Energy Use and Options (Part 2): Current Electrical Generation

[perry]

Energy Use and Options:

This is a rather long subject, and I have broken it into 4 parts. This post is Part 2. Please read Parts 1 first, Parts 3 & 4 will follow over the next week or so.

Part 1: US Energy usage and the effects on the environment and us.
Part 2: Current Electrical Generation.
Part 3: Future Electrical Generation.
Part 4: Transportation Fuel Options for the future.

Let’s now look at the breakdown in Electrical Generation and its affects on global warming (2003 Data):
Fuel Installed Power
Capacity Generated
Coal 33% 51%
Oil/Natural Gas 44% 20%
Nuclear 10% 20%
Hydro 10% 7%
Renewable 2% 2%
Other 1% 0%

From a CO2 perspective: Coal dominates, followed by natural gas, then oil (there is very little oil burned to generate electricity). Most of the renewable is the burning of “renewable” biomass waste products – which also generates CO2 (Solar and Wind generation account for 0.3% of electrical generation). Thus about 73% of electrical generation (KW Hr) account for 39.4% of the US CO2 production (see Fuel Usage chart in Part 1).

The biggest CO2 reduction effect can be accomplished by replacing the coal fired generation.

One thing to consider is how “reliable & useful” are the different generation technologies (plants do not run at 100% of capacity 100% of the time). The utility industry calls this “Capacity Factor” and the data related to this is (2004):

Nuclear (Steam Cycle) 90.5%
Coal (Steam Cycle) 70.8%
Natural Gas (Combined Cycle) 38.2%
Wind 32.1%
Hydro 29.6%
Oil (Steam Cycle) 26.2%
Solar 22.4%
Natural Gas (Steam Cycle) 16.6%

To explain some examples using the last 2 charts: Nuclear plants tend to be highly reliable and are run at full power a lot – the reason that with only 10% of the installed “capacity” that they are generating 20% of the power in the nation. On the other hand; hydro, with the same installed capacity is limited by seasonal water flow, allowing it to only generate 7% (1/3 that of nuclear) of the nations power, which also produces a capacity factor of 29.6% (1/3 that of nuclear). Wind and solar have problems with being intermittent (the power drops off as the wind dies down, or from haze or clouds and as the sun sets) and cannot be counted to provide steady power for homes and business. Natural gas & Oil have a lot of installed capacity – but are not used much due to their high cost. Low cost is also the reason coal plants have a high utilization factor and generate 51% of the nation’s power:

Average national cost of generation, by fuel type (2004 data): In cents per KW-Hr.

Nuclear (1) 1.68
Coal (1) 1.92
Oil (2) 5.39
Natural Gas (2) 5.87
Wind (3) Range of 4 to 7
Solar (4) > 20

Notes:
1) Most Nuclear and Coal facilities are paid for (but, were expensive to build). Cost of generation is largely Fuel, Operations, & Maintenance. Nuclear has an issue with long term spent fuel disposal, but the cost of that disposal and plant teardown is already accounted for in the reported cost of generation above (see Part 3 for full discussion of this and other issues).

2) Most Oil and Natural Gas facilities are still being paid for; but were cheap to build and fuel price overwhelmingly dominates these numbers.

3) Note that finding reliable estimates on the actual cost of wind power is very difficult. Some people claim that places have been built for 4 cents per KW-Hr, others quote current “real” construction and operation cost at 7 cents per HW-Hr (assuming normal 20 year depreciation schedules and turbine/gearbox life: 2003 University Study on repowering Iraq). Massive US government subsidies exist (compared to the amount of generation). These consist of a 1.8 cent per KW-Hr subsidy on all wind generated power (2004 rate), and a huge tax benefit of a 5 year accelerated depreciation (which is worth another cent or two per KW-Hr). It is worth to note that none of the current wind projects within the US have been built without the subsidies; and despite claims of how economical wind is – last year when the subsidy had expired - not a single Windfarm size wind turbine was ordered in the US until it was renewed, nor was anyone interested in doing so if the subsidies were not renewed. I found quotes from people claiming that their local windfarm was generating at 2.85 cents per KW-HR; only to find after digging that the 2.85 was after the 1.8 subsidy and the accelerated depreciation was figured in. It clearly appears that government subsidies are paying the bulk of the cost of wind generation at this stage (and the cost of wind generation is currently 1/5 of what it was 20 years ago, but unlikely to drop much more). Long term reliability of the turbine blades and gearboxes is also unknown. No one has yet had utility size wind turbine and gearboxes generally last 20 years. The current machines are 4th generation machines – and “should” last 20 or more years (we hope). The 3rd generation machines lasted about 10 years, and the 1st and 2nd generation machines were basically short lived disasters of under-designed machines.

4) Solar electrical generation is mainly used in places where the cost of running power lines is prohibited, or where people want solar power regardless of the cost. Here is a great website that provides a reasonable estimate of the current cost of a solar power system ( www.solarbuzz.com/SolarIndices.htm ). Industrial sized system connected to the grid (no storage): 21.3 cents per KW-Hr in a sunny climate, 46.9 cents per KW-Hr in a cloudy climate. Home 2 KW peak system with storage: 37.9 cents per KW-Hr in a sunny environment, 83.3 cents per KW-Hr).

I wish to point out that while the difference between 1.68 and 1.92 cents per KW-Hr may seem small (0.24 cents per KW-Hr), it is in reality a huge number. For example; if all the 1.92 cents per KW-Hr coal fired generation was replaced by nuclear generation at 1.68 cents per HW-Hr the US would have saved 4.7 Billion dollars in 2004.

Electrical energy is a HUGE business with a substantial affect on the economy, and a tenth of a cent (0.10) change in the overall per KW-Hr rate translates into 3.8 Billion dollars affect on the US economy (3,794 Billon KW-Hr’s of electrical usage in 2004). Changing to a source that is 1 or 2 cents per KW-Hr more expensive would produce a huge affect on the US economy if that source has any significant portion of electrical generation.

Of course: Generation costs are only part of the cost structure. Transmission & Distribution cost within the US add 2.5 cents per KW-Hr.
Thus a more realistic look at the production cost of US electricity is (and filling in what cost go where):
Construction Transmission Total
Operation & Fuel & Distribution
Nuclear 1.68 2.5 4.18
Coal 1.92 2.5 4.42
Oil 5.39 2.5 7.89
Natural Gas 5.87 2.5 8.37
Wind Range of 4 to 7 2.5 6.5 – 9.5
Solar > 20 0- 2.5 > 20

To put this in perspective: If you look at the above chart and the % power generated chart you will note that 71% of the US electricity cost more to send across the power lines to your home than to generate (it cost a lot of money to build and maintain transmission [0.5] and distribution [2.0]). I will also note that 6.5% of electrical generation is lost (by overcoming line resistance) in the transmission and distribution system (mostly in the local distribution system).

Taxes, utility profits (usually regulated by the state), and other charges add to the cost of electricity as well.

Overall; the average price paid for electricity was 7.57 cents per KW-Hr (2004 data: note that the “average” residential customer paid 8.7, commercial customer paid 7.9, and the industrial customer paid 5.2).

Note that the cost of oil and natural gas have significantly increased worldwide in 2005, and are expected to continue to increase in the future. That will make oil and natural gas generation even more uncompetitive than it is. It is likely that once the existing gas supply contracts expire to the combined cycle plants that many of these plants will be shut down, unless there is insufficient coal generation in the region to replace their capacity. This will actually increase the use of coal and raise the CO2 emissions.

The final conclusion on present electrical generation is that coal and nuclear are the current base generation of the US because of their cost advantage.

What about future generation (what can be built soon to provide power for the next 30 years). What issues exist with building new generation (The US has largely not built baseload generation for the last 20 years).

One thing about future generation; it will put all fuels on the same footing for price comparison because all new generation will have to pay its cost of construction.

Perry

Next up: Part 3 will deal with the new generation options, including the issues that must be considered and balanced for each type of generation. A full discussion of all nuclear plant issues, urban legends, and disasters will be included there (otherwise known as the good, the bad, and the ugly).