Calvin Frost09.07.16
Since my last column on Lester Brown’s The Great Transition, I’ve had a number of emails from readers reminding me that some of the transitions to renewables have slowed down because of availability of cheap natural gas. They’re absolutely right. I am, for example, reading articles almost every day about the paper industry switching from coal and biomass to natural gas. Georgia Pacific is a good example. The company has added gas units in multiple locations, replacing biomass. (Biomass is considered renewable whether the feedstock is what we call “hog” fuel, or bark or chips or pellets or even sawmill residue. All those types of feedstock are called biomass, because they are tree byproducts).
The price of biomass, measured per MMBTU, is about $2.50. Natural gas is now under $2.00, measured by the Henry Hub Index. An extra tutorial, if you’re not already confused: 1 quatrillion BTUs equals 12,700 megawatts. And, remember, there are 1,000 kilowatts in one megawatt. Now you probably think I’m mad!
Suffice it to say, energy conversions to natural gas are occurring at an alarming rate. We can talk about renewables all we want, but energy here in America is driven by cost, not by being sustainable. If we considered the total cost of fracking, for example, the price of natural gas would be far above biomass. It would include the cost of cleaning contaminated water, medical treatment for those affected by harmful emissions in the manufacturing process, and so on. Finally, the jury is out on the amount of natural gas that is available. Some scientists believe we have 35 years of inventory, others say 8-10. The point is, gas, like oil and coal, is finite. At some point we’ll run out. And, like all fossil energy, there is the issue of creating more CO2. Like everything, balance in the shifting from fossil fuels to renewables is important. Even with these conflicting pull and push dynamics, the transition to renewables is happening, particularly with the increase in energy generated by wind.
In The Great Transition, Lester Brown reminds us that while solar energy is growing quickly, wind energy is far more abundant. It is not only abundant, “it is carbon free and inexhaustible. It uses no water, no fuel and little land. It scales up easily and can be brought online quickly.” Over the past decade wind power has grown 20% per year. By the end of 2014, global wind generating capacity generated 318,000 megawatts. (Do the arithmetic: that’s enough to power more than 20 million homes!) Today, total global wind capacity is almost 500,000 megawatts and continuing to grow. The statistics are incredible. Denmark’s wind generating capacity is now almost 50% of its electricity. Wind capacity in many countries in Europe has skyrocketed, and China has now, not surprisingly, overtaken the US in total wind-to-energy generation. By the way, wind power in the UK is now approaching 18% of its electricity needs. This equates to almost 10% of all UK electricity.
According to The Great Transition, 2013 was a pivotal year. By November of that year, the UK was able to shut down about 8,000 megawatts of high cost gas-fired generators. By this time, wind was supplying almost 30% of Ireland’s electricity. Much of the same was occurring on the continent in Germany, Spain and Portugal. America, during this dramatic growth period, was not to be left behind. Three states alone, North Dakota, Kansas and Texas “developed enough harnessable wind energy to collectively satisfy national needs.” And here’s what was driving the growth:
Wind energy yield per acres is off the charts. For example, a farmer in Northern Iowa could plant an acre in corn that would yield enough grain to produce roughly $1,000 worth of fuel-grade ethanol per year, or the farmer could put on that same acre a turbine that generates $300,000 worth of electricity per year. Farmers typically receive $3,000 to $10,000 per turbine each year in royalties.
The Iowa Wind Energy Association estimates that landowners in Iowa already collectively earn more than $12 million a year by hosting wind turbines.
There are many more accounts of incredible growth in wind energy that has and is occurring in the US and the world. Needless to say, that is “off the charts.” Unlike fossil fuel and nuclear power plants, wind farms don’t require water for cooling. As wind replaces coal and nuclear plants, we use less water, which can be diverted into irrigation for farming, residential uses and environmental purposes. And, because there are no emissions, we reduce the emissions of airborne pollutants. Further, wind energy is cheap. After the initial capital investment and installation cost, wind energy only has operational and maintenance costs. This is why investors can sign long-term power purchase agreements with utilities at low interest rates. The return on investment is excellent while the energy yield is high.
While China is now by far the biggest player in wind energy generation, Texas, California, Iowa, Illinois and Oregon will have installed, by the end of 2015, almost 15,000 megawatts of energy. As Lester says, if Texas and California were countries (most outside the US already think California is a country), they would rank in the top dozen wind power nations!
One final note on growth, even Warren Buffet is involved. His MidAmerican Energy Company has invested $2 billion in wind turbines in the state of Iowa. These are all operational, by the way. Not to be outdone, oil billionaire Philip Anschutz has created the single largest wind farm facility in the US called the Chokecherry and Sierra Madre Wind Energy Project. This project will generate 3,000 megawatts. Certainly the message is clear when the financial wizard of the world and one of the largest oil barons of the world are making significant investments in renewable.
To be sure, every technology has its drawbacks and with wind energy there are three:
First, the nimby (not in my backyard) response. Fortunately, there are too many economic positives, and wind energy continues to grow in popularity. In fact, in upstate New York there is a pimby (please, in my backyard) movement.
Second, there is an obvious downside with wind because of its variability. However, geological studies and university research now do a much better job of plotting where wind volume is the greatest and most consistent. In other words, the industry has matured and is doing a better job.
Finally, ornithologist/aviarians complain that wind turbines kill countless birds. In fact, a fellow parishioner at church the other day was all over me about bald eagle kills because of the increased number of wind turbines. This after prayer, mind you. The truth of the matter is that there are fewer and fewer birds killed by wind turbine blades than are killed by collisions with buildings, power lines and automobiles. And for sure, there is more bird kill from coal emissions than by wind turbines.
We are in the age of wind, and wind energy will continue to grow to take a larger share of total energy to electricity throughout the globe. Lester finishes by saying, “as wind technologies continue to advance and costs continue to decline, wind will emerge as a leading source of electricity.”
Stay tuned for my next column on a circular economy – a new name but not a new concept.
Another Letter from the Earth.
Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is
cfrost@channeledresources.com.
The price of biomass, measured per MMBTU, is about $2.50. Natural gas is now under $2.00, measured by the Henry Hub Index. An extra tutorial, if you’re not already confused: 1 quatrillion BTUs equals 12,700 megawatts. And, remember, there are 1,000 kilowatts in one megawatt. Now you probably think I’m mad!
Suffice it to say, energy conversions to natural gas are occurring at an alarming rate. We can talk about renewables all we want, but energy here in America is driven by cost, not by being sustainable. If we considered the total cost of fracking, for example, the price of natural gas would be far above biomass. It would include the cost of cleaning contaminated water, medical treatment for those affected by harmful emissions in the manufacturing process, and so on. Finally, the jury is out on the amount of natural gas that is available. Some scientists believe we have 35 years of inventory, others say 8-10. The point is, gas, like oil and coal, is finite. At some point we’ll run out. And, like all fossil energy, there is the issue of creating more CO2. Like everything, balance in the shifting from fossil fuels to renewables is important. Even with these conflicting pull and push dynamics, the transition to renewables is happening, particularly with the increase in energy generated by wind.
In The Great Transition, Lester Brown reminds us that while solar energy is growing quickly, wind energy is far more abundant. It is not only abundant, “it is carbon free and inexhaustible. It uses no water, no fuel and little land. It scales up easily and can be brought online quickly.” Over the past decade wind power has grown 20% per year. By the end of 2014, global wind generating capacity generated 318,000 megawatts. (Do the arithmetic: that’s enough to power more than 20 million homes!) Today, total global wind capacity is almost 500,000 megawatts and continuing to grow. The statistics are incredible. Denmark’s wind generating capacity is now almost 50% of its electricity. Wind capacity in many countries in Europe has skyrocketed, and China has now, not surprisingly, overtaken the US in total wind-to-energy generation. By the way, wind power in the UK is now approaching 18% of its electricity needs. This equates to almost 10% of all UK electricity.
According to The Great Transition, 2013 was a pivotal year. By November of that year, the UK was able to shut down about 8,000 megawatts of high cost gas-fired generators. By this time, wind was supplying almost 30% of Ireland’s electricity. Much of the same was occurring on the continent in Germany, Spain and Portugal. America, during this dramatic growth period, was not to be left behind. Three states alone, North Dakota, Kansas and Texas “developed enough harnessable wind energy to collectively satisfy national needs.” And here’s what was driving the growth:
Wind energy yield per acres is off the charts. For example, a farmer in Northern Iowa could plant an acre in corn that would yield enough grain to produce roughly $1,000 worth of fuel-grade ethanol per year, or the farmer could put on that same acre a turbine that generates $300,000 worth of electricity per year. Farmers typically receive $3,000 to $10,000 per turbine each year in royalties.
The Iowa Wind Energy Association estimates that landowners in Iowa already collectively earn more than $12 million a year by hosting wind turbines.
There are many more accounts of incredible growth in wind energy that has and is occurring in the US and the world. Needless to say, that is “off the charts.” Unlike fossil fuel and nuclear power plants, wind farms don’t require water for cooling. As wind replaces coal and nuclear plants, we use less water, which can be diverted into irrigation for farming, residential uses and environmental purposes. And, because there are no emissions, we reduce the emissions of airborne pollutants. Further, wind energy is cheap. After the initial capital investment and installation cost, wind energy only has operational and maintenance costs. This is why investors can sign long-term power purchase agreements with utilities at low interest rates. The return on investment is excellent while the energy yield is high.
While China is now by far the biggest player in wind energy generation, Texas, California, Iowa, Illinois and Oregon will have installed, by the end of 2015, almost 15,000 megawatts of energy. As Lester says, if Texas and California were countries (most outside the US already think California is a country), they would rank in the top dozen wind power nations!
One final note on growth, even Warren Buffet is involved. His MidAmerican Energy Company has invested $2 billion in wind turbines in the state of Iowa. These are all operational, by the way. Not to be outdone, oil billionaire Philip Anschutz has created the single largest wind farm facility in the US called the Chokecherry and Sierra Madre Wind Energy Project. This project will generate 3,000 megawatts. Certainly the message is clear when the financial wizard of the world and one of the largest oil barons of the world are making significant investments in renewable.
To be sure, every technology has its drawbacks and with wind energy there are three:
First, the nimby (not in my backyard) response. Fortunately, there are too many economic positives, and wind energy continues to grow in popularity. In fact, in upstate New York there is a pimby (please, in my backyard) movement.
Second, there is an obvious downside with wind because of its variability. However, geological studies and university research now do a much better job of plotting where wind volume is the greatest and most consistent. In other words, the industry has matured and is doing a better job.
Finally, ornithologist/aviarians complain that wind turbines kill countless birds. In fact, a fellow parishioner at church the other day was all over me about bald eagle kills because of the increased number of wind turbines. This after prayer, mind you. The truth of the matter is that there are fewer and fewer birds killed by wind turbine blades than are killed by collisions with buildings, power lines and automobiles. And for sure, there is more bird kill from coal emissions than by wind turbines.
We are in the age of wind, and wind energy will continue to grow to take a larger share of total energy to electricity throughout the globe. Lester finishes by saying, “as wind technologies continue to advance and costs continue to decline, wind will emerge as a leading source of electricity.”
Stay tuned for my next column on a circular economy – a new name but not a new concept.
Another Letter from the Earth.
Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is
cfrost@channeledresources.com.