Essay Part 1: Energy Efficiency

There’s a lot of talk about the importance of “Energy Efficiency” these days. Apparently it’s the easiest and cheapest way to reduce GHG and our overall energy expenses. But what exactly is it? What does it mean? I want to try and create a basic framework about this subject.

A definition
“Energy Efficiency (EE)” implies getting more out of the energy that we use. While that’s a perfectly fine definition, I think we need to look at this through three separate extrapolations:

Reducing load
Much of EE is captured by simply reducing overall “load”. “Load” has many contexts from an engineering perspective. It could refer to “weight” in products like a car.  Less weight requires less pull from the engine and less gas consumed (there are some other considerations like safety and durability as well).  It could refer to the amount of current needed in a lightbulb.  Compact fluorescents and LED lighting provide light at a lower wattage. The point being that whatever products we design, we build in a lower demand for whatever energy source drives it – lightening the “load”.

Smarter response
Smarter response refers to building in better capabilities to capture produced energy. In cars, there has been a lot of development on using control systems to make engines more responsive to driving conditions. An example is in GM’s new 2-Mode hybrid which synchronizes the number of pistons fired in the gas engine along with the utilization of an electric “helper” motor. A more simple example is a programmable thermostat that you can install in your home. This device will turn your furnace to different temperature controls based on the time of day (no need to have it on while you’re out).

Essentially, making products “smart” allows us to not consume energy in non-value-added situations.

Reducing economic friction
I didn’t really know what to name this title. But I want to point to the direct relationship between energy consumption and GDP growth. You can pretty much use a linear equation to derive this relationship. And of course, the more the GDP grows, the more energy we consume.

The same could be said for any company or household. The more economic friction – gas bills, fuel demand, etc – the less money lying around for buying fattening foods and paying for college tuition.

The good thing is that this relationship doesn’t work the other way around. EE also must be looked at as an economic growth enhancer. Having high energy costs amounts to a tax for all people in that economy. Low taxes makes it easier for individuals to live and for businesses to use their earnings to grow (or squander depending on the company).

I will have several follow-up posts to this one where I discuss how each of these can be applied to different products. I don’t purport to be an expert in many of these areas, but I hope that it serves as a thought exercise for others to extrapolate into more complex applications.

Consortium to develop advanced power city

A consortium founded by Xcel Energy last month will select a location for “Smart Grid City” – a test site in which to test several advanced electrical grid technologies.

Some of the technologies to be implemented include (from the press release):

 · Transformation of existing metering infrastructure to a robust, dynamic communications network, providing real time, high-speed, two-way communication throughout the distribution grid.
· Conversion of substations to “smart” substations capable of remote monitoring, near real-time data and optimized performance.
· Installation of thousands of in-home control devices and the necessary systems to fully automate home energy use.
· Integration of infrastructure to support up to 1,000 easily dispatched distributed generation technologies (including plug-in hybrid electric vehicles with vehicle-to-grid technology; battery systems; wind turbines; and solar panels).

This is an interesting list of technologies – I wonder if a city of 100,000 is too big for implementation purposes.  But there’s a couple in here that sound interesting.

Smart Metering
The smart metering has been talked about for decades now.  It’s actually pretty stupid that we have locally read meters. There’s a lot of reasons as to why that hasn’t changed much – none of which are particularly good reasons.  But if they can show that remote metering technologies yield better results, then it would go a long way towards implementing them in other communities.

Grid batteries 
Second, the usage of battery systems within the grid is intriguing.  While solar and wind have the opportunity to augment peak demand loads, batteries provide a whole new opportunity themselves.

On a grid-wide scale, they could make night production more productive.  Raise productivity at night and store to the grid; consume at night when demand is high.  That’s the whole theory behind vehicle-to-grid applications.  But installing your own batteries directly to the grid might also be a winner.

On  an individual scale, could batteries provide an opportunity for customers to take advantage of lower demand prices?  I might dream of a business model where I can buy and sell my own electric power that I store on a home battery to/from the grid.  Could I do this with my solar installation?  That might provide a new way of augmenting my own income by being able to buy/sell electricity in its own marketplace.  This has been the dream of many others, but has never come to fruition.

In any case, this would be a great opportunity for Xcel to garner some learnings.  I hope in their search they review a lower-income urban neighborhood.  In many ways, lower income households are in greater need of these technologies – the improvements might make life a little less hectic.

Hydrogen Energy to build IGCC facility in UAE

Hydrogen Energy will build their third IGCC facility in Abu Dhabi.

From the Hydrogen Energy Website:

Hydrogen gas would be used to fuel gas turbines and generate 420MW of low-carbon electricity. This project alone would provide more than 5% of all Abu Dhabi’s current power generation capacity at a cost equiv

The CO2 would be transported and injected into a producing oil field and used to replace natural gas that is currently being injected into the oil field to maintain pressure. This natural gas could then be used either domestically or for export. This process could be deployed at scale and release a significant amount of additional natural gas for Abu Dhabi and the United Arab Emirates.

The CO2 injected into the oil field could also enable previously unrecoverable oil to be produced. If this technology was widely deployed it could boost Abu Dhabi oil production by some 1-3 billion barrels. As the oil is forced out the CO2 would remain stored securely and permanently beaneath the oil field’s natural impervious seal.

This is an interesting prospect as it will strictly use CO2 injection to replace the natural gas being used in this process.

Hydrogen Energy already has two such projects underway – Carson, California and Kwinana, Australia. This is a big project that should yield some great learnings around this type of system. Mostly the viability for long term CO2 sequestration underground. While CO2 injection is done regularly in the oil industry, none have been integrated into this type of operation.

E.P.A. Chief Defiant in Senate Hearings

Environmental Protection Agency Chief defended his refusal to support the State of California’s waver to regulate automobile emissions.

From the NY Times Article:

Defending his refusal to let California set limits on the greenhouse gas emissions of automobiles, the head of the Environmental Protection Agencyclimate change posed no “compelling and extraordinary” risk to the state. insisted before a Senate committee Thursday that

Describing such change as “not unique to” and “not exclusive to California,” the agency’s administrator, Stephen L. Johnson, called it “a global problem requiring a global solution or, at least at a minimum, a national solution.”

That is what has bothered me with regard to the Bush Administration’s activities regarding climate change. In many ways, it pays only lip service to global warming, but does nothing very progressive. But moreso, it seems to trounce on very traditional Republican policy in the process.

Ghosn on the Electric Car

View the WSJ video interview with Carlos Ghosn:
First is his perspective on the world economic challenges. The second half exposes his excitement for the electric car. He seems very upbeat about the prospect of an electric car (a stark difference from when he visited my class at Stanford in 2006). In particular, he’s excited about battery prospects even though they are not quite commercialization-grade yet. Nissan continues to be behind the curve with respect to alternative power trains. So I’m not sure I’d take his enthusiasm seriously.

What’s a car’s cost tunnel?

In his lectures at Stanford last year, Amory Lovins spoke of a concept called “tunneling through the cost barrier”.  This is a contrarian notion where instead of optimizing a system, you optimize for the overall efficiency of the design and capture, rather elegantly, a significantly better design at less cost.

One of the examples Lovins gives is his own home.  In this case, he hyper insulated this home to the extent that he didn’t need a central heating system.  That means no real natural gas usage and his home keeps its temperature extremely well.  He paid a lot for the insulation, but he saves on the expense of the furnace and the ongoing energy costs through the life of the home.

What, then, is the “tunelling through the cost barrier” strategy for the car?

Fortune article paints 1-D picture

Fortune currently has an interesting article, Soylandia, on the success of the Brazilian soy bean industry. The overall message the story presents is “Brazil is beating the U.S. in soy beans…and they could beat us at everything else”. While there is certainly credence to the success of the Brazilian agricultural market, I think the article is rather one dimensional in its outlook.

Only movies take such an elementary arc in their story lines. This article, while telling the “truth” doesn’t incorporate the entire story of what is going on.  Here are a couple things to think about when reading this article:
Low costs part of the equation
The big hole in the Brazil Ag argument is that Brazil is still a fairly poor country.  While they can produce a lot of ag products to be sure.  But they also don’t have high costs of labor.

Some notes about Brazil’s productivity from the article:

Soybean yields in Brazil have surpassed the U.S. in three of the past six years. Average costs per bushel in the U.S. are about $6.70, including domestic and ocean freight, while Brazilians weigh in at $5.05.

The United States was built this way – relatively high productivity with relatively low wages.  We even still fight about high wages today even though much of the duties of a farm are automated.  As Brazil matures politically and grows wealthier (meaning people can move to cities as has happened in all developed nations) then Brazil will face the same issues.  But they will certainly do well in the mean time.

Not Zero Sum
A strong Brazil is good for everyone.  Obviously what is going on there is shocking to Midwestern farmers and to the U.S. in general.  But the end game of all of this is affordable food for everyone.  The Midwest isn’t going to go out of business over this.  And I love adamame so I know nothing’s going to happen to soy beans.   So the undertone of “the U.S. is in trouble” isn’t really true or relevant.

Given the improvements the article notes on the growing strength of anti-deforestation efforts, the rest of the world will certainly benefit:

Given the Amazon’s recent history of anarchic brutality and environmental mayhem, one would expect Sting and Leonardo DiCaprio to be flying planeloads of eco-activists to Mayor Franz’s doorstep to denounce Lucas do Rio Verde and the other rising agricultural capitals in Mato Grosso. But Soylandia is jacking up production even as it greens itself – or, more precisely, becomes considerably less brown than it was. According to the Brazilian space agency, the Amazon’s annual rate of deforestation fell by 64% between 2004 and 2007. And much of the decline was in Mato Grosso.

Still more work to do
As the citizens of Brazil grow wealthier, they are going to want more freedoms.  Brazil still isn’t a free and open society.  They have their traditional means of governing and making economic policies.  Their oil and ag industries are still pretty closed off to internationals.  So as they grow, they will ultimately have to address this issue as well.  This is a good thing too as it will help their nation to continue its prosperity.

Final thoughts on the Detroit Auto Show

This was an interesting auto show to say the least. Clearly, “green” and fuel efficiency was the big message that most of the auto companies were trying to push. There are some great concepts and some great new powertrain technologies out there. But I can’t help but be a bit suspicious.

It’s clear that GM and the other auto makers are taking the “green” trend seriously.  All the GM execs seemed as though they’d been through a training course on how to pitch their green message – desiring to be a leader in all of the advanced power train technologies.

More Photos from the Detroit Auto Show

Here are some more pictures from the Detroit Auto Show:

Chrysler
Chrysler introduced three electric car concepts:

Dodge ZEO

Chrysler ecoVoyager

E3 Biofuels has a bidder

EthanolProducer is reporting that Prime Biosolutions, designer of E3’s closed-loop technology, is interested in purchasing them. There are still a few sticking points:

“We’ve got a restructuring plan we’re working on but we’ve got to follow the rules of the game,” said David Hallberg, Prime’s founder. “We’re ready to move when it’s time.”

E3 has claimed that mechanical failures have caused the company to stumble during its start-up period. It has since run out of money and has had to shut down entirely. In particular, the article notes:

One year ago a boiler explosion prevented the plant from coming on line fully and it never attained its projected 25 MMgy capacity.

A boiler explosion?! Boiler explosions are serious business. They’re not just financially costly, they’re extremely dangerous. They’re also fairly easy to manage to. Boiler technology is hundreds of years old at this point. While I can empathize that accidents do happen, a boiler explosion is unacceptable on any grounds. My hope is that this is being misreported – I pray that it was only a serious malfunction, not an actual explosion.

But this seems like it might be good news for E3. The article also details some of their financial troubles – apparently Wells Fargo is owed $57 Million. The details seem to indicate to me that the company was not capitalized appropriately to manage such an endeavor. EP is to report a more in depth article in the coming weeks.