Electricity Generation: Power vs. Energy Power –MW or kW –Like horsepower for your car –Answers question: how fast can I use it? Energy –MWh or kWh –Like gallons of gas for your car –Answers question: how much did I use? 500 MW wind farm and a 500 MW coal plant have the same power rating, but the coal plant will produce 3x as much energy over the course of a year because it runs most of the time.
Timing of Generation Electricity is difficult to store, so electricity supply has to be constantly balanced with demand Baseload is “always on” –Valued for reliability Dispatchable can be turned on and off –Worth the most to utility Intermittent –Only valued for Energy, not Power – lowest paid sources of generation.
Reliability Peak demand is the most amount of power that users are expected to need at any one time Peak usually occurs on hot summer afternoons/evenings Most utilities want enough Base Load + Dispatchable capacity on the system to meet peak with a margin Most are unwilling to count more than a small fraction of Intermittent generation towards meeting peak
Location Generation must be connected to a load or the grid to be valuable Renewable resources are often located in areas without transmission Small distributed generation can often take advantage of “net metering” laws which allows sale to the grid at retail prices
Base Load Technologies StrengthsWeaknesses CoalFamiliar, cheap fuel Global warming, water use, emissions NuclearCheap fuelVery expensive to build, proliferation, waste storage, water use GeothermalLow impact, inexpensive Location, limited but larger resource Biomass & Waste to Energy Free/cheap fuel Has emissions, limited & distributed fuel supplies
Dispatchable Technologies StrengthsWeaknesses Natural Gas Generation Low emissions, Can locate almost anywhere Fuel cost/ volatility Demand Response Inexpensive, reduces emissions Utility must think “beyond the meter”
Intermittent Technologies StrengthsWeaknesses WindInexpensiveFar from cities, usually not timed near peak Solar Photovoltaic (PV) Useful anywhere, matches well with peak Expensive Concentrating Solar Power Moderate price, can be stored, near peak Only works well in cloudless areas Ocean & Tidal Power Near loadsDeveloping, still very expensive
Shifting Supply Using the power we have more effectively Pumped Hydropower InexpensiveLimited by location environmental restrictions on water flows Battery StorageLocate anywhereExpensive, developing technology. Thermal storageLess expensiveUsed only with Concentrating Solar Power, few & small commercial experience Compressed Air Energy Storage Moderate PriceLocate only near underground caverns/mines; requires natural gas Fully dispatchable storage technologies
Shifting Demand Using the power we have more effectively Time based pricing Pays for itself, also reduces total usage Utility must think beyond the meter; often requires infrastructure upgrades Long distance transmission Diversification of supply and demand Takes long time to build or upgrade; politically tricky
Note on Electricity Prices On-Peak Power can be worth as much as 10x Off- Peak power in wholesale markets Quoted ¢/kWh numbers include assumptions: –Fuel prices –Discount rate High discount rates favor technologies with high fuel costs –Environmental & social costs are usually ignored- but they do have value Colorado has passed a law that explicitly includes these costs in the resource planning process for public utilities
Electricity Generation Comparisons Disclaimers: –The following charts are based on my opinion from extensive reading in the field, is highly qualitative and represents a simplified picture –Don’t expect scientific accuracy –Bubble size approximates the size of the potential resource
Customers (except utilities) are not in the market for kilowatts and kWh… they want light, refrigeration, etc. Efficiency is finding ways to deliver what the customer wants (the services electricity provides) while using less electricity
Barriers to Energy Efficiency Energy Efficiency is so cheap because of barriers to adoption –Perverse incentives: Landlord buys equipment, tenant pays bill –High up-front costs / lack of capital –Attitudes/Awareness – not a social norm –Perceived riskiness – esp. on the part of utilities –Often require system level improvements – not just products.
Demand Side Management Overcoming Perverse Incentives Refers to utility programs to promote energy efficiency or demand response Growing quickly in popularity due to government mandates Can be hard to measure results Requires shift to looking beyond the meter
Performance Contracting Overcoming high up-front costs and riskiness barriers Customer –Hires company to provide a fixed level of service (temperature, light, etc) –Pays the company an amount less than the current utility bill Company –Takes over utility bills –Uses energy efficiency measures to save energy – Keeps the savings.
Examples Products: –Geothermal Heat Pumps –Compact Fluorescent Lights (CFL) –Light Emitting Diodes (LED) –Low-e Windows –Insulation Design / Service: –Daylighting –Passive Solar Design –Servicing heating and cooling equipment regularly –Proper sealing of buildings –Cogeneration / Combined Heat and Power
Final Thoughts When and where electricity is delivered is often more important than the price The electricity market is inefficient in many ways –Selling only on price seldom works well Small companies need a ready market for their products… they seldom can survive if they have to transform the market first