The Renewable Sources Power Grid, Part II

While any attempt to begin a wholesale transition to renewable energy would involve wind primarily today because of its proven cost effectiveness and rather mature turbine technology, wind is certainly not the only option, and, in the long run, might not be the best. At least six other renewable sources could conceivably be pressed into service on a fairly broad scale: hydroelectric power, solar, biomass, geothermal, ocean energy, and nuclear fusion.


Hydroelectric power is the most mature of the renewable energy technologies and accounts for a sizable fraction of the world’s total electrical generation, on the order of 20% today. Large scale implementations date back to the 1890s, and the technology is very mature. Unfortunately, most of the prime water resources have already been tapped, and new large hydro installations are being resisted in many quarters due to the environmental havoc experienced by those near such plants in the past.

Low impact hydroelectric power generators represent a promising new renewable technology that would tap river resources that were formerly considered unsuitable. Low impact generators are designed to operate at very low flow velocities and do not require dams or sluices. Instead the generator is simply immersed in an existing stream. We consider this a technology to watch, but it is unlikely to contribute much to the world’s total energy budget for a long time.

Solar Energy

Electrical generation by means of solar energy takes two principal forms, photovoltaic devices and concentrating solar. A third known as magnetohydrodynamic has been demonstrated but not within commercial operations.

Even more than wind, solar energy is an intermittent resource, being available only in the day, and, in the case of some solar conversion technologies, only available during clear atmospheric conditions. For this reason pure solar installations must be provided with some means of storing electrical energy.

Photovoltaic devices: Photovoltaic devices or solar cells convert solar radiation directly into low voltage direct current. Most photovoltaic panels on the market today use specialized silicon semiconductors to perform the conversion but there are also organic, polymer, and gallium arsenide photo cells. Conversion efficiencies of typical commercial photo cells are very poor, slightly over 10% as a rule, and so large surface areas must be blanketed with cells to generate appreciable current. Pilot multi-megawatt photovoltaic electrical generation facilities have been constructed in various places around the world, but they have not proven even remotely competitive with fossil fuel generator plants, or with wind, for that matter.

Photovoltaic device prices have steadily declined over the course of three decades and solar energy use is now the first choice when considering off-grid installations, but the widespread use of these devices in public utilities appears to be a long way off if it ever occurs. Certain new technologies promise to raise the efficiencies of the cells to beyond the 50% point eventually, and prices will surely continue to fall—already, solar cells appear to be riding a near Moore’s Law cost curve—but the fact that solar cells are low voltage DC devices requiring extensive ancillary power management systems won’t change. We see the second category, concentrating solar, as being better positioned to acquire significant market share within the renewable space.

Concentrating Solar: Concentrating solar generators are a much older technology, but arguably a less mature technology than are photovoltaic devices. These devices are named such since they concentrate solar energy with large reflector assemblies and focus it upon heat engines such as Stirling Cycle engines or Brayton turbines (occasionally optical concentrators are also used with photo cells). Subtypes of concentrating solar are distinguished chiefly by the design of the reflectors, and include solar troughs, dishes, and power towers. The solar chimney constitutes another variant with no close relationship to the other technologies.

Concentrating solar generators have been extant in one form or another for about a century, but have seen almost no commercial deployment. The performance of the associated heat engines appears to have been the limiting factor to date. Most have used highly thermally conductive working fluids consisting of molten metals or helium or hydrogen gas, all of which present significant handling and maintenance problems. Very few companies have attempted to commercialize such technology, and while those active in this market today claim that solar generators can be made cost competitive with wind turbines, conclusive demonstrations are lacking. Ability to extract usable energy from a given amount of real estate is about equivalent to that of a wind farm for concentrating solar and much less for photovoltaic.

The real advantage that concentrating solar generators have over photovoltaic solar and wind generators is that they can maintain a very steady sine wave AC output, and, in the case of those using turbines, can throttle their power outputs just like fossil fuel plants. Those concentrating solar generators using molten metal heat engines have a further virtue, namely their ability to store useful heat for hours after sunset and to operate up to sixteen hours per day.

Solar power, as we have seen, can also be used for thermal electric hydrogen generation, and if a renewable grid were to be seriously attempted, we believe that the use of solar thermal electric generation, even though far from proven, might well be a much better gambit than relying upon electrolysers. Electrolysers, as noted earlier, are frightfully expensive at present and moreover do not scale to large sizes very readily. Solar thermal generators do scale well and may achieve greatly superior economics, though that remains to be demonstrated.

Biofuel: Biofuels of various sorts can be combusted in turbines or reciprocating engines for the purpose of electrical generation. Because of the high costs of biofuels relative to coal and natural gas, we see any rapid or extensive substitution as being unlikely. If biofuels are extensively used in the mid term, it will probably be in transportation applications, not in electrical generation, and even there massive use may be a ways off.

Geothermal: Geothermal energy refers to subterranean sources of heat and in some cases steam. Heat sources located near the surface of the ground are widely used for residential heating in rural areas in many parts of the world. Steam resources are much, much rarer, and occur in only a relatively few locales, but they have been successfully exploited in places like Iceland and Northern California for decades to power steam turbines that are essentially similar to those used in coal plants but designed for lower temperatures and pressures.

The dark horse in geothermal is dry hot rock technology where water is injected into heat wells extending thousands of feet below the surface of the earth. Some geologists believe that dry hot rock geothermal is a tremendous untapped resource that could help alleviate future energy problems, but such views are in the minority.

Ocean Power: Ocean power is an emerging family of technologies, most of which are either unproven or cost prohibitive today. Extracting the power of waves, currents, and tides to generate electricity is not a straightforward process, and this is particularly true of waves.

The lure of ocean power is that waves, tides, and currents represent a very concentrated source of power compared to wind or solar and that enormous plants are not required to achieve enormous outputs. The inhibitor as far as electrical utilities are concerned has been the lack of cost competitiveness for facilities constructed to date.

One particularly intriguing scheme involves situating large low speed underwater turbines in shallow water off the southern Atlantic coast of the U.S. where they would be exposed to a steady flow of water from the Gulf Stream. The U.S. Navy performed a study indicating that the entire energy needs of the U.S. could be met by a relatively small installation of this nature, but indicated that such a concentration of energy resources would be highly vulnerable to sabotage if located in open water.

We believe that successful pilot ocean power generating plants based on various technologies will be established within a few years, but that widespread commercial development is decades away simply because these tend to be major engineering projects.

Fusion: Nuclear fusion is arguably not a true renewable resource, but so extensive are the supplies of deuterium and tritium used as fuels in fusion reactions that such reactors, should they ever be perfected, could meet the energy needs of the world for millennia to come, and could largely eliminate greenhouse gas emission problems if they were to become the principal energy source.

Determining the ultimate feasibility of fusion is extremely difficult. Almost a score of distinct reactor designs have already been developed or proposed, but no one has succeeded in operating a reactor at a net energy gain in a controlled reaction, and unless that can be achieved, fusion is going nowhere. Major industrial nations have poured billions of dollars into fusion research over the course of the last five decades, but such research has revealed nothing but unanticipated obstacles in ever increasing numbers. Fusion may eventually play a role in our energy, perhaps a decisive role, but it will not figure in any way within the time span of this report.

The Renewable Grid and Transportation
Most of those espousing the concept of hydricity naturally assume that renewable energy sources-based hydrogen will figure much more prominently in transportation than in stationary and portable power. Necessarily this would entail a significant portion of renewable energy sources-based electricity being devoted to transportation applications, an eventuality that would introduce further gross inefficiencies that would demand a far larger electrical grid than we have today, probably several times as large, and as much as fifteen to twenty times as large if we factor in the possible requirement of huge numbers of hydrogen turbines in order to stabilize the grid.

On a well-to-wheel basis, roughly 85% of the energy in petroleum ends up in an automobile engine’s cylinders, and in an optimized power plant over 40% of that energy might actually be performing useful mechanical work. In the case of electrolytically generated hydrogen, on the other hand, approximately 50% of the energy input is wasted when all losses are taken into account. Thus with a fuel cell utilizing electrolytically produced hydrogen the overall well-to-wheel efficiency is no better than for an internal combustion engine running on petroleum fuel, while, at the same time, the electrical grid becomes the ultimate source of almost all of the energy utilized in transportation whereas today it provides but a small fraction of the energy required by the transportation sector.

According to Ulf Bossel and Baldur Eliasson, a pair of Swiss researchers who have published a number of analyses on the economics of hydrogen as an energy carrier, exclusive reliance upon electrolytic hydrogen for transportation could result in total demands for electrical energy of from three times to five times that which obtain in today’s fossil fuel transportation regime. Given the further inefficiencies that we have already found to be attendant in a wind-based renewable grid, we’re looking at an overall increase in electrical capacity that may be as much as twenty fold and would probably involve tens of trillions of dollars of investment at a minimum.

Financing the Hydrogen Economy

Another fact to keep in mind is that when the initial electrification of America took place in the late nineteenth and early twentieth centuries, investment capital, which was largely controlled by a small New York based “money trust” consisting of a few major investment banks, most notably the House of Morgan, flowed into the electrical utility industry in disproportionate volumes. The investment banking community had collectively decided that public utilities were where reliable returns on investment were to be had, and they supported electrical utilities to the detriment of investment in the newer consumer durable goods industries, a decision that may well have delayed the establishment of America’s mass consumer culture by several decades. Today, of course, there are many and diverse sources of capital apart from the leading investment banks, but the venture community, which has spearheaded investment in new technology for the past few decades, shows little inclination to invest in a replacement grid. Public utility level returns are simply not attractive compared the speculative windfalls which have accrued to successful investors in the so-called new economy of information technology.

The sheer cost of a hydrogen transition and the difficulty of raising investment for it are only some of the impediments with which its proponents must contend, however. A different but related problem has to do with the place that renewable energy utilities occupy in the market.

Because of the generally higher cost of renewable energy electrical generation, and the fact that such renewable energy sources cannot provide either baseline or premium power (with the exception of geothermal plants or hydroelectric which are economically fairly insignificant in the U.S.), renewable generation facilities occupy a rather anomalous position. They cannot in their present form function as full service electrical facilities and cannot directly serve large industrial customers, and currently the power that they do generate is simply dumped into the grid to augment the output of fossil fuel or nuclear generators. Renewable generators merely constitute reserve power, as it were, and thus, in and of themselves, renewable generation facilities are not at present highly attractive investments.

Furthermore, they do not enjoy the same economic advantages that fossil fuel plants enjoyed during the early stages of electrification in the late nineteenth and early twentieth century. Electrical generation plants were initially able to impose monopoly pricing on their first customers, who were almost exclusively commercial and industrial users, and were later able to negotiate favorable regulated public utility status where compliant utility commissions generally acceded to electrical industry demands for high guaranteed profit margins. In today’s chaotic, partially deregulated energy market place, which is filled with well capitalized incumbents who adequately meet the needs of both businesses and consumers, renewable electrical generation companies offer no obvious advantage other than their “green” cachet, and so neither the unregulated local monopoly model nor the traditional public utility model are open to these renewable insurgents. On a total cost basis, we do not believe that renewable generators will be truly competitive with either fossil fuel or nuclear generators for the next quarter of a century, and so where is competitive advantage? Renewable generators can enjoy a very real advantage in remote off-grid applications or in high end residential markets, but not, so far as we can determine, in mass markets, at least not yet.

We believe that private investors are not blind to these limitations. If a renewable energy sources-based hydrogen economy were that attractive, it would be building now. It is not, nor will it be absent heavy government involvement.

The Government’s Role – Past and Present

Is such government involvement possible or likely?

Contrary to the pronouncements of many free market purists, the government of the United States has always played a prominent role in fostering the build outs of basic infrastructure for both energy and transportation. Railroads were provided with free right of way and financed with federally insured bonds, while interstate highway construction was tax supported. The role of the New Deal in financing mass electrification is too well known to require comment.

At the same time, the profit motivated activities of private entrepreneurs were unquestionably the engine that drove infrastructure development in the past. The United States was not a command economy at any time in the past nor is there any indication that it is about to embark upon such a course today. And yet absent private sector support, a command economy would appear to be the only way to allocate sufficient resources to bring about a hydrogen economy.

Many advocates of a hydrogen economy such as Amory Lovins, the head of the Rocky Mountain Institute, suggest that tax incentives alone could stimulate the private sector to undertake a hydrogen transition, but we do not see tax avoidance as a stimulus as powerful as high profits. U.S. corporations are already reducing their tax liabilities significantly thanks to a succession of conservative administrations in Washington. They don’t need hydrogen to reduce their exposure further.

As a point of comparison, the U.S. government allocates approximately one half trillion dollars to military expenditures per year. Multiply that by at least forty and possibly by several hundred and one approaches the cost of a hydrogen energy transition. With this and successive Republican administrations dedicated to ever more profound tax cuts and ever larger military budgets, we see no possible source of public funding for energy projects on this scale. One might speculate that overseas markets for the sale of government bonds could make good the shortfall, but is an exponential growth in the Federal deficit possible? We leave that determination to others.

We state these facts, not to discredit the notion of a renewable energy sources based economy, but simply to enumerate the technical difficulties in achieving it and to suggest the economic implications posed by those difficulties. Anyone who is betting his or her hydrogen generation business on the imminent emergence of a full scale hydrogen economy is betting against some very, very long odds. We advise instead that a focus on well-defined existing or emerging niche markets is the best means of ensuring one’s survival in the mid term.

No Big Hydrogen?

We find the necessary preconditions for an energy revolution involving renewable energy sources based hydrogen to be lacking at present. The technologies for supporting such a transition are marginal and afflicted with problems that do not appear to admit to easy solutions. Yet more troubling are the lack of convincing strategies for financing such a revolution, and without the requisite funding a transition will surely not occur.

What then is one to make of the tremendous enthusiasm for the hydrogen economy, especially in Europe, the widespread government and private sector endorsement of the notion in many places around the globe, and the countless economic summits devoted to the topic? Can such extraordinary zeal and promotional efforts be absolutely without meaning?

In attempting to answer that question one must confront the fact that no close analogy can be found in the whole prior history of technology. The closest is nuclear energy, but nuclear, though it eventually grew into a very large industry, had a much narrower base of support. We can only say that renewable hydrogen is unique.

We believe that renewable hydrogen initiatives address very real global problems in regard to energy, excessive emissions of greenhouse gases and serious depletion of conventional fossil fuel resources, and this is the reason they are supported so passionately by their adherents. Renewable hydrogen is a very obvious though extremely problematic solution to those problems.

We see a real possibility of renewable hydrogen figuring in certain niche markets such as green communities operating their own microgrids, but we remain skeptical as to the feasibility of massive implementations in large nations. The problems we have outlined for an American renewable hydrogen infrastructure obtain in most other regions of the globe. And even with a whole series of unanticipated technological breakthroughs we see many of those problems persisting.