Fellow New Energy Congress member Paul Noel has given a strong warning about the poor state of the American electrical grid and the need for massive investment in smart grid, demand management, and distributed generation technologies and infrastructure. This is an article that should be read and distributed...
The economy isn't the only woe the U.S. faces. It's grid is also in dire straights due to its pending inability to meet peak load. Meanwhile, off-peak lulls, presently largely wasted, are enough to power our vehicles.
by Paul Noel
Pure Energy Systems News
A key issue discussed at the National Governors Conference this weekend has been the issue of peak loading of the grid and how to get energy on time to where it is needed. This is a national emergency issue on a par with the dire situation of the economy. Without remedy, the power grid could fail soon. The only issue is if we can get it fixed fast enough. It needs about $500 Billion in fixes this year. It probably needs about $5 Trillion in fixes over the next 10 years.
This is why you see discussion of "Smart Grid" technology. That is to try to bring down the size of the generation units.
The power grid is the largest machine ever built. It covers the entire continent and is unbelievably massive. It has reserve capacity to power our cars. It cannot do this if the use peaks at uncontrolled times. In order to handle cars and tankless hot water heaters and a myriad of other peak generating devices, the grid would have to increase in size about 300% in order to survive. That is IMPOSSIBLE.
The environmental cost of allowing these high peak loading devices onto the grid without the "Smart Grid" intelligence is absolutely insane. I am not against "On Demand" or "Tankless" Natural Gas units and I am not against the electrical ones but the consequences are a decision to build 300% more grid.
If pulling from off-peak slow times, the Grid has enough power to power all of our cars -- energy that is presently largely to waste! The real issue is what do we do to bring it into a working state. Hydrogen cars and battery cars (which are just a different hydrogen tech) are the solution. This can be done if the charging is timed right, becoming a completely controllable load on the grid, putting to use the waste energy, without pulling energy during peak times. But if these additional loads are added to the already overburdened peak glut, then they could contribute to the problem.
One issue of the big generation of such large peaks came clear to me in the early 1980's as the US TVA was planning 12 big nuclear plants. I calculated the river flow which, including the Cumberland and Tennessee Rivers, is about 180,000 cfs average. (The Colorado River has not run over 8,600 cfs in the past decade.) I calculated the waste wattage of energy (67% of thermal rating of the plants) and calculated the amount of steam that created and reached a stunning conclusion. US TVA was planning to send 90% of these rivers up the cooling towers. Since the river high demand period in summer sees as low as 50,000 cfs or less this was not a possible situation. This is why as an example we cannot push the grid up as much as people want. It does not matter that we have the coal or nuclear energy. We cannot cool them!
When the Three Gorges Dam was started in China (it is equal to 18 big nuclear plants), the dam was to provide something like 70% of China's power. It now will provide just 2.5%. China is collapsing under this as well. China's rivers will not hold the demand. Nobody's rivers will hold the demand. Our oceans will die under the heat dump load of cooling in the ocean. This process will not work the way we are going. We have to change entirely how we do business.
I hope people realize that the limits on what we can and should be doing are not the product of Environmental "Wacko" or "Cracked Pot" ideas. We really are reaching some serious limits and we really are going to have to get a lot smarter on what we are doing.
Peak Load Ratio
The Peak to Base ratio or Peak Load Ratio on the grid in the USA has been rising steadily over the years. In the 1950's it was about 4:1. By 1990 no Grid segment was below 6.5:1. The Ratio in some GRID segments now is well over 17:1.
There is a ratio of GRID Maximum Demand over GRID Generator Capacity that must never be below 1:1. Due to service requirements, the GRID really never should be below a 1.2:1 ratio. The current NATIONAL AVERAGE ratio on the GRID is 0.96:1. That means that the GRID is already failing as our friends in California and the North Eastern USA should already attest. The best expected ratio in 10 years in the USA is about 0.86:1 It probably will be below 0.82:1 This means that on any given day in the USA we can expect a probability that there will be deliberate brownouts of the GRID to save it on the order of about 3% probability. In the Summer and Winter this probability reaches near 100% certainty. This will cause failure of our economy as our industry will be shut down entirely. The USA is fast headed towards becoming a 3rd world country over this peak loading issue.
What you can do
There are some things you can do to fix this. Adopt devices that minimize your peak loading such as high efficiency HVAC and other devices. Adopt methodologies to minimize your base loading. The one device to focus on here is computers and TV devices. Of course invent and if you can get off the GRID as much as possible. Local Generation and such is imperative. If you own a business or factory you must anticipate having to locate on your site generation capacity to handle your operation and of course consider its fuel issues. This later solution actually causes more energy demand but it gets it off the peak. I really wish we could get attention to the seriousness of this situation. It could be yet another anchor on the foot to take down our national economy. The National Governors Conference this week end was seriously discussing the matter and realized just how dire it is.
Tuesday, February 24, 2009
Saturday, February 14, 2009
What is the Real Impact of the Stimulus Bill on Solar?
The stimulus bill that the Congress passed yesterday contains three provisions that will help the solar power industry:
The Renewable Energy Grants are a major, positive development. Essentially, the tax equity market has collapsed. Virtually all tax credit equity transactions were purchased by financial institutions, with Fannie Mae, Freddie Mac, Bear Stearns, and Lehman Brothers being the four dominant players here. All four no longer exist as profitable entities who have any need of sheltering profits. In addition, most of the other players in this market have so many losses that they will not need to purchase tax credits to shield profits for years to come. Without the ability to monetize the 30% tax credit, virtually all commercial solar installations that were not financed by September 2008 have essentially ground to a halt.
The loan guarantee program looks nice on paper but the reality is that it will be months before one can even apply for loans guaranteed under this program and it allows loans for a wide distribution of renewable energy genergation and transmission technologies. Furthermore, like so many other government appropriated programs, this program is extremely vulnerable to politically-driven manipulation and favoritism that does not guarantee that a single dollar is lent to fund any solar projects or technologies.
This bill does little to address the impact of the credit crunch on the solar industry. One still has to finance 40% to 70% of the cost of the project, depending on whether the project qualifies for any other grants or rebates. Commercial and residential installations will continue to be extremely difficult to finance and fewer and fewer potential customers have sufficently high credit ratings to qualify for financing. This will make the industry dependent on government projects providing solar for government building. However, this game has significant uncertainties, places a premium on political connections and influence, and will benefit a few larger installers over the vast majority of the installers in the industry.
In addition, given the roughly 100% over capacity in photovoltaic module production worldwide, it would be virtually impossible to raise capital, even with the 30% manufacturing investment tax credit, to fund any new equipment or module manufacturing project. Module prices are rapidly dropping and some vendors are selling for below $3 per Wp in megawatt volumes -- well below the $3.60 to $4.40 per Wp rates they commanded just a year ago.
Finally, no one is considering the unintended consequences from both this bill and the myriad other stimulus, TARP, and other bailout bills on the solar industry. The solar industry is particularly vulnerable to inflation and a US Dollar crisis because the vast majority of solar photovoltaic modules, inverters, and other components are manufactured in foreign countries and are imported. All of these stimulus, TARP, and bailout programs are massively increasing the money supply and are creating the potential for a Treasury funding crisis because there may not be enough (or ANY) foreigners willing to purchase US Government debt. This would mean paying significantly higher prices to import equipment combined with having to pay higher interest rates on financing.
- Renewable Energy Grants in Lieu of the 30% Investment Tax Credit: Essentially this makes the 30% investment tax credit refundable. One has to apply for the grant once the system is installed but no later than 60 days after installation. This eliminates the need for solar project developers to find tax credit buyers and gives them 100 cents on the dollar for the tax credits (effectively selling them to the U.S. Treasury).
- Loan Guarantee Program: There is a $6 billion loan guarantee program for renewable energy and transmission (smart grid) technologies.
- Manufacturing Investment Credit: There will be a new 30% investment tax credit for investment in facilities for manufacturing renewable energy equipment. However, this tax credit is not refundable and would likely be very difficult to sell to tax equity investors.
The Renewable Energy Grants are a major, positive development. Essentially, the tax equity market has collapsed. Virtually all tax credit equity transactions were purchased by financial institutions, with Fannie Mae, Freddie Mac, Bear Stearns, and Lehman Brothers being the four dominant players here. All four no longer exist as profitable entities who have any need of sheltering profits. In addition, most of the other players in this market have so many losses that they will not need to purchase tax credits to shield profits for years to come. Without the ability to monetize the 30% tax credit, virtually all commercial solar installations that were not financed by September 2008 have essentially ground to a halt.
The loan guarantee program looks nice on paper but the reality is that it will be months before one can even apply for loans guaranteed under this program and it allows loans for a wide distribution of renewable energy genergation and transmission technologies. Furthermore, like so many other government appropriated programs, this program is extremely vulnerable to politically-driven manipulation and favoritism that does not guarantee that a single dollar is lent to fund any solar projects or technologies.
This bill does little to address the impact of the credit crunch on the solar industry. One still has to finance 40% to 70% of the cost of the project, depending on whether the project qualifies for any other grants or rebates. Commercial and residential installations will continue to be extremely difficult to finance and fewer and fewer potential customers have sufficently high credit ratings to qualify for financing. This will make the industry dependent on government projects providing solar for government building. However, this game has significant uncertainties, places a premium on political connections and influence, and will benefit a few larger installers over the vast majority of the installers in the industry.
In addition, given the roughly 100% over capacity in photovoltaic module production worldwide, it would be virtually impossible to raise capital, even with the 30% manufacturing investment tax credit, to fund any new equipment or module manufacturing project. Module prices are rapidly dropping and some vendors are selling for below $3 per Wp in megawatt volumes -- well below the $3.60 to $4.40 per Wp rates they commanded just a year ago.
Finally, no one is considering the unintended consequences from both this bill and the myriad other stimulus, TARP, and other bailout bills on the solar industry. The solar industry is particularly vulnerable to inflation and a US Dollar crisis because the vast majority of solar photovoltaic modules, inverters, and other components are manufactured in foreign countries and are imported. All of these stimulus, TARP, and bailout programs are massively increasing the money supply and are creating the potential for a Treasury funding crisis because there may not be enough (or ANY) foreigners willing to purchase US Government debt. This would mean paying significantly higher prices to import equipment combined with having to pay higher interest rates on financing.
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