Archive for December, 2009

The Cost of Transmission

Tom Konrad, Ph.D.

I’ve been reading a report out of the Colorado Governor’s Energy Office called The REDI Report: Connecting Colorado’s Renewable Resources to the Markets in a Carbon-Constrained Electricity Sector.  I summarized the REDI report’s main conclusions and drew some conclusions for stock market investors here.

I found the report’s discussion of transmission costs particularly interesting, because I’ve had trouble finding numbers for the cost of transmission in the past.  I once resorted to Wikipedia in order to find costs for transmission when comparing them to the costs of large scale electricity storage.  If you don’t think that the two are comparable, consider that long distance transmission can reduce the net variability of wind and solar, making it possible to integrate these renewable forms of generation without the cost of expensive storage.  That’s why even net-zero electricity homes are connected to the grid: it’s prohibitively expensive to buy enough batteries to keep the lights on 24/7.

Here are a couple cost charts from the report:

I took the data from the above table, and plugged it into my spreadsheet comparing the costs of electricity storage.  Below are the updated graphs (click for enlarged versions.)  The notation "2-500 kV AC" means a Double-circuit 500 kV AC line.  As in the storage comparison, I computed the costs and round-trip electricity losses for a 1000 mile line, since that was the example I used in my original Transmission/Storage comparison.

 

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Will 2010 Mark the Shift from the Backward-Looking and Unaffordable Electric Cars to Forward-Thinking Smart Mobility?

Cleantech Group Chairman Nicholas Parker Thinks So

Tom Konrad, Ph.D.

I’ve long argued that the future of mobility in the peak oil era will center on alternative modes of transport, not alternative fuels for the same old car infrastructure.  Electric cars are probably the car of the future, but the cost of batteries and escalating cost of oil will mean that the number of electric vehicles is likely to remain low, while how often we use conventional vehicles will decline as fuel prices rise.

In his annual clean technology predictions for 2010, Cleantech Group Chairman Nicholas Parker prophesies,

Electric cars take the back seat to smart mobility

In 2009, electric vehicles and hybrids eclipsed fuel cell vehicles as the undeniable new center of gravity of the auto industry. Virtually every car company in Asia, Europe and North America announced ambitious clean car strategies, and many brought new models to market, in addition to startups funded by venture capitalists.

In 2010, clean cars will form part of a broader shift to smart mobility. Smart mobility will quickly permeate beyond simply the transport sector, and will be integrated into the new energy paradigm and influence the design of urban systems, even shipping ports. Look increasingly in 2010 for eco-city designs based on concepts such as “new urbanism.” Leading governments around the world will rethink tax systems, fiscal incentives and budgets to encourage greener forms of work and transport based on smart mobility concepts (SNCF, the French state-owned rail operator, set up a fund in 2009 specifically to invest in e-mobility.)

I think he’s being too optimistic on the time frame, but I sincerely hope he is right.   If he is, it will be good for my investments.  Three of my forthcoming Ten Clean Energy Stocks for 2010, to be published on AltEnergyStocks.com in this coming week are currently profitable companies focused on alternative forms of transport.

Two of his other predictions should also be good for my stock pick, if they come to pass.  Mr. Parker sees energy efficiency (three picks) eclipsing solar (no picks), and growing interest in waste-to-energy (one pick.)  You can see the rest of his predictions here.

 

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The Nitrogen-Biochar Link

by Tom Konrad, Ph.D.

Promoters of Biochar should ally with fishermen and other groups concerned about ocean dead zones caused by nitrogen runoff.

The folks at the Carbon War Room are trying to save the world by tackling the trickiest problems in addressing climate change.  One of their current focus points is biochar [pdf].  I’m one of very few investment writers who has taken notice of biochar so far, and they called me to ask what I thought needed to be done to bring in private investment dollars. 

Getting investors interested in biochar is going to be tricky.  The problems are three-fold:

  1. The science of biochar is not yet well understood.
  2. An agriculturalist who uses biochar only gains a fraction of the total benefit; other benefits are positive externalities felt far and wide. 
  3. Creating biochar is fairly low-tech (you can get plans for a charcoal burner on the internet, and make one in your back yard.)  This makes it difficult for companies to profit from it by producing and selling superior technology.

My third point about producing biochar being low tech may not turn out to be a problem.  I ran a draft of this article by Jonah Levine, an industry insider, currently Vice President of Technical Sales at Biochar Engineering, a technology startup.  He says, "The biomass industry is used to driving biomass to ash to garner all of the potential energy benefits. Driving off H and N from the biomass and leaving as much C as possible in a continuous, automated process is not simple. The reaction would like to either take off and reduce everything to ash or not start at all."

If my first two points can be addressed, creating a market for quality-controlled biochar, and portable biochar producing units like Biochar Engineering’s  technology can be produced at a cost low enough that the extra char yield compensates for the extra production cost of the pyrolyzer, then there will be investors interested in biochar, and much more funding will be available.

The Carbon War Room is already supporting research to flesh out the science, and they are working to get biochar included in the World Bank’s biocarbon fund, but I was able to give them one idea: work with others concerned about nitrogen runoff from the overuse of fertilizer to get stricter restrictions or fines imposed for nitrogen runoff.

Nitrogen Runoff

Nitrogen runoff is a massive environmental problem, if not on the same scale as global warming.  Farmers often use more fertilizer than their plants really need because the costs to them of using too little (low yields) outweigh the costs of using excess fertilizer.  Incentives that increase the price they get paid for producing corn and other nitrogen intensive crops only aggravate this tendency, since they increase the benefits of high production without changing the costs of excess fertilizer use. 

The excess fertilizer is not taken up by the plants, and instead runs off into the river system, causing marine dead zones, and contaminating freshwater sources.  This increases the costs of water purification as well as harming people and livestock who drink the untreated water, and is the cause of "blue baby" syndrome.

Biochar and Nitrogen

Biochar, used as a soil amendment, improves water and nutrient uptake by plants.  It has its greatest effects in poor soils, helping the plants access the nutrients that are available, and this effect can last for centuries after the soil has been amended with biochar.  Biochar-ameneded soil should reduce the risks to farmers of using too little fertilizer, and hence reduce the incentive to over-apply, benefiting both the farmers and everyone else in the watershed.

Studies suggest that fertilizer taxes are the most economically efficient way to reduce Nitrogen runoff.  If such taxes were in place, farmers would have a stronger incentive to use biochar in order to make the most of the suddenly more expensive fertilizer.  For environmentalists interested in reducing carbon emissions, this would have the added benefit of reducing nitrous oxide (N2O) emissions from heavily fertilized soils, for an additional reduction of greenhouse emissions.

Hence, Biochar advocates should team up with groups concerned about the fisheries and health effects of runoff to advocate for higher taxes on nitrogen fertilizer.  When farmers complain, perhaps we can buy them off by using the revenue for a biochar subsidy?

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