BlogsMarch 21, 2018
Here Comes the Sun (1), but The Answer is Blowin’ in the Wind (2)
How many roads must a man walk down before you call him a man? And how much cheaper than the price setting fossil fuel does a renewable power source have to before we fully embrace it? The answer my friend, is blowin’ in the wind. With concerns surrounding climate change, with supplies burgeoning from continually increased fracking, natural gas has emerged as the main power source in the United States, eclipsing coal. As a result of the shale gas boom, abundant cheap gas has flooded the power generation markets, rapidly reducing the national carbon footprint. Now, to the surprise of many, a newer player is in turn taking some of the shine away from natural gas: renewables.
Wind and solar can be delivered by train or truck and brought online relatively quickly, without the risk that the wind or sun will get more expensive over time, which cannot be guaranteed for natural gas or other fossil fuels. Helping wind and solar renewable power generation to become the low cost power source and favored by investors is its insulation from price volatility in the global and regional energy markets, favorable regulations, and owner and investor concerns over carbon reduction to address Climate Change. In fact, a recent report by Lazard calculated that utility-scale solar farms are now at parity with natural gas, and wind power is the low cost producer.
A much lower visibility “renewables” category is Waste-to-Energy, which has many aspects. The most recent Paris COP on Climate hardly mentioned biomass energy. Nonetheless, also growing rapidly globally are Anaerobic Digestion (AD) of food waste, yard waste, agricultural wastes, industrial waste, sewage, and other waste organics, to produce biogas for combustion; capture and combustion of Landfill Gas (LFG), older strategies of combustion of biomass in dedicated boilers or co-firing biomass in existing boilers, and gasification of biomass for combustion of syngas. Biogas and LFG can alternatively be cleaned for addition to the pipeline, or used as CNG vehicle fuel. Unlike wind and solar, biomass generation is dispatchable (can be made available when needed), and/or it can provide baseload capacity.
As we have argued for years, in this and many other cases, the factory-built, cookie-cutter modular model (wind, solar, AD) can beat the old idea of “economy of scale” (coal or even large gas turbine central generation). We like the analogy that if you stick-built a Toyota Corolla (Price $25,000) in your garage from aftermarket parts, it would cost as much as a Lamborghini ($200,000). Smaller, cookie-cutter distributed facilities based on more benign technologies are also easier to permit and finance.
Despite this good news for the renewable power industry, the US grid is and will remain an ensemble cast, as dispatchable capacity will still be needed when the sun goes down and on calm days.
1 The Beatles
2 Bob Dylan
Steve Slome, Managing Consultant
Ron Cascone, Principal