The Atlantic's The Most Important Graphs of 2011 (Energy)

From The Atlantic's The Most Important Graphs of 2011

4. ENERGY, ENERGY, ENERGY

Oil Profits v. Oil Prices

"Big oil companies make larger profits when oil and gasoline prices are high.  These revenues come from the pockets of everyday Americans.  The five biggest oil companies - BP, Chevron, ConocoPhillips, ExxonMobil and Shell - have already made $100 billion in profits during the first three quarters of 2011 due to high oil prices. Yet they and other big oil companies have fought tooth and nail this year to retain tax breaks worth $4 billion annually." -- Daniel J. Weiss, senior fellow, Center for American Progress

The Most Disastrous Year Ever

"The National Oceanic and Atmospheric Administration reports that the United States set a record with 12 separate billion dollar weather/climate disasters in 2011.  Total damages were approximately $52 billion.  NOAA Chief Jane Lubchenco noted that "what we are seeing this year is not just an anomalous year, but a harbinger of things to come for at least a subset of those extreme events that we are tallying."  She noted that some of the increase is driven by climate change." -- Dr. Joe Romm, Senior Fellow and Editor of Climate Progress

A Century of Love for Oil and Gas

"Many conservatives have attacked the Obama administration's effort to invest in emerging clean energy technologies, including wind and solar electricity generation. Yet they defend longstanding tax breaks for the mature oil and gas (O&G), and nuclear industries. However, the federal government annually spends an average of thirteen times more money on the oil and gas industry compared to investments in renewable energy." -- Richard Caperton, Director of Clean Energy Investment, Center for American Progress

Our Competitors' Green Investments

"On the two-year anniversary of the American Recovery and Reinvestment Act, we should look back with satisfaction that we have seen the American clean energy industry through a rough period in the global economy. However, the United States risks ceding its gains and falling dangerously behind its competitors without continuing investment.  Many conservatives oppose such investments.   Without it, the United States will see an exodus of firms and capital to countries that  are growing their clean tech industries, particularly China and Germany. U.S. private-sector firms lament a lack of clear and consistent policy on clean energy. This stymies investment and slows job creation." -- Bracken Hendricks, Senior Fellow, Center for American Progress

Where the Green Jobs Are

"The failure of several clean energy companies that received loan guarantees have many conservatives increasing their opposition to such investments.  However, clean energy has been a bright spot in the sluggish economy.  The clean economy sector focused on clean energy--especially wind, solar, fuel cell, smart grid, biofuel, and battery companies--grew far more quickly than the economy as a whole. A Brookings Institution report found major job growth in clean energy between 2003 and 2010: Solar thermal and wind grew by 18.4 percent and 14.9 percent, respectively." -- Kate Gordon, Vice President for Energy Policy, Center for American Progress

Solar isn't a new idea

We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature's inexhaustible sources of energy — sun, wind and tide. ... I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that.
                  - Thomas Edison

What does Japan's energy troubles teach us about our own?

I came across Mark Pendergrast's new e-book after reading a blog post he did recently for Renewable Energy World.  Japan has very few traditional energy resources at its disposal so it relies on fossil fuels imports and nuclear power to power its economy.  After the Fukushima nuclear disaster caused by the tsunami of March 11, 2011, popular support for nuclear power in Japan fell rather dramatically (as one would expect).  Imported fossil fuels for electricity generation, notoriously expensive anywhere in the world, became it's sole source of energy and put Japan in a tough position to re-grow its economy.

Japan's Tipping Point: Crucial Choices in the Post-Fukushima World

Japan now has a major incentive to adopt energy efficiency measures and install renewable energy systems which is what Mark wanted to explore with his book Japan's Tipping Point.  He does a great job of detailing the sustainability initiatives that have been promoted in different parts of Japan and providing commentary on their efficacy.  Despite major structural reasons to the contrary, the Japanese seem to continue thinking in a pre-Fukushima way.  The conclusion you become forced to consider is that they might not make the leap to the next generation of power infrastructure anytime soon.

I worked for a Japanese company (SANYO) a couple of years ago, based in the US to develop solar energy projects with their solar modules.  At the time, SANYO was the 7th largest manufacturer of solar photovoltaic modules and had the most efficient panel that was commercially available.  I was brought on as the solar leader of a new organization called the US Environmental Solutions Division.  The stated purpose of this division was to bundle various SANYO products with a clean energy focus together as a total solution sale.  It sounded like a great initiative at the time but ended up appearing to be more of a PR exercise to make SANYO branded products more attractive during its acquisition by Panasonic.  While I spearheaded a couple interesting projects like a solar charging station in Portland, OR, there was not much appetite for significant solar market development plans.

OMSI solar electric vehicle charging station for e-bikes and e-cars in Portland, OR

My experience with the Japanese left me with the impression that they will be hard pressed to make the difficult decisions they have to make to move off fossil fuels.  While SANYO was a world leader in solar panel production, they have now slipped out of the top ten.  The leadership seemed to be resting on their laurels for cell efficiency and this has allowed competitors to catch up to them and gobble up market share. Sharp and Kyocera have also lost ground to Chinese and Korean competition.  I saw confusion, indifference, and fear in SANYO with respect to exploring new ways to promote solar products in the US.  In a rather obvious application for solar, they wouldn't consider installing more than a token amount of their own modules on their own new solar wafer and ingot factory opened in Oregon in 2009.  This sort of project challenged their entrenched way of thinking; hype was more important than actually accomplishing something innovative and highlighted how collaboration across internal divisions was extremely difficult.

So what lessons does this teach us in the US?  As I've written before, Americans are cursed with substantial fossil fuel resources under our own soil.  With the Japanese being "blessed" with paltry resources and still unable to take decisive action towards renewable energy, things don't look so great for renewable energy in the US anytime soon.  The Japanese are not alone in their resistance to change with respect to energy.  The US with a population of almost 2.5 times that of Japan has about the same amount of installed solar PV.  US leaders continue to talk about nuclear as the hope for the future despite the obvious safety and economic troubles with it and despite no practical hope for new reactor additions anytime soon.  Wind farms get rejected for aesthetic reasons while coal continues to be our primary fuel source for electricity.

Bike & electronics charging solar canopy (concept)

Regardless, I continue to remain convinced that solar technologies will trump our other current energy options in a rather short period of time.  The cost curves of solar and it's O&M advantages with respect to everything else will win out; the environmental benefits will merely be icing on the cake.  Once we make the decision to go solar, the build out period will be much faster than most people realize.  I don't think the path to our solar future will be clear or easy however.  Some sort of major shock will have to get us all on the same page.  I would have thought Fukushima was that sort of shock for both Japan and the world.  Maybe not.  It's a naive thinker, however, who bets on things staying the same when radical change is the new normal.

Why propane users need to investigate solar

Propane is a dominant heating fuel in rural parts of the US. Propane users typically purchase a large volume of fuel all at one time. It would not be unusual for them to have to write a check for $1250 1-2 times per year.  What this means is that like with a solar water heating system, they are pre-paying for the fuel they use to heat their home and domestic water.  Unlike with natgas and electricity customers, it's not great a leap for propane consumers to understand how a solar water heating system would benefit them in the long run since they can't spread payments out over time.  Additionally, propane customers tend to come from agricultural communities were communities tend to have a longer view of financial prudence.

To give a little flavor of the economics, I modeled a 2 panel, 70 gallon tank system pitched at 30 degrees facing due south in Des Moines, IA.  Using a solar water heater with propane back up tank, the homeowner would save about $450/year in water heating costs (using $2.50 per gallon for propane).  Switching to an electric back up tank with the same solar system, would save this homeowner about $500/year.  Either system would reduce the home's greenhouse gas emissions by about 1.3 tons of CO2.  Even with only the federal tax credit, this system would have a 10-year payback or 6.5% rate of return.  If propane prices go up to $3.50, the payback is cut to just over 7 years.  If your state has any additional incentives, you'll see paybacks as low as 5 years. 

A couple of good resources for propane related information would be Build With Propane and this propane supply outlook paper.

Save now and save later with solar. With a solar system, you fix your energy costs today and hedge against rising prices tomorrow.

A little perspective about Solyndra

My summary of the Solyndra story:

• Company launched in 2005 to create a unique thin-film (CIGS) solar module to avoid using expensive (at the time) silicon as most other solar companies use.  They took a calculated business risk to create an innovative product to address a gap in the marketplace.

Solyndra's technology & value proposition

•  Prices of silicon collapse in 2009.
• Almost overnight, the business case that Solyndra was trying to make completely reverses.  More efficient panels are now the same price as Solyndra's less efficient panels.
• Solar panel manufacturing has been extremely turbulent from the beginning so Solyndra stays the course and attempts to weather the storm.
• On May 26, 2010, President Obama gives a speech at Solyndra headquarters to tout his commitment to American job and clean energy development. This was a company that both the Bush and Obama administrations wanted to associate with for political purposes.
• June 2010: Solyndra is producing 30MW of solar panels per year and is in a tie as the 10th largest thin film manufacturer. 
• November 2010: Solyndra gets a $535 million loan guarantee from the 1703 loan guarantee passed in 2005 by the Bush administration.
• Silicon prices continue to fall hitting a 6-year low in June 2011 (~$50/kg from ~$470/kg).

A solar cell nestled in raw polysilicon

• Solyndra tries to restructure its loans again in August 2011 but is refused and subsequently loses a contract with the US Navy.
• Bankruptcy--September 1, 2011

Solyndra was an innovative company in a dynamic market.  The founders took a big risk in a very risky business.  Like other companies in other industries, they lobbied the government for special consideration and like other companies in other industries, they got it.  Governments facilitate markets and companies participate in these markets.  My view is that clean energy companies should get special consideration because they promote technology and ideas that help society as a whole.  Special consideration doesn't mean direct investment however.

One lesson learned from this story is that governments are horrible venture capitalists.  This should be expected since unlike VCs, governmental decision makers are betting with someone else's money.  While market development is a solid roll for governments, picking specific winners like VCs try to do, should be left to private investors.

Solyndra couldn't keep up with John Boyd's OODA Loop

One lesson to not learn from this story is that solar energy can't compete with traditional energy and that solar is doomed to failure.  Solyndra failed in most part due to falling prices of solar components and a general inability to keep up with changing business assumptions.  While this was bad news for Solyndra, this is very good news to proponents of clean energy.  Solar energy is on pace to be the least expensive source of electricity for most of the world in a decade.  All this political theater over Solyndra will seem pretty silly when that happens.

"The trend is my friend."
-Old adage of market makers

Renewables face stiff competition in the energy PR war

Companies selling legacy energy products (oil, natgas, coal) are winning the public relations war over climate change.  This makes sense in a way since they have a lot more to lose than the clean energy companies have to gain.  Fossil fuel centered companies have an elaborate (and expensive) strategy to undercut the value proposition that solar & wind companies have been trying to make in the court of public opinion.  Front and center in this fight is to deny that humans have any impact on the climate and that any changes that might be occurring have nothing to do with burning carbon based fuels.

As you'll see in the chart produced by Riley Dunlap and Aaron McCright, two university sociologists, climate change denial is a well-organized, comprehensive affair.  Regardless of how you feel about this issue, I find it very interesting that so much money, human energy, and legislative time is being committed to refuting something that has an objective answer.  This tells me that the parties in the matrix below are more savvy to the fact that how we feel about an issue matters more in spurring action than whether the something is true or not. Deceptive messengers typically jaundice common sense people to the message however, and truth has a tendency of coming out in the end regardless of obfuscation efforts.

Nothing clean about coal

Coal has been a tremendous asset for the industrialization of the world over the last 200+ years.  Over half of our electricity is produced with coal and it is a major source of American jobs.  The spin doctors at the American Coalition for Clean Coal Electricity go too far, however, when they claim that carbon capture and sequestration will make coal "clean."  Even if carbon capture wasn't an implausible fantasy on the scale of Reagan's Star Wars program, coal is dirty throughout its journey from extraction, processing, transportation, smokestack and finally fly ash disposal.  Clean coal initiatives address none of those other yucky bits.

The folks at Funny or Die realize the power of satire and ridicule to move public opinion.  Check out their little ditty about the latest "energy drink" to hit the shelves:

Coal Energy Drink - watch more funny videos

- I drink [use] it everyday because it's really my only choice.