Biomass Is Big In Sweden, Wind Falters In The US

June 24, 2010

Biomass now accounts for 32 percent of the energy consumed in Sweden, but the gale behind wind energy in the United States has faltered.

Biomass is now the largest source of power in the Scandinavian country, ahead of oil. The fuel is primarily used for heating , especially in multi-family dwellings, and the increase has been aided by taxes on carbon dioxide, sulfur and nitrogen oxide.

Wind farms, like this one in west Texas, can now generate 14 percent of the state's electricity

As a result, Sweden has become the world’s largest consumer of wood pellets, and wood pulp has gone up 20 percent in price since 2005.

On the other hand, the momentum behind the wind industry in the United States has calmed to a breeze. According to the American Wind Energy Association, the nation added new capacity in the first quarter at the slowest pace since 2007.

Only 539 MW of new generation went in during the three months. This suggests an annual pace of 2,156 MW in 2010, down from 10,000 MW in 2009 – a recession year.

The explanation may be simpler than some believe. Wind projects take a long time to plan, which explains why 2009 totals were up from 2008 despite the global downturn. (In 2008, 8,500 MW of generating capacity was added.) Wind projects take 18 months or so to plan. So 2009 installations were conceived during in the relatively good year of 2008 or before. This year’s projects were born in 2009, when credit was tight and investors were avoiding risk at every turn.

Unfortunately, the poor first-quarter performance reveals another stark reality. The Department of Energy’s $3 billion in wind technology investments apparently haven’t had the desired effect of stimulating deployment.

Texas, however, is bucking the national trend. The state now has the capacity to generate 14 percent of its electricity from wind farms with 6,721 MW of turbines installed.

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Posted by Mark Boslet

Ontario Boasts Of Its Feed In Tariff And Adds To The Debate

April 9, 2010

Feed-in tariffs have been taking it on the chin lately.

Germany, with conservatives in charge, plans to cut its generous feed-in tariff for solar by July. Government leaders believe the subsidies are too high, and so above-market payments for rooftop solar will drop 16 percent.

Ontario claims its feed-in tariff has helped attract 694 green-energy projects since 2007

Italy will follow suit with expected cuts of 20 percent in 2011. Even the Czech Republic has weighed in, deciding in recent weeks to head off electricity rate hikes with a cut of its own.

On the other hand, Britain adopted a modest tariff for solar this year, and Japan is considering expanding its to include wind, geothermal and hydropower energy.

So, why the conflicting efforts? Do tariffs work and are they worth the extra fees consumers pay for electricity? Germany’s pioneering tariff helped lift solar sales in the country to about half of world’s total. By some estimates, it has created close to 300,000 jobs.

But it also saddled the country with an abundance of older solar panels, less efficient than the latest panels from manufacturers. Some tariff opponents in the U.K. also complain they face the poorest customers with higher bills they are in no position to pay.

On Friday, Ontario offered its own take on the debate. The province has had a tariff in place since 2007, but last year increased payments for solar to aas much as 80.2 cents a kWh. The government announced other incentives in tandem, including financial support for start-ups.

The result has been 694 new green-energy projects since 2007, 184 of which are larger than 10 MW. A total, 2.5 GW of generating capacity has been approved, or enough for 600,000 homes.

The push should produce 20,000 jobs and about $9 billion in private investment, according to a press release from the Ministry of Economic Development and Trade.

Obviously the debate over tariffs will go on. But the data from Ontario has to go into the “in favor” column.

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Posted by Mark Boslet

Biofuels Need To Go Hyper Local

February 10, 2010

Biofuel prices are rapidly closing in on those of oil and gasoline. But without a massive expansion – and localization – of the industry, production volumes will remain little more than drops in the proverbial bucket.

“Cultivation has to take place on a very large scale otherwise (biofuels) will remain a cottage industry,” says Mark Bunger, director at Lux Research.

Biofuels plants need to be built close to the source of materials and consumption

The problem facing alternative fuels is no longer one of technology. The technology works. It is scale and plenty of it. Without a massive increase in crop production and a focus on building local processing plants to cut transportation costs, biofuels will never help wean the country from its addiction to oil.

This “hyper local” revelation was at the heart of a Lux Research online discussion of the industry and its prospects. If producers are required to cart crops, or biomass, to centralized processing plants and away again, the cost gains and environmental benefits of the fuel will disappear.

The required scale is enormous. Six hundred million cars navigate the roads today. The fleet will grow to 1 billion by 2020, triggering a big increase in demand for fuel.

Some of the new vehicles will be electric. But many won’t, and if drivers want an alternative to filling them with oil, finding the necessary resources will be considerable.

Not only will massive increases in biomass from crops and forest residues be required, but the industry will need a huge expansion in processing capacity.

According to Lux Research biofuels can replace 92 percent of the 31 billion barrels of oil consumed each year, an opportunity that has brought oil companies, such as Shell, into the market. However, a barrel of oil has the same amount of energy as a bale of biomass weighing about a ton.

A huge infrastructure to cultivate, harvest, transport and process needs to be built. And it needs to be erected close to point of consumption. Otherwise the cost of carting loads back and forth destroy the economics.

“There really is no good answer on the horizon of how we are going to fix that,” says Bunger.

Lux estimates that biofuels are on course to replace 3 to 5 percent of petroleum use by 2020. The question is how to raise this relatively paltry target. The answer is that nobody yet knows.

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Posted by Mark Boslet

Energy Dept Grants Should Create 1.5M Jobs, Milken Institute Says

January 26, 2010

The more than $32 billion of alternative energy grants the Energy Department issued in the past year should create 1.5 million jobs over three years, the Milken Institute says.

This projection is included in an institute blueprint for creating jobs in the U.S. The green jobs make up 14 percent of the new employment the foundation believes can be generated through tax cuts and infrastructure spending.

The study, released Tuesday, was funded by the National Association of Manufacturers, so it could over state the expected benefits to producers and be slanted to favor corporate tax cutting. (Yes, Supreme Court, U.S. corporations are willing spend considerable sums of money to influence government policy.)

Still, the findings offer a useful metric for measuring the impact of the Energy Department’s spending. According to the institute, the $32.1 billion the department allocated to smart grid, renewable energy and clean coal projects should create 576,100 jobs a year, or a total of 1.5 million over three years. The money has come from recovery act funds.

The department has set aside an additional $6 billion on nuclear waste clean up, which the Milken study doesn’t address.

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Posted by Mark Boslet

DOE Biofuels Grants Showed Level Headed Bets On Multiple Approaches

December 11, 2009

The Energy Department seemed pretty level headed last week when it pumped $600 million into biofuels companies.

As we reported at the time, the department had a clear emphasis on second-generation cellulosic ethanol. In other words, fuel sources other than edible corn and sugar cane, the purer sugars.

ZeaChem is using a $25 million grant to build its first bio-refinery in Oregon. Key technology integration results are expected in January

But the emphasis was as well on companies that are making steady, measured progress toward commercialization – not those swinging hard for the fence in one blow.

Jim Imbler, CEO of the biofuels company ZeaChem, also says the DOE was careful to hedge its bets. There were firms focused on the fermentation of cellulosic plants, gasification and the conversion of algae into fuel, among other initiatives.

Even the funding for algae-based biofuels – which is further off than cellulosic ethanol – was done with reasoned judgment, not unbridled hope, he said.

Among those getting grants and loan guarantees were BlueFire Ethanol Fuels, eager to build a Mississippi plant to process wood residue, Archer Daniels Midland, BioEnergy International, Enenkem, and algae fuel producers Sapphire Energy and Algenol Biofeuls.

The department also selected ZeaChem for a $25 million grant, which the company will use to build its first ethanol bio-refinery in Oregon.  ZeaChem is earmarking $40 million in private capital for the project, which will use the wood of poplar trees.

Imbler says the company is in the process of proving out the integration of the three key pieces of its conversion process. Key results will be available in January showing whether the technique it uses to convert biomass into sugars is ready for commercial production.

“We’re very confident,” says Imbler of the microbe ZeaChem uses to break down wood chips – and which could be used with switchgrass and other cellulosic fuels.

The data should be broadly useful to the industry, he says. And to the DOE, which is now negotiating the final grant terms with the company.

If the numbers look good, one of the department’s big bets might suddenly look like a sure thing. And second-generation biofuels will appear a step closer to reality.

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Posted by Mark Boslet

The Debate About Green Jobs And Cap And Trade

November 5, 2009

I came across a thoughtful article discussing how many jobs we can expect to lose or create due to a cap-and-trade bill.

The article appeared in the most unexpected of places: a site called FactCheck.org, and it highlighted the wrestling match opponents and supporters are having on the topic.

Two sides, two dramatically divergent claims. On one end of the debate is the National Association of Manufacturers, which asserts a U.S. will cost the country 2.4 million jobs. These are projected losses by 2030.

The European Union expects 400,000 new jobs from cap and trade by 2020

On the other end is President Barack Obama and proponents of the legislation, who say 1.7 million jobs will appear. Their forecast assumes $150 billion of annual business investment in clean energy.

So who’s right?

According to the non-partisan Congressional Budget Office, slow job growth is the more likely outcome. The CBO in a September report anticipates a small decline in employment as labor markets adjust. Over time, jobs will shift from the fossil-fuel dependent industries to companies serving or taking advantage of the growth of alternative energies.

A similar assessment came from the Energy Department’s Energy Information Administration. The organization laid out several best-case and worst-case scenarios. In the best case scenario, employment grows very slightly in the early years of a cap and trade bill, but ends up down 388,000 jobs by 2030 due to the legislation.

In the worst cane alternative, 2.3 million positions will be killed by 2030 due to the bill.

The European Union’s experience with its own cap and trade systems appears to suggest more optimism. The EU anticipates the creation of 400,000 jobs by 2020, or a 30 percent increase in its renewable energy industry. Investments by convention energy companies, on the other hand, have fallen and the economy has had to live with the reduced competitiveness of higher energy prices.

Conservatives also complain that wildly fluctuating prices in the region’s $59 billion carbon trading market cause confusion. During the first years of the system, rapidly falling energy prices did truly create havoc.

However, the EU did achieve as much as a 5 percent reduction in CO2 emissions, which the Congressional Budget Office points out is important.

A strong consensus is building that the impact will be potentially serious and costly if nothing is done, the CBO says, with the viability of some economic sectors in question.

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Posted by Mark Boslet

Wind Farm Financing Market Improves

October 27, 2009

Wind farm funding is getting easier to find, however banks are taking a closer look at projects and deals are taking longer to close.

Vestas sees excess production capacity pressuring turbine prices in the US.

Vestas sees excess production capacity pressuring turbine prices in the US.

The changing market is partly the result of governmental initiatives around the world, which have freed up public money and financial guarantees.

But the improvement stems as well from new banks and financial institutions entering the market for the first time, replacing key financial players that are no longer active, Vestas Wind Systems said Tuesday.

The world’s largest supplier of wind turbines said in a press release that “the impact of the credit crisis on the wind power market is starting to taper off.”

However, deals are more complex as frequently more than one financial institution becomes involved.

And in the U.S., while strong growth is expected after 2010, at present, the “market is characterized by excess (production) capacity, which results in non-attractive prices and conditions on certain projects,” the Danish company said.

Vestas competes with turbine suppliers General Electric and Siemens, among others.

In its Tuesday announcement, Vestas reported third quarter results with higher than expected profits due to cost cutting and held steady its sales outlook for the year. Analysts had expected it to fall. Vestas shares rose.

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Posted by Mark Boslet

Obama Earmarks $3.4 Billion For Smart Grid Companies With Emphasis On Large Utilities

October 27, 2009

President Obama announced an unprecedented effort to remake the nation’s electric energy gird Tuesday, allocating $3.4 billion in government money that will be matched by more than $4.7 billion in private funds.

The government money from the economic recovery act will be poured into 100 private companies, manufacturers and cities, with a strong emphasis on utilities.

Federal money to be match by more than $4.7 billion of private spending

The Electric Power Research Institute estimates a more efficient electric grid could reduce energy use by 4 percent and save the country $20.4 billion.

Of the federal money, $2 billion will go toward designing smart grid components, such as smart meters, substations, appliances and plug-in cars. Another $1 billion will go toward improving consumer access to smart meters and equipment aimed at helping people use power when rates are the lowest. An additional $400 million will be used for grid modernization.

Among the companies receiving money are:

*CenterPoint Energy and Baltimore Gas and Electric, both $200 million;

*Central Maine Power, $96 million;

*Consolidated Edison, $136 million;

*Western Electric Coordinating Council, $54 million;

*Whirlpool, $19 million;

*Duke Energy, Florida Power & Light, Progress Energy and PECO Energy, $200 million each;

*Southern Company, $165 million;

*NV Energy, $138 million.

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Posted by Mark Boslet

Energy Department Sees Carbon Capture Adding 35% To Electricity Costs

October 16, 2009

Carbon-capture technologies being earmarked for coal-fired electric plants could increase costs to consumers by 35 percent.

At least that is the target set by the Department of Energy as it prepares to disburse $55 million in technology funding.

Carbon capture holds the promise of clean coal

Carbon capture holds the promise of clean coal

Despite efforts already underway with carbon capture in places such as Canada and Norway, the department is setting a long-term 8 to 10 years target of widespread deployment of the technology.

The goal is to “support the development of technologies that can remove 90 percent of the CO2 in a (coal plant) flue gas stream at no more than a 35 percent increase in the cost of electricity,” said Energy Secretary Steve Chu.

Carbon capture is a key part of the recipe to reduce global warming. About 50 percent of the nation’s electricity comes from coal and about 20 percent of its greenhouse gas emissions. Coal reserves are plentiful and plants are expected to stay on line for decades to come.

Coal also is a key ingredient in China’s economic expansion with new plants going in every week.

Earlier this month, the International Energy Agency projected the world will need thousands of carbon capture projects by 2050.

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Posted by Mark Boslet

Electric Cars Need $200/Barrel Oil To Sell Well

October 7, 2009

Hybrids will do well with consumers. But all-electric vehicles and plug-in hybrids will struggle unless the price of oil skyrockets.

Only 4% Of vehicles sold will be plug-in hybrids or all-electrics with oil at $200 a barrel, says Lux Research

Only 4% Of vehicles sold will be plug-in hybrids or all-electrics with oil at $200 a barrel, says Lux Research

That’s the judgment of Lux Research in a widely publicized study of the electric vehicle market over the next 10 years. The conclusion that demand for these cars and trucks will trickle instead of gush runs counter to some expectations of a sharp spike in consumer interest.

Obviously one market drawback is the distance electric vehicles can drive on a charged battery – from 50 miles or a couple hundred. This is a noted contrast to the several hundred an average internal combustion car can cover and the ease with which a driver can find a fresh tank of gas.

But more important is price, says Lux. “Even in the scenario with $200 (a barrel) oil in 2020, only about 4% of the vehicles sold worldwide will be (plug-in hybrids) or (all-electrics) due to the high costs of the battery technology for these vehicles,” the study projects.

If oil prices remain closer to $70 a barrel, only hybrids will do well. Sales should be about 3 million vehicles annually by 2020. Plug-ins hybrids will see similar sales levels only if oil rises to $200 a barrel, Lux finds. All-electrics will add up to one-tenth the total.

That said, light plug-in hybrids could be best sellers in the U.S. with oil at $200 and the lithium-ion battery a big winner. The market for lithium-ion batteries designed for electric vehicles could expand to $9 billion by 2020, even as the price of batteries fall from $720 a KWh today to as low as $405 a KWh.

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Posted by Mark Boslet

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