New Energy Economy” An Exercise in Magical Thinking Part 10 Energy Revolutions Are Still Beyond The Horizon

This is the final part of the serialization of Mark Mills’ report New Energy Economy: An Exercise in Magic Thinking.

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Energy Revolutions Are Still Beyond the Horizon

 When the world’s poorest 4 billion people increase their energy use to just 15% of the per-capita level of developed economies, global energy consumption will rise by the equivalent of adding an entire United States’ worth of demand.92 In the face of such projections, there are proposals that governments should constrain demand, and even ban certain energy-consuming behaviors. One academic article proposed that the “sale of energy-hungry versions of a device or an application could be forbidden on the market, and the limitations could become gradually stricter from year to year, to stimulate energy-saving product lines.”93 Others have offered proposals to “reduce dependency on energy” by restricting the sizes of infrastructures or requiring the use of mass transit or car pools.94

The issue here is not only that poorer people will inevitably want to—and will be able to—live more like wealthier people but that new inventions continually create new demands for energy. The invention of the aircraft means that every $1 billion in new jets produced leads to some $5 billion in aviation fuel consumed over two decades to operate them. Similarly, every $1 billion in data centers built will consume $7 billion in electricity over the same period.95 The world is buying both at the rate of about $100 billion a year.96

The inexorable march of technology progress for things that use energy creates the seductive idea that something radically new is also inevitable in ways to produce energy. But sometimes, the old or established technology is the optimal solution and nearly immune to disruption. We still use stone, bricks, and concrete, all of which date to antiquity. We do so because they’re optimal, not “old.” So are the wheel, water pipes, electric wires … the list is long. Hydrocarbons are, so far, optimal ways to power most of what society needs and wants.

More than a decade ago, Google focused its vaunted engineering talent on a project called “RE<C,” seeking to develop renewable energy cheaper than coal. After the project was canceled in 2014, Google’s lead engineers wrote: “Incremental improvements to existing [energy] technologies aren’t enough; we need something truly disruptive. … We don’t have the answers.”97 Those engineers rediscovered the kinds of physics and scale realities highlighted in this paper.

An energy revolution will come only from the pursuit of basic sciences. Or, as Bill Gates has phrased it, the challenge calls for scientific “miracles.”98 These will emerge from basic research, not from subsidies for yesterday’s technologies. The Internet didn’t emerge from subsidizing the dial-up phone, or the transistor from subsidizing vacuum tubes, or the automobile from subsidizing railroads.

However, 95% of private-sector R&D spending and the majority of government R&D is directed at “development” and not basic research.99 If policymakers want a revolution in energy tech, the single most important action would be to radically refocus and expand support for basic scientific research.

Hydrocarbons—oil, natural gas, and coal—are the world’s principal energy resource today and will continue to be so in the foreseeable future. Wind turbines, solar arrays, and batteries, meanwhile, constitute a small source of energy, and physics dictates that they will remain so. Meanwhile, there is simply no possibility that the world is undergoing—or can undergo—a near-term transition to a “new energy economy.”

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 I know it was a lot of reading, but Mills does a marvelous job of making his thoughts easily understandable and convincing.

Mills’ entire report can be downloaded by clicking here. 

The pages of numbered references are found by clicking “to read more”.

cbdakota

End Notes

1 Bill McKibben, “At Last, Divestment Is Hitting the Fossil Fuel Industry Where It Hurts,” Guardian, Dec. 16, 2018.

2 “Mission Possible,” Energy Transitions Commission, November 2018.

3 BP, “Energy Outlook 2018.”

4 Ibid.

5 IEA, “World Energy Investment 2018: Investing in Our Energy Future”; REN21, “Renewables 2018 Global Status Report.”

6 John W. Day et al., “The Energy Pillars of Society: Perverse Interactions of Human Resource Use, the Economy, and Environmental Degradation,” BioPhysical Economics and Resource Quality 3, no. 1 (March 2018): 1–16.

7 Ibid.

8 Jason Hickel, “The Nobel Prize for Climate Catastrophe,” Foreign Policy, Dec. 6, 2018.

 9 Michael Cembalest, “Pascal’s Wager,” J. P. Morgan Asset Manager, April 2018.

10 Biofuels and nuclear energy are also, obviously, non-hydrocarbons, but neither is a central feature for “new energy economy” visionaries. The former, in any case, has clear limits, since it is a regression to a farming to fuel society. Nearly 40% of U.S. corn production is used to produce ethanol that supplies less than 5% of America’s transportation fuel. And after a half-century of government support, nuclear power supplies 5% of global energy.

11 Batteries International, “Battery Pioneers: Stanley Whittingham,” 2016.

12 Historical trends from Massachusetts Institute of Technology, Energy Initiative, “The Future of Solar Energy, An Interdisciplinary MIT Study,” 2015; Johannes N. Mayer, “Current and Future Cost of Photovoltaics,” Agora Energiewende, February 2015; David Feldman et al., “NREL Photovoltaic Pricing Trends: Historical, Recent, and Near Term Projections,” National Renewable Energy Laboratory (NREL), Aug. 25, 2015; Ryan Wiser et al., “Forecasting Wind Energy Costs and Cost Drivers,” Lawrence Berkeley National Laboratory, June 2016.

13 Capital costs and capacity factors from Lazard, “Lazard’s Levelized Cost of Energy Analysis,” 2018: Our calculations here a) overstate wind and solar output since both degrade in operational efficiency over time, and b) optimistically assume equal cost for the technologies needed to convert wind/solar and natural gas into grid-useful power, whereas battery $/kW is actually >2x the cost of a natural-gas generator.

14 This calculation includes a production decline curve. Capital cost and total recovery/production data are from Gulfport Energy, Credit Suisse Energy Summit, 2019; and Cabot Oil & Gas, Heikkinen Energy Conference, 2018.

15 Additional data for the calculations drawn from Vello Kuuskraa, Advanced Resources International, “Perspectives on Domestic Natural Gas Supplies and Productive Capacity,” workshop, Growing the North American Natural Gas Production Platform, EPRINC (Energy Policy Research Foundation), Apr. 19, 2018; gas turbine kWh/Btu from General Electric, “Breaking the Power Plant Efficiency Record”; Energy Information Agency (EIA), “Capital Cost Estimates for Utility Scale Electricity Generating Plants,” Nov. 16, 2016; solar and wind capacity factors from EIA, “Electric Power Monthly,” May 2018. Calculations do not include the ~$1,000/kW capital cost of a turbine generator for natural gas or the cost of battery storage for wind/solar of ~$1,500–$4,000/kW (EIA, “U.S. Battery Storage Market Trends,” May 2018); the latter cost is as critical as the former for utility-scale grid operation.

16 EIA, “Drilling Productivity Report,” February 2019.

17 Ironically, it appears that we have more knowledge about the long-term nature of resources for hydrocarbons than for wind. Recent research reveals that, over the past several decades, over much of the Northern Hemisphere, there has been an unexpected roughly 30% decline in surface wind speeds. See Jason Deign, “Chinese Researchers Claim Wind Resources Are Dwindling,” Greentech Media, Dec. 26, 2018.

18 EIA, “What Is U.S. Electricity Generation by Energy Source?”

19 Mark P. Mills, “The Clean Power Plan Will Collide with the Incredibly Weird Physics of the Electric Grid,” Forbes, Aug. 7, 2015.

20 “Why Too Much Oil in Storage Is Weighing on Prices,” The Economist, Mar. 16, 2017; Nathalie Hinchey, “Estimating Natural Gas Salt Cavern Storage Costs,” Center for Energy Studies, Rice University, 2018.

21 EIA, “Natural Gas Storage Dashboard”; “Crude Oil and Petroleum Products”; “Coal Stockpiles at U.S. Coal Power Plants Have Fallen Since Last Year,” Nov. 9, 2017.

22 Lazard, “Lazard’s Levelized Cost of Energy Analysis”; utility-scale lithium battery LCOE (levelized cost of energy) @ $108–$140/MWh converts to $180– $230/BOE (barrel of oil energy equivalent).

23 EIA, “U.S. Battery Storage Market Trends,” May 2018; U.S. Department of Energy, “One Million Plug-in Vehicles Have Been Sold in the United States,” Nov. 26, 2018.

24 Landon Stevens, “The Footprint of Energy: Land Use of U.S. Electricity Production,” Strata, June 2017. 25 Lazard, “Lazard’s Levelized Cost of Energy Analysis.”

26 Stephen Brick and Samuel Thernstrom, “Renewables and Decarbonization: Studies of California, Wisconsin, and Germany,” Electricity Journal 29, no. 3 (April 2016): 6–12.

27 EIA, “Wind Generation Seasonal Patterns Vary Across the United States,” Feb. 25, 2015; EnergySkeptic, “Wind and Solar Diurnal and Seasonal Variations Require Energy Storage,” June 4, 2015. 28 EIA, “Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2019”: gas @ $41/MWh, wind $56, solar $60.

29 Ibid., p. 2.

30 EIA, “Annual Energy Outlook 2019,” January 2019; Mark P. Mills, “The Real Fuel of the Future: Natural Gas,” Manhattan Institute, Sept. 24, 2018.

31 Hickel, “The Nobel Prize for Climate Catastrophe.”

 32 Thomas Tanton, “Levelized Cost of Energy: Expanding the Menu to Include Direct Use of Natural Gas,” T2 and Associates, August 2017.

33 Landon Stevens, “The Footprint of Energy: Land Use of U.S. Electricity Production,” Strata, June 2017. 34 Lee M. Miller and David W. Keith, “Observation-Based Solar and Wind Power Capacity Factors and Power Densities,” Environmental Research Letters 13, no. 10 (Oct. 4, 2018): 1-11.

35 Gordon Hughes, “The Performance of Wind Farms in the United Kingdom and Denmark,” Renewable Energy Future Foundation, 2012.

36 Brent Wanner, “Commentary: Is Exponential Growth of Solar PV the Obvious Conclusion?” IEA, Feb. 6, 2019.

37 Frédéric Simon, “Germany Pours Cold Water on EU’s Clean Energy Ambitions,” EURACTIV, June 12, 2018: StromReport, “Electrcity Price in Germany,” 2018.

38 Joanne Nova, “Electricity Prices Fell for Forty Years in Australia, Then Renewables Came,” JoNova (blog), February 2018.

39 EIA, “Electric Power Monthly,” February 2019.

40 EIA: data show that the combined contribution from coal and natural gas slightly declined, from 70% in 2008 to 63% today: shifting 7% of U.S. supply from low-cost to high-cost generation also increases average rates.

41 IEA, “Projected Costs of Generating Electricity,” Feb. 27, 2019.

 42 OECD, “Nuclear Energy and Renewables: Systems Effects in Low-Carbon Electricity Systems,” 2012; Barry Brook, “Renewable Energy’s Hidden Costs?” Energy Central, Mar. 23, 2013.

43 George Taylor and Thomas Tanton, “The Hidden Costs of Wind Electricity,” American Tradition Institute, December 2012.

44 AEMO, “South Australian Renewable Energy Report,” November 2017; Daniel Wills and Sheradyn Holderhead, “AEMO Report on Heatwave Rolling Blackouts Reveals Low Wind Power, Inability to Turn on Gas-Fired Pelican Point Led to Power Cuts,” Advertiser (Adelaide, Australia), Feb. 15, 2017; Charis Chang, “Why South Australia’s Blackouts Are a Problem for Us All,” News.com.au, Feb. 10, 2017.

45 James Thornhill, “Musk’s Outback Success Points to Bright Future for Battery Storage,” Bloomberg, Dec. 4, 2018.

46 EIA, “Natural Gas-Fired Reciprocating Engines Are Being Deployed More to Balance Renewables,” Feb. 19, 2019; Kurt Koenig and Grant Ericson, “Reciprocating Engine or Combustion Turbine?” Burns McDonnell (undated).

 47 Tantalizing scientific discoveries are possible, but still largely dreams; see, e.g., R. Colin Johnson, “Superconducting Graphene Beckons,” EE Times, Sept. 16, 2015.

48 Even this likely understates battery costs. The 200:1 ratio emerges from “Lazard’s Levelized Cost of Storage: 2018.” Lazard’s assumption of 84%–90% battery efficiency (electricity in vs. output) may be optimistic, since data from operating grid storage systems reveals efficiencies of 41%–69%. See Northern Power Grid (UK), “Lessons Learned Report Electrical Energy Storage,” Dec. 8, 2014.

 49 Manufacturing cost from Inside EVs, “Tesla Is Approaching the Anticipated Magic Battery Cost Number,” June 28, 2018.

50 EIA, “U.S. Battery Storage Market Trends,” 2018; Jason Deign, “European Utilities Muscle into Energy Storage,“ Green Tech Media, Nov. 26, 2018.

51 Matthew R. Shaner et al., “Geophysical Constraints on the Reliability of Solar and Wind Power in the United States,” Energy & Environmental Science 11, no. 4 (February 2018): 914–25.

52 Trefis Team, “Gigafactory Will Cost Tesa $5 Billion but Offers Significant Cost Reductions,” Forbes, Mar. 11, 2014.

53 Bonneville Power Administration and Northwest Gas Association, “Comparing Pipes & Wires” (undated).

 54 Ore grades: lithium (Nicholas LePan, “Not All Lithium Mining Is Equal: Hard Rock (Pegmatites) vs. Lithium Brine,” TSX Media, July 17, 2018); nickel (Greg Ashcroft, “Nickel Laterites: The World’s Largest Source of Nickel,” Geology for Investors,” undated); copper (Vladimir Basov, “The World’s Top 10 Highest-Grade Copper Mines,” Mining.com, Feb. 19, 2017); graphite (Fred Lambert, “Breakdown of Raw Materials in Tesla’s Batteries and Possible Bottlenecks,” electrek, Nov. 1, 2016).

55 Elena Timofeeva, “Raw Materials Supply for Growing Battery Production,” Influite Energy, June 11, 2018.

56 Pieter van Exter et al., “Metal Demand for Renewable Electricity Generation in the Netherlands,” Dutch Ministry of Infrastructure and Water Management, 2018.

57 Vaclav Smil, “To Get Wind Power You Need Oil,” IEEE Spectrum, Feb. 29, 2016; Robert Wilson, “Can You Make a Wind Turbine Without Fossil Fuels?” Energy Central, Feb. 25, 2014.

 58 Marcelo Azevedo et al., “Lithium and Cobalt: A Tale of Two Commodities,” McKinsey & Co., June 2018.

59 Henry Sanderson et al., “Electric Cars: China’s Battle for the Battery Market,” Financial Times, Mar. 5, 2017; Jamie Smyth, “BHP Positions Itself at Centre of Electric-Car Battery Market,” Financial Times, Aug. 9, 2017.

60 Jens F. Peters et al., “The Environmental Impact of Li-Ion Batteries and the Role of Key Parameters: A Review,” Renewable and Sustainable Energy Reviews 67 (January 2017): 491–506; Qinyu Qiao et al., “Cradle-to-Gate Greenhouse Gas Emissions of Battery Electric and Internal Combustion Engine Vehicles in China,” Journal of Applied Energy 204 (October 2017): 1399–1411.

61 Terence Bell, “World’s Biggest Cobalt Producers,” the balance.com, Oct. 23, 2018.

62 Henry Sanderson, “Electric Cars: China’s Battle for the Battery Market,” Financial Times, Mar. 5, 2017; Jeff Desjardins, “China Leading the Charge for Lithium-Ion Megafactories,” Visual Capitalist, Feb. 17, 2017.

63 EIA, “Chinese Coal-Fired Electricity Generation Expected to Flatten as Mix Shifts to Renewables,” Sept. 27, 2017.

 64 Qiao, “Cradle-to-Gate Greenhouse Gas Emissions.”

65 NREL, “Electric Vehicle Grid Integration.”

66 Zachary Shahan, “Tesla Model S Crushes Large Luxury Car Competition,” Clean Technica, July 5, 2017; Anton Wahlman, “Tesla: From 100% EV Market Share to 0% in 100 Easy Steps,” Seeking Alpha, Sept. 29, 2017.

67 IEA, “Global EV Outlook 2017”; BP, “Energy Outlook 2019.”

 68 EIA, “Global Transportation Energy Consumptions,” 2017.

69 Tony Seba, “Clean Disruption” (video), Stanford University, 2017.

70 Diane Cardwell, “Testing the Clean-Energy Logic of a Tesla–Solar City Merger,” New York Times, June 23, 2016.

71 Max Roser and Hannah Ritchie, “Moore’s Law—Exponential Increase of the Number of Transistors on Integrated Circuits,” Our World in Data, 2019; Timothy Morgan, “Alchemy Can’t Save Moore’s Law,” The Next Platform, June 24, 2016.

72 S. Brown et al., “Investigation of Scaling Laws for Combustion Engine Performance,” Oregon State University, 2016.Acknowledgments Connor Harris, Preston Turner, Eric Li, and Chris DeSante provided research assistance for this report.

73 Author’s calculations. For useful perspectives, see Toyohashi University of Technology, “Unveiling of the World’s Smallest and Most Powerful Micro Motors,” Physics.Org, May 1, 2015; Ella Davies, “The World’s Strongest Animal Can Lift Staggering Weights,” BBC Earth, Nov. 21, 2016; Leeham News and Analysis, “Updating the A380: The Prospect of a Neo Version and What’s Involved,” March 2014.

74 Christopher Goldenstein, “Advanced Combustion Engines,” Stanford University, Dec. 9, 2011.

 75 Marisa Blackwood, “Maximum Efficiency of a Wind Turbine,” Undergraduate Journal of Mathematical Modeling: One + Two 6, no. 2 (Spring 2016): 1–10.

76 Lee Teschler, “Wind Turbines for Low Wind Speeds Defy Betz Limit Efficiency,” Machine Design, May 29, 2014. Note: while the concept is clever, the claim is still not a 10x gain, and commercial realization points to a real-world efficiency closer to 40%.

77 Robin Whitlock, “6 High-Efficiency Wind Turbine Models,” Interesting Engineering, Oct. 29, 2015.

 78 “Crystalline Material Could Replace Silicon to Double Efficiency of Solar Cells,” Purdue University, Apr. 6, 2017.

79 NREL, “Best Research-Cell Efficiencies,” Dec. 21, 2018.

80 Azevedo et al., “Lithium and Cobalt.”

 81 Vaclav Smil, Prime Movers of Globalization: The History and Impact of Diesel Engines and Gas Turbines (Cambridge, Mass.: MIT Press, 2009).

 82 Michael M. Thackeray, Christopher Wolverton, and Eric D. Isaacs, “Electrical Energy Storage for Transportation—Approaching the Limits of, and Going Beyond, Lithium-Ion Batteries,” Energy & Environmental Science, no. 7 (May 2012): 7854–63.

83 James L. Smith, “Estimating the Future Supply of Shale Oil: A Bakken Case Study,” MIT Center for Energy and Environment Policy Research, Jan. 19, 2017; Emily Ayshford, “ ‘Realistic’ New Model Points the Way to More Efficient and Profitable Fracking,” Phys.org, Jan. 7, 2019.

84 EIA, “Monthly Energy Review,” Table 1.2: Primary Energy Production by Source, February 2019.

 85 Dan Murtaugh and Mark Chediak, “Why Charging Your Electric Car at Night Could Save the World,” Bloomberg, Feb. 25, 2018.

86 John Markoff, “Urban Planning Guru Says Driverless Cars Won’t Fix Congestion,” New York Times, Oct. 27, 2018.

87 EIA, “Adoption of Autonomous Vehicles Could Increase U.S. Transportation Energy Consumption,” June 18, 2018; Kenneth A. Perrine et al., “Anticipating Long-Distance Travel Shifts Due to Self-Driving Vehicles,” University of Texas at Austin, 2018.

 88 Alice Larkin et al., “Air Transport, Climate Change and Tourism,” Tourism and Hospitality Planning & Development 6, no. 1 (April 2009): 7–20.

89 International Council on Clean Transportation, “Fuel Efficiency Trends for New Commercial Jet Aircraft: 1960 to 2014,” August 2015.

90 Mark P. Mills, “Energy and the Information Infrastructure Part 1: Bitcoins & Behemoth Datacenters,” Real Clear Energy, Sept. 19, 2018.

91 Mark P. Mills, “Energy and the Information Infrastructure Part 3: The Digital ‘Engines of Innovation’ & Jevons’ Delicious Paradox,” Real Clear Energy, Dec. 11, 2018.

92 The World Bank, DataBank.

93 Sofie Lambert and Mario Pickavet, “Can the Internet Be Greener?” Proceedings of the IEEE 105, no. 2 (February 2017): 179–82.

 94 Kris De Decker, “Keeping Some of the Lights On: Redefining Energy Security,” Low-Tech Magazine, December 2018.

95 “Data Centers,” U.S. Chamber of Commerce, Technology Engagement Center, 2017.

96 Rich Miller, “As Cloud Investment Surges, What’s the New Normal for Data Centers?” Data Center Frontier, May 29, 2018; Mark Haranas, “The Booming Data Center Market: A Look at Hyperscale Spending as It Explodes to an All-Time High,” CRN, June 6, 2018; Tom Cooper et al., “Global Fleet & MRO Market Forecast Commentary 2019–2029,” Oliver Wyman, 2019; Statista, “Average Prices for Boeing Aircraft as of January 2019.”

97 Ross Koningstein and David Fork, “What It Would Really Take to Reverse Climate Change,” IEEE Spectrum, Nov. 18, 2014.

98 James Bennet, “We Need an Energy Miracle,” The Atlantic, November 2015.

99 Mark P. Mills, “Basic Research and the Innovation Frontier,” Manhattan Institute, February 2015.