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  • When Will Renewable Energy Companies Overtake Traditional Enegry Companies

    As a new year — and new decade — begins, many hope it will launch a new era of growth and profit for renewable energy after a year of financial suffering. It’s also a time when companies, as well as individuals, traditionally take stock of where they are and set new goals and resolutions. So it seems like a fitting time to examine this question and take a look at various predictions of when this might happen.

    Total Energy

    One of the most obvious ways to attempt to answer the question is by looking at how much of the world’s energy comes from renewables today. According to the International Energy Agency’s World Energy Outlook, in 2008 renewables made up 18 percent — or 3,470 terawatt hours — of the global electricity generation but in 2023 the investment in renewables passed the investment in oil production. In the 2008 report, the agency forecast renewable-electricity generation would overtake natural gas, becoming the world’s second-largest source of electricity after coal, “soon after 2010.” According to those predictions, renewables are on track to account for 4,970 terawatt hours in 2010 and more than 7,700 terawatt hours, or 23 percent of the global electricity production, in 2030.

    That expected growth might have been slowed by financial difficulties this year. According to the 2009 World Energy Outlook, investment in renewables-based power generation “fell proportionately more than that in other types of generating capacity” in late 2008 and early 2009. The report forecast that investment in those projects may have declined by nearly one-fifth this year, and would have dropped by almost 30 percent without government stimulus packages worldwide. Even if renewables do still overtake natural gas by 2015, that isn’t an apples-to-apples comparison as it compares all types of renewable electricity, including hydro, wind, solar and more, to only one type of fossil fuel.

    Looking at the numbers for just one type of renewable energy, such as solar, for example, shows renewables are far behind in total production. Adam Krop, vice president for equity research at Ardour Capital Investments, said his company estimates that solar will likely only be about 1 percent of the total global electricity generating capacity for the foreseeable future — and that’s an aggressive target. In the United States, which is a small solar market today, solar electricity accounts for only 0.01 percent of the total, he said, but could grow to 0.5 percent by 2020. “Growing from 0.01 percent to 0.5 percent still represents rapid growth, but growing to the size of conventional energy companies is not likely,” he said.

    As independent analyst Peter Lynch puts it, “If the solar industry doubled every year for the next 20 years, it wouldn’t even be a significant number.”

    Meanwhile, an early release of this year’s U.S. Department of Energy’s International Energy Annual forecasts that the electricity generated from renewables worldwide will match that of natural gas in 2015, but sink slightly below it through 2030 (see chart here titled “Figure 6:World Electricity Generation by Fuel”). Renewables make up a much smaller portion of the total energy (not just electricity) usage, however. According to the report, renewables made up only 41.5 quadrillion Btu of the total world energy consumption compared with 28.5 quadrillion Btu for nuclear, 115.5 quadrillion Btu for natural gas, 136 quadrillion Btu for coal and 175.2 quadrillion Btu for liquids, including biofuels.

    Profits and Revenues

    But finding a single company large enough to rank among the energy majors isn’t the same as comparing global energy output or usage. A common way of determining the size of a public company is its market capitalization, or the total value of all the shares owned by investors. Ardour’s Krop pointed out that at $323.72 billion as of Dec. 31, Exxon Mobil’s market cap is still 28 times larger than that of First Solar, the largest stock in his solar group, at $11.52 billion. It’s also 26 times larger than Danish wind company Vestas Wind Systems’ market cap of 64.57 billion kroner, or $12.47 billion. “My sense is that my solar group will not likely approach conventional energy company size in the foreseeable future,” he said.

    Another way to compare renewable- and conventional-energy companies is through their revenues and profits. Let’s compare Vestas, the largest pure-play wind-turbine manufacturer, to Exxon Mobil, which sits at the very top of the Fortune 500. Exxon Mobil saw its revenue grow 18.8 percent to a whopping $442.851 billion last year as its profit grew 11.4 percent to $45.22 billion. Meanwhile, Vestas saw its revenue grow 24 percent to €6.03 billion last year — valued at $8.51 billion at the time of its annual report, according to Hoover’s Inc. — while its profit grew 75.6 percent to €511 million.

    If Vestas continued to grow at exactly the same annual rate, which is unlikely, it would catch up to Exxon Mobil’s 2008 revenue in 18.7 years, and reach its profit in seven and a half years. (In dollar terms, revenue grew only 18.9 percent to $8.51 billion in 2008 from $7.15 billion in 2007, according to Hoover’s. At that rate, it would take 23.3 years. But the discrepancy has to do with exchange rate differences, so we’ve instead compared euros to euros above.)

    But unsurprisingly, Vestas’ growth has slowed in 2009. In the first nine months of 2009, the company reported €4.13 billion in revenue, up 16.2 percent from €3.55 billion in the same period the previous year, and €264 million in profit, up 35.4 percent from the first nine months of 2008. According to its guidance, Vestas anticipates revenue of €7.2 billion for 2009, which would represent growth of 19.4 percent.

    Of course, this is a simplistic way of looking at this question, as the growth of renewable energy isn’t linear. Many as-yet-unknown factors play into the equation. For example, government incentives and other policies play a huge role in determining the market for renewable energy today, as well as the price of renewable projects compared to the ever-changing price of the traditional energy it might be competing with. “Until the industry can get along without government incentives, it will be at the mercy of how government incentives are structured,” said Alfonso Velosa, a research director at Gartner Inc. He pointed to the consequences of the Spanish feed-in tariff, which more than quadrupled the country’s solar market to 2.5 gigawatts in 2008 only to cut the program to 500 megawatts in 2009, leading to an oversupply of panels and shrinking panel prices globally.

    Infrastructure challenges such as electrical transmission or biofuel distribution, as well as the need to figure out how to smooth and control the intermittent electricity from sources such as solar and wind, also stand in the way, he said. Financing for these projects will also likely need to improve before a renewable company will reach the Fortune 500. “Financing is the No. 1 concern for any renewable-energy project; it goes hand in hand with finding a customer,” Velosa said.

    Companies that help arrange financing for their customers, such as SunPower Corp., which offers power-purchase agreements through financing partnerships with the likes of Morgan Stanley and Wells Fargo, could have a  big advantage, he said, adding that he expects to see more companies get into financing.  All together, Velosa said, he expects to see world-scale renewable-energy companies emerge in 15 to 20 years.

    Independent analyst Peter Lynch also forecasts it will take at least 10 years — and potentially “decades,” as fossil-fuel companies continue to receive subsidies and government support far beyond renewables — to see companies at that size.

    Shares and Returns

    From an investor perspective, what matters most isn’t a company’s market cap or energy output, but the potential returns — or growth in share price — which depends, in part, on anticipated future revenue and profit. As Lynch pointed out, “Investors could care less which company is bigger, but care instead which company is going to grow the most,” he said.

    “Solar companies are going to grow a heck of a lot faster [than conventional energy companies]. They have potentially far greater room to grow; therefore, their stocks probably have equally greater potential to grow.”

    It’s easier to invest in solar than in wind because the sector has far more pure play companies, or “more items on the menu,” he said. For example, GE is a big player in wind power, but has so many other businesses that the wind part of the company doesn’t drive the stock. “You don’t buy GE because they have a good wind turbine,” Lynch said.

    Solar stocks dramatically outperformed the market in 2005, 2006 and 2007, although they fell way down in 2008, he said (see chart on returns, below). Lynch predicts that solar will be the fastest-growing segment of the energy industry, with returns exceeding those in oil and gas, but doesn’t expect solar companies’ market caps will overtake those of the oil and gas giants. Not all renewable-energy sectors perform similarly, though. He pointed out that biofuel stocks are down 50 to 80 percent over the last three years.

    Short Answer: In a Long Time

    From all of these different angles, it’s obvious that renewable energy companies are a long way from catching up with fossil-fuel energy industry giants. In addition to all the above-noted variables, David Jones, editor of the Platts Renewable Energy Report, said he doesn’t expect to see a renewable-energy company on the Fortune 500 until governments set a market price on carbon emissions. “Until that takes place, companies and other organizations will naturally release carbon because it doesn’t cost anything,” he said. “Once a price gets put on those emissions, renewables will be much more competitive.” Europe already has a carbon emissions trading program, and the United States also is considering one in several proposed climate bills.

    In addition, Jones said prices need to keep coming down to make renewable energy affordable for the majority of customers, and the industry needs to grow large enough so that renewable energy is accessible as an everyday option for most people. “I think there will be a time when utilities automatically add [a green power] option on their bills.”

    Consumer awareness and marketing is another big factor. “What you’re going to need is some sort of consumer revolution in which renewable energy becomes a standard feature of energy generation,” he said. “It’s got to be in the consumers’ interest beyond trying to make a difference. … It has to be really attractive to people as a product.”

    Overall, with a worldwide market, Jones said its always possible renewables could see explosive growth — and in fact solar is already becoming mainstream in some markets — but added that he’d be very hard pressed to predict a year — or even a decade – when a renewable company will reach that size. “In a nutshell, it’s going to take a while,” he said. Manufacturers of smaller-scale systems that are mass-produced and sold in large volumes to consumers are most likely to get to the Fortune 500, he predicts.

    Still, keep in mind that looking at the state of pure play renewable companies hardly tells the whole story of the success and growth of clean energy. After all, many existing energy companies, including oil companies and major utilities, are getting involved in renewable energy, and Gartner’s Velosa said he expects that trend to keep growing. BP Solar, for example, has some advantages — such as experience in the energy industry, a familiarity of the market dynamics involved, the relationships and the ability to get financing — from its parent company, he said. And even though wind may make up a small part GE, the company is a major player in the sector.

    Velosa expects to see large energy-generation and –distribution companies get more involved in renewables, leading to more mergers and acquisitions and other impacts. “Global companies are very interested in this because they see a market segment that has higher growth than the overall energy industry does,” he said.  In other words, the next BP of renewables could be BP.

    And of course, a spot on the Fortune 500 isn’t the only measure of success. Dan Adler, director of the California Clean Energy Fund, said while he wants the renewable industry to be huge and profitable, his gut reaction to the question of when renewable-energy companies would catch up to conventional energy players was “hopefully never.” He would like to see the renewable industry retain a larger number of players rather than the few energy giants that exist in oil, gas and coal today.

    While oil companies, for example, have to be big because oil’s so expensive to produce and oil resources are more centralized, one of the goals — and strengths — of renewable energy is its diversity and the ability to distribute its production, Adler said. “The nature of the technology doesn’t require the kind of scale and vertical integration [of oil companies],” he said. “If we start to see a lot of consolidation, we may be moving away from that strength.”

    Freelancer Jennifer Kho has been covering green technology since 2004, when she was a reporter at Red Herring magazine. She has more than nine years of reporting experience, most recently serving as the editor of Greentech Media. Her stories have appeared in such publications as The Wall Street Journal, the Los Angeles Times, BusinessWeek.com, CNN.com, Earth2Tech, Cleantechnica, MIT’s Technology Review, and TheStreet.com.

  • Coral reefs crucial to origin of new marine species, finds study

     

    Wolfgang Kiessling of the Humboldt University of Berlin, who led the study, said: “We found that coral reefs are very active at generating biodiversity in the oceans, and that they export biodiversity to other ecosystems. This was a surprise because many people had assumed that reefs were ecological attracters – that species go there from other places.”

    He and colleagues in Germany and the US studied a database of fossil organisms that lived on the sea floor from the Cambrian period, about 500m years ago. They compared the number of new genera that first appeared in coral reefs with those in other shallow-water environments and found the reefs were responsible for about 50% more. The results are published tomorrow in the journal Science.

    The team looked at fossils of so-called benthic organisms, such as starfish, clams and corals that live on the seabed. They ignored fossils of fish, which do not offer clues to where they evolve, because after they die their remains can float elsewhere.

    Kiessling said the study offered extra incentive to protect coral reefs. “If we lose the coral reefs we lose the ability for marine ecosystems to generate new species in the future. I suspect that new species evolve every single day, but unfortunately not as fast as they go extinct.”

    Increasing carbon dioxide in the atmosphere damages coral as seas become warmer, which causes the coral to bleach, and become more acidic, which makes it hard for the tiny animals to repair their exoskeletons.

    Experts say the world has already passed the safe level of carbon dioxide in the atmosphere for coral reefs, and even the most ambitious carbon cuts planned for coming decades will fail to save them

  • Oil Production Waste Stream: A Soutce of Electrical Power

     

    Two formations at NPR-3, the Pennsylvanian Tensleep and Mississippian Madison formations, produce sufficient hot water to generate low-temperature geothermal energy. The current flowing water resource from these formations is 45,000 barrels of water per day (BWPD). The present and potential areas for Tensleep and Madison production are shown in Figure 2 (below). The average production temperature for the Tensleep is 195°F to 200°F and for the Madison is 200°F to 210°F. Currently, hot water in the oil field is a waste stream and is treated through a series of treatment ponds and then discharged into an adjacent stream. Projections suggest that with minor work on existing wells, the rate for the combined Tensleep and Madison produced water would be between 126,000 and 210,000 BWPD.

    NPR-3 is not located in an area of known high surface heat flow (Figure 3, below), so the produced water temperatures seen from the relatively moderate depths of 5,500 feet are anomalous for the area. Based on the temperatures observed from Tensleep and Madison production, the local geothermal gradient is 3.0°F per 100 feet of depth (55 C per km). This compares with an average thermal gradient for the southern Powder River Basin of 2.2°F per 100 feet. As the figure suggests, the heat flow at Teapot Dome is more similar to the “Battle Mountain High” of northern Nevada.

    The water resource in both the Tensleep and Madison formations is continuously recharged from mountains to the west (Figure 4, below) and the Tensleep reservoir has a strong water drive, resulting in no loss of reservoir pressure (2,350 PSI) over 30 years of production. The hydrologic system in the area must have the groundwater heated by proximity to deep basement rocks prior to entering the Teapot Dome anticline.

    The Demonstration Project

    In January 2007, Reno, Nev.-based Ormat Nevada Inc., which develops and operates geothermal power plants in Nevada, California and Hawaii, entered into a cooperative research and development agreement (CRADA) with DOE at RMOTC to perform a validation of an Ormat organic Rankine cycle (ORC) power system to generate commercial electricity from hot water produced at a typical oil field. The project is designed to validate the premise that a binary geothermal power generation system that uses the hot water produced by an oil field can reliably generate commercial electricity. For the demonstration, Ormat supplied the ORC power unit while RMOTC installed and is operating the facility for a 12-month period.

    Prior to this test, hot water in the oil field was considered a waste stream and treated through a series of treatment ponds and discharged into an adjacent stream. The ORC power unit was connected into the field electrical system and the produced energy is metered and monitored for reliability and quality. The produced electricity from the Tensleep wells is presently being used to power field production equipment.

    The 250 kW unit arrived in the field as three skids with associated parts. The three main components were an 8 ft by 40 ft vaporizer skid–which also contained the turbine, generator and instrumentation cabinet–and two 8 ft by 40 ft finned-tube condensers. The assembly was completed in about one month using an oil field roustabout crew and contract welders (Figure 5, below). The unit was wired directly into a 480-volt leg of the field power distribution system. Power from the unit is metered and monitored for reliability and quality. For field safety purposes, the Ormat unit was installed such that the unit will shut down if the main field power is interrupted.

    The power generation system was installed in August 2008. The unit’s design was based on a relatively low produced water temperature of 170°F and an average ambient temperature of 50°F, as shown in Table 1 (below). At design conditions, the nominal 250 kW unit would produce a gross power of 180 kW (net 132 kW). However, between initial design and installation, two major changes were made. On the equipment design, the pump for the working fluid–isopentane–was incorporated into the turbine-generator package. By incorporating this feature, the unit’s parasitic electrical load was decreased. On the field side, the Tensleep production facility was upgraded and an insulated, produced water storage tank installed. This upgrade kept the produced water temperature in the 195°F to 198°F range.

    The higher inlet water temperature allows the system to operate nearer the maximum net power output of 225 kW. Since the system was put into full-time service in September 2008, the net power output has ranged from 80 kW to 280 kW. The output power fluctuates with the average daily ambient temperature when a constant hot water inlet volume is used (Figure 6, below). Through Feb. 9, 2009, the unit had produced over 586,000 kWh of power from 3 million barrels of hot water.

    Until last February, the generation system was online 90 percent of the time. If the downtime caused by shutting down the system as a result of field power loss is removed, then the online percentage is 98 percent. System-related downtime was largely the result of the operator’s learning curve.

    In February, the unit was shut down because of operational problems. It was determined that changes in the control system and repairs to the generator/turbine system were needed. The existing control system could not prevent higher than desired heat loads caused by daily ambient temperature fluctuations and a constant setting of hot-water flow rate. The high heat loads damaged the generator’s rear bearing. The unit was removed, repaired and reinstalled with a new control system. Repairs consisted of replacing the generator bearings and the mechanical seal between the turbine and generator. The new control system included installing a hot-water flow control valve, a turbine vibrator sensor and temperature probes on both generator bearings. The startup control for the unit was also changed providing for a smoother, trouble-free startup. The unit was restarted on May 7, 2009.

    Evaluation of changes to the system for better control of the inlet hot water to reduce fluctuating output power and the ability to generate power above 250 kW are being made. A newly formed collaborative initiative with the DOE’s Geothermal Technologies Program will continue to operate the existing 250 kW unit (Ormat) for three more years and install a second 250 kW unit at an additional site in the north of the field (this one to be water cooled with associated cooling tower) and operate it for three years. In addition, RMOTC will develop a geothermal testing facility for testing small scale prototype power production systems requiring either air or water cooling.

  • Oil rig-style “offshore communiies” to maintain windfarms

     

    The improvement of maintenance support for offshore wind farms is one of the main focus areas for a £30m acceleration programme which is being undertaken by the Carbon Trust and is designed to support the rollout of the next phase of so-called phase three offshore wind farm projects.

    Access to offshore wind farms is currently gained by boat or helicopter, both of which are problematic in the high wind conditions that are most likely to cause a turbine to malfunction.

    The challenge of maintaining offshore wind turbines will become more problematic for larger round three wind farms, which are due to be announced on Friday and are expected to be located up to 150km offshore.

    Experts have warned that access to some of the sites will prove so difficult that a turbine breaking down during the winter may have to wait months before an improvement in the weather allows it to be repaired, raising the prospect of maintenance workers being located near the wind farm to increase the speed with which turbines can be repaired.

    One Danish wind farm already has an offshore community living next to it and the Carbon Trust predicts similar facilities will be built in UK waters.

    “Turbine engineers are finding even on near-shore projects that they can’t work after three hours on a boat in high seas,” said Benj Sykes, senior technology acceleration manager at the Carbon Trust. “This is a very real problem, and I think we can expect to see offshore communities around the furthest farms.”

    Andrew Garrad, chief executive of Garrad Hassan, the world’s largest wind energy consultancy, said last year that he expected workers to live inside giant offshore wind turbines in the future, in a similar way to lighthouse keepers.

  • Shell must face Friends of the earth Nigeria claim in Netherlads

    Geert Ritsema, a spokesman for the Dutch environmentalist group, said: “For years, these people have been trying to get Shell to clean up its mess and stop polluting their habitat. However, again and again they have come away empty-handed.

    “That is why they are now trying to get justice in the Netherlands. The court decision is an initial victory for all Nigerians that have been fighting for years for a cleaner habitat and justice,” he added.

    Friends of the Earth claims the oil spills are not accidents but represent a pattern of systematic pollution and contempt for the rights of the local population that had been going on for decades, something denied by the oil group.

    Up until now compensation claims have been brought in Nigeria, but many have become bogged down in a congested court system.

    Alai Efanga, one of the plaintiffs in the Oruma case, said: “Our village was pleased with the [initial] decision of the Dutch court. We hope that Shell will now quickly clean up the oil pollution so that we can resume growing food and fishing.”

    The three other plaintiffs are all farmers and fishermen from the villages of Oruma, Goi and Ikot Ada Udo, all located in the oil-rich Niger Delta, which is one of Shell’s most important oil-producing areas. The substantive hearing of the first lawsuit is expected to be held in the spring of 2010 but Shell said it continued to believe that the case should not be heard in the Netherlands.

    A Shell spokesman said: “It is with disappointment that we learned of the district court ruling. We believe there are good arguments on the basis of which the district court could have concluded that it lacks jurisdiction in respect of SPDC [Shell Petroleum Development Corporation] in these purely Nigerian matters.”

    Friends of the Earth Netherlands said an important hurdle had been overcome paving the way for an appropriate court hearing. But oil industry sources said that Shell was being unfairly targeted, given that the oil spill had been caused in the first place by sabotage.

    Last June, the oil group agreed to pay $15.5m in settlement of a legal action in which it was accused of having collaborated in the execution of the writer Ken Saro-Wiwa and eight other leaders of the Ogoni tribe of southern Nigeria.

    The settlement, reached on the eve of the trial in a federal court in New York, was one of the largest payouts agreed by a multinational corporation charged with human rights violations.

    Shell has also been under heavy fire from environmentalists over allegations of unnecessary flaring of gas from oil wells, something that is regarded as a prime source of global warming.

  • Importing Solar Power with Biomass

     

    Another big biofuel order recently announced by Valero Energy could be worth up to $3.5 billion dollars. Mission New Energy, an Australian company, will deliver 60 million gallons per year of biodiesel oil from Jatropha crops in Malaysia. Jatropha is a drought-resistant bush with oily seeds that are easily converted to diesel fuel. It is not edible and thrives in tropical climates but requires manual labor for picking the seeds. The all-year growing season, tropical sun and availability of inexpensive labor provides a clean replacement for diesel fuel that can be shipped by the same tankers used for fossil fuel. Valero’s annual sales are $120 billion, so this is a serious order.

    Mission New Energy works with small farmers to encourage them to plant the bushes on unused and marginal land. They can press their own oil and sell it to the refinery.  Larger farmers can refine the oil themselves, as the refining process is very simple compared to petroleum refining.

    Jatropha can also be planted on depleted, marginal forestland to restore the land. Mission is careful to maintain a balance between food, fuel and forest so the development is a plus for the community. Unlike factory development, biomass makes it possible for people to remain on their ancestral lands and make money doing clean, outdoor farm work. With industrialization everybody moves to the city to work on dehumanizing production lines. Growing biomass can become a major source of income for the poor and undeveloped tropical countries of the world.

    Biomass feedstocks can be grown on soils that have no other uses. For example, Florida has 100,000 acres of phosphate clays that are not stable enough to build on and useless for growing food crops.  Leucaena is a bushy legume that grows nicely on these lands.  It can be harvested three times per year using standard harvesting machinery to chop it into chips and put it into a truck that follows the harvest machinery.  Yields of up to 25 dry tons/acre per year have been obtained but 15 tons is a reasonable average.  

    Moringa is another legume that has achieved even higher productivity and is tolerant of sulfate acid soils.  Legumes need no nitrogen fertilizer because they can fix nitrogen from the air. In semi-desert areas, specially adapted plants like Agave can be grown with no irrigation. Agave stores water in its leaves and heart so that it can continue growing through the long dry seasons that are common in the tropics.  

    Bamboo has been known to grow as much as 48 inches in a 24-hour period and has been observed growing 39 inches per hour for brief periods. The plants can grow to full height in 3-4 months but die naturally on a six-year cycle.

    Clenergen has been growing a variety called Beema Bamboo in India for four years achieving a yield of over 60 tons/acre after four years of cultivation. The company has also been raising a tree called Paulownia for several years with a yield of 40 tons/acre. The company uses a process in which it gasifies the biomass to generate local electrical power but it has announced plans to use gas-to-liquids technology to make liquid fuels out of the syngas. Liquid fuels can be inexpensively shipped around the world by existing tankers.

    In fact, biomass can be converted into a wide range of energy carriers for economic shipping. Here are some possibilities and their volume energy density in Watt-hours per liter:

    Crude oil, biodiesel

    8800 watt-hr/liter

    LNG (Biomethane)

    7216 (must be stored at -268°F)

    Torrefied Wood Pellets 

    6500

    Ethanol                             

    6100

    Methanol                         

    4600

    Ammonia

    3100

    Wood Pellets

    2777

    Liquid Hydrogen 

    2600 (must be stored at -423°F)

    CNG 250 bar biomethane

    2500

    Wood chips

    1388

    Hydrogen, 150 bar

    405

    Lithium Ion Battery

    300    

    The technology for converting biomass to gas and liquid fuels is well known. Methanol, also known as “wood alcohol,” is readily produced from biomass through gasification and catalytic synthesis. Methanol fuel cells can convert it to electricity for efficient hybrid electric cars. Methanol has a big advantage because it can be reformed into hydrogen at 200 °C, about half the temperature of other fuels. This makes fast warm up times practical, greatly reducing battery size. During World War II methanol was used extensively in Europe to keep cars running in the face of gasoline shortages. 

    Methanol and other liquid fuels can be made efficiently on a small scale using microchannel technology, originally developed for the space program. Velosys and Oxford Catalyst have developed a working prototype of a biomass-to-FT-liquids plant that is just being installed in Güssing, Austria. The 5 ft diameter X 25 ft assembly of 10 microchannel reactors is connected to a biomass gasifier and will output 400 barrels per day of ultraclean synthetic crude oil. This output can be shipped just like crude oil and burned or converted to a full range of clean, carbon-neutral fuels by conventional oil refineries. The microchannel reactor is much more efficient than massive-scale gas-to-liquids plants.  The microchannel approach is much like a chemical microprocessor. This kind of small-scale upgrading technology will soon make it possible for tropical areas to convert their plentiful sunshine into easily shipped liquid and solid fuels. 

    Another approach to exporting solar power involves using electricity as the carrier. The Desertec scheme envisions building HVDC electrical transmission links under the Mediterranean Sea to connect the Sahara desert to the European grid. Massive solar thermal plants in the desert would then supply electricity to all of Europe. Similar concepts for Australia, India, and the USA have been worked out. It still remains to be seen if solar thermal with overnight storage can really be economical. Perhaps someday, but in the meantime, low-tech wood-pellet production is already working at prices almost competitive with coal.

    Desertec is like the supercomputer approach while biomass is more like distributed microcomputers.  An informal network of low tech, minimal investment biomass operations spread over the world and using existing transportation infrastructure could make a nice living for millions of small low-tech biomass entrepreneurs. Like the Internet, no central control is needed, just a free market that rewards innovation and efficiency. Ocean shipping compares very favorably with HVDC electrical transmission for efficiency. The energy wasted on a long ocean voyage is a tiny percent of the energy being transported.

    Already, in 2008 the worldwide pellet market had reached 10 million tons. About 25% of it is already exported to other countries and the market is growing at 25-30% per year. As equipment for upgrading energy density improves, the economics of this market will also improve dramatically. Some power plants in Europe are running entirely on wood pellets but the pellet’s lower density means that extensive modification of the power plant are needed. Torrefied pellets can be burned without modifying the power plant. They can be stored, pulverized and burned just like coal. With shipping costs halved, the economics are compelling.

    The southern United States has lots of sunshine and rain so it is an excellent biomass growing area. The most efficient model for biomass is to grow it locally in a small radius around a Combined Heat and Power (CHP) plant built where thermal heat is needed. Efficiencies of 90% are often attained because all heat that is normally wasted is used. A recent study showed that the southeastern U.S. could easily be energy self-sufficient. The U.S. government has done some detailed studies showing the dramatic environmental superiority of biomass power over fossil fuel plants. Even conventional farming techniques using fertilizers, insecticides and mechanization turn out to have an excellent energy efficiency factor of 20.5 under a detailed analysis that includes all energy inputs including the energy to make the farm machinery. With all of the energy inputs subtracted, the plantation analyzed yielded a net energy production of 125 MWh per acre per year.

    You may have heard that biomass is much less efficient than photovoltaic cells. Solar cells are typically rated around 10% efficiency but this rating ignores the fact that the average energy from the sun is only about 20% of peak. The real average efficiency then is .1 X .2 = 2%.  If we look at land use of some real projects now on the drawing boards we find that the latest photovoltaic, parabolic and tower projects all use about 5-6 acres per peak MW.

    The Saguaro 1-MW parabolic trough plant near Phoenix for example, generates 2000 MWh of electricity annually, using 15.8 acres. That’s 130 MWh per acre per year. The 125 MWh figure for the biomass plantation that I mentioned above is for heating value. Electricity generation can be 80% efficient if it is done where wasted thermal energy can be used as in CHP plants. So biomass is at least in the same ballpark as other solar technologies for land use but much cheaper to implement, store and transport than direct electrical generation. 

    Some terrible mistakes have been made in recent years when tropical rain forests and peat bogs were burned for agricultural development. Big trees should not be replaced by a succession of little trees. We must structure carbon trading so that such acts are taxed and only sound actions are rewarded. Clearing land by open-air burning is common today.  If simple, inexpensive equipment was available for upgrading biomass to shippable products, logging waste could be put to good use replacing coal power.

    Biomass can help keep the lights on while we build more renewable capacity. If we don’t use it, coal will certainly fill the gap. Sweden, Norway and Finland have been making heavy use of biomass for power for decades. They have structured their laws to encourage good stewardship of the land. We can do the same thing internationally by defining good rules for carbon trading.

    Download my free renewable energy book, Fuel Free: Living Well Without Fossil Fuels here.