Friday, April 8, 2011

The disconnect between Academia, Government, and Industry: System Efficiency? Cost of Electricity? Rate of Return?

There is currently a large disconnect between academia, government, and industry when it comes to "knowing" what we should be optimizing when we build power plants. Some times, the disconnect makes visible when two people at a conference, even two researchers who may know each outside of the conference, get defensive and verbally combative. That is, they go into fight or flight mood when nobody is holding a gun to our heads. But most of the time, the disconnect never physically materializes because we've learned not to listen to people on the other side of a debate.

We, in the electricity-generating research community, seem to be wasting a lot of time because we are talking over each others heads because we can't agree on a common figure of merit to judge the performance of a power plant. On some days, it feels like we should just stop all our research and just agree on one figure of merit. Some people are trying to minimize water usage per kWh; some are trying to maximize sustainability; some want independence from foreign fuels; some don't care as long as it's "renewable and promotes jobs"; others are trying to minimize greenhouse gas emissions per kWh; some are trying to minimize the levelized cost of efficiency; a few are trying to maximize rate of returns on investment; while most are trying to maximize the system efficiency.

So, this post is devoted to looking at how different groups in the "Energy" field are currently optimizing different figures of merit, and are therefore effectively communicating in different languages.

Right now, most academics are trying to maximize the system efficiency of the power plant, which can sometimes be defined as either power per HHV (higher heating value, i.e. the fuel's enthalpy) or power per exergy (power output per total inlet flow of exergy, where exergy is defined as the capability to do work). I'm not really sure where this almost religious concern for system efficiency came from, perhaps from a fear of dwindling resources and the desire to use them wisely, or perhaps from a desire not to taint engineering calculations with the units of $'s. But the problem is that the system efficiency calculated by academics (and some people in gov't and industry) leaves out some major components that are required to tell us how wisely we are using our resources. For example, system efficiency ignores the money/resources/time/work consumed in building the power plant, fueling the power plant, maintaining the power plant, and decommissioning the power plant. Making any statement about the relative merit of a power plant by comparing it to the system efficiency of another power plant is A WASTE OF TIME! It's a waste of time of the researcher doing the calculation and a waste of time of the audience that has to listen or read about claims of 'Improved Efficiency.' Nobody should care about the system efficiency of a power plant because the system efficiency can always be increased by spending more money in capital improvement, such as by building larger heat exchangers to decrease the amount of waste exhaust heat or perhaps by increasing the diameter of pipes to reduce friction. The problem of course is that building larger heat exchangers and larger diameter pipes consumes money/resources/time/work. We, in the field of producing electricity and transportation fuels, need to stop using the term 'system efficiency' because it's a waste of our precious money/resources/time/work.

Even though there are some academics that are trying to include cost estimates, most academics are just simply optimizing the system efficiency as if a high system efficiency actually was a good thing. As I've mentioned before Thoughts on Thermodynamics Imperative, I think that this is unconsciously due to the Thermodynamic Imperative, which is floating around in some peoples heads, like all of the bromides we hear each day on the news, political talk shows, or just about anywhere. "Waste Not" "You can prevent Forest Fires" "A penny saved is a penny earned" "The Love you receive is equal to the love you give." The real question is why do people like to think that being as efficient as possible is a good thing. There is no moral high ground for being as efficient as possible. Spending a bunch of money to build larger heat exchangers or larger diameter pipes is not a morally justified action unless you can prove that the larger heat exchangers or pipes increases the rate of return on investment of the power plant. (i.e. does the increased expenditure of money end up generating more money? If not, then that money could be used for better purposes, such as health care.) Another example is: who cares if you used less gasoline driving to work if you ended up buying an expensive, "fuel-efficient" car that consumed more fuel during the manufacturing of the vehicle than you would have saved by during the 20 years of driving the cheaper,  "fuel-inefficient" vehicle.

Whenever you hear scientists (or politicians) talk about increasing efficiency or improving system efficiency, remind yourself that this person is currently being lazy. They are ignoring import details that are required to make a decision on whether or not to build a power plant. And whenever you hear scientists (or politicians) talk about increasing efficiency or improving system efficiency by adding in co-generation of steam, be very scared. You are probably dealing with somebody with very little grounding in the real world. I have no qualms with co-generation power plants, as long as the researcher can demonstrate increased rate of returns on investment. But if all that researcher does is calculate a Thermal Efficiency (w.r.t. the lower or higher heating value of the input fuel) of a co-generation plant and of a non-co-generation plant, and goes on to argue that we should build co-generation plants because of the high system efficiency, then he/she is probably a believer in the Thermodynamic Imperative, and there is a good chance that his/her real goal is not to help society. I think that believing in the modern for the Thermodynamic Imperative is a dangerous slippery-slope to nihilism, i.e. the philosophy in which you believe that life has no goals. While there are many scientists who consciously or unconsciously believe in the Thermodynamic Imperative (i.e. "Waste not exergy") or its modern version given by Robert Lindsay ("Prevent the natural tendency for entropy to increase"), there is nothing scientific about the Thermodynamic Imperative in either form.

But I will refrain from any more attacks on those people who do believe in the Thermodynamic Imperative because: (a) there is no way for me or anybody else to prove that any philosophy is better at growing society than another, (b) I believe in the institution of democracy and firmly believe that democracy is compatible with a growing society. In a democracy, each person is entitled to their beliefs and should not be attacked for holding different beliefs. In a democracy as in far-from-equilibrium thermodynamics, there is no right answer to the question: "What is the best way to grow our society?"

While academia seems content to talk about system efficiency, the US gov't (as well as many other European gov'ts) seem to spend half of their time talking about the cost of electricity and the other half talking about system efficiency. For example, the US Energy Information Administration calculates the levelized cost of electricity each year, and publishes it on their website. US EIA Electricity Generation. They list the levelized cost of electricity of various power plant configurations, but then in the details of their report, they say (paraphrasing) "Make sure not to compare between different electricity sources that may or may not be baseload, even though we've conveniently listed the power plants so as to invite comparison and failed mentioned in the graph which ones are demand-following, baseload or intermittent." This work by the US EIA is quite disingenuous and it may be hard to unteach people the errors in the EIA's work. See Problems with Calculating LCOE.  The US EIA's misleading calculations will unfortunately lead a lot of people to think that wind energy is cheaper than coal, nuclear and geothermal, and competitive with natural gas and hydro-electric power. The problem is that wind energy is intermittent, and the average price per unit energy (kWh) of intermittent electricity is much less than the price of electricity per kWh of a base-load power plant and much less than the price per kWh that a peak-demand-following plant can obtain. Roughly, I would say that the intermittent price/kWh is 3-4 cents/kWh; the baseload price would be ~6 cents/kWh; and the peak-following price would be ~8 to 15 cents per kWh, for some average hypothetical location in the US today. (This is the electricity generation price only, i.e. it doesn't include the transmission costs.) This means that a wind power plant with a levelized cost of 9 cents/ kWh is not economically viable (with out subsidies), whereas a peak-following gas turbine with a levelized cost of electricity of 12 cents/kWh might be economically viable. There is no Equality and Fraternity when it comes to electrons. Equal amounts of different types of electricity can generate different amounts of revenue, and this should not be forgotten. As currently estimated by the US EIA, large scale wind electricity production is not economically viable without subsidies or mandates, except in a few locations.
[And it should be noted that large-scale subsidies or mandates have major repercussions, such as leaving less money/resources/work available for worthy causes, for example health care and public libraries.]

So, besides LCOE, government agencies also talk a lot about efficiency. For example, the Department of Energy's Office of Fossil Energy has a goal of a 60% efficient coal power plant. (Why we should care about the efficiency rather than the economic viability of a power plant is beyond me? It's got to be because the word "efficiency" and "efficient" are buzz words that the public likes.) Though, most of the goals for the DOE's Office of FE are related to keeping the price of electricity of a coal power plant with carbon dioxide capture and sequestration (CCS) to within ~30% of the power plant without CCS. But here's a potential problem with just talking about the price of electricity (the LCOE as calculated by the US EIA):  what if the LCOE of a power plant were only to increase by 20% by adding CCS, but somehow the addition of CCS changed the power plant from a peak-following plant to a base-load (or a base-load to an intermittent) power plant? If we were to go just on LCOE, 20% doesn't sound that bad. But in real life, the plant is 20% more expensive per kWh and its revenue source may have decreased by 30% per kWh generated. That could be a huge change in the economic viability of a power plant, and this is why I think that we all need to be calculating the rate of return of investment of power plants. You are less likely to fool yourself into thinking that a certain project makes sense.  [Note: I'm not saying that adding CCS will necessarily change the type of electricity generated, but if it does, then it needs to be included in the figure of merit in order to understand the real economic viability of the power plant.]

And before I move on to the last part of the triangle (industry), I want to state that I don't necessarily blame the academic researchers for just calculating system efficiency or LCOE. 1) A non-dimensional number like system efficiency seems so appealing; and 2) The government is not pushing them to calculate the rate of return. And the reason why the government isn't pushing people to calculate the rate of return in investment is because the public isn't forcing the government to force academics to calculate the real economic viability of power plants. It's a vicious cycle; the public only gets out of government what it demands of it. This is why I think it's so important to communicate with the public, and get them to talk to their politicians, rather than try to talk directly to the politicians.

So, now this leads us to industry. And while a lot of companies are using what I believe is actually the correct figure of merit to compare between different power plant designs (the rate of return), industry in no way gets free pass from my critiques in this post. And this is due to the fact that some major companies do not care about environmental externalities, such as pollution. In fact, not only will some companies pay politicians to not have to pay for pollution, but they will also publicly denounce people trying to reduce the emission of pollution. An extreme case were the coal-to-coke plants that used to dump carcinogenic, heavy benzene-like tars into local river ways and emit similar lighter tars into the atmosphere, even after they knew that the substances were carcinogenic. Here's the problem I see: many people in industry could care less about making money at the expense of society at large. (Paraphrased: Greed is good only if it's good for society.) So, we should not be using the rate of return on investment as a figure of merit unless it includes the damages caused by pollution emitted from the power plant. Luckily, it's not that hard to add the cost of pollution into the calculation of the rate of return on investment.

In the hands of the right people, I think that the rate of return on investment can be used effectively to grow society, and yes, this eventually means expanding life to other planets. But I'm afraid that we will lose site of the goal of life (consuming more and more exergy as we continue to expand), because of the actions of some bad people motivated by money or power. Examples are: Enron causing California's blackouts, Union Carbide and gas leak, Soviet Union and Chernobyl, as well as Hooker Chemical dumping chemicals into Love Canal. What we need to do is to figure out the environmental damage of emitting certain types of pollution, and force the environmental damage of pollution to be paid by the company that emits the pollution. In some cases, the pollution effects are so high (such as some toxic chemicals) that they should be banned outright (as we are doing currently), but there are other cases, where we need to be more flexible and force companies to pay per ton of emitted chemical. Here, I'm thinking about acid gases (NOx, SOx), ozone-depleting chemicals (CFCs), and greenhouse gases (CO2, CH4, CFCs).  (Two of the three types are covered by current laws.)

So, what we need to do in order to the bridge the philosophical gap between academia, government and industry is that we need to start talking in the same language. But this probably won't occur until we start agreeing on the same goals.

Can we all agree to grow the global economy in a manner that increases the amount of life on Earth and in the solar system? Does anybody think that it's wrong to populate other planets? And to grow our economy here in order to afford space flight (which would have high up front costs, but possible large, long-term return on investment, especially if we could develop self-replicating solar cells that work under the harsh conditions of other planets.)

Can we all agree to use the rate of return on investment (provided that the calculation includes the cost of emitting weak pollutants and provided that the government strictly regulated toxic pollutants)? Can we all agree to stop using the system efficiency as a figure of merit?

If you disagree with the goals I mention above or will not stop talking about improving the system efficiency, please explain below why you disagree with the arguments I've given above or in similar posts.

Thank you,
Eddie Devere

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