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Amory Lovins/Rocky Mountain Institute warm to PHEVs

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  • Felix Kramer
    If you ve never read anything by physicist Amory Lovins, founder of the Rocky Mountain Institute , author of Natural Capitalism, Brittle
    Message 1 of 1 , Nov 2, 2006
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      If you've never read anything by physicist Amory
      Lovins, founder of the Rocky Mountain Institute
      <http://www.rmi.org>, author of Natural
      Capitalism, Brittle Power, Winning the Oil
      End-Game, etc., this long Q&A with leading
      energy reporter/blogger, Tyler Hamilton is a very
      thought-provoking place to start. That's why I've
      included the entire text. Lovins/RMI have been
      focused primarily on hydrogen and lightweighting
      for transportation, but they're starting to pay
      attention to PHEVs, as seen by this comment:

      THE STAR: Could micropower get us off coal, wean
      us off nuclear and allow us to enter a future
      where plug-in hybrid or all-electric cars are charged off the electricity grid?

      LOVINS: We are about to publish the first
      independent assessment of plug-in hybrids, and in
      the right circumstances it can be an attractive
      option. The amount of electricity required is
      quite modest, and it would be at night so
      wouldn't add to peak capacity requirements. And
      the electricity needed is a very small fraction
      of what can be saved running existing thermal
      stations. So for relatively short trips, shaving
      into medium trips as batteries get cheaper, this
      could be an attractive option. It will, of
      course, have to compete with efficient fuelled
      hybrid, including biofueled hybrids, and
      ultra-lights that further double efficiency.

      [We've checked further, and this report may not
      appear until the end of the year. We can't wait!
      (Especially because CalCars really got its start
      because we were inspired by the Hypercar
      concept---if you scroll down to the bottom of
      you'll see we're standing around a Hypercar model.)]

      Lovins Q&A
      Oct. 22, 2006. 11:53 AM

      For environmentalists and power industry
      executives, Amory Lovins needs no introduction.
      Since the early 1970s, the Oxford-educated
      physicist has been an outspoken advocate of
      energy efficiency and alternative energy
      technologies -- what Lovins first coined as "soft energy paths."

      At the same time, Lovins has been a vocal critic
      of nuclear technology and the idea that big,
      central power stations represent a silver bullet
      to our future energy needs. He has worked with
      the former Science Council of Canada and has
      consulted for governments and corporations around
      the world, including provinces and utilities
      across Canada. In fact, the chairman of his
      not-for-profit research organization, the Rocky
      Mountain Institute, is John C. Fox, former chief
      operating officer of Ontario Power Generation.

      The Star recently had the opportunity to speak
      with Lovins at his office in Snowmass, Colorado.
      What follows is an edited version of a rather
      lengthy phone interview, during which Lovins
      questioned the wisdom of building new nuclear
      reactors in Ontario. Alternatively, he said that
      reducing power consumption through efficiency,
      and embracing what he calls "micropower — solar,
      wind, geothermal, biomass and combined heat and
      power projects — offers a quicker, less risky and
      more environmentally responsible way of achieving
      the province's energy objectives.

      THE STAR: You're quite familiar with the Ontario
      electricity market. What's your view of the
      Ontario government wanting to build new nuclear
      reactors as part of its 20-year power supply plan?

      LOVINS: I get the impression the government would
      like to launch a nuclear revival. Ontario has not
      had a happy experience with nuclear. Given the
      relative cost and financial risk of Canadian or
      U.S. nuclear, you have to have a very restrictive
      set of options or strange idea of economics to
      conclude a nuclear plant makes any sense. So I
      don't know how they could have reached that
      conclusion, unless it's ideological or designed
      just to support the nuclear industry.

      THE STAR: Why isn't the private sector behind nuclear technology?

      LOVINS: Nuclear costs too much and it has
      excessive financial risk. In no new nuclear
      project around the world is there a penny of
      private capital at risk. Contrast that with how
      the competitors are doing. The first and the
      cheapest one is efficient use of electricity.
      There, Ontario, like most places, has barely
      scratched the surface of how much efficiency is
      available and worth buying. Contrary to the
      common supposition of diminishing returns and an
      exhaustible efficiency resource, the actual
      potential savings keep getting bigger and
      cheaper, because the technology is continuing to
      improve faster than we use it. The low-hanging
      fruit is still mushing up around our ankles but
      the tree keep growing more fruit and dropping it
      on our heads. What part of this don't we understand?

      About three-quarters of all electricity we use in
      North America can be saved cheaper than just
      running a coal or nuclear plant and delivering
      its power, even if the capital costs of the plant
      were zero. It's interesting that California, the
      single biggest market in North America, has held
      it's per capita use of electricity flat for 30
      years. And some places closer to Ontario, like
      Vermont, are actually sending that number
      downwards, because they're saving electricity
      faster than their economy and population are
      growing. But we don't have comprehensive,
      accurate measurements of how much electricity is
      being saved. We just know it's a big number, and
      we know it's still a tiny fraction of how much
      efficiency is available and worth buying.

      THE STAR: And the other less risky competitors to nuclear?

      LOVINS: The two competing sources that are easy
      to measure are collectively called micropower —
      not central plants, but more distributed capacity
      that's at or near the customers, or at least
      comes in more decentralized, diversified form.
      Micropower is providing now between one-sixth and
      over half of all electricity in 13 industrial
      countries. Denmark is the leader with about 53
      per cent last year. You'll notice this does not
      count big hydro. If we don't count any hydro
      above 10 megawatts, then the added micropower
      capacity last year in the world was 41 gigawatts,
      compared to 3.7 gigawatts for all kinds of
      nuclear — none of which was a CANDU (technology)."

      There are two kinds of micropower. One is co-gen
      and combined heat and power. That was about
      two-thirds of the new capacity and three-quarters
      of the new electricity last year. The rest was
      distributed or decentralized renewables, which
      was a $38 billion U.S. global market last year
      for selling equipment. That's wind, solar,
      geothermal, small hydro and biomass. So the
      overall numbers are quite impressive. Micropower
      surpassed nuclear power in worldwide installed
      capacity in 2002, and surpassed nuclear in
      electricity generated per year just in the last
      few months. But more interesting is market share
      — micropower provided a sixth of the world's
      total electricity last year. Micropower last year
      provided 32 per cent of the world's new
      electricity and 16 per cent of the world's total
      electricity; nuclear last year provided
      respectively 8 per cent of the new and 16 per
      cent of the total. In terms of electricity
      generated, micropower last year had four times
      nuclear's market share, and it added 11-times as
      much capacity as nuclear, or 8 times as much if
      you don't count standby and peaking units, but you should.

      THE STAR: Aren't many of the renewables, such as
      wind and solar, intermittent and therefore unable
      to replace the baseload power that comes from nuclear plants?

      LOVINS: The variability of sun, wind and so on,
      turns out to be a non-problem if you do several
      sensible things. One is to diversify your
      renewables by technology, so that weather
      conditions bad for one kind are good for another.
      Second, you diversify by site so they're not all
      subject to the same weather pattern at the same
      time because they're in the same place. Third,
      you use standard weather forecasting techniques
      to forecast wind, sun and rain, and of course
      hydro operators do this right now. Fourth, you
      integrate all your resources — supply side and
      demand side — so for example, in the Pacific
      Northwest, where we're rich in hydropower, for
      0.6 cents (U.S.) per kilowatt-hour the Bonneville
      Power Administration will firm your wind power.
      That is, they combine your wind with their hydro
      and open and close the valves on the dams so that
      whenever the wind is not blowing and you need the
      power you can dispatch hydro instead on a firm contractual basis.

      In places that don't have surplus or adequate
      hydropower, it's becoming equally straightforward
      and much cheaper to back up your wind from a
      virtual peaker drawn from load management. Like,
      for example, turning off your water heater for 15
      minutes — you won't even know it's happening.
      That's done automatically, and the power that was
      going to go into your water heat instead backs up
      the wind. You can do other kinds of storage as
      well. For less than 1 cent (U.S.) per
      kilowatt-hour, you can store bulk electricity as
      compressed air in a salt cavern. Typically it's
      much cheaper to manage loads on the demand side
      than to store electricity on the supply side. But
      in a grid that is hydro rich, and with an end-use
      structure that is as inefficient and has as much
      space in water heating with electricity as you
      have in Ontario, it's really very straightforward
      to have large amounts of variable renewables
      without in any way comprising reliability. It's
      also worth bearing in mind that although wind and
      photovoltaics are quite variable, geothermal,
      biomass and small hydro are not. So you can't
      even apply this issue to a lot of renewables that are big in the marketplace.

      THE STAR: Part of the Ontario government's plan
      is to phase out all its coal plants, which
      represents today a large portion of power supply.
      Could the province realistically phase out all
      coal and nuclear over the next 20 years?

      LOVINS: Sure. I think it would require a much
      more aggressive commitment to doing the cheapest
      things first, especially for modern, end-use
      efficiency. For example, I'm talking to you from
      a building at 2,200 metres in the Rockies where
      it can go to minus 44 C -- you can get frost on
      any day of the year and you can get 39 days of
      continuous mid-winter cloud. In the middle of my
      house I've harvested so far 28 banana crops with
      no heating system, and it's cheaper to build that
      way because super insulation and super windows
      and air-to-air heat exchangers add less to the
      construction cost than what you take off the
      construction cost by not needing a heating
      system. So the house was about $1,100 (U.S.)
      cheaper to build with good comfort but no heating system.

      THE STAR: And how are the bananas?

      LOVINS: They're delicious, especially at
      Christmas as you walk in out of a blizzard.
      Actually our last crop came out on the winter solstice.

      THE STAR: You seem to know a lot about the Ontario electricity market.

      LOVINS: I've worked in Ontario, and for (the
      former) Ontario Hydro, and a bit for the Ontario
      government, the federal government. Actually,
      I've worked in every province of Canada —
      although not in the Yukon or Northwest
      Territories. The chairman of my board of
      directors, John C. Fox, formally ran both the
      upstream and downstream halves of Ontario Hydro.
      (ed. note: Fox was last chief operating officer
      of Ontario Power Generation before stepping down in 2000.)

      THE STAR: On the issue of greenhouse gas
      emissions, GreenPeace co-founder Patrick Moore
      has long parted ways with the organization and is
      now a consultant for the nuclear industry. He
      believes large-scale adoption of new nuclear
      technology is the only way to avert climate
      catastrophe. What's your view on this?

      LOVINS: I know Patrick and respect him, but I
      think he's not well informed about energy
      alternatives and I hope he will become so. I've
      spoken with Patrick at some length, for example,
      about variability of wind. He thinks it's a
      serious problem, and he didn't realize there's a
      lot of empirical and analytic evidence that shows it's not a problem.

      There's a more fundamental issue here, though,
      and that's about economics. Nuclear plants
      directly emit no carbon dioxide, although they
      have some inherent in their construction and
      operations from other parts of the fuel cycle.
      I'm prepared to ignore that indirect CO2
      emission. However, because I agree with Patrick
      that climate is a very serious problem, I think
      we need the most solution per dollar and the most
      solution per year. If you go to the December 2005
      issue of Nuclear Engineering International,
      you'll find a paper called `Mighty Mice' that
      summarizes an economic analysis. What that
      analysis shows from the best empirical data
      available last year, is if you spent 10 cents
      (U.S.) to make and deliver a new nuclear
      kilowatt-hour — notice I said deliver, so that's
      at your meter — you can displace 1 kilowatt-hour
      of coal power. That's what Patrick is talking
      about. And it might seem like a good idea until you look at the competitors.

      If you spend the same 10 cents (U.S.) instead on
      micropower or efficient use, you get two to 10
      times as much coal displacement for the same
      money, because those options are cheaper — you
      get more per dollar. They're also faster, so you
      get more carbon displacement, coal displacement, per year.

      THE STAR: But a lot of micropower, such as
      co-generation, relies on natural gas. Doesn't use
      of this fossil fuel increase CO2 emissions?

      LOVINS: Two-thirds of the co-gen in the world is
      gas-fired, but both because gas is less
      carbon-intensive than coal and because you're
      displacing a separate power plant and boiler or
      furnace with one unit that's much more efficient
      overall, you save carbon. Altogether counting the
      gas-fired and all the other co-gen around the
      world, you're saving at least half the carbon
      compared to what it replaces. So yes, I'm making
      proper allowance for the carbon that does come
      out of the co-gen and counting the measured cost
      of the renewables. In fact, I'm counting a wind
      cost that is over twice as big as the cheapest
      wind farms built lately. And I'm counting all the
      cost of making the renewables, like wind, fully
      dispatchable. So it's an entirely
      apples-to-apples comparison, and I've done it on
      a consistent accounting basis but made sure I
      used assumptions that were favourable to nuclear and other central stations.

      The balance is tilted somewhat against nuclear
      lately because the promised low costs already
      have failed to materialize for next-generation
      light water reactors. The Finnish plant is a good
      example. About a year into construction they're
      already a year behind schedule and getting more
      so. They're in serious trouble with the safety
      regulator, and it's already destroyed AREVA's and
      Siemen's nuclear profits for the year. They've
      made already a 1.5 to 2 billion (Euro) allowance
      on their books for cost overruns, and I don't
      think that's anywhere near the end of the story.
      It's driven them right into the ditch. Just look
      at the recent press release on their quarterly
      earnings. I suspect that if Canada tries to build
      another reactor it will have a similar experience.

      THE STAR: Could micropower get us off coal, wean
      us off nuclear and allow us to enter a future
      where plug-in hybrid or all-electric cars are charged off the electricity grid?

      LOVINS: We are about to publish the first
      independent assessment of plug-in hybrids, and in
      the right circumstances it can be an attractive
      option. The amount of electricity required is
      quite modest, and it would be at night so
      wouldn't add to peak capacity requirements. And
      the electricity needed is a very small fraction
      of what can be saved running existing thermal
      stations. So for relatively short trips, shaving
      into medium trips as batteries get cheaper, this
      could be an attractive option. It will, of
      course, have to compete with efficient fuelled
      hybrid, including biofueled hybrids, and
      ultra-lights that further double efficiency.

      THE STAR: So overall, are you generally positive
      with the direction our society is heading? Our governments are heading?

      LOVINS: I'm very positive with where
      jurisdictions that pay attention to modern
      technologies, business strategies, and policies,
      are headed. I wouldn't currently place Ontario
      among those, and I fear for the economic
      competitiveness of the province under this sort of energy policy.

      THE STAR: What advice would you give the province?

      LOVINS: Let electricity and energy compete fairly
      at honest prices regardless of which kind they
      are — savings or production — or what technology
      they use, or how big they are, or where they are,
      or who owns them. If we did that, we certainly
      wouldn't order more nuclear plants and we'd be
      phasing out the existing coal and nuclear plants
      because it's cheaper not to run them than to run them.

      Secondly, I would make sure that the distributors
      of electricity and gas in the province are
      rewarded for cutting your bill, not for selling
      you more energy. This could be done by
      well-understood techniques that decouple profits
      from sales volumes so the distributors are not
      rewarded for selling more, nor penalized for
      selling less. Then I would let them keep as extra
      profit part of what they save the customer, so
      that the providers' and customers' interests are
      fully aligned. The lack of this well-understood
      reform is the biggest obstacle to using electricity in a way that saves money.

      I guess I would add a third bit of advice. If you
      believe as I do that climate change is a serious
      problem, then make sure you buy the resources
      that will save the most carbon per dollar per
      year, because otherwise you're making things
      worse. If you buy a nuclear plant instead of
      cheaper efficiency and micropower, you're getting
      less solution per dollar, less solution per year,
      and therefore reducing and retarding climate protection.

      THE STAR: And the role of the private sector?

      LOVINS: I happen to be a fan of liberalized
      markets, and market competition. So I find it
      very instructive that essentially all of the
      efficiency in micropower being bought in the
      world is financed by private risk capital, but I
      can't find a single new nuclear project on earth
      that has a penny of private capital at risk. So
      what does this tell us? I think it tells us that
      investors perceive higher cost and higher
      financial risk in nuclear. They find that
      unacceptable, and they're buying the other stuff
      instead. The clean energy space, worldwide, is
      getting $63 billion (U.S.) of investment this
      year. Why is that? Why is nuclear struggling to
      find single orders, scouring the earth for them,
      and they're all ordered by central planners and
      largely supported by the public purse; whereas
      vendors of the competing technologies, which
      already have four times the energy market share
      and 11 times the capacity, they are finding it
      hard to keep up with the explosive growth in their businesses.

      In August 2005 the U.S. passed a new law offering
      on top of the existing nuclear subsidies, further
      subsidies of around 4 or 5 cents a kilowatt-hour,
      which equals the entire capital cost of the next
      six units to be ordered, if any. What was the
      market's response to this? Well, Standard &
      Poor's promptly put out two reports saying that
      even this massive intervention would not
      materially improve the credit ratings of the
      builders. In other words, even paying for the
      whole construction of the plant has the same
      effect of defibrillating a corpse — it will jump
      but it won't revive. This technology has died
      with an incurable attack of market forces. I'm
      sorry — it was done with good intentions, a lot
      of talented people devoted their careers to it,
      but like Betamax it lost out in a competitive
      market. Other better, cheaper stuff got to the
      customers first. By now, probably less than half
      of the world market in new electrical services is
      being met by any kind of central thermal power
      station. So let's wake up, look at the data, and
      make sure we count both halves of the market; not
      just competition between traditional central
      thermal plants, but also how they are being
      rapidly displaced by faster, cheaper and more benign alternatives.

      THE STAR: Amir Shalaby, vice-president of system
      planning for the Ontario Power Authority, says
      the private sector will always shy away from big,
      long-term, risky projects that bring a public
      benefit. He says construction of the railroads,
      electrical transmission and other key
      infrastructure would never have happened without
      public support. The same argument holds for building nuclear, he says.

      LOVINS: If the public authority is doing the
      opposite of what the private market is doing,
      should that ring your alarm bells? It sure does
      for me. Second, does he think that philosophy is
      consistent with liberalized markets and greater
      reliance on the private sector? And third, does
      he feel that electricity is such an immature
      sector that central planners' choices should be
      preferred to those of private capitalists. I
      happen to trust capitalists in Toronto or New
      York to make wise investments, better than I
      trust central planners in Toronto, Beijing or
      Washington. I think there's a lot of historical
      evidence to back up that preference. The word
      `risky' is a tip-off that the people who would
      benefit from the choice proposed want to put
      their hand in your pocket again, and don't want
      you to notice that the private market is choosing
      better buys than what your local central planners are proposing.

      -- -- -- -- -- -- -- -- -- -- -- --
      Felix Kramer fkramer@...
      Founder California Cars Initiative
      -- -- -- -- -- -- -- -- -- -- -- --
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