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Eye on the Market | November 21, 2011 J.P Morgan Topic: The quixotic search for energy solutions Today’s US energy reality: electricity generation Before exploring why some of these ideas did not pan out, let’s look at where the US is right now in electricity generation. The table below shows each energy source; its installed capacity; the electricity this capacity generated in 2010 and percent of total generation; its capacity factor; and its long-term levelized cost for new construction, estimated by the Energy Information Agency. Capacity factors are important since they measure the intermittency of each source (capacity factor = actual generation relative to potential maximum generation). Baseload natural gas plants can run at higher factors than 28%; this number reflects the fact that many gas plants are used as “peaking” facilities to provide short-term energy during periods of elevated demand. As stated above, fossil fuels dominate, followed by nuclear. Hydroelectric is next (efficient and cheap, but most large-scale sites are already in use); followed by non-hydroelectric renewable energy, which across all categories makes up less than 5%, in part due to their low capacity factors. Non-hydroelectric renewable energy is a similarly small component of the country’s overall energy use, a broader category which includes transportation fuels”. Energy Installed Electricity %of Implied ElALevelized <---Levelized cost incorporates upfront and ongoing capital costs, cost of Information base genin 2010 total capacity | cost2016 capital, fuel and other operating costs, capacity factor and related power Agency 2010 MW mmMWh | gen. factor per MWh transmission investments (in 2009 dollars) for new construction Coal 316,800 1,847 454% 67% $95-$110 Abundantand cheap, but with a substantial range of environmental problems Natural gas 407,028 988 243% 28% $60-$70 Capacity factors understate potential utilization Nuclear 101,167 807 19.8% 91% $114 Efficient once built: very expensive to build (costs rising sharply in recent decades) Hydro 78,825 260 64% 38% $86 Most viable sites already in use after incentives in the 1960s-1980s Wind 39,135 95 23% 28% $97 Low capacity factor, maturing technology, cost more than doubles offshore BiomassAwood 11,406 56 14% 56% $112 Expensive to aggregate and collect; high capital costs relative to energy density Geothermal 2,405 18 04% 85% $102 Veryexpensive, except near areas with active geothermal reservoirs Solar PVICSP 941 1 0.0% 15% $210-$312 Expensive, low capacity factors: this segmentis commercial (non-res) installations Energy Conversions 101 What went wrong with renewables? Theories generally fall into 3 buckets: (i) why bother, since there are plenty of fossil fuels; (ii) renewable energy would have a larger share if it benefitted from the massive R&D put into things like nuclear; and (iii) renewables have thermodynamic, structural and practical limitations that inhibit their ability to represent much larger shares of electricity or transportation fuel production. While (i) and (ii) have some merit®, it is hard to escape (iii). Energy Conversions 101 is meant to show why, using examples’ that I expanded from Vaclav’s narrative (unit equalities on p.8). Question #1: How much more electricity would the US need if it switched Question #2: Do electric cars require less energy than gasoline powered to electric cars? cars? If not, what might the other benefits of electric cars be? 200 watt hours per km for average electric car 4.4 MWh per electric car per year (see assumptions in #1) 20,000 kmdriven per car per year Now let's figure out the PRIMARY energy needed to make this electricity... 245,000,000 number of US passeneger cars 60% Efficiency loss of generation process (avg for US coal and nat gas generation) 980,000,000 MWh for US passeneger cars per year, all electric 10% Electricity transmission losses 980 TWh for US passenger cars per year, all electric 12.2 MWh ofprimary energy required per car per year 10% + Increase due fo battery self-discharge 44,000 Megajoules of energy per electric car per year (3,600 MJ=1 MWh) 1,078 TWh for US passenger cars per year 2.2 Megajoules per car per year per km driven 4,325 TWh of US electricity production 15.9 kmiliter for electric car when the primary energy (coal or gas used fo generate 25% Incremenél electricity need electricity) is expressed in gasoline equivalents (35 MJ=1 L) 37.4 Primary energy requirement of electric car, expressed in miles per gallon Implication: This is incremental generation, not capacity, since some Implication: In other words, primary energy required to power electric cars is existing facilities could produce more. Butit’s still a huge increase in not that different from high mpg gasoline cars, which exist already. Depending generation, and the cost will depend on where you plan to get the on how electricity is generated, there could be some emissions benefits (but electricity from, and when. Gasoline is used on site; electricity is not if coalis the primary source of electricity, as itis now). There would be generated offsite and then moved across what is perhaps the worst much less depedence on foreign oil, a US objective for decades. But some electrical grid in the OECD. Note that we did not include transmission benefits could also be obtained through a high mileage fleet, perhaps less of an losses here; if we did, generation requirements would be higher. This undertaking than switching to electric cars. If efficiency losses from electricity also ignores electric car battery life issues (heat, cold, etc) and the rising conversion in coal, nuclear or gas plants were reduced from 60% to 50%, that cost of rare earth metals needed for electric cars. would help the thermodynamics of electric cars substantially; but that's a big if. > Domestically produced and imported biofuels make up around 14% of US liquid fuels consumption. ° The nuclear industry was the recipient of 96 percent of all funds appropriated by Congress for energy R&D between 1945 and 1998. ’ These examples are of course assumption-dependent; I tried to be conservative. I am sure you will let me know if I wasn’t. 2 HOUSE_OVERSIGHT_030815