[Ulenspiegel]

$this->bbcode_second_pass_quote('ROCKMAN', 'U') –What I always find interesting is the discussions that revolve around hypothetical or guesstimate economics of the various alts. Not a wasted effort but in the end what matters is what’s actually being done. Granted one should be aware of the full cycle costs especially when govt funds are used to improve the economics but aren’t accounted for in the viability analysis.


Bottom line: be it Germany or Texas if some alt system makes economic sense it will be built. And that’s where the truth is to be found. As they say: facts beat theory every day.

[ROCKMAN]

U – Perhaps this partially explains why Texas, the state with a huge amount of oil/NG production, is also so strong in alt development:

Electricity deregulation in Texas was the result of the coming into force of Texas Senate Bill 7 on January 1, 2002. According to the law, deregulation is to be phased in over several years. As a result, 85% of Texas power consumers choose their electricity service from a variety of "retail electric providers" Since 2002, approximately 85% of commercial and industrial consumers have switched power providers at least once.

Texas has electricity consumption of $24 billion a year, the highest among the U.S. states. Its annual consumption is comparable to that of Great Britain and Spain, and if the state were an independent nation, its electricity market would be the 11th largest in the world. Texas produces the most wind electricity in the U.S., but also has the highest Carbon Dioxide Emissions of any state.

One desired effect of the competition is lower electricity rates. In the first few years after the deregulation in 2002, the residential rate for electricity increased seven times, with the price to beat at around 15 cents per kilowatt hour in 2006. However, while prices to customers increased 43% from 2002 to 2004, the costs of inputs rose faster, by 63%, showing that not all increases have been borne by consumers.

However, the price to beat seems to have accomplished its goal of attracting competitors to the market during the period through January 1, 2007. It has allowed competitors to enter the market without allowing the incumbents to undercut them in price. In a few years, large providers lost a big fraction of the market, and the largest one (TXU) was even sold in 2007 (this was considered the largest buyout in the USA history) and "reconstructed".

In environmental impact, results are mixed. With the ability to invest profits to satisfy further energy demand, producers like TXU are proposing eleven new coal-fired power plants. Coal power plants are cheaper than natural gas-fired power plants, but produce more pollution. When the private equity firms Kohlberg Kravis Roberts and the Texas Pacific Group announced the take-over of TXU, the company which was known for charging the highest rates in the state and were losing customers, they called off plans for eight of the coal plants. TXU had invested more heavily in the other three. A few weeks later the buyers announced plans for two cleaner IGCC coal plants.

There are positive environmental impacts from retail price deregulation as well. The profitable and growing Texas electricity market has drawn considerable investment by wind-turbine companies. In July 2006, Texas surpassed California in wind energy production. Another positive environmental impact is the effect of higher energy prices on consumer choices, similar to the US market trend toward more fuel-efficient cars. As electric bills have risen, residents are reducing their electrical usage by using more moderate thermostat settings, installing insulation, installing solar screens, and other such activities. Texas utilities are also installing advanced electricity meters that may one day enable variable pricing based on the time of day. This would permit energy customers to save money by further tailoring their consumption based on whether it occurred during the peak demand period (high cost/high pollution) or the off-peak (night time).

Effect on Renewable Energy: Due to the increased usage of natural gas immediately after deregulation, new-era energy tools such as wind power and smart-grid technology were greatly aided. Texas' first "renewable portfolio standard" — or requirement that the state's utilities get a certain amount of their power from renewable energy like wind — was signed into law in 1999, as part of the same legislation that deregulated the electric market.

[dashster]

$this->bbcode_second_pass_quote('Ulenspiegel', '')$this->bbcode_second_pass_quote('dashster', '')$this->bbcode_second_pass_quote('C8', 'I') have read in numerous places that the costs of manufacturing renewables keeps going down- especially solar. Many times I have read that, if this trend continues, solar will be cost equal to fossil fuels in 5 years.

Is this true? Isn't it easier to get bigger cost cuts in the beginning and then it gets harder to cut costs later? The first problems to be solved are the easier ones and represent the low hanging fruit.

[Ulenspiegel]

G.T. supported her argument with an arcticle that focussed on poor EROEI for alternatives of NPPs and fossils.

Secondly, the energetical piggybag argument only works if the EROEI of the REs is low. However, during a slow transition from conventionals to high EROEI renewables, we are talking about decades, it does IMHO not make sense. Here one important aspect is that RE can provide substantial savings, that can be used to fuel the transition, e.g. an EV avoids 80% waste heat in comaprison a car with ICE.

And then there is the general problem that people argue that 100% REs are not possible today. If REs are the ECONOMICALLY best solution at least up to 40%, there is no reason to come with the tedious 100% REs don't work argument, especially, when no alternative is provided, or alternatives that also need energy for the transition.

[dashster]

$this->bbcode_second_pass_quote('Ulenspiegel', 'G').T. supported her argument with an arcticle that focussed on poor EROEI for alternatives of NPPs and fossils.

Secondly, the energetical piggybag argument only works if the EROEI of the REs is low. However, during a slow transition from conventionals to high EROEI renewables, we are talking about decades, it does IMHO not make sense. Here one important aspect is that RE can provide substantial savings, that can be used to fuel the transition, e.g. an EV avoids 80% waste heat in comaprison a car with ICE.

And then there is the general problem that people argue that 100% REs are not possible today. If REs are the ECONOMICALLY best solution at least up to 40%, there is no reason to come with the tedious 100% REs don't work argument, especially, when no alternative is provided, or alternatives that also need energy for the transition.

[Ulenspiegel]

$this->bbcode_second_pass_quote('dashster', '')$this->bbcode_second_pass_quote('Ulenspiegel', 'G').T. supported her argument with an arcticle that focussed on poor EROEI for alternatives of NPPs and fossils.

Secondly, the energetical piggybag argument only works if the EROEI of the REs is low. However, during a slow transition from conventionals to high EROEI renewables, we are talking about decades, it does IMHO not make sense. Here one important aspect is that RE can provide substantial savings, that can be used to fuel the transition, e.g. an EV avoids 80% waste heat in comaprison a car with ICE.

And then there is the general problem that people argue that 100% REs are not possible today. If REs are the ECONOMICALLY best solution at least up to 40%, there is no reason to come with the tedious 100% REs don't work argument, especially, when no alternative is provided, or alternatives that also need energy for the transition.

[dashster]

$this->bbcode_second_pass_quote('Ulenspiegel', '
')It can't be a tedious argument to mention the high cost of 100% renewables, because no one ever makes it. Gail Tverberg gave it a rare, if not the first, mention. You should make another thread to complain about other points of her article.

First, we do not need 100% to gain a lot, therefore, the "100% RE is so expensive" is a strawman.

[dcoyne78]

http://www.ceoe.udel.edu/windpower/index.html

$this->bbcode_second_pass_quote('', 'G')iven that there is enough wind power for all human needs (see above), can fluctuations of wind (and solar) be managed to provide steady power? A new study on integration of wind, solar and storage is about to be published: Budischak, Cory, DeAnna Sewell, Heather Thomson, Leon Mach, Dana E. Veron, and Willett Kempton, 2013, Cost-minimized combinations of wind power, solar power, and electrochemical storage, powering the grid up to 99.9% of the time, Journal of Power Sources, 225(2013), 60-74. Published doi: 10.1016/j,jpowsour.2012.09.054, and post-publications corrections, both are open access, meaning anyone can download without payment. Our PDF contains the article together with the correction page. Also see some of the news coverage of the study's findings: Science Daily, Discovery News, Scientific American, Ars Technica, Grist and Midwest Energy News.

[Ulenspiegel]

dashster wrote: "The question was: when will they become cheaper?"

My point is, that the price depends of how much REs are in the system. In Germany no additional storage is needed up to 40%, therefore, onshore wind already kills NG and hard coal. Only if you want a very high level of RE production, then the (long-term) storage problem bites you.

We had already days with very high percentage of peak power delivered by REs, mainly wind and PV, this means the current system can handle this, no additional price tag. Your 11% argument (wind, PV) is misleading, we have months (see October 2013) with very high contribution of wind and PV and steep power gradients, there were no problems.

dashster wrote : "And I think that answer has two parts a) piggyback cost / adjunct power source cost
b) replacement cost / baseload power cost"

No dispute here. However I draw different conclusions:

One could analyse the secondary energy demand of Germany and will find that the largest contribution comes from heating of buildings (~1000 TWh out of 2700 TWh), usually provided by NG and oil.

Now you invest into thermal refitting of a building. From a energetic POV: You pay twice the annual demand as insulation material and reduce for 30 years the demand of the building by 50%, i.e. within 5 years you have a system that is not only self-sustainable but produces savings that could be used to fuel the changes in the field of electricity generation. These changes have a positive feed-back when done correctly, e.g. electric heatpumps driven with green electrity. Refit 3-4% of the buildings per year. The up-front investment (energetical and finacial) is moderate.

My point is, that developed countries, that are the ones with the high energy demand, have a lot of fat to burn, which can fuel the transition to REs without additinal energetic costs. As long as these REs have a good EROEI there is from a purly energetic point of view no real argument.

The more interesting question for me is, whether the rate of efficiency changes and rate of transiton is sufficient to compensate the effects of higher global demand for oil and NG.

[kublikhan]

$this->bbcode_second_pass_quote('Ulenspiegel', 'T')he best would be IMHO 5 to 10 years stable economic framework and everybody could do what works best for him. Unfortunately, at the moment the big utilities are working very hard to stop everything that is not under their control, the last plan for an "improved" renewable energy law shows clear cuts for PV and onshore wind, but none for offshore, the only field where the utilities are present. The statements of Ottinger, it's "our" EU man in Brussels, sound interesting too.

While I do not think, that in case of PV they could really stop the further development of much more capacity in consumer hand or really damage wind in northern Germany, they close the stable door after the horses have escaped, there is IMHO the real possibility that the development of onshore wind power in southern Germany (where the demand is) could be delayed by cutting FITs.

[Ayoob]

When fossil fuel energy becomes more expensive than renewable energy. Imagine the high price of renewable energy becoming the benchmark for the low price of nonrenewable fossil fuel energy. That's it.

[Ulenspiegel]

@kublikhan

I lack the economic background to make a fair comparison between the different incentive systems in the USA and Europe, add the different demand structure (peak vs. baseload and time of peaks) my gut feeeling says that there is no silver bullet. E.g. for me it would be no surprise if PV had a much higher impact in the USA than in Europe and may require different subsidies. Different attitudes in respect to net stability may also lead to differnt solutions.

The next aspect is the complete different owner strcuture of RE production capacity, in Germany more than 50% of the capacity and even more of the RE production is in hands of private persons, in contrast, most of the REs in the USA are owended by utilities or investors.

Third aspect is that now -with PV and onshore wind at quite competitive production price levels- countries start with a quite different situation compared to Germany around 2000, and may cherry pick some components and avoid mistakes. The simple, without tools to maintain a useful installation corridor, FIT system for PV in Germany had led to an overheating of the market and the bankruptcy of most German PV module producers, a developement that could have been avoided. In contrast, the onshore wind developement, which started earlier, is a real success story, but also used a simple FIT system. The crucial difference may be that you can not import high amounts of wind capacity or expand your domestic production in a short span of time in order to abuse the FIT system.

[kublikhan]

Doesn't really matter, looks like I was wrong anyway. The same type of problems you mentioned(Utilities struggling against distributed) are starting up over here in the states as well. Same types of arguments as well(Renewable subsidies too high, they should stand on their own, not a level playing field, etc.) I guess we are not so different after all.

[Pops]

The reason solar has become cheaper is the glut of polysilicon which constitutes 25% or PV module costs.

$this->bbcode_second_pass_quote('', 'P')olysilicon has plunged 93 percent to $33 a kilogram from $475 three years ago as the top five producers more than doubled output, data compiled by Bloomberg shows. The industry next year will produce 28 percent more of the raw material than will be consumed, up from 20 percent this year, said Robert Schramm- Fuchs and Shai Hill, analysts at Macquarie Group Ltd.

[kublikhan]

$this->bbcode_second_pass_quote('Pops', 'S')o as the market shakes out the non subsidized producers, expect prices to not only not continue falling but to rise since that basic material is being sold below cost.

[Ulenspiegel]

Pops,

I think you are on the wrong track. Germany, which is no low-wage country, has quite low prices for PV installations and even here we see that the module only causes less than 50% of the price and Si is only a small part of the module price.

The real problem in the USA is everything besides the module, the BOS: the same installation with the same US modules costs around twice in the USA compared to Germany.

[kublikhan]

Just to build on what Ulenspiegel was saying, there is still alot of potential to lower costs in the US on the BOS side, or "soft costs". The US Department of Energy looked at this area in their SunShot Initiative. Here's some highlights if you were interested.

$this->bbcode_second_pass_quote('', ' ')Continuing cost reductions on the module and hardware side of the solar equation will help solar become more widespread, but the real cost-reduction potential is on the soft cost side. In 2011, the U.S. Department of Energy launched the SunShot Initiative, to make solar energy cost competitive with other forms of electricity by 2020. NREL and RMI’s roadmap shows how we can reach SunShot cost goals—to reduce the cost of solar energy systems by approximately 75 percent—from 2013 to 2020.

Permitting, inspection, and interconnection (PII)
In regards to PII, Germany is currently living on a much more solar-favorable planet than us here in the U.S. several near-term opportunities exist that could achieve modest cost reductions in existing markets while, more substantially, moving other U.S. markets out of stuck/marginal positions.

Customer acquisition
While customer acquisition costs represent about 10 percent of deals in both residential and commercial markets, they are still painfully high compared to Germany and Australia. The good news (from preliminary NREL 2012 benchmarking data) is that these costs are coming down a bit. What’s more, this is a very active entrepreneurial space, and in the residential market customer acquisition appears to have the most certain path to its roadmap target of all soft cost categories.

Reducing permitting, inspection, and interconnection costs and lowering customer acquisition costs are key to bringing down the cost of solar PV. As you might imagine, they also can influence each other. Substantial improvements in one soft cost might help synergistically solve others.

FINANCE: LOWERING THE COST OF CAPITAL
financing for German residential systems, through its government-backed development bank KfW, is achieved at just ~5 percent interest rates, roughly half the average cost of financing available in the U.S. To put this in perspective, imagine the slowdown in the U.S. housing market and broader economy that would result from 30-year mortgage rates suddenly spiking to 8 percent from today’s average 4 percent rates. In the U.S., solar financing currently lives in that high (credit card-like) cost of capital world and will only reach mainstream acceptance by transitioning to a much lower cost of capital environment. Some significant opportunities to bridge the financing cost of capital chasm are: New solutions for the commercial market, Asset-backed securitization, Mortgages and other loans, Yield-oriented public capital vehicles, Corporate financing.

INSTALLATION LABOR
improved industry focus and innovation is needed in several areas, notably: Integrated racking, Plug and play, Commercial PV module integrated electronics.

THE TAKE-AWAY
The solar industry will remain a small story in America’s electrical system unless it can tame the soft cost beast. Progress to date has been uninspiring.Stepping up soft cost engagement requires both increased pre-competitive actions supported by the industry, and additional cross-stakeholder solutions that provide value more broadly across the playing field.