Thursday, November 20, 2014

Google 'engineer'

And find a couple of budding economists (Ross Koningstein and David Fork) who think about costs and benefits when they think about Global Warming/Climate Change;
[Google project] RE [renewable energy]<C [coal] invested in large-scale renewable energy projects and investigated a wide range of innovative technologies, such as self-assembling wind turbine towers, drilling systems for geothermal energy, and solar thermal power systems, which capture the sun’s energy as heat. For us, designing and building novel energy systems was hard but rewarding work. By 2011, however, it was clear that RE<C would not be able to deliver a technology that could compete economically with coal, and Google officially ended the initiative and shut down the related internal R&D projects. Ultimately, the two of us were given a new challenge. Alfred Spector, Google’s vice president of research, asked us to reflect on the project, examine its underlying assumptions, and learn from its failures.
Bold by HSIB (and a hat tip to an e-mail correspondent who knows who he is). Now, on to their reflections;
What’s needed, we concluded, are reliable zero-carbon energy sources so cheap that the operators of power plants and industrial facilities alike have an economic rationale for switching over soon—say, within the next 40 years. Let’s face it, businesses won’t make sacrifices and pay more for clean energy based on altruism alone. Instead, we need solutions that appeal to their profit motives. RE<C’s stated goal was to make renewable energy cheaper than coal, but clearly that wouldn’t have been sufficient to spur a complete infrastructure changeover.  [again, our bold]
No, for that you need the help of someone like Nobel Prize winner Robert Shiller, who wrote about Finance and the Good Society. Koningstein and Fork do their own back of the envelope calculations though;
Consider an average U.S. coal or natural gas plant that has been in service for decades; its cost of electricity generation is about 4 to 6 U.S. cents per kilowatt-hour. Now imagine what it would take for the utility company that owns that plant to decide to shutter it and build a replacement plant using a zero-carbon energy source. The owner would have to factor in the capital investment for construction and continued costs of operation and maintenance—and still make a profit while generating electricity for less than $0.04/kWh to $0.06/kWh.
Still not there yet;
That’s a tough target to meet. But that’s not the whole story. Although the electricity from a giant coal plant is physically indistinguishable from the electricity from a rooftop solar panel, the value of generated electricity varies. In the marketplace, utility companies pay different prices for electricity, depending on how easily it can be supplied to reliably meet local demand.
“Dispatchable” power, which can be ramped up and down quickly, fetches the highest market price. Distributed power, generated close to the electricity meter, can also be worth more, as it avoids the costs and losses associated with transmission and distribution. Residential customers in the contiguous United States pay from $0.09/kWh to $0.20/kWh, a significant portion of which pays for transmission and distribution costs. And here we see an opportunity for change. A distributed, dispatchable power source could prompt a switchover if it could undercut those end-user prices, selling electricity for less than $0.09/kWh to $0.20/kWh in local marketplaces. At such prices, the zero-carbon system would simply be the thrifty choice.
The 'solution' has to meet the test in the marketplace. I.e. has to be valuable enough for the customers to buy it.

More to follow.

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