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Rob Freda

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In a rigorous analysis is this "missing link" a solution or evidence of a much larger and systemic policy, market, and investment problem?

While Prof. Sadowy is correct on energy issues, his “the missing link” conclusion lacks perspective and highlights a larger problem in clean energy.

The Yardstick

“Missing link” technology has to have specific performance (other technologies have these) and cost. The most central feature for a "missing link's" is -

The combined system cost per kWh must net out lower than today’s renewables to have value.

This battery’s cost is 1/3 "the best battery technology" (MIT). AGM batteries are ~$250 per kWh of storage. Renewable output needs to be leveled (store when producing a lot, supply when not) to behave like fossil. Wind requires 3-5 days of leveling storage equal to 50% of rated capacity (the turbine’s max output) (LBNL).

Storage for 1MW wind turbine = 3 x 24 x 500kW x $80 = $2,880,000

1MW turbine cost = $1,800,000

Wind subsidy is ~$.026 per kWh to equal Natural Gas at $.065 per kWh

Combined wind/storage cost = $.15 per kWh, Subsidy raw = ~$.085 per kWh, Subsidy w/externals = ~$.05 per kWh

The effect of subsidizing a large percentage of global consumption at current rates is severe (see Edenhoffer’s ADAM) on the order of a 2% global economic contraction per year. More expensive renewable energy that behaves like fossil is not a solution.

The Larger Problem

As long as governments are subsidizing (driving private investment) energy technologies that are highly unlikely to solve our core energy problems, our problems will not be solved because we frittered away the money to solve them. The last 30 years provide a snapshot of this problem.

The US has funded and subsidized incremental storage, solar, and wind technologies for 30 years at a cost of tens of billions of dollars without producing anything that can or is on track to actually compete with fossil. If we continue to lack rigor in clean energy policy and investment and to invest large sums without vision, the future for climate change and/or our standard of living looks very dark.

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  • Jan 11 2013: I can't see how an analysis can be "rigorous" without accounting for the enormous cost of fossil fuels that are pushed out into the future (e.g., the disappearance of entire island nations, famine, increased "natural" disasters, etc. caused by man-made global warming via burning fossil fuels). Fossil fuel is phenomenally expensive. It may be too late to turn global warming around, but that doesn't make the true cost of fossil fuels any cheaper. I would very much like to see a full-blown rigorous exploration of the issues raised, but that's no simple matter.
    • Jan 11 2013: one of the reasons we are in the position we are in with fossil fuels is the lack of rigor applied to analyzing the potential of renewable technologies over the last 20 years. we have frittered away time and money for no result. technology after technology after technology has failed to displace fossil generation. Promise after promise after promise has turned out to be false hope. Meanwhile we continue to throw capital at technologies like this that are second tier techs without having solved the core generation issues

      This talk is a perfect example. Solar and wind are already expensive and uncompetitive and now to get them to run like baseload we are going to double their cost and that is a solution? One could argue that is because the full cost of fossil is not folded into its price but one must accept the reality that doing so to make substandard renewable techs viable would have a large scale economic impact. better to try and build something useful in the first place.

      by wasting time with techs that do not move the needle we are insuring the the full cost of fossil is exactly what we are going to have to pay.
      • Jan 11 2013: UPDATE: Rob, I realized later today that I misread your post. My apologies. I read it to fast. I deleted my initial response/rant from this spot.

        I agree, we have a systemic problem. We need a comprehensive strategy that takes into account realistic estimates of how fossil fuels (and even biomass renewables) can be replaced with a combination of alternative energy sources (both old and new technology), efficiency, conservation, change of lifestyle, etc. But, given the limitations of alternative energy sources as we know them today, the future looks bleak, and human beings are unlikely to give up their perceived standard of living any time soon.

        However, I wish cost were much less of an issue. Then the "missing link" technology might be viable. We can do amazing things (at tremendous expense) when we deem it important enough (particularly war and defense), but, collectively, we still don't take global warming very seriously (as when the true cost of burning fuels isn't considered part of the price).
        • Jan 12 2013: Unfortunately humans are not exactly known for their long range thinking or more precisely guiding their short-term behavior based on long-term probability. If, to your point, asset loss from sea level rise alone could exceed $44 trillion one would think investing even $5-10 trillion over the next ten years would be worth it, but until it is right in our face getting anything done in today's environment is unlikely.

          So that would beg the question what should we be looking for from renewables or other areas to help guide our policy? And secondarily what development strategy should we apply?

          Seems there are two basic dev options:

          1) Butterfly theory approach - problematic with the current structure. as long as 90% of the gov's budgeted dollars are going into subsidies rather than R&D (Solyndra alone got more than ARPA-e has given out in R&D grants) the spray the bushes approach is unlikely to produce solution/s.

          2) Probabilistic analytic approach - One would expect this is the route they are already on but from where government R&D dollars have been spent in the last decade and given the DOE's primary initiatives there is very little evidence that this is guiding policy.

          There is an additional problem with subsidized flaws in policy. There is a compound effect as long as the technologies are not only R&D funded, but also subsidized. This essentially is why when I saw the talk I decided to pop up this debate. Subsidization basically only really insures that both private and public dollars are spent in the same areas regardless of the effectiveness of the area. Rather than helping generate solutions subsidies contract the fundable solution space and insure that the rate of innovation outside of given areas will be restrained. If you pick the wrong areas initially you have an enormous opportunity cost and make it difficult to pivot or expand the space.

          Since the subsidies are not going away any time soon option 2 seems like the only option. Thoughts?
        • Jan 12 2013: "and human beings are unlikely to give up their perceived standard of living any time soon"

          that really does sum it up.

          we are definitely looking like the Dodos from Ice Age at the moment.
        • Jan 15 2013: Stephen, had a think about it and it seems to me that one of the major challenges on your "wish" list is how to get a marketplace to fold in externalities that are long-term and which nothing in the market's initial or current integration with society was set up to accommodate.

          what I mean by that is the global economy is inextricably tied to the price of electricity and I cannot see a mechanism where that price can rise without negative effects. ostensibly that is what subsidies are but I think underpinning value premise is that the subsidized supply must eventually become cheaper (thereby creating growth) than the existing supply you desire to replace or your economy ends up with the negative effects down the road anyway.

          would be interested to know if there is a corollary in other areas for incorporating such externalities. one simple way to do it would be to make power generation temporarily (say for three or four decades) a public service which would then at least give you back the margin and stock/dividend/corp portion to partially reduce the economic impact of all the new equipment. not sure how far that gets you though.

          cannot see any other way to get it done within the current financial/market structure. could be my vision is limited. hate to even think this, but could this be a useful application for derivatives?

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