US Energy Flow

While I’m on the subject of flow charts, I thought this visual from the Lawrence Livermore National Laboratory brings into relief the changes we are facing in terms of energy supply.

First, there is the sheer inefficiency of the overall system — of 105,000 petajoules (PJ) of energy consumed, some 57,943 PJ are wasted. Second, despite all the debate about nuclear, wind and solar, together they amount for very little of our energy supply. It is a world of coal, natural gas and oil. According to the analysis:

The national energy balance sheet reveals a number of pertinent facts. First, coal-fired power plants generate almost half of our electricity and are responsible for nearly 2 billion metric tons of greenhouse gas emissions per year—equivalent to the emissions of the entire transportation industry. Greenhouse gas emissions from coal, and to a lesser extent natural gas and oil, explain why the electric power industry is the single largest contributor to U.S. greenhouse gas emissions. Second, although there has been explosive growth in solar, wind and biomass power in recent years, renewable generation still provides a small amount of our generating capacity. Third, the current electricity system, from generation to end-user, wastes vast sums of energy; for example, a light bulb receives less than half of the energy contained in a piece of coal. Finally, the U.S. transportation sector is almost wholly reliant on oil, more than half of which is imported.

United State Energy Flow (Petajoules, 2007)
United State Energy Flow (Petajoules, 2007)

Solar Technology Comparison

The latest McKinsey Newsletter featured a link to this well-done interactive feature comparing costs and distilling the features, benefits and other aspects of various solar power technologies.  Coverage includes several flavors of photovoltaic technology (PV), including crystalline wafer-based silicon PV, thin film PV, concentrated PV, and various new emerging PV technologies.  Another section deals with concentrated solar thermal technologies, including parabolic trough, dish/Stirling, and power tower.  Worth a quick look.

Certainty and Solar Power

In today’s New York Times, Thomas L. Friedman’s “Have a Nice Day” column highlights quite nicely the connection between uncertainty and the adoption of renewable technologies — in this case the adoption of solar energy technologies.

In particular, he argues that the solar panel industry is thriving in countries whose governments that have enacted policies aimed at overcoming the triple uncertainty threat:

  1. Regulatory uncertainty — “[A]ny business or homeowner can generate solar energy.”
  2. Connectivity uncertainty — “[I]f they decide to do so, the power utility has to connect them to the grid.”
  3. Price uncertainty — “[T]he utility has to buy the power for a predictable period at a price that is a no-brainer good deal for the family or business.”

Friedman reached these conclusions, in part, after touring the Applied Materials solar panel “war room” in Silicon Valley, from which it maintains “real-time global interaction with all 14 solar panel factories it’s built around the world in the last two years.”  According to Mike Splinter, CEO of Applied Materials, “We are seeing the industrialization of the solar business. In the last 12 months, it has brought us $1.3 billion in revenues. It is hard to build a billion-dollar business.”

And yet because U.S. policies have not adequately addressed regulatory, connectivity and price uncertainties, all 14 factories of these solar panel factories have been built outside the U.S.  As a result “[R]ight now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America.”

Interestingly, Friedman points out that the debate over U.S. energy policies need not depend on competing beliefs about global warming.  “[S]o, you don’t believe global warming is real. I do, but let’s assume it’s not. Here is what is indisputable: The world is on track to add another 2.5 billion people by 2050, and many will be aspiring to live American-like, high-energy lifestyles. In such a world, renewable energy — where the variable cost of your fuel, sun or wind, is zero — will be in huge demand.”

His point is worth exploring.  To understand the magnitude involved in supplying electricity to 2.5 billion more people AND supplying them with more electricity per person, consider that in 2007 the world consumed 18,187 terawatt hours (TWh; 1 terawatt hour = 1 trillion watt hours) of electricity.  That represented consumption of approximately 2,752 kWh for each of the world’s 6.6 billion people.  However, consumption is far from evenly distributed.  For example, OECD countries consumed an average of 8,477 kWh per capita, while China only consumed 2,346 kWh.  Meanwhile in the U.S., average electricity consumption was 13,616 kWh per capita.

All of this means that electricity demand by 2030 is expected to increase nearly 50%.  Perhaps not surprisingly, some have described energy as “the biggest challenge of the twenty-first century.”  But those challenges also may make energy — already an estimated $6 trillion dollar industry worth about 1/10th of the world’s economic output — the “largest economic opportunity in the twenty-first century.”