Powering the Future: A Scientist's Guide to Energy Independence
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Alternative energy policies would induce alternative time streams of costs. What is a “fair” comparison of these time streams? Here, I estimate the annual costs (in 2009 dollars) of each energy policy between 2010 to 2050. Some of the time streams are very simple because they have the same dollar amount every year. For example, the series of costs labeled “Wind Component 3” has the entry $80,500,000,000 each year from 2010 to 2050. Similarly, in “Solar Component 3” the cost is $888,750,000,000 each year from 2010 to 2050. If all the policies induced time streams like these two, then the comparison of the time streams would reduce to the comparison of the constant annual entries. So the comparison of the costs of Wind Component 3 with Solar Component 3 would reduce to the comparison of $80,500,000,000 with $888,750,000,000. We would conclude that the cost of the latter is approximately eleven times the cost of the former.
However, the series of costs labeled “Coal Replaces Fossil Fuels 3” does not have the same cost every year. The cost is $573,029,861,670 in 2010, $582,267,374,847 in 2011, and so on. What is a “fair” comparison of this series with the series of costs of other energy policies? Most economists would say that the simplest useful answer to this question is “net present value” or NPV for short.
The arithmetic of NPV is the same as that of compound interest. That is, if you have a savings account that pays 5% interest each year, then (ignoring taxes) you would have to deposit $1/(1.05) now in order to have $1 one year from now, you would have to deposit $1/(1.05)2 to have $1 two years from now, and you would have to deposit $1/(1.05)2 to have $1 t years from now.
When analyzing public policies, the interest rate (5% in the previous example) is called the social discount rate. Its determination can be a matter of dispute in particular situations, but it is often between 3% and 7% in developed countries like the U.S. So I use 5% here. The NPV of the series of costs labeled “Wind Component 3” is [$80,500,000,000 × 1] + [$80,500,000,000 / 1.05] + [$80,500,000,000/(1.05)2 + [$80,500,000,000/(1.05)3 + ...+ [$80,500,000,000 / (1.05)40]. The first bracketed amount is for the year 2010, the second is for 2011, the third for 2012, the fourth for 2013, and the last for 2050. The NPV is the sum $1,461,806,451,497.
Similarly, the NPV of “Coal Replaces Fossil Fuels 3” is [$573,029,861,670] + [$582,267,374,847/1.05] + [$591,504,888,024 / (1.05)2 + ... + [$942530,388,742 / (1.05)40 = $12,684,632,664,159. So a “fair” comparison of the series of costs of “Coal Replaces Fossil Fuels 3” with those of “Wind Component 3” is that the NPV of the former is approximately 8.7 times the NPV of the latter.
9 The 2009 federal budget summary document is titled A New Era of Responsibility: Renewing America’s Promise, and is available at www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf. Accessed 29 June 2009.
10 Ibid.
11 UNEP, Global Trends in Sustainable Energy Investment 2009: Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency.
12 Mouawad, Jad, and Kate Galbraith, “By Degrees: Plugged-In Age Feeds a Hunger for Electricity,” New York Times, 20 September 2009.
13 Ibid.
14 Solar installations produce 1,235 kilowatt-hours per year for each kilowatt installed; wind generates 2,347 kilowatt-hours per year for each kilowatt installed. From this, we can calculate the installation required as given in the text. Again, we use the average annual kilowatt-hour output from an installed kilowatt capacity, which are 2,347 watt-hours or 2.347 kilowatt-hours over a year from an installed watt of wind turbine, and 1,235 watt-hours or 1.245 kilowatt-hours per installed watt of solar photovoltaics. Based on these generation amounts, in 2050, solar capacity would have to be 5.22 billion kilowatts and wind energy capacity would have to be 2.75 billion kilowatts for each to produce 6,448 billion kilowatt-hours, the energy requirements for these sources in Scenario 3.
15 Solar installations produce 1,235 kilowatt-hours per year for each kilowatt installed; wind generates 2,347 kilowatt-hours per year for each kilowatt installed. From this, we can calculate the installation required as given in the text. At a cost of $6,810 per kilowatt, solar will cost 5.22 × 10 × $6,810 = $35.55 trillion, which, spread over 40 years, is $899 billion a year. At an installation cost of $1,170 per kilowatt for wind, the wind energy installations would cost $5.76 trillion, or $144 billion per year. Combined, solar and wind capacity would cost $1,033 billion a year. Note that this assumes that wind and solar share equally in replacing most fossil fuels.
16 EIA, Table 2.17: “Annual Photovoltaic Domestic Shipments, 1997–2006.” www.eia.doe.gov/cneaf/solar.renewables/page/solarphotv/solarpv.html.
17 According to the Electric Power Research Institute (EPRI), a 100MW wind energy farm would require 25,333 acres, or about 40 square miles. Therefore, 1MW requires 0.4 sq. miles and Scenario 3’s 2.88 billion kilowatts requires 1152 sq. miles. However, actual installations vary. For example, the two largest wind farms in Texas have a very different turbine density and, therefore, different energy capacity density. Roscoe Wind Farm has a stated output capacity 6% greater than Horse Hollow’s, but it takes up more than twice the area. Both are more widely spread out than the average estimate from EPRI. At Roscoe’s density, for wind turbines to provide the electric power for all homes in the United States, it would require 2.6% of the lower 48’s land area; at Horse Hollow’s, 1.3%.
18 Urban area of lower 48 comes from Economic Research Service, Major Uses of Land in the United States, 2002. www.ers.usda.gov/publications/EIB14/eib14g.pdf. Cropland data comes from www.ers.usda.gov/Data/MajorLandUses/.
19 Calculations for Scenario 3. Without the social discount factor: For wind, the installed capacity would be 2.75 billion kilowatts. For solar, it would be 5.22 billion kilowatts. At a cost of $1,170 per kilowatt, wind will cost $5.76 trillion. At a cost of $6,810 per kilowatt, solar will cost $35.55 trillion. These are corrected in the text to take into account an annual 5% social discount factor, as discussed.
20 Smith, R., “U.S. Foresees a Thinner Cushion of Coal,” Wall Street Journal, 8 June 2009.
21 Oster, Shai, and Ann Davis, “China Spurs Coal-Price Surge Once-Huge Exporter Now Drains Supply; Repeat of Oil’s Rise?” Wall Street Journal, 12 February 2008., A1.
22 Ibid.
23 Most recent cost estimates to build nuclear power plants come from Michael Totty, 2008. “The Case For and Against Nuclear Power WSF,” Wall Street Journal, 20 June 2008.
24 The 2008 cost of uranium ore averaged $45.88 a pound, and 53 million pounds were purchased by civilian nuclear power plants, costing a total of $2.3 billion a year. If we wanted to go the nuclear route for Scenario 3, the fuel required in 2050 would cost, in current dollars, $13.4 billion a year.
25 The value of the fuel to provide the present energy output from the 104 nuclear reactors in the United States, including mining, refining, and all other production costs, is $1.17 trillion, based on the cost of 45¢ per kilowatt-hour, given by the World Nuclear Association.
26 Information on decommissioning nuclear power plants comes from the U.S. Nuclear Regulatory Commission, “Fact Sheet on Decommissioning Nuclear Power Plants.” www.nrc.gov/reading-rm/doc-collections/fact-sheets/decommissioning.html. See also www.nrc.gov/info-finder/decommissioning/power-reactor/.
27 Wald, Matthew J., “Dismantling Nuclear Reactors,” Scientific American, 26 January 2009. www.scientificamerican.com/article.cfm?id=dismantling-nuclear.
28 World Nuclear Association.
29 Alexander, Lamar, Chairman, “Blueprint for 100 New Nuclear Power Plants in 20 Years” (Washington, D.C.; U. S. Senate Republican Conference, 2009).
30 The cost comparison for the variations of Scenario 3 are given in this table:
Summary Table of Costs: Adding Coal Pollution Costs ($ Trillions)
Note that, in this table, the cost of a nuclear power plant is assumed to go up and be at the more expensive end of the range, $14 billion each.
31 EIA, www.eia.doe.gov/emeu/aer/consump.html.
32 For more specifics about the terms re
lated to the discussion here, refer to the EIA’s online glossary, www.eia.doe.gov/glossary/glossary_i.htm.
33 Methane is CH OH.
34 Lewis, Nathan S., California Institute of Technology Division of Chemistry and Chemical Engineering Pasadena. See http://nsl.caltech.edu.
35 U.S. Congress, Energy Independence and Security Act of 2007. “The Secretary shall prescribe a separate average fuel economy standard for passenger automobiles and a separate average fuel economy standard for nonpassenger automobiles for each model year beginning with model year 2011 to achieve a combined fuel economy average for model year 2020 of at least 35 miles per gallon for the total fleet of passenger and non-passenger automobiles manufactured for sale in the United States for that model year.”
36 American Society of Civil Engineers, Report Card for America’s Infrastructure, 2005. www.asce.org/reportcard/2005/index2005.cfm.
37 Taylor, N., American-Made: The Enduring Legacy of the WPA (New York: Bantam Books, 2008).
38 Herbert Hoover Library, http://hoover.archives.gov/exhibits/Hooverstory/gallery04/gallery04.html.
39 Taylor, American-Made, 2008, p. 55.
40 Taylor, American-Made, 2008, p. 107.
Index
A
AASHTO (American Association of State Highway and Transportation Officials), 217
active energy-saving features, 231
agrifuels, 180-181, 273
AID (Agency for International Development), 156
air pollution from burning coal as fuel, 62-65
air travel, 159, 220
Alexander, Lamar, 137, 262
algae, producing biofuel from, 186-188
Allegheny Company, 3, 7
Alliance for Mindanao Offgrid Renewable Energy (AMORE), 156
Alliance for Nuclear Responsibility, 100
Altamont Pass Wind Farm (CA), 132
American Association of State Highway and Transportation Officials (AASHTO), 217
American Wind Energy Association
estimate of U.S. wind energy potential, 124
on market for small wind turbines, 135
American-Made: The Enduring Legacy of the WP (Taylor), 267
Anasazi dwellings, 227
ancient Greece/Rome, energy use in, 11-12
Anderson, Roger, 206
Anthracite coal, 54
AMORE (Alliance for Mindanao Offgrid Renewable Energy), 156
Aramco, agreement with Dow Chemical, 33
architecture, energy-efficiency design in
active methods, 231
climate/ecology and energy use, 232-233
costs of, 234-235
explained, 228-230
geothermal energy, 239-243
green buildings, 237-239
modern-age buildings, 235-236
passive methods, 231
radiant heating, 233-234
Arctic National Wildlife Refuge, 34-36
area efficiency of biofuels, 182
Army Corps of Engineers, 78
d’Arsonval, Jacques Arsene, 170
Athabasca Oil Sands, 31
Australia, wind power in, 132
autos
demand for energy-saving cars, 212-213
energy efficiency of transportation, 214-216
fueling with natural gas, 38-39
solar-powered cars, 142-143, 156
Testar all-electric car, 212
Avery, Mark, 139
B
Barnett Shale, 46
Basin Electric, 69
Beluga SkySails, 121-123
Beveridge, Charles, 237
bicycle-friendly cities, 222-225
biofuels, 274
area efficiency, 182
biofuel crops, 179-180
biofuel from microorganisms, 186-188
competition with agrifuels, 180-181
cost efficiency, 182, 190
current energy production of, 177-178
effect of subsidies on biofuel popularity, 191-192
energy efficiency, 182-186
environmental effects, 189
fuel from waste, 178-179
future of, 193-195
increasing interest in, 177
key facts, 174
limitations of biofuel technology, 192-193
U.S. energy use 2007, 15
wood for home heating, 174-177
Biomass Gas & Electric LLC, 178
Birdlife International, 138
birds, collisions with wind turbines, 137-139
Bituminous coal, 54
Black Mesa project, 63-65
blackouts
case study: blackout of 2003, 1-8
preventing, 8-10
Blue H, USA LLC, 137
Bockstoce, John R., 20
Boeing, 129
Bonneville Power Administration (BPA), 78
Boswell, Ray, 40, 43
Botkin, Jonathan, 149
Boulanger, Albert, 206
BPA (Bonneville Power Administration), 78
Brand, Stewart, 89
Braseth, Claus, 240
breaching of Edwards Dam, 74-76
breeder reactors, 92, 112
British Royal Society for the Protection of Birds (RSPB), endorsement of wind power, 139
British thermal units (BTUs), 11
Brookhaven National Laboratory irradiated forest, 108-111
BTUs (British thermal units), 11
Buell, Murray, 238
buildings, energy-efficiency design
active methods, 231
climate/ecology and energy use, 232-233
costs of, 234-235
explained, 228-230
geothermal energy, 239-243
green buildings, 237-239
modern-age buildings, 235-236
passive methods, 231
radiant heating, 233-234
burying CO2, 69
Bush, George W., 52
C
California wind farms, 132
California Center for Biological Diversity, 138
calories, 10
Canine, Craig, 69
Cape Wind project, 136
carbon dioxide (CO2), 22
burying, 69
carbon offsets, xix
Cargill, 266
cars
demand for energy-saving cars, 212-213
energy efficiency of transportation, 214-216
fueling with natural gas, 38-39
solar-powered cars, 142-143, 156
Testar all-electric car, 212
Caudill, Harry, 57