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Economics Renewable Energy

The Renewable Energy Singularity

It’s gonna happen. Some day.

Some day, we (as the human race) will reach a point–or a singularity–where it will be more economically viable to create renewable energy than to harvest oil or coal out of the ground; there won’t be any going back. We started toeing that line a few months ago. Oil just about crossed the $150 mark before dropping way back, thanks to the possibility of recession. Now that we’re back into cheap oil land, we will probably suffer a setback on developing newer more efficient energy solutions (not even necessarily renewable ones). But once we cross that threshold where renewable energy is cheaper than hydrocarbon based energy, the world can only change for the better.

Let’s look at things that will accelerate the pace at which we (are forced to) develop new energy technologies:

  1. We run out of oil — Whoops! Can that really happen? You’re darn skippy it can happen. And will happen, if growth continues as it had for the past few years. China and India are waking up as new middle class citizens and they are thirsty for oil. There were only so many dinosaurs and other critters that are now our oil supplies.
  2. The oil that is left is REALLY hard to get to — Recently Cuba found out they have one of the largest oil reserves in the world just off their coast. Too bad it’s a mile or more under the ocean. That’s a lot of water to get through just to get at the oil. It’s even tougher if you have primitive oil companies trying to get at that oil. If the price of oil is high enough there’s likely to be someone crazy enough to go get it, but that might raise the price even more.
  3. The oil and coal the US imports is no longer available — The main reason would be “conflict” a.k.a. War. We make Iran or other friends of OPEC angry enough and they might decide to stop sending us 55 gallon drums of crude (that’s just how they measure it…not ship it, right?).
  4. We can’t afford it anymore — Since we’ve been sending China our money for a long time, they are sitting on some significantly larger piles of cash (in US dollars, thank you very much). If it comes down to an eBay style bidding war, the bigger pile is going to win. Even bidding at the last moment won’t help!

OK, so we’ve decided what might get us into this mess. But what else can get us out of this mess? It’s pretty clear that the next US presidential administration will have some serious sway over how renewable energies are governed and encouraged. If they read, or better yet employ the author of “Hot, Flat and Crowded” — Thomas Friedman, then they will have a level headed economist with some great ideas on their side. More important than one man or even one administration is a multi-point plan of attack for reducing the cost of renewable energy.

Remember, the thing we’re concentrating on is that point where it’s more cost efficient to harvest renewable sources than to dig up carbon based sources. In theory, this makes a lot of sense. Sunshine is definitely free, even if it is harder to come by in the great north. Wind is prevalent just about everywhere, just look at Kansas. But until the infrastructure and the methods are in place, all of these elements won’t contribute to our renewable energy solution, they will just sit useless until everybody jumps on board. Let’s look at a list of hurdles we will have to pass in order to make renewable energy, and more importantly energy independence, a reality:

  1. Efficiently storing energy– From what I’ve seen so far, this will probably be done by splitting H20 into hydrogen and oxygen. While I don’t like the idea of liquid or gaseous hydrogen sitting in my car, basement, etc, I would hope material technologies catch up so catastrophic events aren’t as often as we might think. Unless some game changing technology such as batteries or super capacitors comes and proves it can store energy better than electrolysis, then splitting molecules will be the way to go.
  2. A newer and better power grid — This is one whopper of a problem. You know how you hate going to Best Buy to purchase a 10 ft length of cable because the one coming out of your wall won’t reach your TV? You know how they totally overcharge you because those are their high margin products? Well even if there was NO margin, imagine how expensive it would be to run one wire all the way across the United States. Now imagine criss-crossing those wires across every town and city across the United States. Oh and those really huge amounts of cable? Well, let’s make them out of copper, which is currently at some all time price highs right now. A better routed and controlled power grid is a good first step to increasing the efficiency of power transport. But until we as a country begin to revamp the aging infrastructure of this country, renewable energy will not be a reality for locally generated power sold to the masses or at a central power station system where excess power can be put on the grid at any time it is available.
  3. Bringing in the big boys — Like it or not, the big energy companies need to be a part of it. Until BP or Chevron can continue to make the profits they are making with oil, then there will be problems.  I’m not saying that the king cannot be dethroned (ahem, GM), but I think that if the big boys are in on the action, they will be less likely to lobby the government for oil and maybe even turn their interest towards lobbying for renewables. Who wouldn’t want to get free energy (solar)? All you do is plop down the infrastructure and collect those deliciously free solar rays.  On another note about the big boys, I am happy to say that they have started recognizing some of the potential in renewable energy, although it is unlikely that they will be turning in their oil rigs for solar panels anytime in the next few years. Oil rigs are expensive!
  4. Progressive tax credit reforms — Again, this is likely to hinge on the upcoming election and ensuing presidency but in the event that point 3 does not go through and oil companies continue to lobby for hydrocarbon use, tax credits will be needed so individuals are encouraged to buy their own wind, solar and geothermal systems.  Sure, the lowered costs help, but until there is governmental push, it’ll be slower adoption on the part of big business.
  5. Finding replacements for current solutions — I once visited the GE Aviation facility in Cincinnati and I can tell you, that facility is HUGE. It must be miles of offices and test bays completely dedicated to producing engines that run on jet fuel. Until THEY decide to switch over and try new methods of propulsion, having an abundance of hydrogen might not do them (or us) any good. The end products (in this case engines) require jet fuel and until they require something other than jet fuel (and therefore drive the demand down and the impetus to go find and sell more of it down), then the cost of renewables will remain high by association (because there will be less demand for it).

As much as we wish it was, making cheaper solar panels isn’t the only solution to reducing costs of renewable energy. There are many different aspects that feed into making renewable energy a final solution for the human race. If you can think of more milestones we’ll have to reach before this vision becomes a reality, please post them in the comments.

Categories
Analog Electronics Politics Renewable Energy

Stealing stars and leaving the Barons in the dust

I recently had a high school friend visit and while watching the Olympics and having some beers, conversation turned to China (and the rest of the world). I know, I know, I’ve recently talked about the Olympics and China and such; But this is different. The conversation moved to energy and how it relates to national security, which I also have read about recently in a trade journal. Basically he brought up the astute point that renewable energy needs to be our number one priority in the coming years. We’re not talking 20 or 30 years…we’re talking 2 or 3. Really, it’s that important.

If you think about it, it makes perfect sense. Let’s say America reduces its energy dependence and busts its hump to get renewable energy contributing to say 40% of the country’s need (imagine a breakthrough that would allow this). What happens next? Well, if it was overnight (which it wouldn’t be), oil demand and prices would more than likely fall overnight too. Not to worry, I’m sure somewhere along the way that the demand would be filled by large countries that manufacture goods and want some newly cheap energy. But what about (the) US? In succession, we’d be able to say “Goodbye! No Thanks! Don’t Need it anymore!” to: Iraq…Iran….Russia….Venezuela….and China (though we probably wouldn’t with China, they make our stuff, right?). Almost all of the conflicts the US has with other countries center around oil! I would imagine it’s not going to stop with these countries either. Oil will become the driving force behind global conflicts for years to come, followed only by the fight for potable water. So why not go over the oil barons’ heads and make our own energy and let the wind and sun give us all the power for free?

40% of energy coming from renewable energy? Does the US have the brainpower to achieve that? No, not unless just about every scientist and engineer was capable of dropping what they’re doing and shift all their focus to working on energy. But there’s tons of smart scientists and engineers all over the world. What a break! In fact, there are engineers already doing a lot of this renewable energy work already. So maybe we could achieve two things here…first, the US would get scientists to help develop energy solutions that would allow us to ignore the tyrants of the world; second, the US would continue to maintain our most important resource going to the future: intellectual capital.

For the past 100 years, the US has been a leader in technology because of its innovators. These best and brightest minds created everything from electronic building blocks to the computers in which they were utilized. And now we’ve seen not only jobs going overseas, but a lot of the best minds are popping up outside this country too. Not only that, a lot of the top minds are coming to the US to study and then following jobs home to their native countries. So another solution for the benevolent (or otherwise) forces in the world: lure them to the United States and claim them as our own. While intellectual capital may have been one of our greatest resources that is arguably losing ground to the rest of the world, the US still has something that many other countries do not. What other countries have Hollywood, New York City, Chicago, LA, National parks bigger than certain countries and so on and so forth? Where do people want to move for jobs and stay and live and raise families? I think that the US needs to utilize the drawing power of our entire country, our availability of opportunities and our lifestyles (whether people agree with the decadence of western culture or not).

The future of the world in regards to energy is very uncertain; the US will remain a world power only if we are able to recruit the best minds, keep them here and have them help to create a world run on renewable energy.

Categories
Politics Renewable Energy Supply Chain

McCain, Gas Prices & the Enron Loophole – Keith Olbermann

I am definitely a fan of Keith Olbermann. There is no denying that he is more than a little left of center, but I feel that he is a bare-knuckled reporter first and foremost and that he will take it to just about any politician, including Obama. Also, I know it’s corny, but I like that he has adopted the Edward Murrow sign off (“Good night and good luck”) and I think that some of his blunt and thorough investigative reports have earned him the right to do so. He definitely gets a little more riled up though…

Anyway, I think this report that Olbermann gives (see link below) is pertinent to this blog because of the effect of gas prices on renewable energy. Aside from the fact that there really are some crook speculators out there (Ben Graham is rolling over in his grave), I have to wonder if this blog would even exist if the gas prices weren’t so high? Would America really care about the environment if our pocket books weren’t shouting at us? Would anyone really care about solar power other than the environmentalists who were investigating it in the first place? I think the answer to that is no. Americans would have happily gone about their world if gas prices stayed the same. There would still be some fringe interest about the environment and about generating cheap, renewable energy (eventually). But otherwise, we’d still be loving our SUVs here in America.

As I’ve written about before, renewable energy will require economies of scale. There’s no other way to really bring down the prices enough for anyone other than Hollywood celebs and Internet startup gurus to afford the power methods available today. And so even though they mention the banks coming in and hurting the consumers in this clip (as I also mention here), it might be a necessary step in the overall evolution of renewable energy.

To make a big impact in renewable energy we have to accept that it will have to be big business.

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