Saturday, May 28, 2016

Coal, Wind, And US Energy

Subtitle:  Coal Falters as Wind Excels

Data from Energy Information Agency
Black line highlights 50 percent point - not a trend line
The long history of electric power production, and the pollution caused by that production, has always been a story of coal and all the others.    The abundant statistics show that coal provided more than 50 percent of US power for decades, from the mid-1950s until 2005 (see chart at right).  The decade of the 1970s had a bit less than 50 percent due to the ill-timed start-up of dozens of oil-fired power plants.   By mid-decade in the 1970s, nuclear power plants were producing approximately 10 percent of all US power, and oil-fired plants were shutting down after OPEC increased the price of oil in the early part and again at the end of 1979.  Coal was again on the rise, reaching the peak in the late 1980s of production as a percent of all US electricity. 

Meanwhile, an ominous warning came from some who (misguidedly) believed that oil and natural gas were in short supply and would soon be exhausted.  There were two opposing camps holding that belief, those who wanted nuclear power to provide the planet's electricity, and those opposed to nuclear and in favor of wind and solar power.  

A notable member of the believers of an oil and gas shortage was President Jimmy Carter, who infamously took to the TV in April, 1977 and warned us about the need to conserve energy.  He wore a sweater in the White House to emphasize the point.   He was, of course, very wrong.  There is more than abundant oil and natural gas world-wide, in fact, there is a glut that has driven prices down to a fraction of what they were in the Jimmy Carter days.  Improved oil and gas exploration and production methods, including precision directional drilling (PDD) and hydraulic fracturing have opened up oil and gas fields world-wide. 

The nuclear power industry of course came to an abrupt halt after the true dangers of meltdowns and explosions became obvious, first with the Three Mile Island meltdown, then the Chernobyl explosion.  Even with almost 100 percent government subsidy and indemnity from public nuclear radiation, the costs to make the plants nominally safe gave utilities pause. 

Meanwhile in all of this, the US environment became an issue and the Clean Air Act was passed in 1970.  However, coal-fired power plants were exempted from most of the provisions of the CAA by various means.  In practice, while other industries such as smelters, chemical plants, and refineries were required to install air pollution abatement systems, the coal-fired power plants did not.   This, as it turned out, was a mistake. 

Coal-fired power plants, and nuclear power plants enjoyed substantial profits while their chief rival, natural gas, was at a high price during the decades after passage of the CAA.  That was the time to spend some of the profits to install pollution reduction systems.  Now, when natural gas prices are low, coal-fired plants cannot afford the pollution reduction systems.   Also, the US EPA has finally closed the loopholes on coal-fired power plants and required them to reduce their air pollution. see link to "The Tragic Flaw of the Clean Air Act."   The response, predictably, is for the owners of the coal-fired power plants to close the plants.  (Note the rapid decline in coal percentage in the graph above, from 2005-2015; from 50 percent to 38 percent)  see link to  SLB article "Coal Power Plant Shutdowns Ahead of Pace in 2015: Gas and Renewables Replace the Coal Power."

The growth in wind power is also a key to the coal industry's woes.  Wind power also impacts the nuclear power industry, and not to nuclear's advantage.  It has always been known that windmills, and later wind turbines, can spin in the wind and do useful work.  Millions of windmill water pumps existed across the US, bringing water from wells to the surface so that cattle could drink.   Some of the first wind-turbines to produce electricity were installed in California's Altamont Pass near San Francisco.   The wind-turbines were expensive, however, and Altamont Pass is not a particularly good location, but it was one of the best in California.  

The next few decades show that wind-turbines were developed, tested, and improved.  These efforts were supported by modest government subsidies, typically 1.5 cents for every kWh produced, with the value adjusted for inflation.  Surveys of US wind potential revealed that there is enormous untapped wind energy, both onshore and offshore.  see link  to SLB article "Renewables in Outer Continental Shelf."  

 If a low-cost means to capture that wind energy could be found, and a means to store the energy then release it when needed, there would be no need to ever burn dirty coal or build dangerous nuclear plants again.  

Which brings us to today, where almost all of the requirements are in place.   The wind industry has developed larger and more economic turbines, so that it is now common to see 3 MW turbines onshore.  The first US offshore wind power project is installing 6 MW turbines, which are on schedule to start up in fourth quarter 2016.  There is an 8 MW turbine operating offshore in Europe.   Onshore wind economics are such that 5.3 cents per kWh is sufficient to entice owners to build.  Of that, 3 cents is from the utility and 2.3 cents is from government tax credits.   With additional cost reductions occurring annually, the tax credits are reduced to zero over the next five years.   Offshore economics are not as good as onshore, due to much higher costs to install the turbines in shallow ocean water.  However, the offshore wind is stronger and more steady so each turbine is more productive.  

The storage problem is also solved.  Many will scoff at that statement, but the reality is that technology has improved dramatically.  The four leading technologies for grid-scale energy storage are high-speed flywheels, pumped storage hydroelectric, advanced batteries, and rail gravity storage.  The first three are already installed in grid-scale service.  Pumped storage hydroelectric has been used for decades.  Batteries are in use on Santa Catalina Island offshore California.  There are better batteries forth-coming, an example of which is the halogenated polyacetylene battery from BioSolar Inc.   Finally, the low-tech gravity storage by ARES is under construction in Nevada.  There, electricity is drawn from the grid during periods of excess, such as with wind power at night, to send heavy electric trains up an incline of several miles length.   The electricity is produced when needed by sending the heavy trains down the incline with the brakes on, where the brakes are wheel-motor/generators operating in generator mode.  The efficiency is high, at better than 80 percent.  

Finally, pumped storage hydroelectric is no longer limited to those few locations with an elevated lake and a low-level lake within a few miles of each other.  Instead, engineers at MIT developed underwater hollow spheres to be positioned in the shallow ocean and near wind-turbine projects.  Electricity is used to pump sea water out of the spheres during night-time excess electricity production.  During the day when demand increases, water from the ocean flows through conventional hydroelectric systems into the spheres, producing power on-demand and in load-following mode.  

The result, for now, is what we see happening today.  Nuclear plants are shutting down due to the inability to compete in the wholesale electricity markets.  Very efficient natural gas power plants that use combined cycle gas turbines (CCGT), and low-cost wind power production have driven the price of electricity down below the point where nuclear power is profitable.  Several nuclear plants have announced closures due to this.  

Coal-fired plants are shutting down because they cannot afford the costs of air pollution control systems, again with low wholesale prices.  Coal also has the problem of limited resources, where low prices for coal have limited the economically recoverable reserves to less than 50 years worldwide, and approximately 25 years in the US.    One might wonder if this is a false shortage, as was the prediction related to oil and gas in the 1970s.  There are significant differences between coal reserves, and oil and gas reserves.   The primary difference is the cost to extract.   If a huge oil reserve is discovered, perhaps thousands of feet deep and offshore a few miles, it will be economic to drill and produce the oil.  ExxonMobil is doing exactly that with their huge oil field offshore Russia's east coast, the Sakhalin Island field.   This oil field required drilling more than 7 miles deep and with the drilling rig located on the island, more than 7 miles horizontally under the seabed.  

Coal cannot be economically mined under such conditions.  Per USGS experts, deep coal mines are uneconomic at more than 4000 feet from the surface.  Also, for surface mines, or near-surface mines, no more than 10 tons of overburden can be removed for each ton of coal mined. This limits coal production to far less than the known amount of coal in the world.  

Coal miners world-wide have a serious problem.  If they use efficient means of mass production, they mine through their reserves quickly.   Also, the efficient production reduces the cost of the coal, which reduces the amount of coal they can recover.   The best thing that could happen to coal miners is for natural gas to run short and its price skyrocket.   That may have seemed likely before the oil and gas industry perfected precision directional drilling and hydraulic fracturing.   From now on, the era of natural gas with low prices is here.  Coal mines are shutting down.  

Even more importantly, wind power reduces the amount of natural gas required in the gas-fired power plants.  As the saying goes, When the wind blows the power flows.   This reduces the demand for natural gas and reduces the demand-driven price.   Wind power also extends the lifetime of natural gas reserves.  

In a perverse way, the same holds true for nuclear power plants.   The more nuclear power that is installed, the less natural gas is burned in gas-fired power plants.  This, like wind power, reduces the demand for, and price of natural gas.  Nuclear power plants simply cannot compete with low-price natural gas.  

Even worse for nuclear power, there are now technologies to produce synthetic natural gas from carbonaceous waste products, such as the process developed and patented by Professor Chan Park of University of California at Riverside.  see link

Over the next few years, one can expect most of the nuclear power plants in the US to shut down due to unprofitable operations.  Also, more and more coal-fired power plants will close as they refuse to install costly pollution controls while knowing that their coal supply is limited to a few years.   CCGT power plants will be installed in great numbers, along with larger and more efficient wind-power projects across the great heartland of America where the wind is strong and free, from north Texas to the Canadian border.   

Offshore wind power projects will also increase, as the Block Island project offshore Rhode Island is but the first of many.  The success of the ARES gravity rail storage system in Nevada will open that technology to every place that has a suitable slope.  Surely the planners in UK will be pondering how to capture the wind there, store it in heavy trains on suitable slopes, and re-capture the power on-demand.   

A brief excursion on the OPEC moves over the decades, but this is a topic for its own article.  What better way for the Saudis to find out once and for all where the world's oil reserves are, than by temporarily increasing the price of oil so their competitors explored and drilled all over the world.  Even better, if the competition produced those new reserves to exhaustion, leaving OPEC firmly in control of oil.  That worked very well for oil in the North Sea and Alaska.  Alas, it will be a very long time before the oil in shale deposits is exhausted.  

Roger E. Sowell, Esq.
Marina del Rey, California

copyright © 2016 by Roger Sowell, all rights reserved

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