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On Seeking Consensus on the Internalized Costs of Onshore Wind

Schalk, Yes, Internalized costs are a function of fixed and variable costs, but also, power grid dynamics and operations.  Since wind power generally makes up a smaller part of total power grids’ generation capacity and is often given 1st supply priority over more fully dispatchable reserve/backup power generation (natural gas & hydropower pumped storage for example), the published internalize costs tend to be driven towards minimum levels.  As the penetration levels of variable wind increases or the levels/mix of available dispatchable backup power or demand response decline, wind power capacity factors will directionally decrease and costs increase proportionally (as capacity factors directionally decline in order to reasonably balance power grids’ supply-demand; assuming limited available power storage capacities continue).

Besides normal variable wind/weather energy availability factors, environmental impacts on ‘at risk’ avian wildlife (bird/bats) will possibly become a growing operating constraint.  Capacity factors and costs will likely become increasingly impacted as wind turbine operations are possibly curtailed to protect avian wildlife during seasonal migrations and other potentially at risk wildlife movements; example daily sunset/sunrise movement behaviors of many bat species. 

October 21, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Todd, creating major U.S. and World crude and petroleum oil supply shortages and energy crises will unfortunately most impact Developing Countries and the Middle & Lower Class populations within Developed Countries.  Perhaps a better solution is much more aggressively pursuing humane/civilized strategies such as more substantially increasing consumption efficiencies, more rapidly expanding lower carbon alternatives to petroleum and other less destructive and more cost effective approaches to uncontrolled disruption of a very large percentage of currently required energy supplies throughout most of the World today.

October 5, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Andrew, the unfortunate reality of operating outdoor night lights intended to address potential Public safety concerns is that all actions have consequences and some may not benefit everyone under all circumstances; as you have identified.  Excessive or wasteful city outdoor lighting makes it necessary for those who study or enjoy astronomy to travel well outside the cities to more efficiently operate their telescopes.  This negative result of cities’ light polluting the night skies is the increased petroleum consumption from accessing more remote darker areas in order to increasingly observe and explore the universe.  Increased petroleum motor fuels consumption of course directionally reduces energy security.

The solution may be to more broadly adopt reduced outdoor ‘light pollution’ regulations as some cities and communities have implemented over the years.

October 3, 2014    View Comment    

On U.S. Crude Oil Exports Headed to South Korea

Robert, ConocoPhillips split into Conoco (Upstream production assets) and Phillips 66 (Downstream Refining assets) recently and is no longer a major integrated Oil Company like XOM and BP.  Since Conoco no longer has the Phillips 66 Refining assets in WA and CA that process large volumes of ANS crudes, their motivation to export this crude is pretty obvious; increased profit margins.  Since the West Coast (PADD V) imports 1.3 MBD of crude and petroleum oil and almost half of these imported crudes come from the Persian Gulf, allowing ANS exports is very inconsistent with U.S., and in particular, West Coast Energy Security.  Re. my recent post on the subject.    

October 2, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Hops, you are affirming or agreeing with which issue that Rick raises?  Uncontrollable consumption or the current Obama Administration’s apparent inability to more tangibly make progress towards educating, persuading or otherwise leading U.S. and other developed/developing countries (or societies) to stop wasting energy and allowing the growing Middle East threats to International energy security?

October 2, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Bob, your feedback, questions and ideas on this and other energy & policy related issues are also much appreciated and valued.  By clarifying and expanding on the many complexities and options for improving energy production, consumption and security we will eventually find the most optimal and sustainable solutions needed in the future.

October 2, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Rick, my thoughts on your questions of missing energy conservation:

1.      Why do we need to light-up the Solar System?  The classic reason or excuse is ‘safety’.  Those who live in densely populated cities often claim that night lights in neighborhoods and downtown areas and most road intersections require strong lighting to maintain safety.  This helps avoid the intercity risks/hazards including personal assaults and robberies or vehicle/ pedestrian accidents.   Some of these concerns are definitely reasonable in higher at risk communities, but not all.  Probably most of wasteful lighting is due to retail, food and entertainment industries' stores, buildings, bill-boards, etc. to attract customers.

2.      Why are there so many speeding SUV’s, fast Sports Cars or large/heavy family vehicles?  Following the energy crises of the 1970’s the Federal government reduced maximum speed limits to ’55 mph’.  Although highly unpopular with the general Public, the purpose was to increase fuel efficiency of those relatively heavy and inefficient 1960’s-1970’s cars & trucks on the roads at the time.  The 55 mph speed limit was replaced by new CAFE standards, which unfortunately have been compromised over the years with numerous compliance credits or loopholes (Re. a past TEC Post: ‘actual vs. lab mph’ graph)  created by Politicians over the years.  As a result of these loopholes and successful marketing campaigns for SUV’s and other large, fast and lower mileage vehicles (including 4,000+ lb. 'hybrid' SUV’s) compared to lighter, smaller and higher efficient vehicles.

Another curious factor that has prevented increased U.S. vehicle fuel efficiency performance has been allowing nearly uncontrolled speeding.  This lawless behavior was recently addressed by installing numerous ‘speed cameras’.  Many have since been constrained or removed due to guess what?  Public safety concerns.

3.      How does the U.S. expedite increased petroleum efficiencies and reduced future consumption?  Other then implementing truly effective increased efficiency mandates or incentives such as CAFE, SEER, building efficiencies, renewable heat/fuel/power, etc. standards (without continuously allowing political/wasteful loopholes) the question is definitely one of ‘needed consumer-behavioral changes’.  If you use the EU as an example, there is possbily an argument for VAT or possibly carbon taxes since EU per capita energy consumption is significantly less than the U.S.; largely due to fuel and power costs being twice what U.S. Residents typically pay.  The behavioral solution may be better educating the Public on how to stop wasting energy and the potential implications including potentially funding terrorist groups in the Middle East by Persian Gulf imports.

The solutions to reduced petroleum consumption are numerous, complex and will take possibly decades to achieve.  In the meantime, the U.S. relies on petroleum to supply about 35% to total primary energy to support the general populous, economy and current standards of living.  A large percentage of these supplies are at growing risk to disruption from growing terrorist threats in the Middle East.  We need to better secure these required energy supplies to avoid a future major oil supply disruption and energy crisis.  Until we can more successfully reduce petroleum consumption to avoid or mitigate the impacts of lost Persian Gulf oil imports in the future, eliminating the source of these imports is a more effective strategy.  Unless the current Administration recognizes this risk and more effectively addresses this risk (politics aside) the U.S.’s risk of a near future energy crisis and the next Great Recession continues to grow.

October 2, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Bob, my point is that the U.S. has increased oil sands imports by almost 800,000 barrels per day over the past 5 years and only 5% of these crude oil imports have found their way to the Gulf Coast for export.  Yes, a small percentage Canadian crude oil imports can find their way to the crude oil marine facilities for loading onto ships and export to other countries, but only a relatively small 5% over 5-years-to-date.  This fact, however, does not significantly support the claim that the overall new Keystone XL project will have zero benefit to the U.S. Consumers.

As far as gasoline and other refined petroleum products, yes these exports have increased by about 1.8 MB/D over the past five years; well over the level of increased Canadian crude oil imports during the same period.  Most the crude refined to produce these increasing exports come from countries other than Canada.  The reason why U.S. refined products exports have increased is due to the combination of excess refining capacities as U.S. petroleum consumption has decreased and the fact that Refinery owners have chosen to continue to operate at reasonably economic capacities (via exports) to maintain minimum required profit margins, sustain current operations, and avoid shutting down.  This is how the Refining Industry has continued to support 10’s thousands of jobs since the 2007-09 Great Recession, and significantly helped sustain and grow the U.S. economy.  The U.S. trade deficit has also benefited significantly.  All of these things have been apparently recognized by the current Administration and frequently been claimed as due to current and past policies despite the facts that no significant changes in Federal policies have supported sustaining the Refining Industry for many years.

Also, referring back to the graph of this Post, Refiners have significantly increased their exports and (gross) imports while U.S. ‘net’ crude and petroleum oil imports have declined substantially in recent years.  In the event of a future Strait of Hormuz shutdown/loss of Persian Gulf imports and associated oil shortage/crisis the Federal Government could possibly persuade the Refining Industry to curtail their exports to help rebalance and supply U.S. markets; therefore help avoid the magnitude of a future oil shortage crisis.  Such an action should be coordinated with the export ‘Countries of destination’ or the U.S. Allies that rely on U.S. exports to support their countries’ economies.

October 2, 2014    View Comment    

On Growing Middle East Threats to U.S. Energy Security

Bob, one of the arguments against completing the Keystone XL pipeline is that all the oil will only be transported to the Gulf and exported to other countries.  If this were true why have Canadian imports increased by almost 800 thousand barrels per day (KB/D) over the last 5 years and U.S. Gulf Coast exports of crude oil have only increased by about 40 KB/D?  Maybe the assumption of totally exporting all the Canadian oil sands imports is a bit exaggerated.

As I recommend in this post an improved and effective U.S. Energy Security policy would also include “persuading Oil Companies and Traders to purchase crude imports from safer, more secure sources”; i.e. such as Canada.

There is another synergy to increased imports of Canadian heavy oil sands (HOS) crudes not mentioned in the Media to-date.  The current and growing over supply of light tight (crude) oil (LTO) could be blended with the Canadian HOS crudes; yielding what is commonly referred to as ‘Dilbit’ crudes.  This operation could make the physical properties of the blended LTO-HOS crudes more consistent with the average gravities processed in many U.S. Refineries today, and, a solution to making the LTO more economically attractive within U.S. Refining markets.

Unless the U.S. takes sensible, near future actions to significantly reduce the country’s reliance on growingly risky Persian Gulf oil imports, the country may be facing real threats greater than shooting one’s self in the foot.

October 1, 2014    View Comment    

On Good News: EPA Standards Could Lower Electricity Bills

It can also be frustrating when some Federal Agencies grossly underestimate the costs of new regulations such as the recent EPA power generation reduced carbon standards.  Re. a recent TEC Post on this subject: Table 4a.  Yes, (non-hydro) Renewable power net generation has increased substantially over the past 20 years (+177 TWh/yr.) and Residential average cost per KWh (1994-2011, 2005 dollar basis, and adjusted for GDP) has remained relatively constant.  But, unfortunately on an actual dollar basis Residential (or Middle Class) power costs have clearly been increasing over the past 10 years (1993-2013).

Nuclear and Natural Gas net power generation have also increased, and even more substantially than Renewables over the past 20 years.  Nuclear increased by a +179 TWh/yr. over the past 20 years (due to capacity factor improvements and despite shutting down several units) and Natural Gas by a huge +699 KWh/yr. (or 4-times non-hydro Renewables 1993-2013).  The primary reason for the U.S. having lower power market prices has little to do with Renewables, which have directionally increased costs; including tax credits and other subsidies.  The primary reason for reduced (constant dollar) power costs is due to substantial increases in Natural Gas and Nuclear power generation capacity factors and thermal efficiencies (lower Btu/KW; for example refer to the 3rd graph of a past TEC Post), and lower cost natural gas.  These lower/zero carbon power generation technologies are major factors towards reduced U.S. carbon emissions over the past 10 years and why the U.S. has some of the lowest power costs in the World today.  This, of course, could change in the future if regulatory or special interests’ constraints  inhibit a more cost effective and ‘balanced’ approach (Re. Table 3a) to reducing U.S. Power Sector carbon emissions.

There is little question future power costs are going up.  The objective question is: “How much?”

September 17, 2014    View Comment    

On Should Electricity Distribution Utilities Build, Own, and Operate Microgrids For Their Customers?

Jesse, as I am sure you are aware, those who require or desire 100% reliable power supply such as hospitals, military and other critical emergency services already have backup generators that operate on either stored diesel, LPG or connected into natural gas supply systems.  Battery backup systems are somewhat limited due to high cost (compared to backup generation capacity) and gaps in commercially available technologies.  Having Utilities’ responsible to build and provide more distributed normal-backup power may be somewhat equivalent to a transition to more ‘medium’ distributed power generation.  This option could become more reliable than existing ‘macro’ grid systems, but tends to overlook why larger sources of power supplies developed over the past 100 years.  The primary reason is most often: ‘economy of scale’; both cost and efficiency.  Yes, larger scale systems are susceptible to more significant power outages when T&D systems suffer mechanical failures due to weather or other uncontrollable operating/failure incidents.  Macro power systems are built to shutdown (trip-off) power as needed to protect all major power generation equipment (first) when power line shorting or excessive power drains occur (amps uncontrollably increases or AC voltages/frequencies fall outside safe operating limits).  Converting a system to more medium or micro scale generation definitely can reduce the size of a given outage impact, but not without other costs; i.e. the increased capital and operating costs to Consumers for smaller/less efficient installations vs. existing larger/high efficiency installations.

There, of course, can be some optimal level of different scales of power system generation, distribution and reliable operation, depending on the market application and Consumers desire/ability accept increased power costs in the short- or long- terms.

September 16, 2014    View Comment    

On EPA Carbon Standard Compliance Strategies, Part 2: Industrial Proven Technology Solutions and Estimated Costs

JE, during this analysis I did complete an additional strategy/option not shown in this post.  If the total electric power consumption for 2013 were to remain constant through 2030 the levelized cost for lower carbon (non-nuclear) generation would be reduced to about $28 Billion/yr. or roughly half the cost for Options 1-5.  This cost level is still 3-4 times the level estimated by the EPA.

As far as increased power cost impacts on Consumers, the impacts on total consumption will depend on projected average Household income levels in 2030 and the changes in costs-of-living (all energy costs, housing, food, and other required goods & services).  If the recent-current declining Households’ income trend continues, any significant increase in future power costs is going to be problematic for the populous and the economy overall.

September 15, 2014    View Comment