The Bottom Line on the New Energy Economy
Previous Articles: Jan-Mar 2009
Solar for Lawyers and Big Corporations

March 25, 2009
By Craig Severance 

President Obama has promised to energize the renewable energy sector to more than double its power production in just the next 3 years.  Despite the Federal government's ambitious goals for renewable energy, two Federal tax rules are now actually preventing willing investors from participating in renewable energy projects.  

Financing for the "new energy economy" is stalled.  My experiences in just the last few weeks illustrate the frustration on all fronts:

Click here to read entire Article.

Going Green: And the Winner Is -- "Clean Coal"?!

March 17, 2009
by Craig Severance

The Going Green East conference was held last week in Boston, a showcase for "green" companies to talk about their business plans before a host of venture capitalists, investment bankers and media in attendance, The event, whose major sponsors include EcoWorldAlways OnScientific American, Morgan Stanley, and KPMG, began with an announcement of the "Top 50" leading "greentech companies".

The shocker was that the Overall WInner in this competition among "green" companies is a "clean coal" company -- GreatPoint Energy, which has developed a proprietary coal to natural gas conversion process using a mix of steam and catalytic metals. 

Going Green East organizer Ed Ring, Editor of EcoWorld, explained that the top winners this year were picked with an eye on the general economy.  A combination of cheap energy and tight credit markets has severely impacted greentech companies, and conference organizers felt it important to pick companies that "will still do well now". 

This pragmatic approach caused GreatPoint Energy's coal conversion process to rise to the top of the list.  GreatPoint has already raised $140 million and has backing from several major corporations including Dow Chemical, Peabody Coal, AES, and Suncor Energy. The company says it proved its "catalytic hydromethanation" process in a pilot plant at the Gas Technology Institute in Des Plaines, Illinois, and now has a demonstration plant in Somerset, Massachusetts.

"Green" Coal?  Most environmental organizations and "green energy" supporters question whether any process which uses coal as its feedstock could possibly be considered  "greentech".  However, GreatPoint Energy's CEO Andrew Perlman describes natural gas as the cleanest burning fossil fuel, while coal is the dirtiest. 

Perlman argues that a process to convert coal into natural gas can be an important strategy to help reduce global warming, because a natural gas power plant typically produces less than half of the carbon dioxide per kWh spewed forth from a coal-fired plant.  GreatPoint Energy's process combines pulverized coal in the presence of catalysts with steam (H2O), with the major outputs being methane (CH4), and CO2.  Greatpoint plans to sell the methane as "Bluegas"(TM), directly into natural gas pipelines.  The CO2  byproduct would need to be sequestered underground, to actually achieve any reduction in global warming effects.  

The process does not achieve the >90% reduction in CO2 emissions sought by post-combustion "Carbon Capture & Sequestration" (CCS) schemes which are currently the subject of much "Clean Coal" research.  The natural gas would typically be burned without any post-combustion process to capture its carbon emissions.  However, Perlman stated that it is a major accomplishment to convert coal into natural gas and thereby achieve over a 50% reduction in CO2 compared to burning the coal directly to produce electricity. Other major air pollutants caused by burning coal, such as particulates and mercury, would also be removed in the conversion process. (Remember Beijing?)

In response to anti-coal environmentalists, Perlman states "You've got to show me a faster way to clean up the environment."  An attendee at the Going Green conference, however, questioned Perlman, asking "what about the front end?" -- noting coal strip mines as examples of why coal is still a dirty fuel.  Perlman counters  "we should not let the perfect be the enemy of the good."

Click here to read the full article.



March 11, 2009
by Craig Severance

Solar power from the sunny Southwest could soon provide relliable and cost-effective electricity, using a new power plant designed to operate around the clock.  The proposal could answer naysayers who have argued that solar is impractical as a power source because the sun does not shine all the time. 

The new power plants would combine solar and natural gas in one power plant, sharing a common steam turbine.  Bob Fishman, CEO of solar company
Ausra, said today that combining the two technologies in one facility can slash one third off the cost of solar power, reducing total generation costs to around 7 to 8 cents/kWh.   

Click here to read the entire Article.

Solar Panels: Tapping The Power of "We"

March 9, 2009
by Craig Severance

This past week I was on a panel at the Clean Power Finance Forum in Glenwood Springs, CO, and the question arose - why are solar panels becoming so popular?  The discussion was electrified with many possibilities for renewable energy here in Western Colorado, but most especially solar power.  

Western Colorado is one of the sunniest parts of the U.S,  and has already seen hundreds of solar electric and solar hot water systems installed on homes, businesses, and public buildings.  However, solar enthusiasm is not just a function of geography. Even much cloudier parts of the world, such as Germany, are experiencing widespread installations of solar panels.

The excitement for solar cannot be explained entirely by economics.  There are many other "green" ways to generate electricity that are less expensive than solar photovoltaic (PV) panels.  Wind farms on the Great Plains beat PV hands-down in any comparison of cost per kWh.  Micro-hydro turbines hold great promise, especially in a mountainous region with water literally pouring down from higher elevations.  Geothermal electric generation and district heating can be very cost-effective where that resource exists, such as Glenwood Springs, CO, where the workshop was held.   Even among solar-only alternatives, it seems that at least for now, solar thermal electric farms are likely to beat solar PV farms for many large utility projects.

Why, then, is there such enthusiasm for solar?  The answer becomes clear when you answer this question from the standpoint of the individual homeowner or business owner.  It is not just a question of what technology is adopted, but who can implement it.  

There are now millions of people who want to help solve the combined global warming, energy dependence, and economic problems, and people are looking for something they can do to reduce their own energy use and cut their own utility bills.  

Unless you own a large ranch like T. Boone Pickens, you are not going to be able to put a wind farm in your backyard.   You can't drill down below your property and generate electricity from hot rocks.  Unless you are a farmer, you won't be burining methane to generate clean energy.  However, the sun shines on us all, and it might very well be possible to install a solar hot water and solar electric system.  

Tapping into the solar resource, therefore, is a way of tapping into The Power of "We", as in "We Can Solve It", or even "Yes, We Can."  Solar energy is something that a great many of us can do,  

Click here to read entire Article.

Business Solar System Pays For New Hybrid

March 2, 2009
by Craig Severance

Our 10 KW solar photovoltaic system for my wife's office is not only paying for itself -- but also generated enough extra cash flow to buy us a Prius.  If you are a business owner thinking of installing a new solar system for your business, here's how:

To read the full Article and access PDF spreadsheet analysis, click here:

Nuclear, Solar Not Red or Blue

March 1, 2009

by Craig Severance

Within days of the well-publicized
release of my new study Business Risks and Costs of New Nuclear Power in January by the Center for American Progress, the Heritage Foundation, the arch-nemesis of CAP, thought it necessary to respond with an article defending nuclear power.  Their article, which also gained wide publicity, was entitled New Study on Staggering Cost of Nuclear Energy, Staggeringly Pessimistic. 

My purpose in doing the updated nuclear cost study was to open up nuclear costs to public scrutiny, with a detailed cost analysis where all assumptions were clearly spelled out.  It is now incumbent upon nuclear supporters to present specific analysis to the contrary.  (None has been forthcoming).

Though the title of their article implied I was being "staggeringly pessimistic", Heritage did not actually challenge the assumptions in the Study.  Instead they noted:

Aside from the cherry-picking of data and its clear tilt toward Big Green (the vast industrial complex and lobbying machine being built around global warming alarmism), its conclusions are potentially not that  far off. 

From the above quote, it seems Heritage is a bit paranoid of the green movement (currently being championed by such far-left institutions as Chevron, IBM, and Microsoft).  The thrust of the Heritage "rebuttal" was to blame nuclear's staggering cost on environmentalists, and to call for measures to prevent the outcomes predicted in my Study:

The value of the CAP study is to demonstrate why a nuclear renaissance may never unfold unless something is done to ensure that the conditions set forth by the study never come to pass.

Oh, if it were only that easy!  The nuclear industry has already achieved its political goals of streamlined applications, restricted intervenor rights, and government subsidies for nuclear power.  The nuclear industry even carried off a masterful public relations coup in convincing a majority of the public and policymakers that it could be an important solution to global warming.  Public opposition to nuclear power is now far lower than at virtually any time in the past several decades. 

In the end, however, none of that matters.  Though ideologues may see every issue as a political battle between Left and Right, Blue and Red - these are just power plant projects.    They are not liberal or conservative, Republican or Democratic.  And when the numbers don't add up, they don't add up.  (Something about "lipstick on a pig" somehow comes to mind.)

Click here to read the full article.

Business Risks and Costs of New Nuclear Power: The Staggering Cost of New Nuclear Power

March 1, 2009
By Craig Severancenuke-costs.jpg

On January 5, 2009 the Center for American Progress published here my new study Business Risks and Costs of New Nuclear Power which projects that power from new nuclear plants will cost from 25 to 30 cents per kWh -- putting dramatic upward stress on electric rates and financial solvency for utilities which pursue these projects.                                                       (Image: Salon)

This staggering cost for new nuclear energy places nuclear power solidly in the "Trash Bin" category of new generation options.                                                       

Many will mourn the loss of nuclear power as an "easy" option to reduce carbon emissions, as nuclear has often been the "magic wand" waved by policymakers faced with finding energy solutions. (For further discussion of this point see here.) 

The actual costs of new nuclear power, however, bring us face to face with a new  "inconvenient truth" -- building new nuclear power plants will actually make global warming worse, because hundreds of billions (indeed, trillions) would be needed to build any substantial fleet of new reactors.  If even a fraction of this money were instead spent on other low-carbon choices such as energy efficiency, wind, geothermal, and solar, vastly greater amounts of  low-carbon kWh's and greenhouse gas reductions could be achieved.   

At a time when the world climate is a "3 Alarm Fire", choosing to build new nuclear power plants is like buying a gold-plated garden hose, when with the same amount of money you could buy the fire engines we really need.

This analysis of new nuclear power's costs was sorely needed, because the nuclear power industry's glossy public relations campaign had succeeded  in convincing the public and policymakers that nuclear power was a cheap and effective means to reduce global warming.  However, when exposed to open scrutiny, the numbers just don't add up that way. 

Open scrutiny is the goal of the Study, as I wrote to Center for American Progress Senior Fellow  Dr, Joseph Romm, who is the editor of the blog, which released the Study:  

All assumptions, and methods of calculation are clearly stated. The piece is a deliberate effort to demystify the entire process, so that anyone reading it (including non-technical readers) can develop a clear understanding of how total generation costs per kWh come together.

As a former utility commission staffer, I find it very disturbing that utilities now proposing new nuclear power plants are actually succeeding (in PSC dockets!)  in hiding basic assumptions about what the new nuclear plants will cost.   Quoting further from my correspondence to Joe Romm:  

In contrast to this transparency, many nuclear promoters have adopted a “Black Box” approach. It has unfortunately been the case over the last couple of years that some utilities have begun to claim that even rudimentary basics of their nuclear cost estimates must be hidden from the public as “trade secrets”. For instance, in the South Carolina Electric & Gas proposal to build two reactors now under consideration by the South Carolina PSC, there is literally a large “box” obscuring the bulk of the calculations in the SC E&G Exhibit which presents the utility’s projection of construction and financing costs for the proposed two-unit facility. In a different case, Duke Energy claimed that it does not even have to disclose its new cost estimates for a proposed nuclear facility in Cherokee County, S.C.. In the Duke case, C. Dukes Scott, South Carolina’s consumer advocate, who represents the public in utility rate cases, noted, “If the cost wasn’t confidential in February,” Scott said, “how is it confidential in April?”

Even when no effort to conceal information is apparent, the very terminology used when projections are presented can be confusing or misleading. For instance, in 2007 when a number of new nuclear proposals began to advance, it was common for “Overnight Cost” estimates to be quoted. For a project (such as solar or wind) whose construction period may be as short as several months, the difference between an “overnight” cost and the full cost to complete the project may not be significant. However, for a nuclear project that may typically take a decade to complete, cost escalations that occur during this long construction period, plus the financing costs during construction, may easily double the total cost of a project compared to its “overnight” cost. When the full picture is presented, some may perceive the total cost estimate has mysteriously doubled. However, it simply should have been stated clearly to begin with that major escalation and financing costs cannot be avoided when it takes a long time to complete a project. Failure to do so is tantamount to selling someone a house with “teaser” initial mortgage payments and failing to make clear that the mortgage payments will later reset to a much higher level.

Another mysterious “black box” presentation method is to fold the overall costs of the new facility into the general rate base of the utility, without ever mentioning what the generation costs per kWh of the nuclear unit will be. Instead, it is often only presented how total costs per kWh for all ratepayers will increase — which includes kWh’s generated by existing generation units. (For instance, if a nuclear unit is to supply 20% of the kWh’s for the utility when it comes on line, any cost increase per kWh appears to only be 1/5 as large because the additional costs are also spread over the 80% of kWh’s generated by other facilities, even though those other facilities did not cause the rate increase.) While it is important to know the impact on final overall retail electric rates, it is also important to know the generation costs per kWh from the nuclear facility. If this step is “skipped” in public presentations, the nuclear units (or any new generation power source that is more expensive than existing units) can appear far cheaper than their real impact.

The Paper takes the approach that it is best to lay out in detail “how you got that number” at each step of the way. All parties can then proceed to have discussions based upon real numbers rather than mysterious “Black Box” secrets.

The "Black Box" is now blown open.  As Dr. Romm said in his Article on the Study: 

Given the myriad low-carbon, much-lower-cost alternatives to nuclear power available today — such as efficiency, wind, solar thermal baseload, solar PV, geothermal, and recycled energy (see “An introduction to the core climate solutions“) — the burden is on the nuclear industry to provide its own detailed, public cost estimates that it is prepared to stand behind in public utility commission hearings.


Click here to read the full Article.


Website Builder