Archive for electric grid

What I told Bill Paul

Mea Culpa, I’ve been falling behind keeping this blog updated… but most of you probably realize that the real stuff goes on at AltEnergyStocks these days. Over the last two weeks, I wrote a series of companion pieces to a series of articles that were published on energy Tech Stocks, based on a long interview Bill Paul, the writer did with me. Here’s an index to them (and they each contain links to the interview articles.)

1. Large Scale Electricy Storage

2. Plug-In Hybrids and Battery Stocks

3. & 4. Improving Transmission and my Ambivalent stance on Biofuels

5. Light Emitting Diode (LED) Stocks

6.Cellulosic Ethanol and Sustainable Forestry.

7. Alcoa and Blue Chip Stock Picks


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ABB Group: Efficient Electiricty Transmission and Distribution

TransformerThis week, I highlight ABB, (the maker of all those boring green boxes most people see every day without even wondering what they are) in my AltEnergyStocks column.

As I have written before, a smarter, more efficient grid is key to integrating more renewable energy and replacing fossil fuels. ABB is well placed to profit from the increase investment that’s needed. You can read the whole column here.

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Indigestion After the Coal Binge

Many energy advocates are concerned about the construction of new conventional electricity generation. This is not only due to the harmful effects of mining, using, and disposing of the waste from coal, natural gas, and uranium, but also because there is only so much electricity demand. My Alt Energy Stocks column this week exproles the possibility of utilites building too much conventional generation to need any renewables at all.

Utilities often say that they will have trouble meeting future demand… this was the justification for the coal plants (now mostly replaced by nuclear) planned by TXU. But these projections massively underestimate the potential of imporved energy efficiency which most studies put at about 1.2% acheivable savings per year, but I believe could be much higher with changes to the regulatory landscape.

To read the entire article, click here.

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Smart Metering for Energy Efficiency

I forgot to post about this one, but better late than never. Here’s an article I did for AltenergyStocks on Smart Metering, and how giving people feedback about how they use eletricity can lead to better decision making.

I’ll have another article tomorrow, on rooting out stock scams (it’s easier than it sounds.)

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Modern Portfolio Theory and Electricity Generation Planning

I mentioned on Saturday that I had gotten some ideas which I planned to use in testimony before the Colorado Public Utilities Commission Least Cost Plan.

Yesterday, I ran my ideas by my friend Morey Wolfson, who is currently serving as head of the utilities program at the Govenor’s Energy Office. Like many members of the local energy advocacy community, Morey was recently tapped by Governor Ritter to help jumpstart Colorado’s New Energy Economy.

I hit the jackpot by talking to Morey, because he turned me on to the work of Shimon Awerbuch, who has been thinking along these lines for years. I’ve just read the first couple pages of his working paper Applying Portfolio Theory to EU Electricity Planning and Policy Making and I’m confident that he’s done a lot of the hard work for me. Here’s one great quote:

    Least Cost procedures are roughly analogous to trying to identify yesterday’s single best performing stock and investing in it exclusively for the next 30 years. Clearly, modern finance theory offers better tools.

Dick Kelley, are you listening? I have a hunch Ron Binz will be….

So what’s the big deal?

I almost forgot to say why this is such a big deal: According to Awerbuch and me, renewable energy and energy efficiency projects deserve a lower discount rate than conventional generation when projects are being evaluated, due to the fact that their costs have low (or even negative, in the case of solar) correlation with electricity prices in general. To use the stock valuation metaphor again, renewable resources are like low and negative beta stocks: the benefits in reduced risk to your portfolio justify paying a higher price for the same level of earnings or dividends.

What this means when evaluating utility projects is that the typically relatively high up-front costs of renewable energy resources do not have to be justified solely by their lower operating costs, but it gives a methodology for taking into account the benefits of reduced risk. This is something that renewable energy advocates have been arguing for a long time. The relatively new part is this gives us a way to quantify those benefits, and utility commissions are very fond of numbers to back up thier decisions.

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Transmission Stocks.. not exciting enough?

My AltEnergyStocks column this week is about investment opportunities in transmission, but to judge by the comments, readers are much more interested in direct investment in wind.

This is not particularly surprising to me… electric transmission is both complex and boring. It’s also absolutely necessary for our transition to a sustainable energy economy. As a contrarian, the lack of interest in my readers makes me more bullish; I love sectors with great prospects that no one is interested in talking about (or buying) yet.

An interesting parallel is my article on the polysilicon industry, which I wrote last July. At the time, only my regular readers read it, but in the last few months, now that the companies involved have risen another 50-100%, it’s consistently one of my most popular, despite the fact that there’s a good chance that the silicon supply crunch may soon ease up.

I wonder how many people will be reading my transmission column eight months from now?

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A Demand Response IPO

I have written another article for on the IPO of a company specializing in Demand Response.

Another way of thinking of Demand Response as “dispatchable demand.” In general, the electic utility matches supply and demand of electricity by controlling supply and trying to keep it in sync with demand from customers. But the other side of this coin is to allow customers to respond to price signals from the utility to allow them to choose to use electricity when it is easier and cheaper for the utility to supply. I see the widespread use of demand response (along with energy storage) as essential if we are going to meet our energy needs with intermittent resources such as solar and wind.

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