Clean vs. semi-clean

Exploding out of stealth mode after 10 years and $400m of VC, Bloom Energy got great press Wednesday (at least here in Silicon Valley) on both TV and written form on the front page of the Merc.

Of course, it didn’t hurt that CEO K.R. Sridhar got to unveil his new technology earlier in the week on 60 Minutes. The company has done a great job of PR. Apparently Kleiner Perkins partner Al Gore has been whispering its praises for years.

For its rollout, the TV cameras came because it was able to attract A-list celebrities like Colin Powell (a Bloom Energy advisor) and the Governator (who will come for anything at the intersection of two of his passions — green and jobs).

The company has also lined up an A-list bevy of customers for its industrial fuel cells like Google, Coca-Cola, eBay, Wal-Mart and Bank of America. I assume this is because natural gas is becoming ever cheaper, and because in the Banana Republic of California you never know when the state is going to screw up electricity generation. (Conveniently, taking these industrial users off the grid would reduce PG&E’s overall electricity load would make it easier to meet its RPS quotas.)

However, what is puzzling to me is why this is trumpeted as “green” or “cleantech.” Like all fuel cells, the Bloom cells would produce pure water if fed hydrogen, but when fed hydrocarbons, will produce CO2 with the water. Before global warming became a concern, this would have been a big plus over burning the gas (which produces other pollutants like nitrous oxides), but now of course CO2 is the driving concern when it comes to environmental impact.

Sure enough, Fast Company has run the numbers to compare the CO2 output of the fuel cells with other alternatives:

Bloom's device generates electricity at 50% to 55% conversion efficiency. In comparison, solar generally produces power at between 10% to 15% efficiency. But unlike solar panels, the Bloom Energy Server produces CO2 as a byproduct. According to the Energy Collective, "CO2 emissions when running on natural gas would be just under 0.8 pounds/kWh, which compares favorably to electricity from central station coal-fired plants (2 lbs/kWh) or natural gas plants (roughly 1.3 lbs/kWh) and the national average for on-grid electricity (around 1.3-1.5 lbs/kWh)." If the box runs on landfill gas or biogas, it produces net zero carbon emissions.

So from a “green” standpoint, using a fuel cell to convert the natural gas produces about 40% less CO2 than burning, which of course is a good thing.

So that’s half the equation: what about the other half? The Achilles heel of renewable energy generation is high upfront capital costs. Wired notes that each “Bloom Energy Server” generates 100kW and costs about $700-800k. Various estimates say that the capital costs range 9-10¢ a kW-hr.

A couple of savvy GreenTech Media readers do the math and suggest that the servers will never be cost effective against a simple natural gas boiler. (As readers note, relevant unresolved questions also include the useful lifespan of the fuel cells, and how quickly the firm can improve its manufacturing efficiency.)

So is it worth paying more (or paying government subsidies) for a more expensive way of converting natural gas to electricity for slightly less CO2 output? From an economic standpoint, clearly not. How about from an environmental standpoint? I suppose it depends on the environmental impact of the extra cost — materials costs, transportation costs, commuting by engineers etc.

Be Green! Aloha!

Earlier this month, the LA Times ran an interesting article about EE/RE in the Hawai‘ian islands. The Merc ran it prominently Tuesday in its Business section, but many people probably missed it since that section is now buried inside local news.

The short version of the story is that Hawai‘i is doing more than most states to promote energy efficiency and renewable energy, it’s bragging about it, and the reporter bought their story hook, line and sinker.

The facts are interesting, but unfortunately the story is so badly written with cliches and misleading statistics that you have to look at it sideways to figure out what’s really going on. Here’s an example:

Although Hawaii's efforts to green itself won't make much of a dent in the world's total carbon emissions, environmentalists hope the state can prove what's possible. The goal is to transform the nation's most energy-dependent state into its cleanest and most sustainable.

"We're adopting policies and technologies here that can serve as a model for the rest of the globe," said Jeff Mikulina, executive director of the Blue Planet Foundation, a Hawaii clean energy advocacy group.
…
The policies stem from an agreement Hawaii signed with the Department of Energy in 2008. The state pledged to obtain 70% of its total energy needs by 2030 -- 40% from renewable electricity generation and the remaining 30% from energy efficiency. Known as the Hawaii Clean Energy Initiative, that agreement has since been strengthened with binding legislation that exceeds California's mandate to get 33% of its electricity from renewables by 2020 (though Hawaii has an extra decade to get there).

In other word, 40% by 2030 is better than 33% by 2020. It seems like a silly distinction, since California has been ratcheting up the goal every decade and it seems unlikely that it will decide to do nothing from 2020-2030. (There’s also the minor matter that either state’s “goal” might fail in its implementation.)

The Times continues:

About 6.5% of Hawaii's electricity came from renewable sources other than hydroelectric power in 2007, according to the National Renewable Energy Laboratory. That's about half what California -- the nation's solar champion and a major player in wind and geothermal energy -- has achieved.

But experts said Hawaii's small size and unique geography could prove advantageous in the race for energy independence. With just 1.3 million inhabitants, its energy consumption is small. The islands have abundant solar, wind, geothermal and wave resources. And Hawaiians are less likely to object to the cost of renewables since they already pay high energy prices.

"It's easier for Hawaii to pull this off than anyone else," said Alison Silverstein, an independent consultant and onetime energy regulator. "They know how bad things can get, and they are highly motivated . . . to take action."

Uh, yeah. There’s nowhere in the US with more favorable conditions for solar power. Plus the cost of substitutes for RE are much higher there than anywhere else, resolving the chronic problem of cheap fossil fuels faced on the mainland. Sounds like a dog-bites-man story to me.

But “race”? What “race”? Is there an X-Prize for most successful state EE/RE policy? Or is this just press hype?

Where is the mention of the failed South Point wind farm, where the tax subsidies rewarded building the turbines but not maintaining them and keeping them running? (By comparison, the contemporaneous Kramer Junction solar plants in California’s Mojave Desert were the largest solar field in the world for almost 2 decades and still remain in active use.)

And the article reflects a profound ignorance about California EE mandates that have led the country for decades, whether it be Title 24 (which dates back to 1978) standards for new construction or the Governator’s latest retrofit plan. It doesn’t sound as sexy as adding 30% to 40% to get a misleading number, but in reality California’s existing conservation has already saved more carbon emissions and fossil fuels than anything Hawai‘i will ever do.

I’m sure there’s something that can be learned from the Hawai‘i experiment: that’s one of the major advantages of the US (and German and Canadian) model of federalism. Heck, I have some money left in my research budget, so perhaps I need to do a field visit to investigate for myself.

However, as with many such stories, there is a tendency to put too much stock in the boasting of the local sources, rather than put the local efforts into a broader context — in this case of US EE/RE policy.

Note to international readers: One of my favorite childhood TV shows was Hawaii Five-O, which offered most Americans their first glimpse of life in the 50th state. The preview of next week’s episode always closed with Jack Lord saying “Be there! Aloha.”

Green incentives: incentives vs regulation

While football is my favorite sport, this was one of those years where I watched the Super Bowl more for the ads than the game. (It turned out to be a surprisingly fun game.)

As in previous years, many of the ads turned out to be more entertaining than effective. Our family’s favorite ad — got us all to laugh — was the Budweiser ad that satirized the TV series “Lost” (now in its final season). But no amount of advertising would get me to drink Bud, or my wife or tween to drink beer under any conditions whatsoever.

But an ad that closely linked the message to product — and one that’s stirred a controversy for several days afterwards — is the “Green Police” ad for the Audi A3 TDI turbodiesel. (I originally thought it was for VW, but since they have the same corporate parent and similar powerplants, the confusion was understandable.)

If you happen to have been on Mars, the ad shows teh Green Police busting citizens for various far-fetched environmental transgressions. It was accompanied by a redub of Cheap Trick’s hit “Dream Police” to sing the words “Green Police” to the original music.

USA Today’s green blogger Wendy Koch endorses the ad:

The ad is not just another pot shot at greens. It's an appeal to a new and growing demographic that isn't hard-core environmentalist -- and doesn't particularly like hard-core environmentalists -- but that basically wants to do the right thing. Audi's effort to reach them, however clumsy, is actually a bit ahead of the curve.

While it’s just an ad — and a funny one at that — there’s still something about the satire that hits a little too close to home. As one blogger put it, “it feels eerily like a near-future dystopia.”

The ad was made in San Francisco, which has an actual composting mandate as in the ad. Koch notes that Israel, UK, New York state, Vermont have special police authorities to sanction CO2 emissions or other anti-green crimes.

Whether the green police are real or not, I think there is a broader question of using regulation rather than prices to encourage socially desirable behaviors in a market economy.

In a great triumph of hope over realism, we hoped that centralized command-and-control bureaucracries (ala 1984 and Des Lebens des andres) died with the Berlin Wall in 1989. Alas, the once-free liberal democracies seem to be approaching central planning quicker than the former Soviet republics are approaching free markets.

It’s not that market approaches are unavailable. Most of the problems of the US EE and RE industry — long payoff periods, unpredictable substitute costs, uncertain investment climates — could be solved quickly and simply by tripling or quadrupling the price of fossil fuels via a fixed carbon or extraction tax — and returning the money via individual and corporate income tax cuts. More complex systems (like cap and trade) have proven they are amenable to fraud and political payoffs .

The one minor problem is that any politician voting for such an increase in the cost of gasoline, natural gas, heating oil and electricity would be unemployed at the next election. So those who advocate European-style or Japanese-style oil prices will never see their theories tested.

Cost-ineffective "green" investment

The NY Times reported Sunday plans for a $133 million renovation of the Portland (Ore.) Federal building. By using innovative technologies to make the building more “green,” the government will save $280,000 a year. At that rate, it will pay for itself in 475 years.

Even by relaxed standards of Federal pork-barrel spending, this is ridiculous. Was the government unwilling or unable to find a lower bidder? Did it not have some higher priority project to fund instead? Or is this a payoff to local politicians?

Many energy efficiency retrofits have payoffs of 2-10 years: with tax credits some claim payoff of only 17 months. In fact, a 5:1 ratio was implied by a 2009 announcement by energy secretary Steve Chu of a $454m energy efficiency program. Even LED lightbulbs might have a payoff of 5-10 years.

It’s an abomination that such a project was even considered, let alone proceeding ahead. There are no shortage of buildings in this country awaiting improvements in efficiency. This same $133 million could produce annual savings of $10, $15 or even $25 million, instead of 1/10 or 1/100 of that.

Given that the wastefulness has been long known, why is it continuing? The Green stimulus money will at some point be gone — perhaps after FY2010 — and wouldn't it make sense to prioritize the money to achieve the greatest impact? Y’know, to spend it the way an concientious individual, business or nonprofit would do it?