Discussing Energy Economics on the Internet

To Green, or Not To Green?

Posted in California,Renewables,Texas by Cheryl Morgan on the November 25th, 2008

Things have been a little quiet here of late due to pressure of work on other projects, but while I have been busy various other things have been going on:

  • Governor Schwarzenegger committed California to a target of 33% renewable generation by 2020;
  • Mike Giberson complained about excess wind capacity causing negative prices in Texas; and
  • I received a fat document from the Cato Institute railing against the evils of renewable energy subsidies.

I’m not paying much attention to the Cato rant. As usual with such things it highlights all of the problems with the issue under attack while conveniently turning a blind eye to any problems associated with the big businesses whose entrenched interests Cato is trying to protect.

Giberson is much more even handed, but I find myself wondering whether asking for perfection in government action is wise. Of course other forms of generation get subsidies too – sometimes very well hidden, but they are there. If you try to take those subsidies away the companies that enjoy them will complain about being victimized. And of course we really ought to focus on the problem in hand, but if that means taxing something then the voters will get mad. Government interference is, I suspect, inherently inefficient, but if we want something to be done about climate change then governments need to prod markets into action.

Still, there are always things that can be done, and here is a paper on how real time pricing might reduce the problems that wind generation causes.

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California Rejects Green Pork

Posted in California,Renewables by Cheryl Morgan on the November 5th, 2008

Californians are a lot more cautious about energy measures these days. While they are still very much pro-environment (an animal welfare measure and various rail funding proposals passed), they will no longer pass an energy measure just because it says that it is green. Two propositions on yesterday’s ballot, numbered 7 and 10, were both defeated by sizable margins.

The two propositions managed to showcase some of the worst aspects of energy planning. Proposition 7 was a classic example of California’s passion for trying to micro-manage the state through ballot box legislation. The measure was so complicated, and poorly written, that it managed to draw opposition from a coalition comprising the Republicans, the Democrats, all of the major utility companies, the Public Utilities Commission, the Environmental Defense Fund, the Sierra Club, the Union of Concerned Scientists and, well, just about everyone except those voters taken in by the “it is green so it must be good” ads of the measure’s backers.

Proposition 10 was part of T. Boone Pickens‘ campaign to boost renewables. The voters saw it as simply an excuse to give millions of dollars in subsidies to Pickens’ company, Clean Energy Fuels, which provided most of the campaign finance for the measure. San Francisco city also rejected a renewable energy-related measure.

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California Sets Rules for Tradeable RECs

Posted in California,Renewables by Cheryl Morgan on the October 30th, 2008

The California PUC has issued a ruling by Administrative Law Judge Anne Simon on the subject of setting up a market in Renewable Energy Credits. There is an overview of the decision on Platts, and the full ruling can be found here.

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Gloom and Doom Round-Up

Posted in Investment,Renewables by Cheryl Morgan on the October 3rd, 2008

At EU Energy Policy Fereidoon P. Sioshansi talks about how the turmoil in financial markets might affect the energy industry. The article is mainly about the sudden collapse of Constellation, but other companies may also get into difficulties. Reliant is already making noises that sound a bit like a sports coach saying that he has the full backing of the owners.

Meanwhile Forbes looks at how the collapse in investment will affect the renewables industry.

To make matters worse, the collapse of investment bank Lehman Brothers has become a liability for many solar energy companies. In recent years, Lehman had become a principal underwriter for solar energy companies raising money or financing debt to build factories and solar farms.

Double Plus Ungood would appear to be an appropriate comment.

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But How Does It Affect Us?

Posted in California,Nuclear,Renewables by Cheryl Morgan on the September 30th, 2008

That has to be the question that everyone is asking right now. OK, so the banking sector is in meltdown, but what about me? Or, in our case, what about energy?

Despite the regular panics about price spikes, market failure, environmental regulations and so on, it appears that the energy industry is weathering the storm. Last week Platts reported that the US energy sector was still seen as a good investment. Of course that was last week, but it does help to be producing a product that just about everyone needs. The demand for energy may tighten, but it will never go away.

On the other hand, the nature of investment in energy may change. Today the California PUC has warned that lack of investment capital may put the brakes on the state’s green agenda. Platt’s reports that Commission member John Bohn has been voicing concern about the ability to finance development projects. Even major utilities are likely to be hit, but smaller companies will feel the pain much more deeply.

That, I suspect, will be a major problem for the burgeoning renewables industry. Right when it was about to take off in a big way, investment is going to come to a grinding halt. Instead new investment will have to come from other sources, and there will probably be government involvement in many cases. We can’t afford to let the lights go out, so government will feel the need to Do Something. And, as is the way of government, they will eschew multiple small and innovative projects, and go instead for something big and flashy that will appear to solve all of their problems in one go. Building nuclear power stations may prove to be a lucrative career over the next few years.

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Offshore Wind Goes Underwater

Posted in Renewables by Cheryl Morgan on the September 29th, 2008

Today’s BBC news includes a story about a plan for a massive tidal power project planned for Scotland. But this is not a wave-power system like that in Portugal, or even a tidal reach system like the WaveGen system. Rather it is an underwater wind farm using turbines very much like those used on land to extract power from ocean currents.

This is not a new idea. Similar systems are currently being tested in New York’s East River. On the other coast, PG&E is looking at possibly siting turbines on the sea bed underneath the Golden Gate bridge. Wind turbines are proven technology, and the problem of bringing power ashore from offshore installations is also well understood, so putting the turbines themselves under water is hopefully a relatively small step.

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Portugal Rides the Waves

Posted in Portugal,Renewables by Cheryl Morgan on the September 25th, 2008

The world’s first commercial wave-power generating station was officially opened for business in Portugal today. Manuel Pinho, Portugal’s Economy Minister, performed the ceremony at Aguçadoura where the generating station floats 5 km offshore. The plant has been built by Pelamis who have hopes that the technology will take off elsewhere in the world. Initial attempts to get wave power to work in Scotland foundered because the machines proved too fragile for the Scottish weather, and perhaps due to a lack of enthusiasm on behalf of the UK government. However, Ross Henderson of Pelamis told the BBC that similar machines will be installed in Orkney and Cornwall next year, and the company is looking at projects in Norway, Spain, France, South African and North America.

Which Way Will the Wind Blow?

Posted in Modeling,Renewables,Wind by Cheryl Morgan on the September 18th, 2008

Variability in the availability of renewable generation is often cited as an issue for grid managers, but the obvious thing to do in that case is forecast it. Generation market simulation software often includes the ability to model seasonal and annual variation in water availability for hydros. Presumably wind (and solar) will acquire they own modeling methods. The PJM is apparently looking at the possibilities for build a wind forecasting model. Other people are doubtless doing the same. Does anyone know of any papers on this sort of thing?

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Science Frontiers

Posted in Renewables by Cheryl Morgan on the September 17th, 2008

With the rapid increase in wind and solar generation has come a great deal of concern about the intermittent nature of the power that such systems provide. Consequently a great deal of research is going into systems that might allow that power to be stored more effectively. One of the current front-runners is the molten salt battery, which actually stores heat rather than electricity. A possible new technology that stores electricity is a capacitor made from sheets of graphene. Capacitors have the advantage of being usable on a small scale in electric vehicles and even electronic devices as well.

For real cutting edge research, however, Nature has an article about the feasibility of building orbital death rays satellites to beam solar power to earth.

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Europe Invests in Africa

Posted in Africa,Electricity Transmission,Europe,Gas Transmission/Storage,Renewables by Cheryl Morgan on the September 9th, 2008

EurActive reports on a major European Union initiative to invest in the African energy sector. The €600 million will go to a variety of projects including renewable generation, power pools and infrastructure projects. A further major announcement is expected soon on the subject of the proposed Trans-Saharan Gas Pipeline. This is intended to bring up to 30 billion cubic metres of Nigerian natural gas across more than 4,300km of desert to EU markets via Algeria. It would also, of course, significantly reduce Europe’s dependence on Russia for gas supplies.

The primary source of all these handouts is something called the European Development Fund, which is of course abbreviated to EDF. Any resemblance to a French energy company is entirely coincidental, if somewhat amusing.

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