Does a Big Economy Need Big Power Plants? A Guest Post

INSERT DESCRIPTIONAmory Lovins

Amory B. Lovins is the energy maven’s energy maven, viewed variously as a visionary or a heretic in his assessments of how the U.S. and the world should be generating and using energy. More specifically, he is the chairman and chief scientist at the Rocky Mountain Institute, a man who has won many awards, written many books, and, as if that weren’t enough, was a fan favorite for Energy Secretary when we asked blog readers a few months ago to give incoming President Obama some advice.

Lovins has written a guest post for us today, which I am guessing that everyone who cares about energy will find instructive in one way or another. It is especially interesting in light of forward-looking projects like this one about battery-exchange stations for electric cars — for as eager as we may be to wean ourselves from oil, it’s worth remembering that all that newly-demanded electricity doesn’t grow on trees.

Does a Big Economy Need Big Power Plants?
By Amory B. Lovins
A Guest Post

If I told you, “Many people need computing services, so we’d better build more mainframe computer centers where you can come run your computing task,” you’d probably reply, “We did that in the 1960’s, but now we use networked PC’s.” Or if I said, “Many people make phone calls, so we’d better build more big telephone exchanges full of relays and copper wires,” you’d exclaim, “Where have you been? We use distributed packet-switching.”

Yet if I said, “Many people need to run lights and motors, Wii’s, and air conditioners, so we’d better build more giant power plants,” you’d probably say, “Of course! That’s the only way to power America.”

Thermal power stations burn fuel or fission atoms to boil water to turn turbines that spin generators, making 92 percent of U.S. electricity. Over a century, local combined-heat-and-power plants serving neighborhoods evolved into huge, remote, electricity-only generators serving whole regions. Electrons were dispatched hundreds of miles from central stations to dispersed users through a grid that the National Academy of Engineering ranked as its profession’s greatest achievement of the 20th century.

This evolution made sense at first, because power stations were costlier and less reliable than the grid, so by backing each other up through the grid and melding customers’ diverse loads, they could save capacity and achieve reliability. But these assumptions have reversed: central thermal power plants now cost less than the grid, and are so reliable that about 98 percent to 99 percent of all power failures originate in the grid. Thus the original architecture is raising, not lowering, costs and failure rates: cheap and reliable power must now be made at or near customers.

“Central thermal stations have become like Victorian steam locomotives: magnificent technological achievements that served us well until something better came along.”

Power plants also got irrationally big, upwards of a million kilowatts. Buildings use about 70 percent of U.S. electricity, but three-fourths of residential and commercial customers use no more than 1.5 and 12 average kilowatts respectively. Resources better matched to the kilowatt scale of most customers’ needs, or to the tens-of-thousands-of-kilowatts scale of typical distribution substations, or to an intermediate “microgrid” scale, actually offer 207 hidden economic advantages over the giant plants. These “distributed benefits” often boost economic value by about tenfold. The biggest come from financial economics: for example, small, fast, modular units are less risky to build than big, slow, lumpy ones, and renewable energy sources avoid the risks of volatile fuel prices. Moreover, a diversified portfolio of many small, distributed units can be more reliable than a few big units.

Bigger power plants’ hoped-for economies of scale were overwhelmed by diseconomies of scale. Central thermal power plants stopped getting more efficient in the 1960’s, bigger in the 1970’s, cheaper in the 1980’s, and bought in the 1990’s. Smaller units offered greater economies from mass production than big ones could gain through unit size. In the 1990’s, the cost differences between giant nuclear plants — gigantism’s last gasp — and railcar-deliverable, combined-cycle, gas-fired plants derived from mass-produced aircraft engines, created political stresses that drove the restructuring of the utility industry.

Meanwhile, generators thousands or tens of thousands of times smaller — microturbines, solar cells, fuel cells, wind turbines — started to become serious competitors, often enabled by IT and telecoms. The restructured industry exposed previously sheltered power-plant builders to brutal market discipline. Competition from a swarm of smaller electrical sources and savings created financial risks far beyond the capital markets’ appetite. Moreover, the 2008 Defense Science Board report “More Fight, Less Fuel” advised U.S. military bases to make their own power onsite, preferably from renewables, because the grid is vulnerable to long and vast disruptions.

Big thermal plants’ disappointing cost, efficiency, risk, and reliability were leading their orders to collapse even before restructuring began to create new market entrants, unbundled prices, and increased opportunities for competition at all scales. By now, the world is shifting decisively to “micropower” — The Economist‘s term for cogeneration (making electricity and useful heat together in factories or buildings) plus renewables (except big hydroelectric dams).

The U.S. lags with only about 6 percent micropower: its special rules favor incumbents and gigantism. Yet micropower provides from one-sixth to more than half of all electricity in a dozen other industrial countries. Micropower in 2006 (the last full data available) delivered a sixth of the world’s total electricity (more than nuclear power) and a third of the world’s new electricity. Micropower plus “negawatts” — electricity saved by more efficient or timely use — now provide upwards of half the world’s new electrical services. The supposedly indispensable central thermal plants provide only the minority, because they cost too much and bear too much financial risk to win much private investment, whereas distributed renewables got $91 billion of new private capital in 2007 alone. Collapsed capital markets now make giant projects even more unfinanceable, favoring lower-financial-risk granular projects even more.

In short, many, even most, new generating units in competitive market economies have already shifted from the million-kilowatt scale of the 1980’s to the hundredfold-smaller scale that prevailed in the 1940’s. Even more radical decentralization, all the way to customers’ kilowatt scale (prevalent in and before the 1920’s), is rapidly emerging and may prove even more beneficial, especially if its control intelligence becomes distributed too.

Global competition between big and small plants is turning into a rout. In 2006, nuclear power worldwide added 1.44 billion watts (about one big reactor’s worth) of capacity — more than all of it from uprating old units, since retirements exceeded additions. But that was less capacity than photovoltaics (solar cells) added in 2006, or a tenth what windpower added, or 2.5 percent to 3 percent of what micropower added. China’s nuclear program, the world’s most ambitious, achieved one-seventh the capacity of its distributed renewable capacity and grew one-seventh as fast. In 2007, the U.S., Spain, and China each added more wind capacity than the world added nuclear capacity, and the U.S. added more wind capacity than it added coal-fired capacity during 2003 to 2007 inclusive.

What part of this story does anyone who takes markets seriously not understand? Central thermal stations have become like Victorian steam locomotives: magnificent technological achievements that served us well until something better came along. When today’s billion-watt, multi-billion-dollar plants retire, we won’t replace them with more of the same. I’m already experiencing a whiff of prenostalgia.


Carl Christopher

Since posting my comment above, I read Lovins's report Nuclear Power: Climate Fix or Folly? That report covers the same ground as this Lovins guest post, but in much more detail.

I'm not convinced that wind and solar electricity are better than nuclear electricity. Look to France and Denmark for a comparison as to how nuclear and wind do in the real world at generating electricity.

France produces 80% of its electricity from nuclear (and most of the rest from hydro). Its electricity generates the least (per capita) carbon dioxide in Europe at the cheapest price in Europe.

Denmark has the capacity to generate 20% of its electricity from wind. Yet Denmark's electricity generates the most (per capita) carbon dioxide in Europe at the most expensive price in Europe.

In practice, there are lots of reasons why that is. And that is not to say that all countries would be better off abandoning wind and solar and going with nuclear.

That being said, Lovins's proposals work on paper but not in the real world. History has shown they do not work. And history has shown us what will work. Watch Nobody's Fuel, by Douglas Lightfoot, to see more about that.

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matt

AC is less efficient for long distance power transmission. Look it up, the problem is with impedance. The overhead of conversion into DC is worthwhile for lines long enough to be a quarter-wavelength of a 60Hz signal. An AC signal along a wire of that length effectively causes the line to behave like an antenna, radiating energy.

Just pointing that out for a previous commenter.

As for the distributed computing analogy, well, it also depended upon sophisticated networking infrastructure which allows every node to participate as fully as possible. That isn't so easy for our power distribution hierarchy.

Rod Adams

As usual, Lovins has produced a seductive piece that contradicts itself in several ways. Unfortunately, like many glib people who have more training in sales than in physics, he is able to convince some of the people some of the time.

He confuses capacity with production - in Lovins world a kilowatt of capacity from emergency generator purchased by a cell phone provider that runs a couple of hours per year from a local fuel tank counts just as much as a kilowatt of capacity from a nuclear power plant that runs 8050 hours per year. In the real world, the nuclear kilowatt of capacity produces thousands of times more useful power when most people need it - nearly all the time.

He talks about how most power failures occur in the grid, not the power plant, and then advises that a microgrid of small, distributed units can be more reliable than our current model. The problem with that statement is that central station power plant reliability is partially a result of careful engineering, redundancy and professionally trained operators that would not exist if units are too small. Microgrids also have many of the same vulnerabilities of the existing grid, but they will be less carefully engineered and less carefully maintained.

Lovins likes to use the evolution of computers as an analogy, but anyone who is commenting here who has paid close attention to the computer revolution knows that reliability has not been its strongest measure of effectiveness. They also should know that local area networks are difficult beasts to manage, especially if there are a wide variety of devices on the network, each with special characteristics. Network admins know that mixing up a bunch of different operating systems can provide headaches, electrical power network admins know quite a bit about the challenges of mixing in intermittent sources like wind and solar, small and relatively unreliable sources like gasoline generators, medium sized and very expensive marginal cost generators like natural gas fired turbines, and large, low marginal cost generators like nuclear and coal.

Lovins definition of "micropower" also happens to include some existing nuclear power plants in places like Sweden, Russia and Switzerland since they are designed and operated to use the waste heat from electrical power production for district heating in a cogeneration mode. There are also a large number of "cogeneration" nuclear plants operating out on the ocean that use waste heat for a variety of useful purposes. Bet he did not know that.

As William Tucker pointed out, Lovins is not totally wrong - there are some significant advantages to right sized power plants that can be manufactured in a factory rather than stick built and that can be delivered in far less time than is typically assumed for a large central station power plant of any kind. There are at least three companies who have publicly announced plans to build nuclear power plants in unit sizes of less than 50 MWe (150 MW thermal). They are Toshiba, which has designed a 10 MWe unit that can run for 30 years without new fuel; Hyperion, which has designed a 70 MW thermal heat source useful for assisting in enhanced oil recovery, district heating and which can be connected to a 27 MWe steam turbine for power production; and NuScale, which has designed a 45 MWe power plant that can be delivered as a single 300 ton unit to a site that has water or rail access.

For my money, those smaller nuclear plants have a HUGE advantage over the types of systems that Lovins advocates - they produce reliable power without producing ANY polluting emissions at all. They also need very little in the way of fuel delivery infrastructure. In a world powered by Lovins microgrids, there will be a large demand for diesel fuel and natural gas to fuel the generators that must back-up intermittent wind and solar power. That vision also includes a whole lot of excess capacity that must sit idle for much of its existence.

One final thought. When listening to a salesman like Lovins, it is always important to understand where his bread is buttered. During a Democracy Now! interview in July 2008, Lovins let slip just why he has been so adamantly opposed to nuclear and so interested in fossil fueled micropower for his entire career as an energy "guru":

"You know, I've worked for major oil companies for about thirty-five years, and they understand how expensive it is to drill for oil."

I think that says it pretty clearly. Lovins has some very powerful friends with plenty of money to back his marketing campaigns. You can find my own disclosure below.

Rod Adams
Publisher, Atomic Insights
Host and producer, The Atomic Show Podcast
Founder, Adams Atomic Engines, Inc.

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Ian

This is a very humbling piece to the nuclear industry.

Almost any power source could be scaled. There are tiny hydorelectric facilities, there are tiny natural gas units, tiny wind generators, tiny solar cells, etc.

There cannot be small scale nuclear plants from an economic perspective not to mention an engineering one. They are an expensive power source as it is. Hmmmmmmmmmm.

How dare you make me rethink my pro nuclear power stance!

Thanks, I guess.

Mike M

Rod "Atoms".

Great name for someone in your field!

chance

I've read about those small nuclear reactors, small enough to power a small town or even just a neighborhood. Even if I thought they were a good idea (and I'm not sure they are) NIMBY makes it a dead issue from the start.

keith

I thought the single biggest line-item of consumption of electricity was the arcs used in aluminum smelting; is this still the case or no longer (it's possible that the cooling of data centers is bigger nowadays)? The Icelandic plans to build a dedicated geothermal electric system to supply the new Alcoa Fjardaal smelter is one of the most exciting recent developments I've seen in power systems. For other aluminum operations, do macro plants still make economic sense?

Eric M. Jones

Dear "winsome?"

The cost per kWh is the driving factor in power generating. Imagining a wonderful world or tiny spinning power plants ignores the reality of $$/kWh's delivered. Wishing won't make it so, On the other hand, the real cost of kWh's delivered to us don't include the military budget, or the future emergency spending when the Saudis get pissed at us, so considerable accounting adjustments need to be done.

On another topic....Let's be sure to understand that the picture above shows just water vapor coming from the massive hyperboloid cooling towers and the one chimney. The two chimneys on the right are the pollution...and they look pretty clean.

James D

I'd agree distributed generation's role needs to grow, but we also need those big central station power plants. The sun doesn't always shine and the wind doesn't always blow, so people with those systems in their homes will still have to draw power from the grid when they aren't. Combined heat and power has it's limits as well, it makes next to no sense for individual homes and small businesses because it just costs too much.

Dwight Nager

It's not clear to me at all that Lovins is a guru. And I'd like to see the Times take the responsibility to back up the case.

He seems to be endemically incapable of understanding the biology of money.

His writing strikes me as the John Denver of economics. All earnestness, airiness, and hope. But then, cotton candy. Clouds in the coffee.

Sure, the car of the future is fun to dream about. And yes, if there is Nimbysm and hope so that the only big projects that can, maybe, be passed are wind and solar farms...then as others have pointed out, our 'guru' can take a factoid and say mega is done.

But...but...but...dear Guru, we have distributed power everywhere. In our cars. And the motors only get 30% efficiency, if that, with the rest lost to heat. And big centralized plants can recapture that heat, getting more efficiency.

Mr. Lovins sees what he wants, and says what he wants. He says the grid is wasteful; it is. But he ignores the math around efficiencies in centralized plants.

And the Times prints him up like a guru. Maybe the Times editor would be better suited to the poetry or music section. We all like airy hope. I'm just not much for it in the supposed economics pages.

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Lea Kosnik

I am an energy economist at the University of Missouri, St. Louis, and I recently received two grants to study the prospects for increased micro HYDROpower in the United States. There are actually a huge amount of potential sites, all across the U.S., for distributed small hydropower development. It would cut emissions, cut reliance of foreign oil, increase stability by being decentralized, etc. And the ecosystem effects are small because these are micro hydro, run-of-river plants. Now we just have to figure out the actual COSTS of developing these sites - which is what my work is about. Stay tuned....I should have results within the year....!

D iversity

Whatever way you add it up, the USA needs a much smarter power grid. Pity that the USA is apparently not going to get one.

We need a smarter grid because wind, tide and solar power are imtermittent at any one location, because big central power plants will be with us for more than a generation, both meaning that cutting transmission losses will remain important, and because a dumb grid cannot be relied on to prevent chain consequences spreading from a grid element failure.

The underlying technical factor that a kilowatt is a kilowatt and the costs of transmitting it from one place to another will never be as low (barring ambient temperature superconductivity) as the cost of transmitting information means that the long term technical trend is likely to be towards generating closer to usage. A lot of small scale generating technology exists or is at prototype stage (even nuclear). But my expected life span is about 12 years and I do not expect to see local generation become dominant.

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question

I understand that a priority will be upgrading the electrical grid to a 760 KV spec or DC (correct me please if I'm wrong). I read nothing about a grid that uses higher frequency AC (200-500Hz) instead of higher voltage (maybe the current physical grid can be upgraded for transmission at higher freq).
And in the "distributed" vs. "centralized" model, it will surely be a place for the mini-nuclear plants and natural gas-fired and coal and wind and solar and geotermal.
I'm sure that there are many competent electrical engineers to design and maintain such a grid.
Another thing that was not mentioned at all: hydrogen
Anybody here that can share driving Honda Clarity or BMW 7H? (I would propose in a blink to any single, hydrogen-engined-car-leasing chick out there! :)

Careysub

An interesting treatment, but one that is incomplete in some very misleading ways.

The key one is in lumping renewable and fossil fuel energy production together as "microgeneration". These are power sources that have very different prospects for the future.

Sure, natural gas co-generation turbines are great, as long as natural gas is assured to be an economically priced fuel with ample supply into the forseeable future, and with no long term environmental consequences. But none of these things are true. It is substantially less harmful than coal for global warming (and much less so for immediate pollution), but it isn't zero, nor is it available in such quantities that it can become a mainstay of power production into the indefinite future.

And while photovoltaic solar power is true distributed microgeneration, solar thermal plants (on of the best prospects for replacing coal base-load plants) are not: they are centralized large scale (if not gigawatt scale) facilities typically remote from the consumer. The same is true of wind farms - you can't call a single wind pylon a "microgenerator" because they aren't used that way.

Finally, when a system is finally set up that imposes carbon costs on fossil fuel burners (as it must soon, one way of another, to provide the economic incentive to address global warming) the economics of nuclear power will improve, as it may also improve with "right sized" (100 megawatt scale) nuclear power plants that have been proposed (jury is out on that, we'll have to see some built).

With fossil fuels not having to carry the cost of carbon pollution nuclear power is currently at an unjustified disadvantage, which makes the lack of recent plant starts (which Lovins seems to gloat about) an unreliable predictor of the future.

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ShowMe

I look forward to the day that I can be totally off the grid. Conservation can save a great deal and make the people more resilient. Green building can generate many jobs.

Johnny E

Yes, but then that would obsolete big-energy CEOs with their mega-salaries and bonuses. They would never go for that.

If we could land a moon in less than a decade why can't we install a wind turbine and solar panels on every family farm in 10 years. That would make a great farm-subsidy to keep them in business, save the environment, wouldn't depend on a grid upgrade, and it would pay for itself by harnessing free energy. The technology is already there, it's just the political and financial will to get it going. The income generated could reduce the deficit.

And we could convert postal trucks to V2G ( http://www.udel.edu/V2G/ ) technology. You could even use solar collectors as body panels. Then you'd really have distributed power.

Every town could have a plant converting garbage to energy.

There are probably lots of airliners and military jets past their operational life with engines that would still be efficient for the turbine plants you were talking about.

There are probably still nuclear subs that were put in mothballs because of SALT treaties that could be used to add power to the grid.

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Giulio Flore

Without going into suggesting micro-nuclear, the crux of the matter is load management, which is a nasty thing at best of time, as noted above.

It is true that there is a development in software and high energy electronics that can lead to the ability of better managing oscillating loads - but the point is that you need to guarantee a baseload for a class of intensive and continuous users (in short, factories, transports) vs intermittent highly variable users (in practice house, to a degree offices).

The true is that there should be (so to speak) a trunk network of heavy users around which clusters of small/intermittent users, whose - possible - shortfalls can be filled in by spare capacity of the main network.

It must be noted that given the high reliance on NG, to decouple small users from the big ones is a blessing, because if gas supply goes to put in a Winter (we are familiar to this in Europe) you get a double whack - gas must be kept at a pressure - but to keep heating going, mostly done with NG it meand that power generation get switched off and with factorties etc.

So micro/local grids would increase overall robustness of the system. And micro grids can be made reliable provided that you invest in it. The grid is bad now in the USA, because, so I understand, of underinvestment and the fragmentation.

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Mike K

Good points all.

Norm

Distributed power is the only viable way out of the current power paradigm, and here's a suggestion:

Put solar panels on the flat or suitably angled roofs of all state, county, and municipal government buildings and schools, Small-scale wind turbines on adjoining sites could also be installed where appropriate.

Then connect them to the grid by net-use metering. As these building are usually only open for part of the day and are usually closed on weekends and statuatory holidays, and in the case of most schools, throughout the summer. a considerable percentage of the power generated would be returned to the grid.

Make federal loans, fully repayable, available to the municipal, county, and state agencies and institutions which qualify; with a loan payment schedule based on the net savings (or profit) realized at each installation.

Such a plan would ultimately cost the federal government nothing, as the loans would be paid back in full using the savings or profits generated. There would be no costs involved for the borrowers, as they would pay the loans using only the savings or profits generated as well.

Ultimately, there would be savings for everyone - the federal government would have a multiply-redundant, non-polluting local source of energy for the nation. The local, county, and state agencies would have reliable (backed by the larger grid) source of energy, either cheaper or with continuing profits.

The benefit for everyone else would be more non-polluting power and fewer large power plants and massive power transmisstion corridors, plus the jobs created in the manufacturing and installation of the solar and wind generating units and electrical panels (especially if the loans specify use of American-made products.)

The same kind of arrangement could be offered to businesses as well, perhaps more attractively through tax incentives, rather than direct loans (or some combination of the two.)

Win, win, win, as I see it - other than the nation's coal producers and huge energy companies which have a vested interest in keeping us all dependent and indentured .

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scott wayland

I think it's going to take a combination of DG and new, large solar plants in the desert regions that feed new, long DC lines.

I think we are going to NEED both.