The Market Ticker
Commentary on The Capital Markets- Category [Energy]
2015-05-04 07:00 by Karl Denninger
in Energy , 444 references

Jesus, the stupid is strong with people....

The Powerwall is available in 10kWh, optimized for backup applications or 7kWh optimized for daily use applications. Both can be connected with solar or grid and both can provide backup power.

The 10kWh Powerwall is optimized to provide backup when the grid goes down. When paired with solar power, the 7kWh Powerwall can be used in daily cycling to extend the environmental and cost benefits of solar into the night when sunlight is unavailable, Tesla said.

Tesla’s selling price to installers is $3,500 for 10kWh and $3,000 for 7kWh. (Price excludes inverter and installation.) Deliveries begin in late summer.

So let's see..... I'll assume (and I'm being kind) that this pack in cyclic use will return 10 years of power with an average drawdown of 50%.  Note that the drawdown percentage is critical; a pack that can handle 3,000 cycles with a 50% drawdown can probably only handle 1,000 if the drawdown is in the 70-80% range.

This in turn means that the actual capacity of the pack, in real use, isn't 7kWh -- it's half that, or 3.5kWh.

So you're paying $350/year for 3.5kWh of storage.  Now double that investment for the grid-tie inverter and wiring, and by the way, inverters don't last forever either.  We'll assume that's good for 10 years as well although you might do better on the inverter.

Now we have a $700 annual cost, before the cost of the money (which isn't zero!) and we haven't actually done anything but provision a storage bank for power; we have no source yet.

So how much power does that $700 buy?  That's pretty easy -- about 7,000 kWh at the more-or-less average cost of about 10 cents/kWh around the country.  Some areas pay more, some less.

The average house can run for anywhere from several months to nearly a full year on 7,000 kWh and remember, you haven't bought the solar panels yet.

I see utterly no reason to buy such a system.  The so-called "backup" system is even more idiotic; a 5kW backup generator can be had for under $1,000, is portable as it requires no permanent installation and will run for as long as you can feed it gasoline.

Oh, we haven't looked at the environmental and other sunk costs of producing the batteries; lithium is mined, and is a pretty nasty business -- never mind that most of it is produced from third-world nations.

There are, even with the very steep drop in solar cell prices, very few cases in which solar makes sense on a cost basis -- and that's for direct conversion, with no storage.  There are even fewer when you start adding battery storage to such a system, simply on the economics.

If you insist on burning $100 bills in the quest to play "foo-foo" games with your so-called "carbon footprint", have at it.  But from a purely economic standpoint this sort of system makes no sense at all unless you can't be on-grid for some particular reason (e.g. availability or cost to extend it to your location.)

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Nice sentiment.

As more people move to urban centers, either for the first time as in China, or as part of the re-urbanization underway in major urban areas of the United States and elsewhere, it is increasingly important to meet increased population density and energy demands with realistic, everyday solutions that improve energy efficiency. Those solutions include things that can be implemented today: Advanced battery technologies in vehicles, automated and efficient smart systems that integrate technology systems in buildings and street lighting, district energy systems and micro grids in communities. At the local policy level, building codes and financial incentives can be leveraged to encourage greater efficiency in both new and existing buildings.

Including that highlighted one marks this as a scam.

Sorry folks, but so much of this screech-owl crap is a scam; energy efficiency is only valid if measured end-to-end, including the cost of production, disposal of waste generated during production, during use and then again at the time of disposal or recycling.

The problem with these so-called "alternatives" is that these total cycle costs, including the energy required for them never is accounted for.

As I pointed out the other day with my article on so-called "green diesel" the efficiency claims are farcical because they intentionally omit energy loss in the various conversions from source to final sink.  Only by relying on government subsidy are those losses hidden economically, and that means that in point of fact what is going on is theft from you at literal gunpoint so that these "companies" can claim to be doing something they're actually not.

Fossil fuels look very attractive on a total energy budget basis for one simple reason: The input energy costs happened a long time ago and this big orange ball called "the sun" was responsible for them.  That is, oil and coal in the ground are batteries, not energy "sources."  The only real "energy source" is found in nuclear power -- whether it be in the form of fission here or fusion in the sun, and even that, if you want to get technical, isn't really a "source" either.

This is not to say there aren't things that can be done.  Insulating buildings and cutting window sizes (windows, comparatively, are awful when put up against insulated wall spaces) can make quite a difference in heating and air-conditioning costs.  Zoning HVAC so as to shut it down or greatly curtail consumption when areas are not in use for relatively long periods of time comes with great benefit too.  So does replacing incandescent lighting and (to a lesser extent) fluorescent tubes with LED emitters; they have finally reached a price point where the time to return their higher cost in the form of lower energy bills has become reasonable and so has the quality of light produced.

In homes the largest consumers of energy by far are HVAC, water heating and your refrigerator, with the next up being (for most homes) lighting.  Big gains for HVAC comes from insulation improvement more than anything else and in many cases (but not all) it's cost-effective.  Domestic hot water is far more difficult to address; the means of doing so (primarily instant hot water heaters or hybrid tank designs) are expensive and difficult to justify on a cost basis.  Solar, if designed in at the outset, can usually be done with reasonable cost effectiveness but retrofits are frequently uneconomic.  The domestic refrigerator load can be very effectively mitigated but not in the form factor we like in our kitchens; turning a chest freezer into a refrigerator with a different-range thermostat can easily cut your refrigerator power consumption in half or more, but there are zero kitchens I've seen in homes that are amenable to this sort of installation (never mind that doing so requires a second unit for freezer service and you need to manually defrost the latter on occasion.)  Has there been any developer that has built homes set up for a pair of (small) chest freezers, one for freezer use and the second modified as a refrigerator?  Not that I'm aware of -- that sort of intelligent design certainly goes directly against the "nice, big glitzy SubZero refer unit in the kitchen" mentality.

The key point to keep in mind in all of this is that behind every unit of GDP there is a unit of energy.  Using energy wisely is always a good idea for simple reasons of cost if nothing else, but we cannot "greenie" our way out of this box.  The fact of the matter is that a stable and deployable resource in the form of nuclear power, specifically LFTRs, has been within our reach for the last 50 years and we have refused to develop and deploy it for political rather than engineering reasons.

The worst of this deficit isn't so apparent when oil is selling for $60/bbl, although that's not far from a reasonable expectation of breakeven if you use coal as a feedstock and the thorium in it as your "fuel" source.  The real issue is one of energy production stability; I argue that only nuclear technology in the form of LFTRs or similar, where fuel is both plentiful and waste production tiny compared against existing BWR and PWR fission plants make sense if one looks at total end-to-end costs, and you must if you're looking for actual solutions rather than political polemics.

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Where is the technology side of most "journalism" -- oh, it went missing around 1974 or thereabouts, it appears.

German car manufacturer Audi says it has created the "fuel of the future" made solely from water, carbon dioxide and renewable sources.

The synthetic "e-diesel" was made following a commissioning phase of just four months at a plant in Dresden, Germany.

Why is this news?

Mostly because it's full of greeny BS.

Here's the problem, when you boil it all down -- the so-called "ecological" power generation is crap.  It requires energy to make both solar cells and turbines; neither is "free."  End-to-end efficiency has to account for both the cost of acquisition and fabrication of the plant itself as well as the disposal costs at end of life, but neither is ever accounted for in these computations.

Further, I noted back in 2011 when I wrote Leverage and a series of Tickers on energy policy that using "captured" CO2 isn't revolutionary at all -- the reason not to do so is cost, not ability.

Fischer-Tropsch, the conversion to synthetic oil, works with any carbon source.  Coal happens to be a good one because it contains Thorium, which you can (and should) extract and use as the fuel for your LFTR reactor that gives you the energy to drive the conversion.  This is also more efficient than converting to electricity first because you can use direct process heat; the temperature profile of the LFTR is compatible with direct process heat requirements for Fischer-Tropsch.

The claim of an "overall" 70% efficiency is nonsense; I can believe it in the conversion itself but the power generation already contains more loss than that; they're counting that as "free" but of course it isn't.

Production of synfuel is a good thing provided it makes economic sense, and it very well may in the future (right now with oil at under $60/bbl, not so much.)  But a dual-use technology such as using coal as the feedstock while extracting the thorium from it first so as to use that as the energy to drive the reaction is likely to be both more efficient and cost-effective.

If one cares about such things, that is -- and we should.

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