Tag Archives: Achieving
Critical Factors for Achieving Commercial Breakeven in Renewable Energy
Critical Factors for Achieving Commercial Breakeven in Renewable Energy(Abhishek Uppal)There are a number of key sensitivities that affect the point at which renewable technologies hit the commercial breakeven points. In their research, analysts have pointed out how four sensitivities are particularly important: The regulatory frameworkRegulation is important for low carbon technologies. These technologies can be expensive and costs need to be brought down the learning curve. There are a variety of policy levers that can be employed to do this – with the rate of learning tied to how effective policy is in encouraging the development and deployment of the technology. Local electricity priceThere is significant geographic variation in electricity price due to differences in fuel prices and in conventional power production methods. There are also variations between peak power and off-peak power prices, which is important to consider when evaluating the competitiveness of renewable technologies. Solar:If capital costs of solar PV could be lowered to the region of $2,500/KW and natural gas stays above the $8/MMBtu mark, solar PV could be competitive with traditional peak power. The US has variable electricity prices that will result in different regions exhibiting different electric grid parity bands as peak retail rates in some regions have already gone above $150/MWh. Citigroup notes that, as a whole, rising electricity prices in the US are likely to drive demand for solar PV installations. High electricity prices in markets such as Spain and Italy in Europe have supported growth in solar in these countries. Wind:At current gas prices, wind is cost competitive with conventional gas in regions such as the UK and California. Despite supply chain issues, which we discuss below, onshore wind is an established form of power generation that can respond profitably, and is ready to be scaled up within favourably high gas price economies. Natural resourcesThe theoretical resources available for the exploitation of solar PV power and wind power are far larger than any practical means for development. Nevertheless some regions exhibit particularly favourable conditions, which help to explain why geographic growth pockets have emerged. Solar:Electric grid parity without carbon pricing or subsidies is dependent on location as a result of variation in insulation (solar intensity). Areas such as Southern Europe and California benefit from above average hours of sunlight and some island economies such as Hawaii have already achieved electric grid parity without carbon pricing or subsidies for solar PV, in part because of high sun resources and in part due to high fossil fuel costs. The potential for developing countries, such as India, to utilize the natural resource of the sun is high, but barriers of connectivity to electric power grids will need to be overcome. Wind:Wind power is driven by the nature of the resource. A doubling of wind speed means about an eight-fold gain in electricity production. The UK is the best region in Europe for wind power owing to high wind speeds. Similarly, the Midwest US is rich in wind energy resources. Research and development in technology may enable wind power at higher elevations, offering more wind extraction. Supply chain bottlenecksMaterial supply chain bottlenecks may potentially delay the competitiveness of both solar and wind. Solar:Severe shortages of silicon have plagued the solar PV market for the past two years and thus, the cost of supplying the modules required for solar PV has remained high. The market is currently in tight supply, a state that is expected to ease up in 2009/2010. When the silicon bottleneck does eventually clear, costs will decline as a result and the overall cost of solar PV is likely to come down the curve, moving the technology closer to commercial breakeven without carbon pricing or incentives. Goldman Sachs notes that going forward there will be cheaper silicon prices due to significant production capacity coming online, which will move solar PV towards electric grid parity without carbon pricing or subsidies. Lehman believes that the availability of polysilicon will remain a bottleneck until 2010 as a result of greater capacity expansion plans from cell manufacturers than poly suppliers. Wind:Strong regulatory incentives, pockets of high wind resources, the push from high conventional fossil fuel prices and continued improvements in wind technology and performance have enabled wind to reach electric grid parity without carbon pricing or subsidies in some geographies. However, there are a few potential bumps in the market that could delay broad electric grid parity without carbon pricing or subsidies. The turbine market is currently in tight supply, and steel prices that are integral to turbine manufacture have increased significantly. Major capacity investments in manufacturing are needed to ease this lag in supply. In addition there are challenges of skills shortages in the sector. Both drawbacks are inherently the result of strong demand in the sector and consequently, as long as they can be overcome, the wind industry should be positioned to grow rapidly. Beyond breakeven: The special case of biofuels: A renewable that is actually reducing the costs of conventional energyWhile biofuels have suffered a lot of criticism for being unsustainable, causing deforestation, harming indigenous people and being net carbon emitters, we believe that there are good biofuels out there. We consider 2nd and 3rd generation biofuels, along with a limited number of 1st generation biofuels (sugarcane ethanol and jatropha-based biodiesel) to be worthy parts of the climate change investment universe. Biofuels compete in the road transport fuel market rather than the electric power market. However, their special story deserves attention as a sign of what may be coming down the road. More so than any other renewable, the economic influence of ethanol has been felt in the conventional energy markets. Research from Iowa State University indicates that blending ethanol with gasoline has kept fuel prices $0.29-$0.40 lower than they otherwise would have been in the US; McKinsey analysis indicates additional upside for blending up to E10, with the potential to decrease retail gasoline prices by $0.43-$0.65. Biofuels in the US are now “beyond breakeven.” We recognise that the sustainability of much of the ethanol for sale in the US is debatable. This is problematic, and will need to be addressed. However, economically, US ethanol has reached the final goal of renewables – becoming lower-cost alternatives to fossil fuels, unlocking cheaper energy costs and a wave of low-carbon prosperity. The reason that ethanol is having this material impact on the price of retail gasoline in the US is that blending permits the replacement of expensive gasoline imports with a lower-cost substitute. Biofuels have demonstrated their potential to reduce the cost of energy – and we see a promising future for them, as long as they are produced with respect to the highest standards of sustainability. This may mean that tariff regimes need to be eased to allow increased imports from tropical climates that are naturally disposed to produce biofuels, such as Africa and Brazil. In any case, the story of ethanol’s impact on US gasoline prices may become more familiar in other energy markets going forward – ethanol may be the very first of a number of renewable technologies that unlock a low-carbon revolution, where consumers pay less to consume clean, renewable fuels. Abhishek Uppal college graduate from Cornell University.
Achieving Mood Lighting and Saving Energy – are Fluorescent Lights Dimmable?
Dimmer switches can give a more relaxed feel to your home, and save you energy as well. But with the increasing prevalence of compact fluorescent lights or CFLs, many people are wondering what options they have for using a dimmer with these lights – or whether it saves more electricity to use a regular CFL, or to use incandescent or halogen bulbs on a dimmer switch. Let’s start by putting to rest some misconceptions people have over the relative energy use of fluorescent, incandescent, and halogen bulbs. Many homeowners put in halogen bulbs, starting in the 1990′s, on the mistaken idea that these lights are more efficient than incandescent lights. In fact their energy efficiency is pretty much the same as that of incandescents. So don’t think you’re saving energy by using them. CFLs, meanwhile, are very efficient – it takes about one fourth as much electricity to light up a CFL as to light up an incandescent or halogen lamp with the same light output. They also happen to last about eight times longer than incandescent lights. So if you are using a dimmer primarily to save power, you might be better off just switching your incandescent or halogen lights to CFLs, and keeping the dimmer switch on full, or going back to a standard on-off switch. That will give you more light for less power. If you want a more mellow lighting all the time, one way is to put in light bulbs that aren’t as bright. Whether you go down from, for example, a 100 watt incandescent to a 60 watt incandescent bulb, or down from a 100 watt incandescent bulb to an 18 watt CFL, you’ll still get less light and you’ll use less electricity. Of course, the CFL solution will save you much more electricity in the long run. But chances are you want the best of both worlds: the low running cost and better durability of CFL bulbs, with the flexibility to dim them when you don’t need their full light. You may have heard that you cannot put a regular CFL on a regular dimmer switch. In fact you can, but it is not recommended, because it can really reduce the life of the bulb. There is no increased risk of explosion or fire from installing a regular CFL on a standard dimmer switch – you’ll only increase the risk of shortened bulb life. And since the higher price of CFL bulbs is offset by the fact that they outlive incandescent bulbs by a ratio of 8 to 1, putting regular CFLs on a standard dimmer destroys that cost advantage. If you choose to dim CFLs, you have two real options: buy a special dimmer switch that is compatible with CFLs, or buy dimmable CFLs that are designed to work with standard dimmers. Both choices leave you with the energy-saving advantages of CFLs, as well as the ability to dim those CFLs. But for now at least, dimmable CFLs seem like the more affordable option, because fluorescent-compatible dimmer switches are prohibitively expensive, while the price difference between standard and dimmable compact fluorescents is miniscule. Let’s consider the total cost for both options, for a fixture with three 60-watt light bulbs. Let’s assume you already have a standard dimmer switch and regular incandescent light bulbs. If you want to upgrade to CFLs, your choices are: 1. Installing three 13-watt standard CFLs at $3 a piece, and a $49 fluorescent dimmer switch. Total cost: $58. 2. Going for three 13-watt dimmable CFLs at $3.50 a piece, and use the existing dimmer. Total cost: $10.50! As you can tell, using an existing dimmer switch is a more affordable alternative. Since both options use the same amount of energy, in terms of payback period the solution with dimmable compact fluorescent lights is definitely much shorter. Even if you need to buy a dimmer switch because you don’t have one, it still makes sense to go with a standard switch and dimmable CFLs. You can get a standard dimmer switch for under $10. Even a fashionable one for $25 is more affordable than a fluorescent dimmer at $49. And with the cost gap between standard and dimmable CFLs so small, the only way a fluorescent dimmer switch will be cost competitive is if its price drops substantially, which it probably will over the coming years. If your only motive for using a dimmer switch with CFLs is to save money, and you don’t already have a regular dimmer switch, I would suggest you stay with basic CFLs and forego the dimmer switch. Use the money you save on the dimmer switch to buy more CFLs for other areas of your house. Dimmer switches resulted in major savings for incandescent or halogen fixtures because the bulbs were so wasteful. For example, my rec room has six 50-watt bulbs on a dimmer switch. By using the dimmer at about half power, we use 150 watts instead of the full 300 watts. Assuming an hour on each day, that would save 150 x 365 watts, or 55 kilowatt hours a year. But if we were to switch those halogen bulbs to 13-watt dimmable CFLs, we’d save 81 kilowatt hours a year at their full strength. By turning them down to half, we’d only save an extra 13 kilowatt hours a year – that’s about $1.30 worth of electricity. Not really enough to make it worth considering this alternative. Consumer response to dimmable CFLs has been less than overwhelmingly positive. There were certainly some teething issues with these lights – early burn-out, flashing light, and loud buzzing noises. These problems have been pretty much resolved in the more recent dimmable compact fluorescents. But if there isn’t a strong motivation for you to dim your CFLs, I would recommend sticking with standard compact fluorescents for a year, until the market offers a wider range of choices for dimmable fluorescent lights. Who knows – in a year or two, fluorescent dimmer switches could be as cheap as standard dimmers. Robin Green owns Green-Energy-Efficient-Homes.com, a website that helps people save energy in their homes. Go to this website for help on cutting your energy use on heating, cooling, lighting, and other household activities. For more on compact fluorescent bulbs, see the dimmable compact fluorescent bulbs page and the CFL savings calculator.