Worlds of Differences

I’ve always known that Americans hold a pretty different view about the state of the energy sector than elsewhere in the world, but never really knew how to characterize those variances.

Today, I write in gratitude, thanking the efforts of Sonal Patel, senior writer at Power magazine.  Patel developed this helpful visual framework summarizing the recent issuance of the World Energy Issues Monitor, a a global survey undertaken annually by the World Energy Council posing the question “what keeps energy leaders awake at night?”

For each of three regions — North America, Europe and Asia — Patel has drawn circles for each major issue area of potential concern to the energy sector and placed them on a two-dimensional chart, where higher indicates more impact and right represents more certainty.   The size of the circles is proportional to the urgency of an issue.

Perusing Patel’s graphic is an illuminating exercise.  Of note:

Only in North America is the topic of “unconventionals” — meaning producing oil and gas from unconventional sources such as shale and oil sands — viewed as a particularly big deal.  In Europe, unconventionals are somewhat lower on the radar screen, and in Asia barely on the screen at all.

Conversely, energy prices are a critical topic in Europe and Asia, but deemed only of modest importance in North America.

Similarly, energy efficiency is high on the agenda in Europe and Asia, not so much in North America.  Even more starkly, renewables are seen as only a low-impact issue in North America, and a more significant issue elsewhere.

Perhaps because of the high penetration of renewables there, energy storage is of most interest in Europe, but of less interest in North America, and of hardly any interest in Asia.

Nuclear energy is viewed as a high-impact issue in North America, moderate impact in Europe, and (perhaps surprisingly) low-impact in Asia.  So, for that matter, are electric vehicles.

The so-called “hydrogen economy” — involving the use of fuel cells for power generation and transportation — retains a bit of interest in North America (though with low urgency), but has fallen off the map elsewhere.  Carbon capture and storage (CCS) follows somewhat of the same pattern, although Europe does hold it in higher esteem than hydrogen.

True, there are some commonalities to acknowledge:  the smart grid and policies to deal with climate change and energy subsidies are seen in approximately the same light globally.

However,  more than anything else, Patel’s framework shows that leaders in the energy industry live in very different worlds, depending upon which part of the world they live and work in.

The End of Nuclear Power? Or Just the Beginning?

This week’s news: US NRC freezes decisions on new reactor, license renewal applications

“The US Nuclear Regulatory Commission voted unanimously Tuesday not to issue final decisions on granting licenses to build new nuclear power reactors and 20-year license renewals to existing ones, pending resolution of the agency’s waste confidence rule overturned by a court in June.

The commissioners, however, also ordered that NRC review of these license applications continue and that the agency’s Atomic Safety and Licensing Board Panel not accept or deny new challenges that may be filed in these proceedings relating to waste storage issues.”

Nukes in the US not dead of course, but the revival still on hold?


The post Fukushima nuclear future in Japan?  Still shut down, the replacement generation fleet still a patchwork.  The future is . . .?


And Germany?  Trying to get out of nukes puts intense pressure on gas (from Russia), renewables, and the grid.  As well as adds costs. Prognosis unclear.


Has Fukushima changed China’s nuclear energy ambitions? Or just its technology choices?


And exactly what are the costs for nuclear?  I will say generally, that on a cents per kwh basis, the broad lowering of interest rates benefits nukes better than any other form of power but hydro, given the combination of high portion of the of costs from the capital, and the high capacity factor.


So is the end of nuclear power’s 50 year challenge to coal power insight?  Or are we on the verge of a resurgence?  Situation unclear at best.

Banking on a Low-Carbon Energy Future

One of the world’s largest banks, London-based HSBC (NYSE: HBC) issued last September a very interesting research report entitled “Sizing the Climate Economy”.

At less than 60 pages, it’s an excellent read for those interested in the future growth of the advanced energy economy.  There are really too many highlights to capture all of them in this blog post, but here are a few snippets.

HSBC pegs the global low-carbon energy market — comprising low-carbon energy supply (renewables, nuclear, and carbon capture/sequestration) and energy efficiency (vehicles, buildings, industrial, energy storage, and “smart-grid”) — at $740 billion in 2009.

The HSBC authors characterize four potential scenarios between now and 2020:  ranging from a “Backlash” scenario where most world economies retrench from commitments to reduce or limit carbon emissions, to a “Green Growth” scenario in which many nations commit (and actually follow through on those commitments) to clamp down on emissions to an even greater degree than in earlier headier days of 2009. 

Even in the most-pessimistic (in my view, most realistic) scenario, the global low-carbon energy market is projected by HSBC to more than double by 2020, to about $1.5 trillion, representing an annual growth of over 6%.  By any account, and even under this uninspiring scenario, the low-carbon energy market is a solid growth market of the next decade.  If the dominoes fall right and we get a result similar to HSBC’s most optimistic scenario, then the low-carbon energy market would nearly quadruple to $2.7 trillion by 2020, for a 12.5% compounded annual growth rate.

The numbers in the HSBC report need to be taken with a grain of salt.  Any system or market as complex and multi-faceted as the global energy sector cannot be modeled with any great degree of precision.  If HSBC’s forecasts for 2020 end up within +/- 50%, I’d say they would be doing well.  What’s more valuable, in my opinion, about studies of this type are the qualitative conclusions that can be drawn.

In general, the energy efficiency side of the ledger fares better in HSBC’s analysis than low-carbon energy supply.  No doubt, this is because many effiicency options are lower cost (certainly, lower cost per ton of emissions reduced) than new low-carbon supply options — and because the demand for new energy supply options will inevitably be depressed as more efficiency is implemented.  HSBC is particularly bullish on electric vehicles, especially in the second half of the decade — an optimism that I’d like to share, but can’t at present based on the decidedly mixed results of 2011 for electric vehicles (as discussed in my last post here).

For most of the report, HSBC uses their “Conviction” scenario as “the most likely pathway to 2020″, in which Europe meets their renewable energy targets but not their energy efficiency targets, China more than meets their clean energy targets and becomes the largest market for low-carbon energy in the world, and the U.S. (disappointingly, but predictably) experiences relatively limited clean energy growth.  So, for those of you in the clean energy marketplace, the place to be is….NOT the U.S.

This report was written by a team of HSBC analysts based in Europe — and it shows in many places. 

The text refers several times to human-driven climate change as a phenomenon that’s commonly-known and understood to be a real issue, and the need for public sector intervention to address the issue — if not cap-and-trade or carbon taxes (which seems unlikely for the foreseeable future), then command-and-control regulation.   Alas, much of corporate America and most of one of the two major political parties in the U.S. (lots of overlap here) contends that climate change is unproven at best or a hoax at worst — and therefore undeserving of any policy initiatives.   

This study could never have been issued by a U.S. bank, or even a U.S. based team of a global bank, or else they would be disavowed.  It certainly won’t help HSBC grow market share for U.S. corporate banking services.

Notwithstanding the lack of political will and leadership (especially in the U.S.), HSBC is more hopeful about progress in lowering carbon intensity, because other co-aligned forces will be powerful in the coming years.  In particular, austerity will squeeze out inefficiencies.  Furthermore, the authors note that many countries are pursuing low-carbon strategies because such an emphasis fosters industrial innovation or offers the prospect of creating many “green jobs”.

As HSBC notes, “a low-carbon economy will be a capital-intensive economy”.  This makes intuitive sense, as the use of carbon-based fuels implies an ongoing set of economic activities to continually extract and consume the resource.  Put another way, low-carbon energy will be more about capital expenditures and less about operating expenditures.  And, a LOT of capital will be required:  HSBC estimates about $10 trillion of capital cumulatively through 2020, tripling from 2009 levels to reach an annualized rate of $1.5 trillion per year — “a large but manageable sum in our view”. 

Where will this investment capital come from?  “It will be private capital from corporations and consumers that will finance the climate economy — with governments setting the framework and providing capital at the margin.”  In typical understatement, HSBC notes that “the challenge for investors, however, is the lack of certainty over both policy intentions and actual implementation.”

That’s a polite way of saying the world will likely muddle through, somehow.

Predictions For Cleantech In 2012

It’s December again (how did that happen!?) and our annual time for reflection here at Kachan & Co. So as we close out 2011, let’s look towards what the new year may have in store for cleantech.

There are eggshells across the sector for 2012. Global economic uncertainty in particular is leaving some skeptical about the chances for emerging clean technologies. And those who watch quarterly investment data, or who look only in a single geography (e.g. North America) may have seen troubling trends brewing this past year. But the true story, and the global outlook for the year ahead, is—as it always is—more complicated.

As you’ll read below, we predict a decline in worldwide cleantech venture capital investing in 2012. But as you’ll also read below, we believe the gap will be more than made up by infusions of corporate capital. And the exit environment, depending on who you are and where you list, still looks robust in 2012 for cleantech (it may not have felt so, but it was actually surprisingly robust in 2011, according to the data. See below.) All in all, if you’re a cleantech entrepreneur seeking capital, our advice is brush up that PowerPoint and work the system now… while there’s still a system to work.

Because, as we detail below, the largest risk, to cleantech and every sector in 2012 we believe, is the specter of precipitous global economic decline and the systemic changes it might bring. Details below.

Here are our predictions for cleantech in 2012:

Cleantech venture investment to decline
In the face of naysayers then forecasting a cleantech collapse, in our predictions this time last year, we called an increase in global cleantech venture investment in 2011. We were right. At this writing, total investment for the first three quarters of 2011 is already $6.876 billion, with the fourth quarter to report early in 2012. Given historical patterns (fourth quarters are almost always down from third quarters), we expect 2011 to close out at a total of ~$8.8 billion in venture capital invested into cleantech globally. That’d be the highest total in three years, and second only to the highest year on record: 2008.

cleantech 2012 predictions venture investment
Total 2011 investment is expected to show growth from 2009’s figures once the fourth quarter (dashed lines, estimated) is added. However Kachan predicts total venture investment in 2012 to decline from 2011’s total. Data: Cleantech Group

Yet in 2012, we expect global venture and investment into cleantech to fall. Not dramatically. But we expect cleantech venture in 2012 as measured by the data providers (i.e. companies like Dow Jones VentureSourceBloomberg New Energy Finance,PwC/NVCA MoneyTree, and Cleantech Group) to show its first decline in 2012 following the recovery from the financial crash of 2008. Our reasoning? There are factors we expect will continue to contribute to the health of the cleantech sector, but they feel outweighed by factors that concern us. Both sets below:

On one hand: What we expect to contribute to growth in cleantech investment in 2012

  • China gets a hold on its economic turbulence – For five years now in our annual predictions, both here at Kachan and when I was a managing director of the Cleantech Group, we foretold the rise of China as cleantech juggernaut. Yet, now with China having become the largest market for and leading vendor of cleantech products and services by all metrics that matter, and now receiving a larger percentage of global cleantech venture capital than at any point in history, there have been recent warning signs. New data just in (for instance, falling Chinese property prices and sluggish export growth because of faltering first world economies, not to mention the first decline in clean energy project financing in China since 2010 as wind project financing declined 14% in the third quarter of 2011 on fears of over-expansion) suggests the Chinese economic engine is slowing. On the face of it, that might look bad for cleantech. But we put a lot of faith in China’s central government and the seriousness with which it views this sector as strategic. Even now, the country has just gone on the record forecasting creating 9 million new green jobs in the next 5 years. Nine million! And China has a good track record in executing its 5-year plans.
  • Rise in oil prices – Cleantech is a much wider category than energy. But for many, renewable energy is its cornerstone. And while there’s no question about the long-term markets for renewables, the biggest factor affecting their short-term commercial viability is the price of fossil-based energy. The good news: indications are that oil prices are headed upwards in 2012, which should be expected to help make renewables more economic. Naysayers maintain that a poor global economy will destroy demand for energy, keeping the price of oil artificially low. For much of 2011, the price of oil was relatively low. But we argue the price per barrel will continue its inexorable rise in 2012 given continued growth in the size of the global market for oil, driven by market expansion in the developing world. Further adding to the expected oil price increase is a little-known fact: there’s been a decline in the quality of oil the world is seeing on average. And the poorer the quality of the oil, the more it costs to refine it into the products we require. Oil prices are headed up.
  • Corporations’ even stronger leadership role – Corporate venturing was up in 2011, possibly setting new record highs, according to the data providers (4Q data not in yet.) Cleantech corporate mergers and acquisitions globally were up in 2011, again possibly setting new record highs, according to the data. The world’s largest companies assumed the leadership we and others predicted they would last year at this time—and indications are they will continue to do so in 2012, with balance sheets still strong.
  • Solar innovation as a perennial driver – Investment into good old solar innovation and projects is still strong, and has remained so for years, while other clean technologies have risen and fallen in and out of investment fashion. And that’s despitemost solar companies being in the red and having billions of dollars in market capitalization disappear over the last year. As some solar companies will continue to close up shop in 2012, look for investment into solar innovation to remain strong in 2012 as the quest for lower costs and higher efficiencies continues.
  • Persistence of the fundamental drivers of cleantech – The sheer sizes of the addressable markets many cleantech companies target, and the possibilities for massive associated returns, will continue to draw investors to the sector. Why? The world is still running out of the raw materials it needs. Some countries value their energy independence. More than ever, economies need to do more with less. Oh, and there’s that climate thing.

On the other hand: What worries us about the prospects for growth in cleantech investment in 2012

  • Investor fundraising climate tightening – Today, limited partners (i.e. “LPs” – the organizations and/or wealthy individuals that fund venture capital companies) are still bankrolling cleantech worldwide; in its 3Q 2011 Investment Monitor for clients, the Cleantech Group details 34 dedicated cleantech and sustainability-focused funds receiving billions in capital commitments internationally in the third quarter of 2011 alone. But we expect a slowdown in venture fundraising in 2012. Blame Solyndra for negative American LP sentiment. Or blame the lack of rock star returns in cleantech of late. But there are more indications than ever that some LPs are becoming increasingly reluctant to fund cleantech. They’ve been grousing about cleantech for years. But the politicizing of the Solyndra bankruptcy has amped the rhetoric higher than ever, and will foster a self-fulfilling prophesy in 2012, particularly in America, we believe.
  • Waning policy support in the developed world – Expected conflicting government policy signals to continue in 2012. Don’t expect cleantech-friendly U.S. policy leadership in 2012, an election year. We wouldn’t be surprised if the ghost of Solyndra and other U.S. Department of Energy stimulus grants and loan guarantees continued to haunt American cleantech through the whole of 2012, making any overt U.S. government support of clean or green industry unlikely. While cleantech is far from solely an American phenomenon, there’s no mistaking that the (now expired) American national loan guarantee program helped loosen private cleantech capital in an immediately post-2008 shell-shocked economy. However, continued uncertainty over the future of the U.S. Treasury grants program and production tax credits is holding the U.S. back. Policy support suffers elsewhere in the developed world. For instance, in the UK, investor confidence was recently dealt a blow by a dramatic drop in solar feed-in-tariff (FIT) rates, and the erosion of renewable policy support in Germany and Spain is well known.
  • Lag time of negative sentiment – Even if the sky indeed started falling in cleantech (and we don’t believe it yet has), it would take a few quarters to show in venture or project investment numbers. Remember, deals can take quarters to consummate. Transactions being counted now may have been initiated a year ago. Fear takes several quarters to manifest. Which is why we believe today’s uncertainty will start to show in 2012’s performance.
  • VCs still circling their wagons – In 2007, before the financial crash, the percentage of early stage venture investments into new cleantech companies was roughly the same as later-stage venture investments into established companies. Since the crash of 2008, deals have remained skewed—both by number and size of deals—towards later stage companies, illustrating investors’ preference to keep existing investments alive than take risks on new companies. While the exact ratio varies quarter to quarter, and from data provider to data provider, there have been generally fewer early stage companies getting funded. That’s hampering cleantech innovation. We expect the trend to continue into 2012.
  • Perennial concern about exits and IRR – Despite the size of its massive addressable markets and near-record amounts of capital entering the space today, on the whole, cleantech investors are still seeking the returns that many of their web and social media tech brethren enjoy. Even now, 10 years into this theme that we started calling cleantech in 2002. That’s not for lack of exits; 2010 saw the largest number of cleantech IPOs on record (93 companies raised a combined $16.3 billion) and 2011 has already had 35 without the last quarter reporting. And cleantech M&A activity in 2011 was strong and significantly higher than last year. No, the concern is for lack of multiples. For instance, 8 of the 14 IPOs of the third quarter of 2011 were trading below their offering price as of the publication of the Cleantech Group’s 3Q 2011 Investment Monitor. Don’t let anyone tell you exits aren’t happening in cleantech. They’re just underwhelming. And/or they’re happening in China.
  • Macro-economic turbulence, collapse, or at least, reform – They’re the elephants in the room: The Occupy movement. Arab Spring. Peak Oil. The continued and growing mismatch between overall global energy supply and demand and food supply and demand. Ever-increasing debt and trade deficits. Currency revaluation or political/military developments. Any or all of these could spur another massive global economic “stair-step” downwards of the scale we saw in 2008, or worse. Concern about all of these points and the impact they’d have on the cleantech sector weighs heavy on us here.

Venture dip made up for by rise in corporate involvement
The world’s largest corporations woke up to opportunities in cleantech in 2011, making for record levels of M&A, corporate venturing and strategic investments. General Electric bought lighting and smart grid companies. Schneider Electric bought some 10 companies across the cleantech spectrum. Corporate venturing activity was high, as were minority-stake investments. In just the third quarter alone, ZF Friedrichshafen invested $187 million in wind turbine gearbox and component maker Hansen Transmissions of Belgium, Stemcor invested $137 million into waste company CMA in Australia, and BP invested $71 million into biofuel company Tropical BioEnergia in Brazil. And there were dozens more minority stake transactions like these throughout the year.

Look for even more cash-laden companies to continue to buy their way into clean technology markets in 2012, supplementing the role of traditional private equity and evidencing a maturation of the cleantech sector.

Storage investment to retreat
Significant capital has gone into energy storage in recent quarters. In 3Q11, storage received $514 million in 19 venture deals worldwide, more than any other cleantech category. Will storage remain a leading cleantech investment theme in 2012? We’re betting no. Here’s why.

Storage recently made headlines as the subsector that received the most global cleantech venture investment in the third quarter of 2011, the last quarter for which numbers are available. An analysis of the numbers, however, shows the quarter was artificially inflated by large investments into stationary fuel cell makers Bloom Energy and ClearEdge Power. Do we at Kachan expect more investments of that magnitude into competing companies? No. Why? Even if you believe analysts that assert that stationary fuel cells for combined heat and power are actually ramping up to serious volumes (oldtimers have seen this market perpetually five years away for 15 years, now), just look how crowded the space currently is. Bloom and ClearEdge are competing with UTC Power, FuelCell Energy, Altergy, Relion, Idatech, Panasonic, Ceramic Fuel Cells and Ceres Power … just some of the better-known 60 or so companies vying for this tiny market today. And many are still selling at zero or negative gross margins.

But the main reason we’re not bullish on storage: Smoothing the intermittency of renewable solar and wind power might turn out to be less important soon. Sure, nary a week goes by without announcements of promising new storage tech breakthroughs or new public support for grid storage (e.g. see these three latest grid storage projects just announced in the U.S., detailed halfway down the page.) But we believe that utility-scale renewable power storage might be obviated if utilities embrace other ways to generate clean baseload power.

In 2012 or soon thereafter, we expect those clean baseload options will start to include new safer forms of nuclear power (don’t believe us? Read Kachan’s report Emerging Nuclear Innovations—U.S. readers, don’t worry: nuclear innovation won’t apply to you.) Or NCSS/IGCC turbines powered by renewable natural gas delivered through today’s gas distribution pipelines (see The Bio Natural Gas Opportunity). Or even geothermal (gasp!) or marine power (see below). All of these promise to be less expensive than solar and wind when you factor in the expense of storage systems required—incl. electrochemical, compressed air, hydrogen, flywheel, pumped water, thermal, vehicle-to-grid or other—if solar and wind are to be relied on 24/7.

Marine energy to begin coming of age
I’m a closet fan of marine energy, despite today’s extraordinarily high cost per kilowatt hour. We started covering wave, tidal and ocean thermal energy conversion equipment makers in 2006. Anyone who’s heard me talk publicly on the subject has had to suffer through hearing how I’d much prefer invisible kit beneath the waves than have to gaze upon solar and wind farms taking land out of commission.

In 2006, the lifetime of equipment from then-noteworthy companies like Verdant Power and Finavera (which since exited marine power after a failed test with California’s PG&E) in the harsh marine environment could sometimes be measured in days. The designs just didn’t hold up. Even Ocean Power Delivery, now Pelamis Wave Power, with its huge, snakelike Pelamis device, had hiccups in early onshore grid testing. Back then, the industry clearly had a long way to go.

Today, six years later, we think it’s time to start taking marine energy seriously. A high profile tidal project is now underway in Eastern Canada’s Bay of Fundy. Several weeks ago, Siemens raised its stake in UK-based tidal energy developer Marine Current Turbines from less than 10% to 45%, because it liked the predictability of ocean energy, and Voith Hydro Wavegen handed over its first commercial wave project to Spain. And last week, Dutch company Bluewater Energy became the latest vendor to secure a demo berth at the European Marine Energy Centre at Orkney, Scotland—the most important global R&D center for marine energy. Things are going on in marine power. Still, its major hurdle is the large variation in designs and absence of consensus on what prevailing technologies will look like.

2012 won’t be the year marine power becomes cost-competitive with coal, or even nearly. But you’ll hear more about marine power in 2012, and see more private and corporate funding, we predict.

Increased water and agricultural sector activity
Look for increased venture investment, M&A and public exits in water and agriculture in 2012.

At one point, only cleantech industry insiders championed water tech as an investment category (and, frankly, at only a few hundred million dollars per year on average, it still remains only a small percentage of the overall average $7B annual cleantech venture investment.) Industrial wastewater is driving growth in today’s water investment, with two of the top three VC deals of the last quarter for which data is available promoting solutions for produced water from the oil and gas industry, and the largest M&A deal also focused on an oil and gas water solution. Regulations aimed at making hydraulic fracturing less environmentally disruptive to will spur continued innovation and related water investments in 2012.

Where water was a few years ago, agriculture investment appears to be today. There was more chatter on agricultural investment than ever before at cleantech conferences I attended around the world this past year. Expect it to reach a higher pitch in 2012, because of:

Investing in farmland is even resurfacing, in these uncertain times, as a private equity theme.

Remember the food crisis three years ago, when sharply rising food prices in 2006 and 2007, because of rising oil prices, led to panics and stockpiling in early 2008? Brazil and India stopped exporting rice. Riots broke out from Burkina Faso to Somalia. U.S. President George W. Bush asked the American Congress to approve $770 million for international food aid. Those days could return, and they represent opportunity for micro-irrigation, sustainable fertilizer and other water and agriculture innovation.

And so concludes our predictions for 2012. What do you agree with? What do you disagree with? Leave a comment on the original post of these predictions on our site.

This article was originally published here. Reposted by permission.

A Fusion Reactor Hollywood Could Love

Some latest scuttlebutt from the world of nuclear fusion has all the ingredients of a Hollywood thriller screenplay (and for those who remember Inside Greentech’s Greentech Avenger, you know I know scuttlebutt!)

There’ve been all kinds of cinematic ideas, and personalities, on the front lines of the crazy world of cleantech innovation. Wild claims from charismatic mad scientists abound.

So hearing word that a tiny company has potentially cracked the code of fusion energy and created a working megawatt-scale reactor that actually produces more power than it requires is something I’d normally dismiss as yet another tale from the lunatic fringe.

But, in this case, I trust the source. So, whether you believe nuclear energy is cleantech or not—and especially if you don’t—read on.

In researching a new Kachan report on new safer, cleaner nuclear technology, we interviewed dozens of scientists at nuclear research outfits like Flibe Energy, General Atomics, General Fusion, Helion Energy, Hyperion Power Generation, the International Thermonuclear Experimental Reactor (ITER), Invap, Lightbridge, NuScale, Ottawa Valley Research, QPower, Radix Power and Energy Corp, Rare Earth Extraction Co., Rhodia, Scandinavian Advanced Technology (SCATEC), Terra Power, Thor Energy, Thorium One International, Tri Alpha Energy and U.S. National Ignition Facility (NIF).

Most fusion organizations are pursuing big, capital-intensive tokamaks and other reactors. But one interviewee, in a face-to-face conversation in an exotic location abroad, told us of a small company he’s involved with that he claims has built a working 1MW fusion reactor the size of a rice cooker (though it’s dubious that approximation includes the requisite shielding, cooling, turbines, etc.) The company is now apparently in the process of building a 10MW version that it plans to trial in 2012.

If true, it would turn a lot of heads, in particular at organizations like the international €15 billion ($20.4 billion) ITER project, the multi-billion dollar U.S. National Ignition Facility, and smaller fusion companies like General Fusion, Helion Energy and Tri Alpha Energy. And maybe, just maybe, represent a new energy production paradigm.


A generic tokamak-based design for a fusion reactor. NOT the design employed by our secretive fusion company. ITER’s tokamak is 98 feet tall and is taking years to build. Administrators expect ITER to require somewhere between €30 billion ($41 billion) and €50 billion ($68 billion) to hit its goals by 2040. Illustration source:

More on the company in a moment. First, a quick primer on fusion:

Why fusion matters
Nuclear fusion has represented a Holy Grail of power potential since the 1950s. Fusion reactors, in theory, mimic the internal processes of the sun and other stars by fusing atoms. Typically, this means combining a plasma of hydrogen atoms into helium. This is in contrast to today’s fission reactors, which typically split solid uranium atoms. The fusion process would emit heat that would ultimately drive electricity generators and could serve many other purposes, such as keeping buildings warm and firing up high-temperature industrial operations.

The potential advantages of fusion are enormous. Compared to conventional fission, a fusion reactor theoretically ticks several very important boxes in today’s safety-conscious nuclear energy world. Here’s an excerpt from the fusion benefits section of our report on nuclear innovations:

  • It cannot melt down, so the potential for a radioactive leak is miniscule. Fusion tends to run on very little fuel, and the fuel stops fusing as soon as conditions become imperfect. Thus, a loss of power to the reactor would shut down the reaction, with no threat of runaway, uncontrollable events. While this would carry financial consequences, it does not pose the safety risk associated with conventional fission reactors, in which large volumes of fuel can carry on fissioning in an outage. In fission, if cooling and/or control mechanisms fail, meltdown can ensue, as happened at Fukushima.
  • It produces relatively little radioactivity. The levels are extremely low and very short-lived compared to the long-lived, highly toxic radioactive waste of conventional fission reactors.
  • Its waste poses little weapons proliferation risk. The waste that fusion produces cannot be used to make bombs, although some believe that the tritium that it breeds does pose a proliferation risk.
  • There are potential uses for fusion’s helium waste. Helium is widely used in the medical industry for, among other things, cooling the superconducting magnets in MRI scanners, and in welding.
  • Most components of a potential fusion fuel are plentiful. Most fusion projects aim to use deuterium and tritium. Deuterium is plentiful—it’s the stuff that Canadian CANDU “heavy water” reactors use as moderators in fission reactions. It occurs commonly in water. It’s so common in seawater that, according to fusion company Helion Energy, the potential energy in 1 barrel of seawater equals that of 700 barrels of oil. The other hydrogen isotope, tritium, does not occur naturally. Fusion fuel makers will have to obtain their first doses from either CANDU reactors, where it is a byproduct, or from other sources, like the weapons community. But the good news is that once fusion starts, it breeds its own new tritium.
  • It requires very little fuel. Most proposed fusion reactors rely on very small amounts of deuterium and tritium. ITER, the massive international fusion project in France, plans to deploy a mere 2 grams of deuterium and tritium at any one time in its 98-foot-tall reactor. By comparison, utilities typically load fission reactors with hundreds of rods of uranium at a time.
  • Fuel costs are low. If a year’s worth of coal carries a value of “1”, then the combined cost of the deuterium and tritium would be 0.0005. The uranium in fission would cost 0.1, significantly more than fusion fuel.
  • It does not emit CO2 or other greenhouse gases. While this is also true for fission reactions, it adds to the appeal of fusion as a baseload clean energy source.

If fusion sounds too good to be true, that’s because, so far, it has been. As of this writing, there’s been no independent verification that anyone has yet successfully built a working fusion reactor that can produce sustained energy greater than that put into it.

Enter our small fusion company. Our source, concerned he was telling us too much, initially wouldn’t even reveal its name.

The fission wonder down under?
As mentioned, this company and its story seem to have all the elements of a Hollywood thriller:

  • Harnessing the power of nature! The analogy most often applied to fusion is harnessing the reaction of the sun. But this company’s fusion reaction, fueled by deuterium and tritium, isn’t nearly as high temperature, our source claims, and is more “rooted in nature.” Specifically, the reaction is said not to require the high temperature, high pressure or accelerated particles of others’ approaches. “The key is not how many neutron hits you generate, but how you sustain them, how well you can control them.” For a 40-watt power input, the reactor is said to be able to generate a megawatt.
  • Exotic locales! The company is based in Australia. Why? “Everyone’s expecting big nuclear innovations to come out of China, or France,” said our source. But it’s replicated its intellectual property and technology “around the world in case they get infiltrated.”
  • Self-funded by mad scientist! The technology’s inventor has apparently tinkered with his design for 40 years, and self-funded the company’s early stages, reinvesting income from earlier lucrative inventions. Now, strategic investors are said to include family money, such as a Shanghai real estate baron and decedents of American industrialist John Pitcairn, Jr.
  • Culture of secrecy! The company’s secrecy about its actual progress makes Apple look sophomoric. In development since the 90s, it has sworn employees and investors not to let on how successful its research has been. It’s said to have retained the former head of Israel’s counter terrorism unit as its chief of security.
  • No to takeover offers! The company is said to have already fielded a buyout attempt by General Electric (NYSE:GE). The founder apparently didn’t want the invention owned by just one corporation, characterizing it an invention for mankind, apparently.
  • Requisite military involvement! The company is said to be secretly working with the Australian Air Force and Navy, and the U.S. Department of Defense, and aims to trial a 10MW version of its reactor in 2012 with an Australian utility.
  • Political and industrial upheaval! If fusion can be made to work at scale, it could indeed affect the world in profound ways. All the ingredients for drama!

More about this secretive company, and other companies working to radically improve nuclear power as we know it today, is available in Kachan’s new Emerging Nuclear Innovations report, just released. This 64-page report rounds up 6 months of looking carefully at the nuclear power industry for companies best placed to usurp big, conventional fission of the type that powers the 432 non-military nuclear reactors that exist worldwide today.

Beyond fusion, the report also looks at improvements in conventional light water reactors (LWRs), including boiling water reactors (BWRs) and pressurized water reactors (PWRs), use of thorium as a fuel in molten salt and solid fuel reactors, molten salt reactors (MSRs), fast neutron reactors (FNRs), pebble bed reactors (PBRs) and modular reactors.

So don’t write off the nuclear power industry after Fukushima. Despite last March’s meltdown in Japan, the World Nuclear Association believes that in the 33 countries that currently operate nuclear reactors, capacity will increase 52-200%, to between 559 and 1,087 gigawatts in 2030 (up from 367 gigawatts today). Among countries that don’t already use nuclear power, those with plans to do so could add another 30-123 gigawatts, and new potential entrants could increase that by yet another 13-140 gigawatts.

Expect that new, safer nuclear technologies—possibly even fusion—will be part of that growth.

This article was originally published here. Reposted by permission.

A World of Hurt

Seemingly generating nary a ripple here in the U.S., the International Energy Agency (IEA) just issued its 2011 World Energy Outlook — its annual synopsis on the future of the global energy sector. 

If ignorance is bliss, then we’re certainly blessed by generally not bothering to confront the pretty-alarming conclusions of the report. 

A pastiche of the highlighted snippets in the Executive Summary, when stitched together, provide a glimpse of the world we’re now choosing to invent for ourselves and future generations:

“There are few signs that the urgently needed change in direction in global energy trends is underway.”

“Global investment in energy supply infrastructure of $38 trillion (in year-2010 dollars) is required over the period 2011 to 2035.”

“The age of fossil fuels is far from over, but their dominance declines.”

“The cost of bringing oil to market rises as oil companies are forced to turn to more difficult and costly sources to replace lost capacity and meet rising demand.”

“Factors both on the supply and demand sides point to a bright future, even a golden age, for natural gas.”

“Coal has met almost half of the increase in global energy demand over the last decade.  Whether this trend alters and how quickly is among the most important questions for the future of the global energy economy.”

“The dynamics of energy markets are increasingly determined by countries outside the OECD.”

“All of the net increase in oil demand comes from the transport sector in emerging economies, as economic growth pushes up demand for personal mobility and freight.”

“China’s consumption of coal is almost half of global demand and its Five-Year Plan for 2011 to 2015, which aims to reduce the energy and carbon intensity of the economy, will be a determining factor for world coal markets.”

“Russia’s large energy resources underpin its continuing role as a cornerstone of the global energy economy of the coming decades.  Russia aims to create a more efficient economy, less dependent on oil and gas, but needs to pick up the pace of change.”

“International concern about the issue of energy access is growing.  Around $9 billion was invested globally to provide first access to modern energy, but more than five-times this amount, $48 billion, needs to be invested each year if universal access is to be achieved by 2030.”

“We cannot afford to delay further action to combat climate change.”

“New energy efficiency measures make a difference, but much more is required.”

“Widespread deployment of more efficient coal-fired power plants and carbon capture and storage (CCS) technology could boost the long-term prospects for coal, but there are still considerable hurdles.”

“Events at Fukushima Daiichi have raised questions about the future of nuclear power.”

“The wide difference in outcomes between [the scenarios analyzed in this report] underlies the critical role of governments to define the objectives and implement the policies necessary to shape our future.”

When observing the dysfunctional nature of the current political ecosystems in the U.S., in Europe, and in world affairs (e.g., the United Nations), and the increasing imperative for economic austerity to resolve the shortfalls in public coffers, it is hard to believe that governments (other than autocratic places like China and Russia) will be able to take any meaningful action to nudge the energy sector from its trajectory of “muddle-along.”  The chaos that IEA describes in the world energy scene will thus likely only intensify.

Lots of challenges in this world.  But, then again, lots of opportunities too.

The Winter of Nuclear Energy

On March 11, 2011, an earthquake then tsunami triggered escaping radiation from nuclear reactors near millions of people in Japan.

On Sunday, August 7, a group of the world’s greatest musicians performed an inspiring benefit concert to support disaster relief in Japan. Crosby, Stills & Nash, Jackson Browne, Bonnie Raitt, Jason Mraz, The Doobie Brothers, Tom Morello, John Hall, Kitaro, Jonathan Wilson,  and Sweet Honey in the Rock sang on behalf of  Musicians United for Safe Energy (MUSE). Music video links and breaking news are available at NukeFree.Org.

I was mesmerized by the music, the soaring harmonies of veteran cosmic rockers and new voices, and a dazzling performance powered with little grid energy. The Shoreline Amphitheatre concert stage was powered by an integrated system of SunPower solar PV in mobile SunPod modules, biodiesel gensets, mobile batteries, and WindTronics wind turbines. The energy-saving GRNLite LED lighting rig for the show has been donated by Bandit Lites, and Schubert Systems has donated the sound rig.

“The disaster in Fukushima is not only a disaster for Japan. It is a global disaster. We come together now across cultural boundaries, political and generational boundaries, to call for changes in the way we use energy, and in the ways we conduct the search for solutions to the problems facing humanity,” says Jackson Browne. “We join with the people of Japan, and people everywhere who believe in a non-nuclear future.”

It was shortly after the March 2011 earthquake and tsunami that triggered multiple meltdowns at the Fukushima Daiichi nuclear plant in Japan that the decision was made by MUSE to coordinate the benefit. We have all read the news about the radiation in Japanese drinking water, food, and children exposed in radiation contaminated schools (New York Times Article).  When these great artists meet press members including me before the concert, Bonnie Raitt said, “We all live downwind.”

These musicians are committed to making a difference. Graham Nash uses solar power. As a father of three he told me of his compassion for all of our children. Speaking of nuclear industry executives he asked, “How can they do this. They’ve got their own children.”

“This is another massive world energy disaster from which there will be long-term effects,” adds Jason Mraz. “I am thrilled to be a part of this amazing show that will not only help those in Japan, but that will also call attention to the urgent need to embrace safe, clean energy alternatives.” Jason lives only 20 miles downwind from the aging San Onofre reactors built on an earthquake fault. Jason uses solar power and even had a solar party to educate his neighbors including my 86-year old friend Vera who now uses solar.

For over 25 years, Jackson Browne has lived off-grid using solar and wind power. He even rides on sunlight, charging his Chevy Volt with his renewable energy.

Major Nations Phase Out Nuclear

Germany makes it the age of renewables and will be ending its use of nuclear power in 10 years. By 2022, the last German nuclear power plant will be closed down. After the disaster in Japan, Germany has already permanently closed 7 nuclear plants. Germany’s world leadership in energy efficiency, wind power, and solar power, make the end of nuclear by 2022 feasible.

Italy is also no nukes due to a referendum where 90 percent of Italian voters called for the end of nuclear power. Italy is also showing strong leadership in solar power.

Reuters reports: “Japan, the world’s third-biggest nuclear power user, has only 16 of its 54 reactors on line, supplying less than a third of the total commercial nuclear generating capacity of 48,960 megawatts. The share of nuclear power in Japan’s power supply tumbled to about 18 percent in June from about 30 percent before the disasters struck.” Upgrading buildings and homes in Japan to LED and other energy efficient lighting would eliminate the need for those 16 reactors.

Most problematic in Japan are nuclear plants that are over 30 years old. Such dangers should give us pause in the United States where over 100 plants were built pre-1977 with 40-year target lives. 59 of those plants have had their licenses extended to 60 years. The nuclear industry has campaigned to stretch these to 80-year licenses.  In almost all cases, like Japan, the spent rods are stored onsite in U.S. plants. Some U.S. reactors are located near major earthquake faults.

The new generation of reactors are designed to be safer. Unlike wind and solar, nuclear provides electricity 24/7. Contrary to a common perception, nuclear is not as clean as renewable energy. The nuclear industry admits that the lifecycle greenhouse emissions from a nuclear plant are roughly equal to a natural gas plant, due to building with cement, mining, and spent fuel management. Promising innovation is occurring in small nuclear reactors, waste processing and the perpetual dream of fusion. But the industry constantly fails to meet commitments of being safe and cost-effective without government subsidy. Perhaps the greatest obstacle to new nukes in the U.S. is that financing requires taxpayer guarantees, taxpayers to insure the plants, and taxpayers on the line for future disasters.

It is no wonder that many Europeans have insisted on the phase-out of nuclear power after Chernobyl radiation spread to Europe, contaminating food and water. The cancer deaths from radiation exposure haunt people, as do child birth defects.

From my childhood, I remember when the Cuban Missile Crisis brought the United States and Russia to the brink of nuclear war.  Students were drilled to duck under our desks in the event on an atomic bomb. Neighbors built bomb shelters. We lived in fear. The threat still exists today as we watch the tension between North and South Korea, between Pakistan and India, and the threat of Nuclear Terrorism. The mideast worries that Iran’s nuclear ambitions go beyond generating electricity. If they do, another defiicit-financed war in the mideast will be the least of our problems.

Coal is the Other Unsafe Fuel

It would be tragic, however, if the phase-out of nuclear power lead to an increase of coal power. More people die each year from coal-power related lung cancer, asthma, and heart attacks, than die from nuclear plant radiation. Coal power plants emit mercury, sulfur dioxide, nitrogen oxides, and carbon dioxide.

Even worse is the methane escape from blowing-up mountain tops to feed our hunger for coal. Basic chemistry informs us that methane and CO2 accumulate in our atmosphere trapping heat. Climate models show that increased heat is threatening our food, our water, and our future. My 87-year old mother has been evacuated twice in recent years from wildfires that followed record draughts.

Although many in the fossil fuel industry now work behind the scenes to shutdown the EPA, or at least reduce their budget to make them ineffective, we actually need the EPA to increase its vigilance in protecting our health and future.

Fortunately, when new power plants are built, coal is rarely cost-effective in comparison to efficient natural gas power plants. In some parts of the world, coal cannot compete with renewable energy such as hydropower and wind power.

Safe Energy Meets All of Our Energy Needs

The good news is that we are moving to an energy future that is brighter and safer. Nations are moving from last century’s model of energy waste and unused capacity to this century’s model of energy efficiency and renewable energy.

In the United States, only about 52 percent of our generation capacity is used on average. We have build an ancient power system designed for all the air conditioners to run on the hottest afternoon in August. Now that smart grid technology including smart meters are being installed by the millions, utilities can deliver the right price signals and charge more when energy demand strains the system, and less energy is plentiful. Using software based intelligent energy management, corporations can run processes at the most cost effective time and we can wash our clothes at times when we can save money.

Energy efficiency (EE) is also lowering our need for coal and nuclear power. LEED buildings use of fraction of the energy of our worst structures. The new LED lights that shine over me as I write to you use 5 times less energy than the incandescent bulbs I formerly used.

The cleanest solutions to global warming, air pollution and energy security are wind, water, and solar power (WWS).  As Dr. Mark Jacobson walks me through the numbers of his, Dr. Mark Delucchi, and their teams’ multi-year study, the renewable energy solution stands out as the clear winner. Dr. Jacobson is a Professor of Civil and Environmental Engineering at Stanford University and an advisor to the U.S. Department of Energy.

Wind power has been doubling in capacity about every three years. It’s now over 200 GW; in 3 years it will be over 400 GW. 36 U.S. states generate enough wind power to replace one or more coal or nuclear power plants.  U.S. wind grew 39 percent in recession year 2009. In a growing number of global locations from Hawaii to Denmark, wind is the least expensive way to generate power. Their WWS study includes both on-shore wind power, which is plentiful from Texas through the Dakotas, and offshore with enormous potential along our Pacific and Atlantic coasts and our Great Lakes.

Solar includes the photovoltaics that cover homes and the faster growing PV that covers commercial roofs. It also includes the grid-scale PV and concentrating solar power (CSP) that generates the equivalent power of a natural gas or coal plant. The water in WWS includes hydropower, our most widely used source of renewable energy, and geothermal power, which uses steam to drive turbines.  Water also includes emerging, wave and tidal power generation. Brilliant minds, breakthrough innovation, and billions of investment in companies that deliver more cost-effective renewables and energy efficiency.

WWS can meet all of our needs for electricity. WWS can also meet all of our need for heat and for transportation. VantagePoint Capital Partners provide venture capital and management guidance to innovative leaders in energy innovation and efficiency, such as BrightSource, Better Place, and Goldwind.  VantagePoint was the presenting sponsor of the MUSE Concert.

Safer Energy and Economic Growth

During the next ten years, we will see major nations make their people safer by shutting down their last nuclear power plant. Due to the innovation and progress in energy efficient lights and buildings and thanks to the high growth of renewable energy their nations will better meet all their power needs.

Within the next three decades, all the of our global energy demands can be achieved with zero coal and nuclear power as we replace massive waste with intelligent energy management, replace darkness with energy-efficient lighting, and replace mercury and nuclear poisoning of our children with the power of the sun and the wind.

Cleantech Investing: A View From 21

Ordinarily, I let my fellow blogging colleague Neal Dikeman of Jane Capital take the lead in covering cleantech IPOs and publicly-traded stocks. 

However, I recently received the May 2011 newsletter from 21Ventures, and found the commentary by David Anthony on cleantech public equities an interesting complement to Neal’s most current take — sufficiently so to expound upon it herein.

According to David, “by the end of Q1 2011, we will have seen the bottom of cleantech investing and valuations”, with three key subpoints:

1.  “Oil seems stuck above $100/barrel.”

2.  “Nuclear energy may be too ‘radioactive’ as a source for baseload grid power.”

3.  “Renewables will fill the void left by dwindling nuclear capacity.”

It’s a nice newsletter, well worth reading, though I think David’s analysis is a bit too sanguine.  Oil prices will remain volatile, and each time they go down somewhat, the rank-and-file will think (again) that our energy crisis has passed, thus reducing the pressure for change or action in moving towards cleantech.  David overlooks the growing sense of many that natural gas from shale will represent the answer to most if not all of our future energy supply challenges for years to come, thereby mitigating the need for renewables and/or energy efficiency.  And, David neglects to discuss the future role of coal, which I believe will hang on for a long time to come, and whose benefactors will rain on the parade of cleantech as much as possible whenever possible to elevate coal’s relative position in the energy scene. 

All of these factors will mean that cleantech investing will still experience more than its fair share of bumps along the road.  It will be a tough and choppy market to navigate, and I don’t think the public markets lend themselves well to companies unless and until they have very sizable and stable earnings — which most purely cleantech firms (including publicly-traded ones) do NOT have.  Thus, cleantech is an industry that, for awhile, will mainly be capitalized through private equity and venture capital markets, with liquidity events through sales to major corporate acquirers that have sufficient scale to float well on public markets, rather than IPOs for the most part.

But, I do share David’s closing summation:  “We have always believed that dwindling low-cost fossil fuel reserves, climate change, growing middle classes in emerging markets, and urbanization will converge to create some of the best investment opportunities in our lifetime.”  I think Neal would share this conclusion too.

Fukushima: Where It Stops, Nobody Knows

The staggering trifecta of disasters in Japan created images of horror that will last for decades.

A 9.0 magnitude earthquake shook buildings hundreds of miles away, sending office workers in Tokyo skyscrapers scrambling under desks while trembling video recorded the screams of terrified occupants and the freakish sight of rippling floors and walls.

A massive tsunami of proportions unimaginable without helicopter-based footage for documentation swept away seemingly endless numbers of buildings and vehicles as if they were toys, drowning untold thousands of people.

But, it was the accidents at the Fukushima Dai-Ichi nuclear powerplant operated by Tokyo Electric Power Company (Tokyo: T) that made for the most chilling legacy.  Although several spectacular explosions beset the plant – all for the lack of robust systems to keep supplying cooling water in the wake of the destruction of the earthquake and tsunami – it was what couldn’t be seen that bothered people the most:  the invisible radioactive emissions and the scary (if not fully-grounded) fears of torturous poisoning from clouds floating downwind thousands of miles that captured the world’s attention.

Although it seems as though the worst of the situation is finally behind us, it will be some time until some degree of stability returns to Fukushima.  “Normalcy” will not return to that area for many decades, perhaps centuries. 

With the crisis past now its most critical point, just about everyone on the planet is reassessing the future place of nuclear in the global energy equation.

Germany has ordered a shutdown and review of the older segment of its nuclear powerplant fleet, and China suspended for the time being the approval process for new nuclear plants.  In the U.S., President Obama has asked the Nuclear Regulatory Commission to reassess the safety of U.S. nuclear powerplants, especially those that are most exposed to the risks of earthquakes and tsunamis, most notably as San Onofre and Diablo Canyon along the coastline of Southern California.

General Electric (NYSE:  GE), the supplier of the nuclear technology at Fukushima, suffered significant declines in its stock price, as investors and traders worried that GE would be liable in some manner to some degree for the enormous costs and consequences that are likely to be borne for years to come in tending to Fukushima – which is almost certainly destined to become, like Chernobyl, an entombed monument never to operate again, surrounded by vast swaths of abandoned land.

Even with all this angst, no-one really knows what Fukushima means in the long-term for nuclear energy – whether it’s a knockout blow or merely an admittedly severe setback.  I’ve asked several friends active in various aspects of energy for their perspectives on the Fukushima disaster, and there’s a collective shrug and hand-wringing reflecting a general bewilderment.

Far be it from me to suggest I have a clearer view than my esteemed colleagues.  However, these are the questions that I think need to be asked and answered to develop a consensus by respected voices from the energy industry – both inside and outside nuclear – if the so-called “nuclear renaissance” promised over the past couple of years will in fact ever materialize post-Fukushima.

  • What can the nuclear industry do to convincingly assure the public’s trust that the authorities are really telling the whole truth and nothing but the truth?  Apparently, many Japanese had historically been highly distrustful of their nuclear authorities — based on previous examples of real or perceived deceit, cover-ups, lies, etc. — before Fukushima.  Even the U.S. government indicated at times that they weren’t sure they were being fully informed about conditions at Fukushima.  As a friend of mine — who possesses a Ph.D. in nuclear engineering — commented to me at one point last week, “They’ve stopped communicating, which means they’re either too busy to communicate, or they don’t want us to know.  Either way, it’s bad.”   This distrust is not unique to Japan.  Any industry that has Homer Simpson (the Safety Inspector at the fictional Springfield Nuclear Power Plant) as its most visible icon is going to struggle to maintain a confident public.
  • How can everyone be sure that the lack of sufficient cooling water in the wake of a disaster will never befall a nuclear plant again?  If there’s anything a nuclear reactor must have, it’s continued access to cooling water under any and all contingencies.  In the case of Fukushima, the power lines were swept away and the diesel backup generators were swamped by the tsunami, eliminating the capability to keep the reactors cool — hence, the cascading failures.  Every nuclear powerplant needs to be proven to have multiple levels of redundancy on cooling water supplies.   
  • How would evacuation plans really work?  As part of its operating license from the Nuclear Regulatory Commission, the operator of a nuclear plant must file an emergency preparedness plan.  A “full-scale exercise” is required every two years, but it’s far from clear that these “exercises” are indicative of how a sure-to-be-panicked public would respond.  For certain plants, such as Indian Point less than fifty miles north of Manhattan, a truly effective evacuation seems fanciful.
  • What is the next-best solution for baseload supply of electricity available today and for many decades to come?  With nuclear now clearly out of favor, general antipathy towards coal power due to its environmental impacts, and the widely-held desire for energy prices to be as cheap as absolutely possible, the only remaining option for 24/7 power generation at any meaningful scale would appear to be natural gas generation.  To be sure, with the recent boom in domestic production from shale gas reserves, it seems as though there’s an abundance of natural gas and low prices to last for years to come.  However, this was also the prevailing sentiment during the 1990s, spawning a slew of new natural gas powerplants that chewed up all of the seeming glut of natural gas, thus driving natural gas prices to historic levels before the economic collapse in 2008.  No reason in my mind it can’t happen again in the 2010s.
  • What are the true, full costs of nuclear energy?  If there’s anything obvious about Fukushima, it’s that the costs of building and operating a nuclear plant are now much, much higher than they were a few weeks ago.  Exactly how expensive remains unclear.  Even before the incident, the full costs of nuclear energy were obscured from the public in a variety of ways, such as the large R&D expenditures by the government on nuclear technologies.  Arguably, the costs associated with waste disposal, plant decommissioning, and emergency response have been underfunded over all of these years of nuclear operations; for certain, a definitive approach for the waste disposal issue has been continually deferred for decades.  Perhaps the most obvious subsidy is the DOE loan guarantee program, which makes the taxpayer the creditor of last resort in the event of default by a nuclear powerplant owner.  If a Fukushima-type situation were ever to occur in the U.S., it is virtually certain that the owner would be financially broken, leaving the U.S. citizen to pick up a bill that is truly incalculable.

Until there’s a much higher degree of comfort that there are good answers to these questions, it doesn’t seem likely to me that there will be significant public acceptance of nuclear energy as a viable option for new choices to be made in the future.  In which case, the previously-coalescing-but-fragile support for nuclear from across the political spectrum (see Time article from just six months ago) will have splintered, perhaps a Humpty-Dumpty never to be put back together again.

In concluding, I will restate my record as saying that I’m not necessarily opposed to nuclear energy, and support it under the right conditions:

  • The plant needs to be located at a sensible site
  • The operator needs to have an excellent operational record and processes for maximizing safety without concern for cutting-corners to maximize profits
  • A sound and scalable permanent waste disposal process must exist

We as a country are failing the third test, and in many cases, the first two aren’t in place either. 

Will a Fukushima happen here?  Probably not.  Can a Fukushima happen here?  Yes.

Should we get panicky?  No.  Should we be more concerned, and be willing to pay more attention (and money)?  Yes.

“Power Hungry” is Filling, But Not Fully Satisfying

It had been on my nightstand for awhile, but I finally got around to finishing Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future by Robert Bryce.

According to his own bio on the book jacket, “Bryce has been producing industrial-strength journalism for two decades” –whatever “industrial-strength” is supposed to mean.  And, by his own writing, he states that “I am neither a Republican nor Democrat.  I am a charter member of the Disgusted Party.”

Given his angst-ridden and self-assured stance, perhaps it shouldn’t be surprising that Bryce’s narrative is laced with the type of adjective-overladen hyperbole that has come to dominate the media in our Michael Moore and Glenn Beck era – a rhetoric style that I personally find annoying and unhelpful in its seeming desire to provoke.  (Though, I would pay good money to see Bryce call someone like Dr. Gal Luft an “underinformed-but-persistent sophomore” to his face as he implicitly does in writing.)

If one can get past the sometimes maddening and offensive passages, the book has its share of merits.  Bryce is right to focus on facts, to seek to strip away untenable claims, and to decry the lack of clarity of thinking in the national energy discourse.  Part One of the book is an occasionally masterful primer on many of the basics about energy production and consumption in the modern world, studded with facts – mostly accurate by my superficial review.

But, as the Einstein principle implies, “A theory should be as simple as possible, but no simpler.”  And, in striving to simplify the energy topic by driving towards sound-bites from a massive but still incomplete set of facts, Bryce sometimes strides too far.  He sometimes pieces the facts together in such a way so as to draw skewed conclusions.  And, his lack of nuance – indeed, his distaste for nuance – leads ultimately to oversimplification and conclusions that are at best only partly correct.

Part Two of the book is consisted of chapters devoted to debunking “myths” about green energy.  I guess it’s fair to tackle this, in that some commentators supporting green/renewable/alternative energy really have been guilty of overstating the facts and creating too much unsustainable hype as a result.  Yet, for the most part, the myths that Bryce attacks are constructed in such a way as to be too easily knocked down like a cheap strawman. 

For instance, the chapter entitled “Myth:  Denmark Provides an Energy Model for the United States” is written as though someone actually thinks that Denmark and the U.S. are sufficiently similar that the Danish energy system can be largely replicated in the U.S.  Maybe some people do actually think that the U.S. should really pattern itself after Denmark, but most of us in the energy sector know that’s a naïve thought.  Even so, that’s not to say that the U.S. can’t learn valuable lessons from the Danes – and in fact, Bryce acknowledges as such in the chapter itself, though you might not notice because of the chapter title.

I could go on with a number of other examples of how Bryce makes himself a valiant protector of Joe Six-Pack by dismissing so-called “myths” that are portrayed as elitist ideals of little substantiation and hence value – even when the “myths” he’s debating are drawn in a hopelessly indefensible manner. 

Bryce can’t seem to accept that, just because some people have said stupid things about green energy, it doesn’t mean that green energy is stupid.

It’s clear that Bryce is an devout disciple of the Peter Huber & Mark Mills school of energy analysis, in which energy density is the primary factor driving winners and losers in the energy sector.  By this way of thinking, nuclear and fossil fuels are clearly superior to wind, solar and bioenergy, which require large footprints.  It’s an intriguing perspective, and definitely applies well to mobile and transportation energy, in which density is a critical driver of commercial acceptability. 

However, I’ve never been convinced that energy density is a significant factor in “stationary” energy to power, heat and cool buildings:  it’s all about economics, and if the cost of land and delivery is sufficiently cheap (i.e., in a remote area connected via a delivery system), who cares how dense the energy is? 

(Let’s not forget that Huber/Mills have been less than an infallible source of energy prognostication, as any reader of the fascinating but yet wholly inaccurate Huber-Mills Digital Power Report from the early 2000’s – sample forecast:  ubiquity of digitally-managed distributed generation – can attest.)

It’s equally clear that Bryce passionately hates several things:  virtually all political figures of all stripes, T. Boone Pickens, wind energy, and biofuels.  Bryce has no use for them, can find no virtue or benefits from any of them; the dislike seems to go beyond the rational. 

Putting aside politicians and Pickens, I’m well aware of the limitations of wind energy and biofuels, but that doesn’t justify throwing the baby out with the bathwater, as Bryce does.  Rebuttals to Bryce’s diatribes on wind energy and biofuels can be constructed to indicate where, how, when and why wind and biofuels can indeed make sense, but it would be a Herculean task just to overcome the volume of volleys he lobs.

Part Three of the book provides Bryce’s (over)simplifying conclusion to our whole energy problem:  we’re finding immense amounts of natural gas in shale, more than we could have ever expected a few years ago, so we need to use all of this to bridge to a nuclear future, which is the ultimate long-run solution and for which technology and economics will ultimately prevail.  As Bryce calls this vision of natural gas to nuclear, N2N.

I’m not intrinsically against increased utilization of natural gas and nuclear energy.  I’m more sanguine about the natural gas – though I don’t know if the shale plays will have the duration Bryce expects, due to the steep decline curves encountered so far – than I am about nuclear energy, which both has poorer current economics and lower public acceptability than the wind energy that Bryce damns to high heaven.  (And, Bryce is super eager to gladly accept all the hype he can accumulate on nuclear energy, especially about waste management safety and fuel recycling technology advancement.)

The problem I have with Bryce’s N2N synopsis – the oversimplification resulting from his lack of appetite for nuance – is the “silver-bullet” mentality about energy that has played a large part in getting us to where we are today.  Bryce seems to think that there should be one answer for most if not all our energy needs:  natural gas in the immediate future, nuclear in the longer future.  He doesn’t see a future for renewable energy, in large part because he seems to think that something that represents only a part of the solution isn’t really a solution.

I disagree, and believe we need a highly diversified all-of-the-above energy strategy, as I don’t see a one-size-fits-all energy approach as workable.  For example, if wind can supply 15% and solar 15% of our needs (at prices that are likely to decline with volumes to levels approaching competitiveness with fossil fuels), that shouldn’t be pooh-poohed just because it doesn’t supply a majority of our needs.  Indeed, going from less than 1% to more than 10% in either of these forms of energy represents a huge growth potential and huge wealth creation opportunity.

Notwithstanding its flaws, I do recommend cleantech advocates read the book.  It is cited widely by opponents of renewable energy and media articles and outlets unfavorable to renewable energy, so it’s good to have read the raw source material. 

Though you may need to have some industrial-strength antacid at your side when reading his so-called “industrial-strength journalism”.

Renewable Energy Almost Equals Nuclear Energy in USA

According to the most recent issue of the “Monthly Energy Review” by the U.S. Energy Information Administration (EIA), “nuclear electric power accounted for 11% of primary energy production and renewable energy accounted for 11% of primary energy production” during the first nine months of 2010 (the most recent period for which data have been released).

More specifically, renewable energy sources (i.e., biomass/biofuels, geothermal, solar, water, and wind) accounted for 10.9% of domestic energy production and increased by 5.7% compared to the same period in 2009. Meanwhile, nuclear power accounted for 11.4% of domestic energy production but provided 0.5% less energy than a year earlier.

And according to EIA’s latest “Electric Power Monthly,” renewable energy sources accounted for 10.18% of U.S. electrical generation during the first three-quarters of 2010. Compared to the same period in 2009, renewables – including hydropower – grew by 2.2%. While conventional hydropower dropped by 5.2%, non-hydro renewable used in electrical generation expanded by 16.8% with geothermal growing by 4.9%, biomass by 5.5%, wind by 27.3%, and solar by 47.1%. Non-hydro renewables accounted for 3.9% of total electrical generation from January 1 – September 30, 2010 — up from 3.5% the year before.

Preliminary data also show that fossil fuels accounted for 78% of primary energy production. Overall, U.S. primary energy production rose by 2% compared with the first nine months of 2009. The report also showed that consumption of oil, including imported oil, has declined due to more fuel-efficient vehicles and because vehicle miles traveled peaked in the U.S. in 2005.

“Members of the incoming Congress are proposing to slash cost-effective funding for rapidly expanding renewable energy technologies while foolishly plowing ever-more federal dollars into the nuclear power black hole,” said Ken Bossong, Executive Director of the SUN DAY Campaign. The Southern Company was recently provided with $8.4 billion in federal loan guarantees to build two new nuclear reactors. The guarantees could cost taxpayers $8.4 billion should the project later be cancelled due to cost overruns. Congress is considering over $40 billion for new nuclear reactors.