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How About A Sane Energy Policy Mr. Obamney?

It’s Presidential Election year.  Ergo, time to discuss our 40 year whacked out excuse for an energy policy.  Royally botched up by every President since, umm?

Objectives:

Make US energy supply cheap for the US consumer and industry, fast growing and profitable for the American energy sector, clean, widely available and reliable, and secure, diversified, environmentally friendly and safe for all of us.

or

Cheap, Clean, Reliable, Secure, Energy

 

An Energy Policy that leaves us more efficient than our competitors

An Energy Policy that leaves us with more and more diversified, supply than our competitors

An Energy Policy that leaves us more reliable than our competitors

An Energy Policy that makes us healthier and cleaner than our competitors

An Energy Policy that makes us able to develop adopt new technologies faster than our competitors

An Energy Policy that makes it easy for industry to sell technology, energy, and raw materials to our competitors

An Energy Policy that keeps $ home.

A Sane Energy policy

 

Think more drilling, less regulation on supply, lower tariffs, more investment in R&D, tighter CAFE and energy efficiency standards, simpler and larger subsidies for new technologies, less regulation on infrastructure project development.

 

A couple of key action items:

  • Support the development of new marginal options for fuel supply, and support options that improve balance of payments, whether EVs ethanol, solar et al
  • Make crude oil, refined products, Gas, LNG and coal easy to import and export
  • Drive energy efficiency like a wedge deep in our economy
  • Support expansion and modernization of gas, electric, and transport infrastructure
  • Support long term R&D in both oil & gas, electric power, and renewables
  • Reduce time to develop and bring online new projects of any type (yes that means pipelines, solar and wind plants, offshore drilling, fracking and transmission lines).
  • Support policies and technology that enable  linking of energy markets
  • Challenge the OPEC cartel like we do EVERY OTHER cartel and break the back of our supply contraints
  • Support the export of our energy industry engineering, services and manufacturing  sectors overseas
  • Incorporate energy access into the core of our trade policy
  • Support deregulation of power markets
  • Support long term improvement in environmental and safety standards
  • Broadly support significant per unit market subsidies for alternatives like PV, wind, biofuels, fracking as they approach competitiveness

Or we could do it the other way:

  • Leave ourselves locked into single sources of supply in a screwy regulated market that involves sending massive checks to countries who’s governments don’t like us because that’s the way we did it in the 50s?
  • Keep massive direct subsidies to darling sectors so the darling sectors can fight each other to keep their subsidies instead of cutting costs?
  • Keep a mashup of state and federal regulatory, carbon and environmental standards making it virtually impossible to change infrastructure when new technology comes around?
  • Promote deregulation in Texas, and screw the consumer in every other market?
  • Every time there’s a crisis, we can shoot the industry messenger in the head, stop work, and subsidize something.
  • Continue the Cold War policy of appeasing OPEC so they can keep us under their thumb for another 30 years
  • And drop a few billion here and there on pet pork projects

Come on guys, stop the politics, let’s get something rational going.  Oh wait, it’s an election year.  Damn.

And in the meantime how about making energy taxes (a MASSIVE chunk of your gasoline and power prices) variable, so they go DOWN when prices go up.  Then at least the government’s pocket book has an incentive to control cost, even if they’re incompetent at putting together a policy that does so.

Storing Wind Energy as Hydrogen

By David Anthony and Ken Brown

Wind turbines capture the energy contained in wind.  The turbine rotates a shaft which powers an electric generator.  The electricity that flows from the generator can go to the wind farm’s grid connection to be consumed immediately or go to storage.  We have previously discussed the advantages of storage.  Let’s look at storage using hydrogen.

Water electrolysis produces hydrogen.  As the electricity flows through the water in an electrolysis unit, oxygen and hydrogen are evolved as gases at separate electrodes. In a 100% efficient unit, it takes about 39 kilowatt hours (kWh) of electricity to create 1 kilogram (kg) of hydrogen.  In the real world, electrolysis units are about 80% efficient at best.  With an 80% efficient unit, it takes about 50 kWh of electricity to create 1 kg of hydrogen.  The hydrogen is piped to a hydrogen storage unit.  To avoid the high cost of compressing hydrogen or of cooling and liquefying hydrogen, a good alternative is to store the gas in a metal hydride slurry.  Safe Hydrogen uses magnesium as the metal and mineral oil as the liquefying agent.  With the use of small particles and a suitable dispersant, the particles will stay in suspension almost indefinitely.  Using a hydriding reactor, hydrogen is absorbed by the Magnesium Slurry with suitable pressure and temperature that ensures rapid reaction.  The Magnesium Hydride Slurry that is created in this reactor then can be stored in large quantities at ambient conditions.  The hydriding reaction to create the magnesium hydride slurry creates heat.  This heat is about 30% of the heating value of the hydrogen gas.  About 10 percentage points of this heat, or one-third of the heat, can be used to perform useful work such as generating more electricity.  The rest of the heat can be used for space heating or to produce hot water.  Thus the hydriding step in the process can be from 110-130% efficient.

There are a number of options for the stored slurry.  One, the hydrogen can be recovered on site and the hydrogen can be used to power a gas turbine-generator.  The wind farm owner has the option of selling into the real time and day ahead electric market at a time and price of his choosing.  Since wind blows more at night than during the day on average, and since consumers use more electricity during the day than at night, the wholesale price at night is often $0.02 per kWh or less.  It was reported in Business Week in September 2009 that year to date in the Texas Grid, the wholesale price of electricity was zero or below for 11% of the time.  During those times, the generation facilities on line were paying to put power on the grid.  The Electric Reliability Council of Texas (ERCOT) controls the wholesale price of electricity in the real time and day ahead markets to balance generation and load.  Why would generators pay to put power on the grid?  Large base-load coal and nuclear plants do not want to vary their loads.  Cycling the plants leads to premature wear and high costs.  Wind farms get a $0.022 production federal tax credit.  Until the price passes down through a negative $0.022, wind farms still receive revenue if the turbines generate power.

Another option is to use the hydrogen slurry to “firm” the wind power.  Wind does not blow consistently from hour to hour, day to day, week to week, or season to season.  The ISO that supervises the grid cannot count on the full power of the wind farm’s output.  Typically, only 15% of a wind farm’s output can be counted on as reliable capacity—likely to be available in any given time period.  This means that for a 500MW wind farm, only 75MW is counted as generating capacity by the ISO.  Often, to “firm” the wind farms output, a natural gas fired plant needs to be constructed—partially negating the carbon free output of the wind farm.

With storage, the picture can be different.  Below is an example of a 500MW wind farm delivering 150MW dispatchable power 100% of the time by using storage and gas turbines(GT) powered by hydrogen.  In this example, the ISO can count on 30% of the wind farm’s output.

Wind Storage in Hydrogen Slurry

 

The beige portion of the power generated is stored, the blue portion is delivered by the wind turbines to the grid, and the red portion comes from gas turbines powered by hydrogen.  The horizontal axis represents a probability of power going to the grid from the wind or gas turbine.  About 45% of the time in the year, 100% of the 150MW will come from wind with the excess going to storage.  About 40% of the time, power comes from both the wind and gas turbines.  About 15% of the time, all of the power comes from the gas turbine.  In any give hour or day, power may flow in any of these ways.

Advantages:

  1.  Dispatchable power can demand a higher price.
  2. The grid connection can have smaller capacity—it no longer has be sized for maximum wind farm output.
  3. Firming natural gas fired plants do not need to be built.
  4. The gas turbines can provide the regulation that natural gas fired turbines now provide.
  5. The wind turbines can spin 100% of the time the wind blows (excluding the time when the weather is too violent to operate).

 

David Anthony is Managing Director of 21Ventures.  21Ventures has made over 40 clean tech investemtns  across the globe since 2004. 21Ventures is a co-investor  in Safe Hydrogen, LLC 

Ken Brown  is CEO  of Safe Hydrogen, LLC, a developer  of  safe, transportable  hydrogen.  

California Needs Texas for Cleantech Success

By Joel Serface – May 28, 2009


When I moved from Silicon Valley to Austin in 2006, many of my VC friends were left scratching their heads… Why would someone who has been leading the cleantech charge in California want to move to Texas?  After all, there was conventional thinking in California that there was no hope for Texas and that only the California-way would lead to cleantech success.


I had many motivations including helping Texas become a renewable energy state.  The rationale was this…. If you want the greatest leverage in mitigating carbon emissions, start with the most carbon-polluting state in the most carbon-polluting country in the world (this was before China surpassed the US in carbon emissions).  If you make progress in Texas, then other states and countries would understand they could make the transition as well.  If you don’t show up, engage, and get the state (more importantly its people, investors, and industry) to buy in, then you cannot expedite progress or bridge the necessary gaps to accelerate the cleantech industry in Texas. 


The fact was that Texas has always been a leader in energy including renewables.  Much of the early work in solar happened in Texas at Texas Instruments under the leadership of Jack Kilby in the 1960’s and 1970’s (remember those early solar calculators?).  Like California, Texas had its share of early “successes”, but many of those disappeared in the 1980’s as federal support for renewables waned.  It wasn’t until many leaders in Texas got together to push wind energy in the late 1990’s that renewables appeared as a scalable and reasonable technology.  While California had invested into several generations of wind technologies covering its valuable lands with poorly performing wind turbines, Texas didn’t develop a policy until around the same time 1.5 MW wind turbines became commercially viable.  With the combination of a good wind policy (first-come, first serve REC availability), competitive asset pricing, and low land lease rates, the wind industry in Texas took hold. 


Since then, Texas has developed around 8 GW of wind energy with more than 15 GW planned.  To support this, Texas became a leader in transmission policy developing Competitive Renewable Energy Zones (CREZ), which are now being copied in Western states and other parts of the country.  It has also led in transmission development to renewables with 18.5 GW of new capacity approved to be developed to strong wind and solar areas of the state.  Texas will also go live in its own transmission grid, the Electric Reliability Council of Texas (ERCOT), with the most advanced “nodal” market allowing more entry points for renewables, storage, and ancillary services.  In short, Texas has had its own renewable successes even though they are not as sexy or as publicized as what has been done in California.


California’s strengths are well-known and publicized.  There is no better-experienced region in the world in taking ideas from laboratories and technology entrepreneurs and turning them into products.  California has also been an energy policy innovator historically in clean air and energy efficiency, and more recently in policies for carbon (AB 32), transportation (AB 1493), fuels, and cleantech investment (Greenwave Initiative).  The scope of the technology and policy innovation in the state has allowed it to be a thought leader while seeing some of the early returns from its efforts.  California’s strengths come from its researchers, entrepreneurs, and investors that all think they can change the world.  In short, there are no limits to what Californians think they can accomplish and therefore no limits in its scope of innovation.


Texas’ strength in energy runs deep in the veins of its people.  It starts with a “can-do” or “wildcatting” nature of its people, extends to land development, project development, industrial scalability, and energy trading.  Texans have always taken energy risks and developed core competencies in scaling and optimizing massive processes for chemical and petroleum production.  They have also developed critical technologies for extracting and transporting energy from its origin across vast areas to deliver it where it is needed.  Most of this experience is in extracting, refining, and converting hydrocarbons, but it can also be applied to all aspects of cleantech.  In short, Texas knows how to scale energy technologies and once it is given a price or incentive will become the leader in delivering new forms of energy.


If California represents scope and Texas represents scale, then we need both to transition cleantech ideas from lab to market at an ever-increasing pace.  So what needs to happen to achieve the scope of California and the scale of Texas? 


First, new interfaces need to be built.  If they are, we can accelerate the early and the late to more broadly deploy renewables.  Both Texas and California need to dismiss their pre-conceived notions that their respective approach is best.  The nation needs policy and technology innovators as well as deployment and market innovators.  In the middle is the need for a new dialog and new interfaces especially around how to tie ideas from California into projects in Texas.  There also has to be acknowledgement that California isn’t the only place ideas come from or can be built into companies.  It might actually be better to develop these technologies closer to the points of adoption or at least understand customer and integration needs from the outset.


Second, Texas needs to learn from California and develop policies that support more renewables and energy efficiency.  In the Texas wind case, the state waited to develop a policy just ahead of the time when asset performance of wind turbines was about to achieve price parity with traditional electrical generation.  We are on the precipice of this with solar and other technologies.  If Texas doesn’t adopt policies in this legislative session, it will be left on the “solar sidelines” while other states and countries continue to develop their solar industries, achieve economies of scale, and geographic advantage.  This would lead Texas down the path of possibly importing solar panels as opposed to developing its own domestic solar industry.  If Texas indeed learns from other states and adopts policies more aggressively, then the scaled industries will take hold in Texas and grow faster.


Third, California needs to recognize the potential in developing projects in Texas.  Texas has created a favorable environment for the energy business and has been ahead of the curve in market transformation in order to do so.  This coupled with their demonstrated success in delivering large energy projects gives them a tremendous lead in deploying new energy technologies at a massive scale.  In fact, many of the incentive approaches for wind, transmission, and transmission grid management for renewables should be examined at a national level.


Fourth, Texas cannot sit on the sidelines on carbon pricing.  It is in Texas’ best interest to have a predictable carbon target and therefore price.  This will mobilize many of the traditional energy companies and utilities to get off the sidelines and begin investing into the future energy industry and building their future business models (new financial, trading, and integration models are likely where Texas will succeed). 


Finally, new investing models need to be attempted combining early and late stage investing.  A great deal of attention needs to be paid to the “valley of death” between development of new energy technologies and their delivery in large scale to integrated projects.  While Federal loan guarantees and Federal test and integration centers will be useful here, it will require experienced investors, developers, and corporations to step in, provide financing, and minimizing risk ultimately accelerating these implementations to market.  Texas could become the large-scale test-bed for these implementations.

To make this all work, Texas needs to step forward in this legislative session to begin embracing solar energy and other forms of renewables as well as energy efficiency.  The state’s leadership also needs to announce their support for renewable energy and endorse its associated economic opportunities for the state.  If a pragmatic and immediate approach is developed in working together with industry and California (and other states), the results will be a healthy, high-growth new energy economy, increased numbers of jobs, greater global competitiveness, and enhanced energy and economic security for the United States (and Texas and California). 



Joel Serface served as NREL’s first Entrepreneur in Residence with Kleiner Perkins Caufield & Byers.  As an investor and entrepreneur, Joel has planted cleantech seeds in Massachusetts, California, Texas, and now Colorado.  Since 2000, Joel has started or invested into more than 20 cleantech companies with 5 liquidity events so far and has catalyzed the formation of numerous supporting cleantech institutions and regional and national policy initiatives.