December 31, 2009

Are posts on hold?

Yes, for the moment.

This blog is being considered for inclusion in a major magazine, and while I'm waiting to hear from them I'm filing new ideas to ensure that I have material if and when that starts.

Hang in there...

December 4, 2009

Is climate change real? Part 2

Insurance companies seem to think so.

"The insurance industry, including reinsurers, who distribute risk around the sector, has traditionally been the main way to hedge against hurricanes, floods and other natural disasters.

But climate change could increase the scale and frequency of these disasters so drastically in coming years that traditional insurance might become unable to handle the burden.

Much of the risk would have to be shifted into the capital markets, where financial instruments such as catastrophe bonds and hurricane futures may boom, and increasingly exotic instruments are being developed to spread the burden further.

"In a more volatile risk landscape, as might be produced by climate change, the need for risk transfer instruments quickly increases," said John Seo, managing principal at Fermat Capital Management."


November 19, 2009

Has photovoltatic solar reached grid parity?

It looks like it has.

Daytime grid power sells for more than $.20 per KWH in Southern California. PV has to sell for less than $4 per peak watt to beat that price.

Well, First Solar has been selling it's panels for less than $2.50 per Wp - with Balance of System costs (wiring, inverter, structural supports, installation) that allows installation near the magic $4/Wp.

Now we hear that panel pricing has fallen by more than 50% in the last year:

"China Sunergy’s average selling price of $1.32 per watt was down from $3.48 a year earlier and $1.44 in the second quarter. Wafer costs declined to 87 cents per watt from 96 cents the previous quarter. "

That should allow full installations below the $4/Wp parity point, at least on the large industrial/commercial roofs for which PV works best.

Here's the source.

November 11, 2009

Have EVs and plug-in hybrids reached the tipping point?

I'd say so.

Look at the Volt, around which GM is centering it's future. Look at the dozens of vehicles coming in the next 3 years, like the Nissan Leaf . Look at the explosion of development around them:

" is where the dots connect and the news turns good. For the technical challenge of greening electric cars means entering a commercial landscape that mirrors the transformative industries of the 1980s and '90s: computers and software, switching and networking, consumer electronics converging with cellular technology. This landscape is full of start-ups and medium-size supplier businesses that play to American strengths: entrepreneurship, originality, comfort with the virtual. We ought to stop thinking about the auto industry as a handful of great manufacturing companies superintending large, dependent suppliers -- or, for that matter, cars as standalone objects. Rather, the electric car will be a kind of ultimate mobile device, produced in expanding networks for expanding networks; a piece of hardware manufactured by a burgeoning supplier grid and nested in an information grid interlacing the electrical grid. Building out these three networks will be more profitable, and a greater engine of economic growth, than building the cars themselves."


October 27, 2009

Is energy innovation slowing down?

I'd say no, judging from some new grants awarded by the Dept of Energy.

The DOE created a new section which is intended to do for energy what the DOD's DARPA did for many things, including the internet. These awards were the best of a much, much larger number of submissions. This is the first round of projects funded under ARPA-E, which is receiving $400 million under the American Recovery and Reinvestment Act.

If even a few are successful, the effect would be dramatic.

Take a look:

October 26, 2009

Which is better for energy - regulation or free markets?

I'd prefer free markets. For instance, if you want to reduce carbon emissions quickly and simply, use a simple carbon tax. Or, if you like things that are slower and more complex (and therefore easier to sell politically), go to cap and trade.

Why do I prefer free markets? Because they're easier. If you're going to run things by central planning instead of by free markets, then the central managers have to manage them. Command economies require a lot of good management in a small circle of bureaucrats. That requires a lot of local talent, and a lot of good luck. They have to stay on top of things, and adjust as they go, or things will fall apart.

Two examples.

First, the automobile Corporate Average Fuel Efficiency regulation. It originally contained a light truck loophole, which made sense because light trucks were working vehicles. Gradually, car makers moved to SUV's, because the lower MPG level allowed greater engine power. Detroit stymied an update to the regulations, as Detroit needed SUV's to compete with Asian manufacturers. That meant the growth of absurdly over-powered military vehicles, wasting gasoline and making the roads less safe overall (the occupants of SUVs are safer, but only because greater size means that when they hit a smaller vehicle, that smaller vehicle absorbs most of the kinetic energy, and therefore is much less safe).

Second, China mandated that utilities build wind power, but not that they use it, so they don't spend the extra money for transmission!

Also, China mandated "Buy Chinese", and the domestic manufacturers can't build turbines that can keep running!


Just goes to show - you've got to keep on top of regulations...

October 25, 2009

Volt battery costs, part 6

How likely are large reductions in lithium-ion battery costs?

Highly likely, according to their manufacturers.

"During a panel discussion at a plug-in vehicle conference in Detroit, several speakers said dramatic cost cuts are possible once the advanced batteries reach high-volume production...

Johnson Controls-Saft Advanced Battery Systems aims to reduce the cost of a lithium-ion battery pack by 50 per cent, said Michael Andrew, the venture's director of government affairs and external communications for hybrid electric battery systems....

Ric Fulop, vice-president of business development for A123 Systems Inc, said he believes the cost of battery packs could come down 9 per cent per year as the industry matures....

Ramanathan...said initial costs may be too high because car manufacturers are over-engineering cars and battery packs to ensure there are no mechanical glitches that could sour consumers on the technology."

October 24, 2009

Will Chinese fossil fuel consumption grow? Part 3

As I've noted before - many are concerned that growing fossil fuel consumption in China will necessarily dramatically increase world CO2 emissions, while competing for oil with western importers, and setting the stage for economic volatility when it's coal runs out.

So, what's China doing?

"China has also begun to see energy efficiency and renewable energy as ingredients for the type of modern economy it wants to build, in part because it would make the nation's energy sources more secure.

"We think this is a new business for us, not a burden," said Gan Zhongxue, who left a job as a top U.S. scientist for the giant ABB Group to head up research and development at ENN, the Langfang company that made its fortune as the dominant natural gas distributor in 80 Chinese cities. "
"China has taken significant steps in the past five years. It removed subsidies for motor fuel, which now costs more than it does in the United States; its fuel-efficiency standard for new urban vehicles is 36.7 miles per gallon, a level the United States will not reach for seven years. It has set high efficiency standards for new coal plants; the United States has none. It has set new energy-efficiency standards for buildings. It has targeted its 1,000 top emitters of greenhouse gases to boost energy efficiency by 20 percent. And it has shut down many older, inefficient industrial boilers and power plants. "


October 23, 2009

Will Chinese oil demand grow? Part 2

The concern is often heard that growing oil consumption in China will necessarily cause demand for oil to skyrocket, regardless of supply or pricing, such that other countries will be forced to settle for a smaller share of the oil production pie. So, what does the Chinese history of oil consumption tell us?

Average oil consumption in China in 2007 was 7.29 million b/d. In 2008, when oil prices peaked, Chinese consumption fell to 6.92 b/d. When prices fell again in 2009, consumption rose to 7.84 b/d. Source:

So, we see that Chinese oil demand does indeed respond to supply and demand.

October 20, 2009

Will Chinese oil demand grow?

The concern is often heard that growing vehicle sales in China will necessarily cause demand for oil to skyrocket. So, will Chinese oil demand grow?

No, not necessarily. According to the well -respected Industrial Engineering consulting firm McKinsey & Co.:

"China is quietly laying the foundation to become a global contender in the development of hybrid and electric vehicles....The Chinese government has been actively promoting the development of the electric vehicle industry..."

They estimate that EV market penetration will be roughly 3-4 as great in China, compared to the world market.*

*Their estimate of EV market penetration in 2030 are very conservative: 5-10% for the world, and 20-30% for China. They do not attempt to evaluate whether Chinese oil consumption can grow to the level found in simple growth projections, which they indicate is 17M bbl/day in 2030. I think we can expect EV market penetration to be much larger, based on growing shortfalls in oil production.

October 14, 2009

Will oil prices stay high?

No, not in the long-term, due to lower price of substitutes for oil. As I have discussed on this blog, the fundamentals here are quite clear.

Substitutes are roughly in the same cost range as oil currently: PHEVs like the Volt1 become economic at about $3.35/gallon gasoline ($90 oil?). In the longer-term (the time it takes to ramp up PHEVs) this also puts a cap on prices.

In roughly 5 years economies of scale will reduce the cost of PHEVs to the range of $80 oil, and we'll see a race between oil depletion and EV growth.

1Pure EVs are cheaper, but much less convenient.

Are battery prices really this predictable?

The price-performance improvement of batteries has been very consistent for quite some time, and it's accelerating. Those improvements are based in new tech (lower cost materials in newer chemistries), larger formats (which eliminate the overhead of packaging and controls per cell), improved manufacturing, and economies of scale.

I've been using such batteries on laptops for a long time - they're not very long-lived.

You're using out-dated battery chemistry, with inadequate temperature and charge-discharge management. Look into the newer li-ion chemistries being used by A123systems and LG (and many others).

If I'm so confident on price of substitutes for oil, why don't I get rich in the futures market?

I am quite confident about the price of substitutes - I called the oil price peak last year (as you can also see in earlier entries here) as did Richard Rainwater looking at much the same data.

I'm not so confident about the time before another price peak ends - the next peak is likely to be longer and lower. Things depend as much on the willingness of oil exporters to recycle petrodollars, and the willingness of oil importers like China and India to subsidize their price controls, as they do on the speed with which substitutes replace oil.

If exporters get as smart as China and Japan, they'll finance exports just as long as exports exist: that could support much higher prices for quite a while, if the US was stupid enough to continue borrowing to support it's addiction to oil. OTOH, if China, India and other importers with price controls wise up and eliminate price controls & subsidies (or, even better, replace them with taxes and import controls), the price could drop sharply.

EV/PHEV substitution will happen incrementally. Lifestyle substitution, especially carpooling, could happen quickly with the proper "victory-garden" promotion (although it's hard to see that kind of realism in US politics at the moment).

What if world oil production declines more than a few percent per year? Wouldn't balancing supply and demand be very difficult without a worldwide economic depression?

Not because of a lack of BTU's. See . OTOH, the trade imbalances it would create would indeed be very difficult to manage. I haven't seen a good model for what might happen - I would guess we'd see economic stagnation for a good 10 years. Eventually I would hope to see an aggressive response in the US, which could dramatically reduce oil consumption quickly.

Emergency measures could easily reduce consumption by 25% in 6 months by conservation (just make all highway lanes HOV, strictly enforced), and drilling (in ANWR and off the coasts) and large-scale CTL could both be done in 3 years under truly emergency conditions.

We have more than enough energy to build new electric vehicles. For that matter, we can carpool and telecommute during the transition. We really can. I'm often baffled by the lack of awareness of the potential of carpooling: the US could cut it's oil consumption by 25% in 3 months, if it chose to. It would be inconvenient, and require an emergency to do, but everyone would still get to work.

How important is the energy to manufacture vehicles?

Not as important as the fuel they use.

This is analyzed here ( ). It's an interesting article.

Here's the relevant quote for EVs:

"An LCA reveals that in terms of global warming effluents, for example, everything in the car's life cycle from manufacture to getting scrapped pales when compared to the emissions while it is driven."

So, it really is the fuel used for driving that matters.

September 29, 2009

How do we overcome resistance to change?

There's been a lot of discussion of how to overcome resistance to change, especially to the changes needed to deal with climate change. I think a lot of it's been pretty unrealistic.

We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables (and other new ways of doing things) - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.

This applies especially to coal consumption: there isn't any country in the world that will let the lights go out, if coal is available (This means that we don't face Peak Energy: we face Peak Oil and Climate Change).

With luck, we'll start building out wind and solar even faster. When it starts hurting revenues for investors in coal, we'll need to find a a way to buy them out to maintain the pace of the transition.


We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.

A classic story: Manhattan needed more cab drivers, but faced resistance from the current drivers, who would face more competition. The solution? Giving the licenses to the old drivers, so they could sell them and get the benefit of the new resource. It accomplished the result, and yet the existing drivers were happy.

We need creative ways to enlist the investors, and employees, in existing industries, so that they become enthusiastic partners. Otherwise, they'll fight change forever, in the exhausting trench warfare we see today.
The Cash For Clunkers program was a good example.

Criticism of CFC seems a bit "hindsight is 20/20" ish. While it's always good to identify where something could be improved, it seems we should acknowledge that

1) it did what it was intended to do - primarily to stimulate auto sales and the economy, amd secondarily to improve efficiency,

2) it was an improvement over the European programs from which the US got the idea (they had no efficiency provisions), and

3) CFC got intense criticism during the drafting process for the efficiency provisions, as many people thought they would limit the program too much.

Sure, it was expensive: that's the point of stimulus programs, to put money into the economy.

Efficiency regulations are cheap for the government, and great in theory, but the difficulty is that you're creating costs for those who are regulated, so that they'll fight the regulations tooth and nail. We have to acknowledge the costs in delay created by a parsimonious approach. We may need to compensate people for their costs in order to get things moving.

Shouldn't Cash for Clunkers have had much stronger efficiency requirements?


The problem here is that the political context in which such legislation is crafted doesn't contain the PO/CC awareness needed to support more aggressive action. CAFE requirements should be much higher; we should have stiff carbon/fuel taxes; we should be doing many other things such as cap and trade in addition to regulatory efficiency improvements such as CAFE and carbon taxes (not to mention building efficiency).

Of course, we have most of the information we need to take action. Much of the reason for delay is resistance in the form of disinformation ("FUD") from those who would lose careers and investments. That's one good feature of "C4C": it overcomes such resistance by paying people to give up their inefficient capital investments (rather than just making them obsolete by regulation).

Finally, we learn by doing and trial & error. There was much speculation that the efficiency requirements were too stiff, and that as a result the program would fail for lack of participation. Instead, there was so much demand that they expanded the program substantially.

September 26, 2009

Does sustainability mean less complexity?

A popular theory about the challenges of dealing with resource limitations suggests that resource limits may force us to simplify (Tainter).

Probably not. Here's an example: bricks that use less energy, recycle pollutants, and cost less..but rely on more precise (read complex) manufacturing.

"Bricks have been made pretty much the same way for 3,000 years, until Calstar's scientists came up with their new technique, said Chief Executive Michael Kane.

Ordinary bricks are fired for 24 hours at 2,000 degrees F (1,093 C) as part of a process that can last a week, while Calstar bricks are baked at temperatures below 212 F (100 C) and take only 10 hours from start to finish, Kane said.

The recipe incorporates large amounts of fly ash -- a fluffy, powdery residue of burned coal at electric plants, that can otherwise wind up as a troublesome pollutant.

"Ours is a precise product" that relies on getting the chemistry right, said Amitabha Kumar, Calstar's director of research and development."

September 16, 2009

Is Climate Change real?

Sure looks like it. Here's a report that was signed off on by old-fashioned management consulting firm McKinsey:

"The study looked at eight areas, both rich and poor, around the world seen as high risk from more droughts, hurricanes, floods and rising sea levels that climate change may cause.

In the worst-case scenario, global warming could trigger severe flooding in Guyana, costing the South American country over 19 percent of its annual GDP by 2030, the report said.

The hurricane-prone U.S. state of Florida could see weather-related costs knock 10 percent off its GDP each year.

The group that produced the report is made up of the United Nations, insurer Swiss Re, management consultancy McKinsey, the European Commission, the Rockefeller Foundation, Standard Chartered Bank and environmental network ClimateWorks."


September 11, 2009

How expensive is the wind power needed to eliminate Chinese coal??

Previously, I asked How expensive is the wind power needed to eliminate coal in the US??

Well, China's emissions are just as high.

What would it cost in China?

It turns out: not much, in the grand scheme of things. Only about 7.5 cents per KWH

“Sept. 11 (Bloomberg) -- Barren, windy stretches of the Tibetan plateau and grasslands in northeastern China hold untapped value in a country searching for more energy and cleaner air.

China, the biggest polluter from burning fossil fuels, has enough wind-energy potential to generate seven times its current power consumption, said Michael McElroy, a researcher at Harvard University. To develop that capacity and meet rising demand would cost about $900 billion, he wrote in a study published yesterday in Science.”

This is only $90B per year for 10 years, which really isn't much, expecially given that other power sources wouldn't be much cheaper.

Volt battery costs, part 5

Are li-ion battery costs really dropping?

Yes. here are some retail costs:

We see that current Lithium cells are about $350/kWh for individual purchases. We can expect that an OEM can get them for around 50% of that (no more than $200/kWh), which places GM's wholesale cost for the Volt pack in the neighborhood of $3,200.

The range in the Volt is electronically limited in order to avoid any warranty issues with pack replacement (due to California Air Resources Board requirements). Essentially, GM's only letting the pack discharge to about half, so when capacity drops with age/cycling, as it does with all batteries, they can get more mileage out of it compared to going with a smaller pack and having the range drop below 40 miles within twenty+ thousand miles.

Going by specs for the retail batteries above, 5000 cycles before they hit 70% capacity would be at least .7(40 miles)5000 = ~140,000 miles until the pack capacity degrades to 70%, and probably ~200,000 miles before it degrades to 50% and drivers can't go a full 40 miles on all electric power w/ something like the Volt.

GM had to, in effect, de-rate their battery pack because the California Air Resources Board requirements for PHEVs are very stringent. Pure EVs don't have these requirements, so manufacturers can get away with using the whole pack.

September 8, 2009

Would we have been better off without oil?


We would have gone to Electric Vehicles. In 1899 EVs outsold everything else (1,575 electric vehicles, 1,681 steam cars and 936 gasoline cars were sold). By 1912 there were thousands of EVs on the road, and electric trucks were also selling well. Here's some interesting history and analysis.

Ferdinand Porsche
designed an extended range EV like the contemporary Chevy Volt in 1904*. Given that an ErEV uses 10% as much liquid fuel as a contemporary US ICE vehicle, it could have run on our limited supplies of ethanol - the Model T was built to run on ethanol. where the Volt is today, roughly

The lack of oil would have slowed down personal transportation only slightly.

Isn't oil irreplaceable?

Electricity successfully replaced oil in the late 1800's for lighting - the Edison bulb was superior in every way to kerosene. If gasoline for automobiles hadn't come along, the oil industry would have been in real trouble.

Now it's time for electricity to do the same for transportation. Electric motors are superior in every way to infernal combustion engines. Now that oil is no longer dirt cheap, and batteries are finally good enough to power hybrids and plug-ins, the transition is under way.

“I'd put my money on solar energy… I hope we don't have to wait til oil and coal run out before we tackle that.” —Thomas Edison, in conversation with Henry Ford and Harvey Firestone, March 1931

That's a great quote, isn't it?

I read a conspiracy theory once, that claimed that Edison was developing an improved battery and planning an EV in cooperation with Henry Ford, but that all of his labs were attacked by arson to prevent it. I have no idea if this theory is credible**.

In the long run, of course, Edison was right. In the meantime, we have a solar derivative in the form of wind as our cheapest source of renewable power.

*Many ErEVs have been designed, including production models in 1916, and concept models later in the 1960's, 70's and 80's. The EV-1 engineers built a rough version, in order to simplify vehicle testing. The Renault Elect’Road was the first ErEV sold, in 2003. It was discontinued after 500 were sold. It uses a manually controlled 21hp genset to extend the range of its 13kwh nimh battery pack. Electric only range is 50 miles, 60mph max speed, and the 10 liter gas tank allowed perhaps another 100 mile range. See here.

**Here's a quote from an enthusiastic reviewer of a book that discusses it:

"His new book, an exposé of the confluence of corrupt forces that killed the growth of nonfossil transportation fuels, the trolley system and what is now called "alternative energy," is presented in the context of history stretching over a millennium, back when wood was man's primary fuel and horses were the main form of conveyance.

"Quite the gripping Gilded Age saga. Black documents the machinations of the coal industry as well - back to the 13th century or thereabouts, the Royal Foresters and proscriptions against the commonry taking so much as a twig out of the woods; this evolving into use of coal far before the Newcome engine. Exactly how much of this is suitable stuff for Art Bell I'm not sure and don't care; the material on the decades of half-measure attempts to market crude EVs is where the story really hits its stride. " (source of quote)

August 28, 2009

Could race cars go electric?

From Wikipedia:

"According to NASCAR, about 6,000 U.S. gallons (~22,700 litres) of fuel are consumed during a typical Sprint Cup weekend.[9] For the 2006 season, which includes 36 points races, the total for the season would be 216,000 U.S. gallons (818,000 litres). One environmental critic recently estimated NASCAR's total fuel consumption across all series at 2 million U.S. gallons (7.57 million liters) of gas for one season;[10] however, the methodology used has been a point of dispute."

Electric motors have better torque, so how long before they go electric?

Pretty soon!

Here's a nice description of that electric torque, vs a Porsche:

"Zero-to-60 mph acceleration is less than 4 seconds, which is Ferrari quick. Around a tight, technical racetrack, the Tesla will beat the pants off your garden-variety supercar." LA Times

The Chevy Corvette, with a monster 6.2 liter, eight cylinder, 430 horsepower engine takes 4.6 seconds. The Tesla accelerates faster than the Porsche 911. Faster than the Ferrari Spider....I can say with certainty, now, that if anyone doubts whether all-electric cars can compete: they can. Scientific American

"The all-electric sports car is faster than Porsche 911 or Audi R8 yet is six times as efficient as conventional sports cars." Tesla achieved overall corporate profitability in July, thanks to strong demand for the Roadster.

Here's a 0-60 in 3.5 seconds electric Ford Pinto dragster!

Here's a discussion of low-CO2 Formula One:

Here's a good discussion of EV racing.



August 27, 2009

How quickly can Plug-in hybrids grow?

I was struck by a recent EPRI Projection of 100M PHEVs by 2030. EPRI is the technical arm of the electrical utility industry - clearly they take PHEVs seriously.

Some people wonder if GM is serious about the Volt, and whether it can increase production quickly. Here's a hint: GM is building a dedicated battery assembly plant, with a capacity of about 100,000 battery packs per year, to be finished in time for the planned unveiling in November of 2010.

But won't most people wait until a recession, or some crisis, before they do something like buying an electric vehicle?

I think that the most important way to prepare for Peak Oil is electric transportation. This includes hybrids and plug-in hybrids (including Extended Range EVs like the Chevy Volt and Plug-in Hybrid EVs like a plug-in Prius) of various sorts.

It looks to me like the US and China are doing moderately well in ramping up hybrids and EREVs and PHEVs: the Chevy Volt will be ready for large production volumes in 2011, and a wide range of PHEVs and EVs is coming in the next several years, from almost all of the major car makers. Also, I think enough early-adopters are out there to allow these vehicles to ramp up to pretty large production volumes, putting them only a few years away from being the primary mode. So, I think that when mainstream buyers are ready, the electric vehicles will pretty much be there.

What about an emergency?

Production can be increased very quickly in an emergency. The Classic Example is World War II airplane production, which grew in 4.5 years from 6,000 per year to 9,000 per month!

August 14, 2009

How's wind doing?

Very well.

Wind was 42% of new capacity in 2008, and there's an enormous backlog of projects in the pipeline (about 300GW!). See here.

An interesting note - local grids are handling up to about 16% in wind market penetration without problems. The DOE report says: "Recent wind integration studies continue to show that wind integration costs rise with higher levels of wind penetration, but are below $10/MWh – and often below $5/MWh – for wind capacity penetrations of as much as 30% of the peak load of the system in which the wind power is delivered."

I understand that to mean the following: for a system with 100GW average load, and 150GW peak load (as a wild guess), wind capacity could rise to 45GW and still have low integration costs (well below one cent per KWH). The report indicated that capacity factors were around 35% for recent projects, so that gives us 15.75GW average, or 15.75% market penetration of KWH production.

This study doesn't say we can't get well above 16%. It just says that with current grid engineering, we can achieve at least 16% without a problem.

And that's pretty good. It's consistent with a lot of such studies: none of them found a maximum for renewables. I've seen some that showed that something in the range of 20% was possible just for wind, but weren't testing the hypothesis that more than that could be done. IOW, most of them said it was the minimum that could be done, based on current grid technology. They didn't test such things as expanded long-distance transmission, greatly expanded Demand Side Management, a large fleet of PHEV/EVs providing demand buffering and V2G; greatly expanded storage; etc.

Here's a good example: This modelling study* says that given current tech and some modest assumptions on price change, that 20% wind penetration is likely in 2050. It doesn't say that it's a maximum, and it doesn't take into account the effect of an aggressive policy push toward wind, and new conditions, such as 230M PHEV/EVs.

There's enormous potential out there.

*The study just gives a result of 300GW of wind power, so we have to do some calculations.

The DOE reports that new farms in the last several years are achieving an average of 35% capacity factor. The modelling study doesn't give the total generation in 2050, so we have to guess that it assumes something like DOE projections of 1200 GW system capacity. That gives us 11.6% growth (1200/1075 currently).

If we use 35% and 11.6% growth that gives 20.1%.

August 13, 2009

Can a plug-in hybrid compete on price?


But aren't vehicles like the Volt expected to sell for $40,000 due to a very expensive battery?

Well, first, we should be clear that most of that $40K is not due to the battery.

First, a simple EV, without a battery, should sell for less than a comparable Internal Combustion Engine (ICE) vehicle. Electric motors don't cost any more than ICEs, and EV powertrains are simpler than ICE powertrains (no transmission, muffler, catalytic converter, fuel pump, air filter, oil filter, etc, etc). There are basic sedans out there priced for $15K, so a basic EV should be less than $15K.

Second, GM says the ICE backup on the Volt costs about $2k, and their battery supplier says the battery cells cost right now about $5,600 ($350 per KWH x 16 KWH). There is another $2,400 for the power electronics and battery management system - that's a cost that will mostly go away with very large volume production - so let's allocate 500 for that. 25% markup of those additional pieces ($8,100 x %25) would add about $10,250.

So, the basic pricing should be around $25,000. The rest of the Volt 1st-gen pricing is due to R&D, low-volumes and upper-market options.

You've said battery prices will drop. How do we know?

Here's a good discussion for this (and a lot of other Volt battery information):

"From a historical perspective over the past 17-18 years the cost has come down by a factor of 15x. In the next 5-10 years we should be able to come down by an incremental 2-4x and we will have to do that to accelerate the penetration of the technology."


August 10, 2009

How good is the new EV, the Leaf?

Pretty good.

Some sources say that the Nissan Leaf ( ) will cost around $25K-$33K without the battery (you lease the battery, which is supposed to be cheaper than gas). Others that it will be priced in the same range as the Altima. With the battery, it's likely to be about $10K more.

The Leaf has a battery capacity of 24KWH. This is 8KWH larger than the Volt's 16 KWH, and the Volt adds an internal combustion engine. The extra 8KWH of battery capacity likely costs about $4k, while the ICE costs about $2k. So, the Volt should be cheaper.

The Volt's pricing hasn't been announced, but it's executives have talked about something close to $40k. It sure looks like they're going to price it just as high as they can (taking into account the $7,500 tax credit) to capture the early-adopter premium. If the Leaf is very competitive, you can be sure the Volt price will drop.

We're seeing a continuum of capital cost, electrification and operating costs: hybrids like the Prius are cheapest and least electrified; PHEVs like the Volt (40 mile electric range, with gas engine backup) are in the middle; and EV's like the Leaf (70-100 mile range)are most expensive. Which you choose depends largely on your economic situation and in the short-term, how much you're willing to pay to reduce your oil consumption (IOW, your personal pricing of oil's externalities).

When PHEVs and EVs hit very large production volumes, their overall cost will be lower than conventional cars, but not before.

August 7, 2009

Volt battery costs, part 4

A recent study from the University of Michigan suggested that it will take a very long time for PHEVs to gain a significant share of the car market.

"Annual sales of plug-in hybrid electric vehicles (PHEVs) in the US could reach 2% – 3% with fleet penetration of around 1% by 2015, according to a new study by researchers at the University of Michigan Transportation Research Institute (UMTRI). By 2020, sales could reach around 4% – 5% with fleet penetration a little more than 2%. And in 30 years, they could be around 20% of sales with a fleet penetration of about 16%. " And...these are the high-end estimates!

So, is this correct?

Fortunately, no. The study makes several very, very odd assumptions. First, it assumes that current gasoline prices are $2 per gallon, and that they will never rise above $4 in the next 30 years.

Second, they assume that a PHEV-40 (a plug-in hybrid with a 40 mile electric range) would cost $50,000 both now, and 30 years from now.

Given these assumptions, a PHEV could never pay for itself with gasoline savings. Fortunately, PHEV-40s are likely to be priced below $30,000 in 5 years (and certainly in less than 10), and will pay for themselves quite nicely.

July 30, 2009

Is there enough wind resource to provide all of our electricity?


A peer-reviewed study in the Proceedings of the National Academy of Sciences indicates that "a network of land-based 2.5-megawatt (MW) turbines restricted to nonforested, ice-free, nonurban areas operating at as little as 20%of their rated capacity could supply >40 times current worldwide consumption of electricity, >5 times total global use of energy in all forms.

Resources in the contiguous United States, specifically in the central plain states, could accommodate as much as 16 times total current demand for electricity in the United States. "

This study doesn't address changes to the grid that would be needed to supply all of our electricity from wind and solar:

"...Wind power accounted for 42% of all new electrical capacity added to the United States electrical system in 2008 although wind continues to account for a relatively small fraction of
the total electricity-generating capacity [25.4 gigawatts (GW) of a total of 1,075 GW] ...Short et al. , using the National Renewable Energy Laboratory’sWinDs model, concluded that wind could account for as much as 25% of U.S. electricity by 2050 (corresponding to an installed wind capacity of 300 GW). "

But 25% is a good start.

See here the full study in PDF form.

July 29, 2009

Should we expect climate scientists to cut their carbon footprint?

I saw an article by someone who talked to climate scientists, and found they were planning to take long plane trips. Trips like that create a lot of CO2 - doesn't that say they aren't serious about climate change?

No. This kind of analysis is misleading.

First, air travel is a relatively small contributor to CO2, and that the marginal cost of CO2 reductions from other sources is very likely much larger. Air travel isn't really the place to start. This is a good example of why public policy is better than random, ill-considered individual action. Better is a society-wide program like carbon taxes and/or cap-and-trade, which unleash the power of markets to find the easiest and cheapest ways to cut CO2 emissions.

Markets are nice and simple, in many ways. Unfortunately, institutional resistance (primarily the car makers, but also the oil & gas industry) has killed any chance of a gas tax, and is working hard (joined by other fossil fuel producers, primarily coal) on killing a cap-and-trade market approach, so all that's left is regulation, such as CAFE and the efforts of CARB.

Second, people don't want to be the only ones doing making sacrifices: they know that their individual contribution is tiny, and their personal sacrifice is very large to themselves. They want uniform rules so that everyone is sacrificing.

Sports give us some good analogies: no player is going to wear protective gear that gives them a disadvantage, but they are likely to be very much in favor of uniform rules that require all players to wear the gear.

But, if you talk the talk, Shouldn't you walk the walk, or be a hypocrite?

Sure. If a climate scientist says that everyone should take the individual initiative to stop flying, and then goes ahead and flies, he's a hypocrite. that the case? Do scientists actually say that? I suspect not. I think if you look at their public statements on What Should Be Done (if you can find any - many confine themselves to the science), I think you'll find that they recommend changes in public policy, and when they talk about individuals they mention relatively minor personal changes like CFLs and electronic thermostats: things that actually save people money, or are minor sacrifices.

We don't want to lump together everyone who deals with climate change. Is the average climatologist out there being an activist? Mostly not.

Scientists....activists..mostly different. Sure, there's the occasional Hansen, but they're mostly different groups.

Doesn't this suggest that human nature isn't conducive to solving climate change via billions of people deciding to restrain their fossil fuels consumption?

Sure. Individual actions can help a bit, but it's very clear that public policy ("rules of the game") is the big lever.

If a police chief were to advocate for a law against drunk driving, and then were to commit the currently legal act of drunk driving, we wouldn't think much of him.

Sure. I'd have to say that I'd agree that climate scientists probably are being at least a little hypocritical. Part of it is probably external influences, like pressure to go to meetings for professional reasons, and family desire for vacations. And, partly....they're human.

But...does that really say anything about climate science? Of course not. It does say something about the difficulty of dealing with climate change. I'm not all that optimistic, and I would say that we really need to develop cheaper low-CO2 tech, to make dealing with climate change less painful to implement.

Here's a comment from WCW:

hypocrisy is not interesting, and even if it were, this is not hypocrisy. Individual virtue is not a solution to collective-action problems. The way we solve collective-action problems is collectively. The fair question about hypocrisy is something like, have you organized to help stop AGW, have you voted for people who have committed to stopping AGW, and such. Any question about individual behavior is prima facie misdirection, and calls into question the motives of the questioner.

Good points.

July 27, 2009

More Volt Questions...

Are we sure consumers want this?

I don't think there's much uncertainty about consumer response. GM only decided to make the Volt because there was enormous response to the concept vehicle. EVs have been around for 100 years, and its been very clear that battery problems (cost, life, charging time, range limits, etc) have been their primary problems. They have great performance, low maintenance, low "fuel" costs, are quiet, etc, etc. Now that those problems are adequately solved with the PHEV design, new-gen li-ion, and higher gas prices, the market is wide open for PHEVs.

In an age of Peak Oil-related high fuel prices, ruinous oil-related trade deficits, oil wars, and potentially disastrous climate change (which is pretty likely to start to be priced in to market prices), isn't it nice to know that there's a cost-effective alternative, with no performance compromises, that uses only 10% as much fuel as the average US car?

Wouldn't charging at work be expensive for employer?

less than 10% of Volt owners are likely to want at-work charging (only 22% of all commuters are going to need it at all, and many of those are only going to need it for 5 or 10 miles on the way home). That's not going a large-volume problem for a little while.

As I noted before, it's likely that PHEV/EV charging will get a discount at whatever time it happens, as it's enormously useful for load following and frequency regulation (if the utility sees a spike in demand, or loses a generator, it can cut off the PHEV/EV charging in milliseconds).

If employers provided free charging, wouldn't that delay the rollout of public charging by companies like Better Place?

I think it's pretty clear that in the US the primary market niche will be for PHEVs, not EVs. Unlike gasoline, 90% of drivers have an outlet available at home, so public charging is much less important; and distances are much greater in the US. I wish Tesla, Nissan and Better Place very good luck (they'll have their market niche), but PHEVs will dominate for quite a while. And...that's just fine.

The perfect is the enemy of the good.

Why do you talk about these cars as though they were already in mass production, when they remain essentially prototypes today?

Are you concerned that the Volt might go the way of the EV-1? I think you're worrying too much. The Volt has none of the performance problems of the EV-1; PHEV/EVs are strongly supported by public policy, as shown by what the current administration says and by the planned CAFE regs; and, GM has made it pretty clear that the Volt is absolutely central to it's corporate strategy.

Electricity isn't free in either an economic or energy sense.

We don't have any real possibility of a shortage of electricity in this country; all of our electricity is domestically produced, so there's no trade deficit or security of supply problems; and PHEV/EVs supports the expansion of wind power by providing night time demand and mitigating intermittency.

Won't expensive, fossil fuel powered natural gas turbines be the primary power source for PHEVs/EVs?

No, when PHEV/EVs start to scale up, wind power is the natural source. Charging will be at night, when there's excess wind power, and charging can be dynamically matched to wind output. Smart meters will move charging to the points in time with the lowest marginal rates, which means wind and nuclear.

July 26, 2009

How much electricity does the Volt use?

We don't have all of the information we might like. On the one hand, the 1st-generation Volt gets at least 40 all-electric miles on both the EPA city and highway cycles, and does it using an effective battery capacity of 8 KWHs (50% of the nominal 16 KWHs). That gives us .2 KWH/mile, battery to wheel.

Efficiency is likely to improve with later generations - especially aerodynamics (the most important factor with an electric drivetrain, where regenerative braking greatly reduces acceleration/braking losses), but also peripheral loads. The importance of aerodynamics can be seen with the ultra-streamlined Aptera, which is expected to use only .07 KWH per mile.

On the other hand, that doesn't include the charge-discharge losses, which are usually 7-10% for li-ion, or AC-DC conversion losses, which can range from 1% to 75% (for small, cheap "wall-warts"). And, those efficiency improvements could easily go to larger vehicle size (though not to acceleration: one of the nice things about electric motors is that they get more efficient as they get larger, unlike infernal combustion engines).

You could use .25KWH/mile, if you wanted to be conservative.

July 25, 2009

But would the Chevy Volt pay for itself?

I was asked:

I only drive 10,000 miles per year, and I'd guess only half of that would be on the 40 mile electric range. Electricity is expensive, and I don't have a meter that charges less at night. Would that really pay for itself for the average driver like me?

Well, let's look at the numbers:

Annual Vehicle Miles Travelled: US total VMT is about 2.9 trillion. There are about 230M 4 wheel light vehicles, for an average of about 12,500 miles per vehicle per year. Newer vehicles are driven more, so about 13,000 miles is probably about right.

% of electric miles: For one who drives 12K miles per year, the % will be about 80%. This will seem more intuitive when one remembers that 50% of all VMT is commuting; the average commute is well below 40 miles; and even someone who commutes 50 miles will still drive 80% of the time on electric.

So, total electric miles will be about 10,000 per year for the average driver - a large minority will drive even more.

Electricity costs: the energy act of 2005 mandated that utilities make smart meters available to their customers. These programs often aren't well publicized, but they should be there - look carefully at your utility's web site. If you like, tell me your utility, and I'll see if I can find it - this wouldn't be the first time I've surprised someone by finding their utilities time-of-day metering program.

The average price of electricity in the US is about 11 cents/KWH. That gives a cost of 2.3 cents per mile ($.01165/KWH x .2KWH/mile). Any decent smart meter program should cut that in half.

If I get my employer to let me charge during the day, wouldn't that be expensive peak power?

It's likely that most employers won't find it worth their while to meter individual power outlets in the parking garage: they'll consider it a low-cost employee benefit, paying for itself with good PR. It's likely that when the cost becomes high enough to matter that the utility will have in place programs that take advantage of the load-following and frequency regulation services that EV/PHEVs will provide, and therefore charge relatively little for the KWHs to EV/PHEVs.

Will there really be enough early adopters to pay the high price of the first plug-in hybrids?

Yes. There's an enormous pent up demand, and a PHEV like the Volt doesn't have a range limitation like the EV1, and has 0-60 in 8.5 seconds (much faster than the EV1, though even the EV1 made drivers very happy) - there's no compromise at all. Also, don't forget that there's a $7,500 tax credit for buyers of vehicles like the Volt.

The EVs of a hundred years ago didn't have to contend with 21st century safety regs and product liability litigation. Voltage high enough, for example, to electrocute a first responder using the "jaws of life" to pry someone out of a wrecked EV requires some care.

Voltage problems and other safety questions for electric drivetrains were solved in the Prius long ago - that's really not a realistic concern.

July 21, 2009

Volt Battery costs, part 3

Well, at last I've found an authoritative source for the cost of the Volt's battery pack.

The CEO from CPI (the company that builds the Volt packs today) says the pack will cost $350/KWH for the cells. We saw in another article costs of $1,000 per KWH for the available 8KWH capacity of the battery pack, which equals $8,000 per pack.

"All four of these items together justify a 2.5x premium for the AT application (or approximately $ 1,000/available kWh) compared to the $350/stated kWh of a CE system, CPI says."

That includes the cost of the pack, with electronic controls.
For a minority of drivers, who would drive 15k electric miles per year, a Volt will pay for itself at $3.35 gas (an $8K battery over 10 years is $800 per year - a Prius uses 300 gallons to drive 15K miles, and a Volt would use 240 fewer gallons). This would include long-distance commuters (say, driving 30 miles each way and charging at work for 230 work days per year, and 10 miles per day on the other 135 days per year) and fleet drivers such as taxis whose vehicle can be used two shifts per day, and yet don't go that far and can be charged during multiple breaks (taxis typically drive 100,000 miles per year, putting 300,000 on a hybrid in just 3 years) - perhaps 10% of drivers?

Now, there are other costs: there's $.01-.02 per mile for electricity ($.01 for the average person charging at night, $.02 for during the day). But, what about the value of time? Saving 30 trips to the gas station at, say, 7.5 minutes each, is 3.75 hours. At $20/hours, that's another $75 per year. Also, maintenance costs will be less: very few oil changes, etc. Together, these roughly pay for the electricity.

The current battery might require $4-$5 gas to capture a large % of the rest of drivers. They will have to wait for the 2nd or 3rd generation of Volt, which will be less expensive, or for more expensive gasoline - whichever arrives first.

What costs are you assuming for this?

I'm assuming $24K for the Prius - I've seen news reports indicating that's the average actual US selling price (Edmunds says the base price is $22K). The same reports indicated that the average price for the US overall was $28K. Edmunds says that one high mileage competitor, the Jetta TDI, has a base price of $23,370 (I note there are a lot of options), with 33 MPG.

Now, on Volt cost analysis. I'm assuming a Prius cost, with an $8K battery added. I think it's clear that the Volt with no battery will be no more expensive to manufacture in large volume than a Prius.

Why do I think that?

Electric drive trains are cheaper than ICE (internal combustion engine) drive trains. Heck, a ten year old can build one from scratch with wire, cardboard and pliers (with really good instructions.....) - I don't think anyone can say that about an ICE. A Volt is an EV with an onboard backup generator and a lot of good programming of the electronic controls. That won't be any more expensive than a Prius, which also has dual drive trains. Heck, the Volt should be cheaper, as the auxiliary ICE support systems can be smaller.

Electric drive trains are oooooold. EV's were sold in large volumes 100 years ago, commercially, until cheap gasoline killed them. GM sold electric trucks in large, commercial volumes from 1912 - 1918. There are something like 30,000 EV conversions on the road in the US (you'd be amazed what hobbyists do). Submarines have had them for what, 80 years? Freight trains have them. The largest container ship in the world has them. There are many tens of millions of small, non-highway legal EVs in use. It's very likely that there are more electric motors in use in the world than ICEs.

EVs are easy to do. Optimizing them, as well as the batteries, to make them as competitive as possible (which is what GM and other companies are obsessing over right now) is good old fashioned engineering - no rocket science*, no tech breakthroughs. PHEVs require a bit more work to optimize the connection between the backup generator and the electric drive train, but that's good old fashioned programming.

Now, the latest batteries do represent tech breakthroughs, but that's done. All that remains is ramping up production volumes and getting prices down. Is there any question that will happen? Not really. I think one can be rationally skeptical of Tesla: it's a small company, and perhaps it will fail. But the major car companies, like GM? Not now, with a very clear US gov public policy in place, and rising gas prices to back that up.

Do we need better batteries?

No. It would be really nice to have something like the Firefly new-tech lead-acid, or the Eestor ultra-capacitor make batteries really cheap, to really make it clear that the ICE era was over.

But, it's not necessary in order for EVs and PHEVs to compete with $5 fuel with the current battery price, and for them to compete with $3 fuel in 4 years without the credit.

*I was amused to note that the CEO from CPI quoted above has a PhD in Aerospace Engineering, so he's literally a rocket scientist.

July 13, 2009

Is the Volt battery too expensive? (part 2)

A new Wired article says that electric cars cost too much, because the needed batteries cost $20,000 to $30,000.

The article is correct: Tesla tells us that their 52 KWH battery cost $20,000 wholesale a year ago (for about $400/KWH), so the article's estimate of a $20-$30K price is roughly ok. At that price, batteries are still too expensive for EVs to provide a driving range that is comparable to an ICE vehicle, at a comparable market price.

It's worth noting that this is probably not true if one includes non-market external costs - costs which are real, but not included in the market price), so for those buyers who are willing to pay for non-market costs even though they don't have to, the car pays for itself. That's a relatively small niche market, but it's real. It's also worth noting that the Tesla provides serious sportscar performance at a price that is lower than that of comparable ICE vehicles, so it's actually competitive in that niche.

But, all of the above doesn't matter, because...we don't need pure EVs. PHEVs like the Chevy Volt will eliminate 90% of liquid fuel consumption at a life-cycle cost which is comparable to, or less than, that of an ICE.

Take the Tesla battery and reduce it from 52KWH to 16 KWH, and we get a price of about $6,000. Apply the 8% annual price reduction that Tesla reports seeing in the markets (and which both NIMH and li-ion batteries have been experiencing consistently for the last 10 years) over the period 2008 to 2012 (when the Volt will get to serious volumes) and we get a price of about $4,000. That's about $300/KWH, as predicted here. "I do expect the price will come down to perhaps as low as $200 per kilowatt-hour when mass production begins in 2010 and 2011," she says." They'll use less expensive materials than 1st Gen li-ionbatteries; the larger format is much less expensive (Tesla uses about 7,000 batteries!); and they'll have very, very large production volumes relative to most 1st-gen li-ion. Large production volumes reduce costs very quickly.

The Volt's non-battery components won't cost any more than those of a Prius when manufactured in volume. Toyota is selling it a profit, at about $24K on average. It has an electrical drivetrain, and an ICE drive train. The only real difference in cost between it and a Volt is the battery. If the battery adds $4,000, that's $28K, or the average new ICE vehicle.

Here's what GM's CEO says about the Volt's costs: “My job is to get it out there and get it right the first time but then get it cost-effective so that we can do a huge number,” he said. “If I had to go with my first generation, we couldn’t really pencil a business case. Any new technology is expensive, but if you get to the second or third generation you find that the cost goes way down”.

Now, I think GM is over-pricing the Volt in order to capture the premium that early adopters re willing to pay, as well as the new tax credit. It's worth noting that he Volt was originally planned to sell at about $30K. Then, the federal government passed a $7,500 tax credit aimed at the Volt, and the expected price of the Volt rose to...the high 30's. Similarly, Mitsubishi plans to sell the iMiev for the high 40's in Japan (that's where the $50K price comes from - it's an estimate based on the price in yen, and is before Japanese subsidies - the price in the US is likely to be very different), where tax credits will bring the price back down to...about $30K. I see a pattern.

Didn't GM raise their expected cost long before a $7500 tax credit was passed?

The tax credit was in the planning stages well before that. The credit is clearly customized for the Volt (some people in Washington call it the "Volt-credit", or something like that) - GM was certainly involved in the planning.

Perhaps their earlier $30k price was just hopeful dreaming at an early stage of the design?

Well, a PHEV is no harder to cost out than an ICE. Keep in mind that EVs have been around for 100 years (GM sold electric trucks in large quantities from 1912-1918); that there are probably 100 million electric vehicles in use, albeit not highway legal; that electric motors are ubiquitous and extremely well understood; that GM designed and built the EV-1, which supplied much of the technology of the Volt; that GM has enormous experience in large electric drivetrains in electro-diesel trains; and that electric drivetrains are much simpler than ICEs. Heck, whenever a new generation of Prius came out, GM would tear it down and cost it out, down to every component. They know how to cost these things out.

Perhaps as the design got fleshed out their estimated break-even cost rose above $40k?

Yes, and they said the reasons were: unexpected costs to get high energy efficiency components ready for the 1st gen; and inclusion of the cost of two batteries, just to be safe. Even if you believe that GM really thinks they need to plan for 2 batteries, these aren't costs that will exist for later models.

And hasn't that estimated price gone as high as $48?

Well, Lutz once said in an interview that they might have to charge $48K to make a conventional profit. But again, that's for the 1st gen Volt. And, we have to remember that pricing is an artifact of accounting: GM is spending about $1B on R&D for the Volt: if you allocate that to the first 50K of vehicles, that's $20K per vehicle. If you allocate it to the fist 1M vehicles, it's only $1k.

Keep in mind that an EV is much simpler. It will cost substantially less when produced in volume. Look at the Prius: it costs about $24K, and it has two drivetrains.

June 5, 2009

Why don't we see EV's, especially in Europe?

Sometime people ask: if plug-in's and EV's are such a good idea, and if they're competitive at, say $3 gasoline prices, then why aren't they used more in Europe, where gas prices are higher?

There are a number of factors:

1) A different capital cost to operating cost picture.

EVs and PHEVs trade a higher purchase price for lower fuel consumption.

In Europe, fuel prices are 2-3 times as high as in the US, but due to historical factors (shorter distances, higher fuel taxes due to the high % of imports), average car in Europe uses about 1/3 as much fuel as one in the US. Further, European taxes on new cars are generally much higher in the US.

Thus, the economic case for EVs and PHEVs is actually worse in Europe, and the lack of EVs and PHEVs in Europe really doesn't add any useful information to the question of how competitive electric powertrains really are with oil in the US.

2) Pure EV's still can't compete on convenience with ICE vehicles. Even in Europe, fuel costs are only a part of driving costs, and the lower cost of an EV hasn't been quite worth the inconvenience. The logical transition from an ICE to an EV is the PHEV, which for some reason wasn't explored seriously until very recently when GM took that path. Now that GM is pursuing PHEV extremely seriously, they're planning an Opel version for Europe.

3) Europeans have fewer garages, as their housing is much older.

4) Tax preferenced diesel occupies the high-MPG niche.

and perhaps most importantly,

5) there were large barriers to entry (billions in R&D and retooling, as well as resistance from ICE oriented manufacturers) for PHEV's, and there wasn't an obvious need for them. There was resistance from people in the industry who's careers would be hurt. This ranges from assembly line workers and roughnecks to automotive and chemical engineers. And, you've got to give them respect and compassion: they're people, and deserve to be helped as much as possible during a necessary transition away from oil.

Until we find a way to help these people, they're going to desperately fight any proposals to transition away from their industries, by honest attacks or dishonest: whatever works. You can't really blame them: they're just trying to protect their lives and families.

Biofuels, fuel cells, nuclear power, carbon sequestration all involve more chemical/process engineering R&D, and building of plants and retirement of old technologies. Isn't reduction of greenhouse gases is gonna be a golden age for the Chemical Engineering?

I suspect that this kind of thing is much more attractive to students and professors than it is to engineeers with 10-20 years of experience, who've attained high salaries in large companies due to their narrow expertise in a particular area, in that company. For them, I suspect any change which threatens their company threatens them personally.

On the other hand, the momentum has now shifted: most of those R&D $ have now been spent; the technology is better tested; the cost comparisons have shifted; and there's enormous pressure for PHEV's from regulators.

May 15, 2009

Is solar cost competitive?

Not quite yet, but it's coming:

"The economics of solar power are changing rapidly. And if the Prometheus Institute for Sustainable Development (PI) is right that solar module prices will fall more than 50% by 2012, grid parity will be achieved across many parts of the US."

They assume rising electricity prices (which is pretty realistic, with CO2 pricing apparently on the way), but we don't need to focus on that.

The fact is, that PV grid-parity is beginning to emerge right now for a very few specific applications and locations. This will just expand over the coming years, and the assumption of rising power prices will only change the inflection point by 2-3 years.

Also, keep in mind that this is the unsubsidized price, which doesn't reflect any of the externalities, like CO2, sulfur, etc, etc.

The fact is, that solar is here: as production expands, prices will continue to fall, and demand will rise explosively.

May 12, 2009

Why is talking about energy so hard?

It can be very hard to talk about the kind of big changes in our energy infrastructure that we really need. Traditionalists and activists talk past each other. Here's pretty good article
about that - it's also fairly realistic about what's most likely to happen, (though I think it discounts what we could do, if we wanted to...) .

"One executive decried the “cheap shots” taken at the oil and gas industry by climate change activists, and then a few moments later mentioned how much he liked a print ad that offered a false choice between offshore drilling and high gasoline prices."

"An attendee stood before a panel of major oil company executives and ask how the energy industry could engage more fruitfully with policymakers and the public on climate change, then admitted that she had boycotted a recent local presentation by T. Boone Pickens about his energy plan for the country simply because he was an oil baron."

"what I see is both sides—the green/climate change side and the fossil fuel side—retreating to their corners, throwing up walls of propaganda, and demonizing the other side."

Do Electric Vehicles cost less to maintain?

Car manufacturers and dealers think so:

"Car dealers are nervous a shift from gas to electric cars will mean that they don't see their customers as often as they currently do.

The design of the electric car is really simple. There's not a lot of parts, so there won't be much need for maintenance says Mark Perry, Nissan (NSANY) Americas' head of Product Planning. When he said that, was speaking to a group of dealers at an event in New York to show off Nissan's upcoming electric. (We stood outside the circle of dealers and listened in.) "

I've heard a contention that transmissions are the most important cause of car scrappage (" you can call any wrecking yard sales clerk and ask him why most of the cars in his yard are there ,if not because of an accident that rendered them undriveable,and he will tell you the same thing. The used mechanical component that is most often sold out is the automatic transmission. Among working class people who drive older cars this is accepted as a given as certain as death and taxes").

So, what about transmissions?

Well, EVs (and Extended range EVs like the Volt) don't have them. EVs generally do have a reduction gear to reduce the ratio of engine rpm to wheel rpm, which is often called a transmission. However, it's not the multi-speed affair with a torque converter and one or more clutches that drive conventional vehicles, and so reliability will be very high.

Regenerative braking greatly reduces brake wear. Brake maintenance is a significant cost. Even Prius brake wear is greatly reduced, and it only has partial regenerative braking. Taxi drivers with Priuses are very happy about that cost reduction.

EV's have no starter motors, transmissions, mufflers, tuneups (plugs/injection, air filters), timing or other belts, fuel pumps, engine coolant (with fan, radiator, hoses and pump), valves, oil (with filter and pump), exhaust pipes or muffler, catalytic converter, supercharger, idle control, or fuel injection. The engine has only one moving part, almost no internal friction, and is likely to last forever.

Wouldn't all of this likely reduce maintenance costs by roughly 75%?

Jay Leno has a 1909 Detroit Electric model that's still working just fine - it's even still using the original battery.


The Leaf’s service manual says the Leaf requires ABSOLUTELY NO SERVICE. No oil change, transmission fluid, spark plugs, tuneups, oil filter, gas filter, air filter, radiator leaks, muffler changes, power steering fluid, transmission radiator leaks, brake pads, emission control sensor failures, air care inspections...

The only recommendation: inspect/replace brake fluid every 30,000 miles.


Fleet EV managers seem particularly aware of the potential maintenance savings:

“On an equivalent 100 mile-per-day diesel vehicle, we spend roughly $900 per year in preventive maintenance – oil changes, filter changes, anti-freeze adds, and eventually transmission oil changes. With the electric vehicles, we take that down to $250 per year.

The electric trucks are only equipped with four grease fittings and no engine or transmission oil. The truck must still be taken to look at brake lines and other wear components that may be cracked. Overall, there is virtually nothing that goes wrong with these things.” – Staples vehicle fleet manager

May 9, 2009

What about cultural obstacles?

Doesn't moving to renewable energy, greater efficiency, and a lower environmental "footprint" require a cultural change? Culture changes slowly - what hope is there for the change we need?

Change can come from surprising places:

Producers and advocates of green technology are taking note. The Defense Department derives 9.8% of its power from alternative sources and is looking to expand use of wind, solar, thermal and nuclear energy. Some believe that the military has the potential to become a catalyst, helping to turn more expensive power sources into financially viable alternatives to coal and petroleum.

"If the military were to go green, I think that this really could achieve some environmental goals, for a very simple reason: the military is so big," said Matthew Kahn, an environmental economist at the UCLA Institute of the Environment.

Although that remains to be seen, Kahn noted that it would not be the first time the military has had a transforming effect on technology. Cellphones, the Global Positioning System and the Internet all have roots in the military.

Some in the green energy sector hope that as the military adopts alternative power sources, the technology will gain broader acceptance among political conservatives.

""Just hearing that their military is embracing this new technology that was thought of as left-of-center is going to swing people's thoughts" about using it, said David Melton, president of Albuquerque-based Sacred Power Corp., which installed some of Ft. Irwin's photovoltaic panels and wind turbines.

Military officials concede that changing an institutional culture that until recently was far from green has sometimes been an uphill battle. But at a time of shrinking defense budgets, they say, commanders are finding that making their facilities more energy-efficient and generating some of their own power can yield significant cost savings."

The Army has more than 12 million acres, including large tracts that cannot be used for military, residential or commercial purposes because they are intended as buffers between bases and the civilian population. Some of that land, Eastin said, would be ideal for a solar array, wind farm or geothermal project. Within 15 years, he predicts, the Army "will be a net energy exporter.",0,4417523.story?page=2&track=rss

Nate Hagens asks: A green 'military' is kind of an oxymoron don't you think? I suspect they would be green in peacetime and take whatever energy they need during war. Which I suppose is an ecological improvement over taking whatever energy they need during wartime AND peacetime...


As far as the oxymoron goes..I know what you mean. That's the whole point: if the military does it, that takes it out of the realm of treehuggers, makes it a hard-headed business proposition, and gives conservatives permission to pursue it.

As far as the rest: aren't we involved in a war now? I mean, what war bigger than Iraq is going to come along? Russia? China? Canada?

If you read the whole article, I think you'll see that they're looking at a wide range of energy consumption, including energy efficiency. In fact, they're beginning to realize that their current immense refueling needs are a major strategic vulnerability, whether it's tanks, planes, or soldiers.

DARPA is funding R&D of batteries, PV, wind (wind provides 1/3 of Guantanamo's electricity), etc, etc. Everything.

All of this means that whatever they do, they'll use fewer Fossil Fuels.

April 3, 2009

Is the Limits to Growth world simulation accurate?

The well known LTG model lacks energy as a discrete component - it only includes "non-renewable resources", which it assumes will become increasingly difficult to extract as limits are reached. In other words, Return On Investment will decrease.

Without an explicit analysis of energy, the model is invalid, as we see in a report of an attempt to add energy as a component here; . It says the following: "in a world with unlimited energy, any chemical compounds useful as a raw material but not as an energy source could be easily obtained "

Energy Return on Energy Invested (EROEI) is a key, foundational element to the energy component of this new model: "The available data on EROEI is very spotty, but it’s such a crucial concept to explain what may happen in the future with energy sources that I believe a model would be inaccurate if it didn’t include it in some way."

This new model assumes that renewable EROEI is low:
"Renewables aren’t used until the end of the 21st century, due to their low EROEI: "

The new model predicts serious problems in the medium term, in large part because renewables don't start to grow in a serious way until 2075, due to their low EROEI.

Wind and solar have high EROEI*, therefore, the energy component of the model is incorrect, and so is the overall model.

*Oddly, this model also makes the unrealistic assumption that nuclear fuel will be depleted within the 21st century.

March 31, 2009

How quickly is wind growing?

Wind power in the US in 2008 added 21.2 Terawatt hours (8.4GW nameplate @29% capacity factor).

That was 32% of our 10-year growth of 66 Twhrs per year, and about 60% higher than the installations in 2007. At that growth rate wind could provide 100% of new power in less than 4 years, and after that start replacing coal.

There's no reason we couldn't resume that growth curve, should we decide to. Obviously, wind isn't growing as fast right now due to our current financial problems, but I imagine nuclear isn't helped by the financial mess, either (also, 2009 may well show zero or very small electricity demand growth, so there's a nice match there of supply and demand side stagnation).

March 14, 2009

How expensive is the wind power needed to eliminate coal??

In my previous post, I said we could build enough wind capacity to replace coal for $400 billion. Coal supplies half our electricity - can we really do that?

Sure. Here's how I came up with that number:

The US generates about 50% of our electricity from coal, which amounts to an average of 220 gigawatts. Wind, on average, produces power at 30% of it's nameplate rating, so we'd need about 733GW of wind. Wind costs about $2/W, so that would cost about $1,466 billion. Transmission might raise that about 10%, to about $1,613 billion.

Now, roughly 50% of coal plants need to be replaced in the next 20 years, so about 50% of the $1.6T coal replacement investment is needed anyway; new coal plants are just as expensive per KWH as wind, so that half, or $800B of the investment can be eliminated from our considerations.

Coal plants cost about $.035/KWH to fuel and operate, which is about 50% of the cost of wind. That's an expense that we'll have either way, so we can eliminate 50% of the remainder, which is about $400B: all told, we can discount the wind investment by 75%!

Wind's intermittency is often raised as another source of cost: I address that here.


So, that gives us a cost of roughly $400B, or $40B per year for 10 years. That's about 5% of US manufacturing (less than the currently idle manufacturing capacity!), and .3% of GDP.

A bargain.

Would dramatically reducing CO2 emissions be expensive?

No, surprisingly enough.

The British Stern report projected a cost of 1% of GDP per year, and later Stern revised that to 2%. I think that's too high. Fortunately, we don't have to rely on some kind of authority to figure this out - at least for the US, I think we can do the calculations ourselves.

Most CO2 emissions in the US come from coal - a solution that eliminates coal and a large % of oil consumption will get us most of the way.

Well, replacing coal with wind in the US would only have a net cost of about $400 billion*. Light vehicle transportation accounts for 45% of US oil consumption - replacing it wouldn't cost anything at all, if you include all costs and savings over the vehicle lifecycle**.

$400B divided into a $14T economy is 3%. Over 20 years, that's only .15% per year. Not much, really.

*, ** I'll show the calculations for this on following days.

March 12, 2009

Does Peak Oil mitigation hurt Climate Change?

No, probably not. Here's a conversation I had recently:

Randall Parker said :

Nick G,

Peak Oil versus AGW: Peak Oil has the advantage of causing a shorter term necessity with personal direct feedbacks. When the oil production starts the big decline people will have to come up with solutions. Their choices will be so stark and immediate that they'll act, invest, move, research, insulate, cut back. Each person will see immediate costs and benefits for their own decisions.

I am thinking that, however, Peak Oil helps with AGW in two ways:

1) Peak Oil will accelerate the shift to electric cars. Electricity has many ways to get generated, some much cleaner than others. That shift makes it easier because the cost differences btw the dirtier and cleaner ways to generate electricity aren't huge and they are narrowing.

2) We will do more insulating and have more incentives to develop more efficient ways to use energy.

My guess is that domestic opposition to coal plants will stop coal's growth in the US and then we will use less oil. So the US CO2 production trend will start going downward (if it isn't already trending downward). It is Asia that will keep producing more and more CO2 emissions.

I replied:

I agree with your thoughts on Peak Oil versus AGW.

A few more:

"the cost differences btw the dirtier and cleaner ways to generate electricity aren't huge and they are narrowing"

1) There's some indication that new coal has overall costs similar to or higher than wind! Some proposed coal plants in the US (not sequestering carbon, but cleaning up all other index pollutants, like mercury) have capital costs around $2.5/W, which gives overall costs of $.08-.09/KWH, which is higher than wind: . On the one hand, some of this may have been a temporary capex cost problem, due to a construction bubble, but on the other, this is an "overnight" cost, which doesn't include the cost of the construction period, which is much longer for coal than for wind (or nuclear). In any case, it kind've looks like coal is no longer the cheap option.

2) There is a plausible argument that the swing night-time electricity producer for the near-term will be coal (which has spare night-time capacity, and lower fuel costs than gas), and that therefore new demand, like electric vehicle (EREV/PHEV/EVs), will be mostly supplied by coal. Coal, as we all know, produces twice as much CO2 per BTU as oil. Conversely, electric vehicles are 6x as efficient as your average light vehicle, and 3x as efficient as a Prius. Therefore, it looks like EV's will still produce less CO2 than ICE's.

3) Demand Side Management of electric vehicle charging (and, later, V2G) provides, in effect, almost free storage to wind power. Wind and EV's are synergistic. More electric vehicles supports a higher grid market share for wind power.

"It is Asia that will keep producing more and more CO2 emissions."

The faster we deploy new, cheaper renewable power and electric vehicles, and the sooner we achieve economies of scale, the sooner those things can move to Asia and displace coal. We've said that before...but it's worth saying again.

I think we agree that there isn't a significant conflict between solving PO and solving climate change, and that in fact solutions for one are generally helpful for the other.

The one exception may be a move from oil-fired electrical generation to coal: the US has phased out oil-fired generation (for all but 3% of the market - the remainder is in odd places like Hawaii), but very roughly 25% of world oil consumption is for electrical generation. I kind've think that move won't happen very much, however, as 1) coal isn't really cheap, as we saw above; 2) much of the world's coal is in the US, which probably won't be excited about large coal exports; 3) many countries will put at least a small implicit price on the emissions (both index and CO2); and 4) wind and solar tend to have lower incremental costs and shorter lead times, which helps off-set their higher capital costs.

March 10, 2009

How pessimistic should we be?

I was recently asked that question, more or less. Below I duplicate the dialogue:

Nick, our disagreement about Peak Oil boils down to a question of capital replacement. While I do not foresee the collapse of civilization I do think that the costs and lead times on capital replacement and lead times in organizing new industries around new ways of doing things will cause a long deep recession as Peak Oil's decline hits full force.

I've become more pessimistic about Peak Oil due to the financial crisis. Imagine how bad the next financial crisis will get when the amount of oil available is declining 3%-10% per year.

I answered:

"Our disagreement about Peak Oil"

I don't think we differ that much - I think we have a real challenge ahead, that certainly could hurt us economically. That said, I'm somewhat more optimistic. Below I'll comment on each of your points in detail.

"a question of capital replacement"

Peak Oil (PO) is mainly a liquid fuel problem, and cars turn over fairly quickly, even now (9M per year is still not bad). We have substantial idle production currently, and putting it to use making extended range EV's (EREVs) is a social problem which I am reasonably hopeful we'll solve. EREVs are currently ready for production - I recently saw a fully finished production-ready prototype of the Chevy Volt. It's just a matter of ramping them up.

Hybrids are a transition to plug-in's (PHEVs) and EREVs, and Honda Insight and Prius production could be ramped up fairly quickly (Toyota has a second plant waiting in Texas for expansion of Prius production).

"While I do not foresee the collapse of civilization "

For a significant % of those in the world of PO, that makes you a "cornucopian". Have you looked at

"costs and lead times on capital replacement"

The Volt R&D is pretty much done. Production will start in 18 months - that's not bad.

"organizing new industries around new ways of doing things will cause a long deep recession as Peak Oil's decline hits full force"

Well, GDP measures activity, and PO could keep us mighty busy. GDP gets a bump up after natural disasters.

High oil prices hurts the US's GDP mainly because of the income transfer to oil exporting countries. If OEC's can be persuaded to take T-bills, then GDP will be ok (at the cost of a large long-term wealth transfer). After their current reminder that oil prices can also go down, leaving them to live off investments, I think OEC's will be more receptive to that.

The current crisis is largely a failure of petrodollar (and Asian exporter dollar) recycling: low income households were borrowing directly from oil-exporting (and Asian) countries through CDO's, but it turned out they didn't have good collateral, and we're returning to financing our trade deficit with national debt, rather than personal debt. That's much more workable for the long-term.

I'm a bit more pessimistic about Climate Change, and a bit more optimistic about PO, because of their differing dynamics. Take Y2K: it was a problem with a purely man-made system, and so it's cure was relatively straightforward. PO has a geological element, but ultimately it's mostly a problem with human systems - heck, with the right national consensus we could reduce oil consumption by 10% overnight, 25% in 3 months, and 50% in 5 years. CC, on the other hand, has enormous natural lag times, and dynamics which we understand only poorly.

March 5, 2009

Is street parking a barrier for PHEV(plug-ins) or EV's?

Not really: more than 90% of vehicles have garage parking or a driveway, parking lot or other off-street space.

"PARKING: Slightly more than nine in ten American households (91 percent) have at least one car, van, or light truck at home for personal use.
Because 71 percent of homeowners and 35 percent of renters have more than one vehicle, parking space can be a real concern. Garages or carports are common for households living in single-detached units—just over three in four of these homes (76 percent) have a covered shelter for vehicles. Townhouses or row houses, on the other hand, include a garage or carport less than half the time (46 percent). In both mobile homes and units in multiunit buildings, the proportion is 26 percent.
At homes without a garage or carport available, vehicles may be left either on the street or in a driveway, parking lot or other off-street space. For homes without a garage or carport, some kind of off-street space is available at 87 percent of the detached units, at about 75 percent of both the single-attached units and units in multiunit structures, and at 90 percent of the mobile homes.
All this leaves about 7.8 million households who must rely on street parking. Of course, not all of those households have vehicles. Four in ten households who report no offstreet or garage parking also have no vehicles."

Here's the source.

I live in SoCal - most people I know have too much stuff in their garages to use them. On the street where I live almost all the cars are parked on the street or in the driveway in front of the garage. What about us?

I see this occasionally, but in the midwest this is fairly rare. I would guess that it's a symptom of very temperate weather combined with home prices much higher than average for the country that put space at a premium. I would guess that the availability of PHEV/EV's will encourage more people to actually use their garages.

Apartment dwellers face similar obstacles for charging up cars as they have for getting efficient appliances and good insulation: They get the benefits of the investments in charging facilities or insulation. But the landlords spend to provide the equipment. What about them?

Well, many don't have cars, and many others use mass transit. I would think that this will encourage the use of carsharing (like ). The remaining will need public infrastructure: outlets in parking meters, parking garages, or gas stations. Fortunately, that's a small %.

March 3, 2009

Is the Volt's battery too large/expensive?

A recent study Carnegie Mellon University argued that "plug-in" hybrid-electric vehicles, like the Chevy Volt, are too expensive. Are they right?

No. They assumed that the battery would cost $16,000 (or 1,000/KWH). As GM says, that's way too high. (Oddly, they also conclude that a plug-in with a 10 mile range would be better, because drivers would stop and charge every 10 miles!)

Similarly, $10,000 for the Volt's battery has been widely reported in the media, but we shouldn't rely on mass media! Really, no one knows how much the batteries cost. The $10K figure is purely speculation. Here's an example, in the CS Monitor. We see that it doesn't say $10K. Here's what the article says: "the race isn't over making a Chevy Volt battery designed to run 40 miles on a single charge that could (emphasis added) cost as much as $10,000." We can see that the reporter doesn't have a firm source for this cost figure.

Elsewhere, the article says: "Still others say that the cost of new battery power for PHEVs may drop faster and already be lower than what has been widely reported at perhaps $500 per kilowatt-hour or even less, says Suba Arunkumar, analyst for market researcher Frost & Sullivan.

"I do expect the price will come down to perhaps as low as $200 per kilowatt-hour when mass production begins in 2010 and 2011," she says."

Tesla's cost is $400/KWH - it's very likely that GM will pay $200-$300 in volume. The batteries won't be produced in large volumes for several years. They'll use less expensive materials than 1st Gen batteries; the larger format is much less expensive; and they'll have very, very large production volumes relative to most 1st-gen li-ion. Large production volumes reduce costs very quickly.

GM is pricing the Volt high purely to capture the early-adopter premium and the federal rebate - their official justification is that they're pricing in 100% replacement of the battery under warranty, which really isn't credible. We can expect the Volt to cost less than $30K with large volume production.

Is the battery too large?

Yes, they're only using 50% of the battery - a 50% depth of discharge (DOD) is very conservative. That means they have to use a 16 KWH battery to get an effective 8 KWH's. They could be more aggressive (and probably will be in the future), but they're very sensitive to the bad publicity that early battery failures would create.

Could they use a battery that allowed a deeper DOD?

No, there aren't any batteries on the market that are more durable as measured in charge cycles. Tesla's batteries aren't expected to last more than 400 cycles, and the Volt will do 5-10x as many. In theory, the Volt could have a smaller battery. That would mean a shorter range, which would still accomodate many drivers. That might more perfectly optimize costs, but then it wouldn't feel like a big step forward. It wouldn't feel like a real EV, with generator backup - instead, it would feel like an incremental hybrid. Both GM (for PR) and buyers want a large, step forward, I think.

March 2, 2009

Why does the US have difficulty paying for oil imports?

This is really asking: why isn't the US competitive in it's exports, so that it can pay for imports?

The US has several major problems: a persistent negative balance of trade with oil exporting countries; another persistent negative balance of trade with Asia; loss of manufacturing jobs; bubbles in the financial and real estate sectors; and slowing economic growth.

Economic growth slowed in the 70's and 80's; sped up in 90's; and crashed recently.

The US doesn't have enough engineers (civil, manufacturing, software, etc) - we have to import students from other countries, something which has gotten a bit harder lately, as reverse brain drains send talented engineeers and scientists back to India and China.

What's the common thread?

Military spending: half of all US engineers work directly (West Point is an engineering school) or indirectly (Boeing, etc) for the military. Sometimes we get indirect benefits, spinoffs like the Internet (developed by the Defense Advanced Research Projects Administration to make military communications more resilient), but a lot is classified, and at best ends up in domestic products that can't be exported.

In the 90's the US reduced the military, and growth took off (and we had our first budget surpluses in decades). In the 00's we took the military option: innovative energy strategies like the PNGV program (the US hybrid program which sparked Japan's Prius) were ended, and we chose a military invasion of the M.E to guarantee oil supplies.

Now this administration is pushing investment into innovative energy strategies, and (slowly)winding down the Iraq war. Are we on the right track at last? Can we sustain it?