to generate a gallon of gasoline using electricity:

What I'd like to know: If you started with lots of electricity to power a synthetic gasoline producing chemical plant how many kilowatt hours would you need to expend to produce each gallon of gasoline? 50 kwh? 100 kwh?

So, yes, I said it might be 3:1. I phrased this as a question because to me it is a question. What's the efficiency of converting electricity into liquid hydrocarbons?

So again, does anyone know: What energy loss can we expect in converting electricity into liquid hydrocarbons?

Randall Parker said at June 1, 2009 6:25 PM:

Other Larry,

Actually, you misread me in a different way than I first thought: I'm discussing the conversion of electricity into liquid hydrocarbons, not the other way around.

We have no shortage of electricity and have many ways to produce it. We use little oil to generate electricity because liquid fuels are too valuable to waste generating electricity (though Florida with 18% of its electricity coming from oil seems a foolish exception). Our problem is how to get more cheap liquid hydrocarbons. Look at the price gap for BTUs from oil versus from natural gas and coal (which is the cheapest source of heat energy).

If we can some day make electricity very cheaply using more advanced future PV, wind, or nuclear power at what price of electricity does it become useful to use electricity to run liquid hydrocarbon synthesis plants?

John Galt said at June 1, 2009 7:57 PM:

Randall:

Re: Florida....here's how it works, again, based on my experience structuring power deals in Florida. Fuel oil does account for a significant amount of FPCC's unit stack. There are three reasons for this. First, a very limited transmission capacity into FPCC exists...if memory serves, Santee Cooper in South Carolina and Seminole Electric Coop control substantially all of it. They sell at marginal cost, but if the Florida utilities do the generating, they get to rate base the obsolete power plants used, while purchased power gets passed through to the ratepayers at cost. The incentivew is to run the worst unit and only buy when the alternative is letting Grandma Tillie dies of heatstroke.

Second, even if you could import power, Florida's geography (peninsula) limits the number of interconnects you can have. For technical reasons (voltage support), a plant is preferable to a transmission line.

The third reason is, again, that the two public utes and SEMI make it a brass-plated bitch to get a plant permitted. Because of Reason #1.

Unrelated: I do not think there is a way to get liquid fuels from electricity, unless you count hydrogen as a hydrocarbon. I guess it's theoretically possible, but I don't know hw much energy it would take...you can guess by looking at the atomic mass defect between CH4 (methane) and C + 2 H2.

Randall Parker said at June 1, 2009 9:33 PM:

John Galt,

Of course one can use electricity to break down water to get hydrogen. Then use plant matter, coal electric plant waste soot, or other carbon sources and basically reduce them with hydrogen and build up hydrocarbon chains to 7+ carbons long. Surely this is possible. Whether it will ever become cost justifiable is another question.

My crystal ball says we are going to witness a peak in oil production and yet still have lots of energy in other forms. We can shift some transportation toward electric cars and natural gas vehicles. But some uses of liquid fuels for transportation are going to be harder to find substitutes for. Airplanes are the biggest challenge. Long range trucks and buses are others.

Another alternative is to start with natural gas and do synthesis into larger chains. Looks like natural gas will last a lot longer than oil.

Florida utility regulation sure sounds defective. There's a similar problem around NYC where at least one legacy oil electric plant is still in operation. I've read NIMBY blocks construction of much more cost effective replacements. How foolish.

Guest User,

In your example 745kv line the loss is 4% over 170 miles. Is that AC or DC? How much does energy loss drop with DC? It is 350 miles from Beach North Dakota on ND's western border to Fargo ND on ND's eastern border. How can western ND wind ever yet harvested in large quantities? There's no population nearby to use it. Either wind has to become much cheaper or transmission has to become cheaper. Is transmission to expensive now for western ND wind to get used?

Randall Parker said at June 1, 2009 9:42 PM:

MikeinAppalachia, Regards special nuclear power plants designed for hydrogen generation: Several methods of using nuclear power to generate hydrogen are possible. But the advantage of the high temperature method is that it bypasses the step of generating electricity and therefore bypasses the inefficiency and energy loss of that step. It is my understanding that the high temp approach basically makes water so hot that the sigma bonds between hydrogen and oxygen break and they separate from each other.

It requires a much higher temperature and therefore a new reactor design to do use a thermal approach for hydrogen generation from water. In theory the resulting hydrogen could be used in at least two ways for transportation:

- burn hydrogen in hydrogen vehicles.
- use the hydrogen to bind it to carbon to make liquid hydrocarbons to power existing design internal combustion engines.

Ennis said at June 1, 2009 11:59 PM:

Why should Texas pave over it's land to produce power for those NIMBY "environmentalist" energy pigs in NYC, San Francisco and LA?

Unlike the coasts we actually produce the electricity we need right here in the state and the state is on it's own grid. The hypocritical NIMBY "environmentalist" energy pigs think nothing of destroying whole ecosystems, displacing entire populations, destroying cultures and drowning canyons (Hetch-Hetchy, Glen Canyon and James Bay Project ring a bell?) to supply their energy and drinking water while patting themselves on the back for being so "green".

To hell with the bleu states. Let them either produce their own energy or sit in the cold and the dark. To quote Kos "Screw 'em!"

John Galt said at June 2, 2009 4:34 AM:

Randall: I don't think we'll ever run out of oil either. Today, the world burns about 30 billion bbls/year. It's estimated that the Alberta tar sands contain 3-4 trillion bbls, of which, up to 2 tillion can be recovered with today's technology and $80 oil price.

There are about 14 trillion bbls in the Rocky Mountains, but none are crecoverable with today's prices and technology.

No one knows how much oil is in the Bakken shales in Nodak, and estimates range from 3 billion bbls to 500 billion bbls.

No one knows how much is off the East and West coasts and Florida, as they are closed for drilling (Despite the fact that the Cubans are drilling less than 90 miles from Florida).

It's estimated that the Orinoco tar sands have 1.2 trillion bbls, of which, up to 300 billion can be recovered with current technology.

No one knows how much oil exists in Siberian tar sands and under the Arctic, as it's been inaccessible.

Gas-to-liquids may become practical, but it is only one of a number of competing technologies. Oil nad gas is not a manufacturing business, it's a technology business.

Nick G said at June 2, 2009 9:50 AM:

John Galt,

All of what you're talking about in your last post is long-term (say, longer than 25 years out). I agree: in the long-term we don't realistically have an energy supply problem.

But, we have 2 short-term problems: climate change and peak oil. We need to solve both ASAP.

CC could cause enormous problems, and we need to nip them in the bud as much as possible.

PO is already causing enormous security of supply and balance of trade problems for the OECD in general and the US in particular. Oil prices look like something of a speed limit for the US economy for the next decade or more - i.e., as signs of US economic growth appear, oil prices rise, transferring those gains to oil exporting countries. I would prefer not to have a US "lost decade", like Japan's.

Mercy Vetsel said at June 2, 2009 8:27 PM:

Nick G,

It's a bit late to nip Global Warming in the bud. First, I should point out that we have already achieved MOST (that is, over half) of the warming directly attributable to the CO2 concentration that we can expect between now and the point where we reach a full doubling of CO2. Without the super-computer models predicting a positive feedback loop we only get 1 more degree C of warming this century. Calling the results of those models "a consensus" is laughable for anyone who has tried to model even much less complex systems than 100 years of the entire climate system, but I'm getting off point.

There's a more practical problem than the question of the computer model reliability. Currently no legislation being seriously considered will have any effect even if we accept the positive feedback loops built into the models.

Realistically the only chance we have of reducing CO2 enough to have a serious effect is to implement some form of geo-engineering or to stumble onto a dramatic technological breakthrough that makes new electrical capacity so cheap that that it wouldn't make economic sense to keep operating existing coal plants.

I don't see peak oil as big problem once gasoline reaches $5/gallon and stays put all sorts of massive forces come in to play.

-Mercy

Randall Parker said at June 2, 2009 9:44 PM:

John Galt,

I used to believe that cost effective oil shale was not that far away. But that was 4 years ago. Shell's pronouncements on oil shale have since become a lot less optimistic in terms of time line.

The problem with Peak Oil is a flow rate problem. By 2015 oil shale's contribution will be negligible. It might still be negligible by 2020. By 2015 the oil tar sands in Alberta might contribute another 2 or 3 million barrels per day (being optimistic). But part of that will offset declines in conventional Canadian oil production. The big project delays and cancellations in Canada make a bigger tar sands scale up a more distant prospect.

I do not see a really big source of oil coming online in the next 5 years.

Mercy Vetsel,

We could cool the planet pretty cheaply with sulfur aerosols or silicon dioxide.

Nick G said at June 9, 2009 9:42 AM:

We could cool the planet pretty cheaply with sulfur aerosols or silicon dioxide.

That wouldn't address ocean acidification.

Do we know of any other major non-temperature effects of CO2? I worry that we don't have all the info we need on our grand atmospheric experiment.

Jay said at June 16, 2009 2:08 PM:

I sort of stumbled across this site. I have an idea about wind turbines which I will run past everyone here and I have a question which hopefully might get answered.

My idea is to manufacture electricity via industrial wind turbines in West Texas. I want to start a co-op similar in structure to how wildcatting (oil drilling) is conducted in Texas. Each oil well is divided into shares so to speak and then sold out to investors for the sum total (plus fees) to produce the well. If the well hits, the shares pay off, only in the case of Wind Turbines, there would be no hit or miss. I figure that each 1 megawatt turbine could provide enough electricity for 800 homes which means if I could get 800 homes to invest into one turbine then they could have electricity for life or until the turbine fails. I figure the cost to produce one turbine is roughly 1 million per megawatt and an additional 400k to 500k for installation. This would equate to roughly 1.5m for one megawatt turbine which if divided by 800 investors would be about 1875 per share.

My question is how much is the whole sale price of west Texas wind produced electricity? How much does a 1 megawatt turbine produce in sales each month?

What sort of road blocks would I run into here with the production of the electricity and selling to the grid? I'm not exactly an engineer, but I am a licensed financial broker which is where my angle comes from. There must be other licenses involved, I just haven't found them yet in terms of selling electricity to the grid. Selling the 800 investors is the easy part for me, the hard part is putting up a turbine! I am still stuck on the fundamental concept that for a 2k investment I can pretty much give you free electricity for the life of the turbine. Show me where I am wrong, Please!

Randall Parker said at June 16, 2009 6:21 PM:

Jay,

There's no way a single wind turbine can provide the electricity for a group of families. Why? Wind is too unreliable. Plus, demand is too unreliable. The wind will blow when none of the families are using much electricity. The wind won't blow when they are using a lot of electricity.

Then there's transportation. You are better off selling the electricity to the nearest source of demand and only sell further away when local demand is weak. There's no single ideal constanly best source of demand.

Wayne said at September 17, 2009 10:25 AM:

Wind and solar can become completely reliable with Compressed Air Energy Storage. There are two utility sized facilities already in operation, one in Huntorf Germany (290 MW) and one in McIntosh Alabama (110 MW). A 2.7 GW facility is under development in Ohio. There are plenty of depleted gas wells in west Texas where the infrastructure is already built to facilitate the CAES. This technology is cheap and already proven. The owners of the wind farms would much rather store the energy produced than sell it at a negative price. The stored energy could be sold at peak prices. It is only a matter of time before this technology is utilized. These storage facilities could be placed both at the wind farm and at the usage site to minimize the size of the transmission line required.
Mark Buehner: You equate wind and solar footprints. They are not the same at all. Solar will produce more watts/sq.meter than wind but with a complete 100% change of land usage. A large solar thermal plant will occupy hundreds or even thousands of acres. A large wind farm which matches the solar plant in output would require more acres but with a 10MW turbine with 40 acre spacing the actual land affected could be less than 1 acre per turbine with no impact to the remaining 39 acres. Details are important. Solar will become the energy of choice with peak oil in such cities as Phoenix. Photovoltaic panels are approaching competition with conventional power in price and will be installed on rooftops and parking lots with no negative environmental impact. Solar Parking Lots have no negatives. The heat island effect is reduced, the blacktop/concrete lasts longer, your car is cooler and lasts longer, you need no environmental studies, no additional land area is affected, and the infrastructure already exists. Why not?

loiz said at November 8, 2009 10:56 PM:

@Wayne - CAES is not an energy storage, despite its name, but just a more efficient way of burning the most scarce fossil fuel: methane (natural gas).


http://en.wikipedia.org/wiki/Compressed-air_energy_storage
quote: "The McIntosh CAES plant requires 0.69 kWh (2,355 btu) of electricity and 4,100 btu (LHV) of gas for each 1.0 kWh of electrical output [3]. A GE 7FA 2x1 combined cycle plant, one of the most efficient non-CAES natural gas plants in operation, uses 6,293 btu (LHV) of gas per kWh generated[4], a 54% thermal efficiency comparable to the McIntosh 6,455 btu, a 53% thermal efficiency."

Replacing coal with natgas(+little wind) is even less sustainable than burning oil for electricity, as there is more energy in oil reserves than there is in gas left.

Trey05 said at September 13, 2010 6:34 PM:

My wife and I prefer to sign up for a year contract during the winter. Rates are usually lower at this time and you can lock the lower rate in until the same time the next year. We have been using Ambit Energy for the past 3+ years and are very satisfied. We sign up for the 100% green plan which only uses electricity produced from wind power.

Ben Harack said at September 23, 2010 8:26 AM:

Negative electricity rates seem to me to be a product of a constrained market. Building more transmission lines obviously expands the customer base for this energy. North america has continued to add greater interconnection over the years. I expect that this will continue, so that power can be effectively sold over longer distances. I have it on good authority that there are a lot of people working on careful regulations for the north american grid that will allow utilities to have a system in which they can safely sell their power across state and even country lines (Canada).

As far as wind, solar and nuclear go. Big issues. All show tremendous potential in different ways. There is no way I am going into these in detail here, but I can refer you to pretty much exactly what I would say on the matters of Wind and nuclear.
Wind: http://www.visionofearth.org/industry/wind-power/
Nuclear: http://www.visionofearth.org/industry/nuclear-power-the-whole-story/

As far as solar goes, I was aware of dramatic changes in the prices of solar PV, but as far as I know those systems are still coming in around or above 20 cents per kwh. Solar thermal electricity seemed to me to be capable of much more with current technology. I go into this in more detail here: http://www.visionofearth.org/featured-articles/solar-thermal-power/

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