Reliability of Energy Sources

The reliability of an energy source is an important economic factor. Since large sums of electricity cannot be stored at a time, energy supply must meet energy demand in real time. This means that when the most electricity is being used, the most electricity must be simultaneously created, and vice-versa.

This creates an interesting and constantly changing problem facing energy companies. They not only need to predict electrical output throughout the year, but also throughout the day. After predicting the energy needed, they will need to actually produce it. If their prediction is wrong or they are unable to create the energy needed, ratepayers could experience a shortage or the energy company could waste a lot of money via wasted electricity.

Since this is the case, extensive research has gone into electricity usage over time. Looking at a figure provided by the U.S. Energy Information Administration, we can see that electricity usage on October 22, 2010 in New England peaked at 8 in the morning, called the morning ramp, and 6 to 7 PM, which is the peak demand time. This data follows a regular pattern of electrical use. High use when people get up in the morning, and high use right when they get home from work. These are times when the most electrical supply is needed.

hourly_big

This kind of data is also collected on a month to month basis. As seen in the figure below provided by the U.S. Energy Information Administration, electrical use goes in cycles with low use in the springs and falls and high use in the winters and summers. This is generally due to the use of heaters and air conditioners during these months.

CoalNatGasElecGenMatches

 

With this, the reliability of energy sources must be considered. Nuclear, natural gas, and coal are all time independent. You can always burn coal or natural gas, and you can always run nuclear reactors no matter the time of day or time of year. For renewables like wind and solar, this is not the case. The wind doesn’t always blow and the sun doesn’t always shine.

For solar, there are many parts in the country, including Colorado, in which the sun doesn’t shine during peak energy usage.  At 7 and 8 AM in Colorado in the winter time, the sun has hardly risen. By 5 PM, the sun has completely set in the winter thus completely missing the peak hour of usage. Furthermore, what if we experience large cloud cover or storms during times of high energy demands? Surely, there will be a shortage.

For wind, the story is similar. Luckily, the wind isn’t as variable upon seasons as the sun is, thus giving wind more chances of possible electrical generation time, but definitely not guaranteed time. There is no way to guarantee a satisfactory amount of wind will be blowing to ensure it will meet energy demands, thus making it unreliable.

Due to how unreliable renewable energy is, many countries, like Germany, are paying to keep coal generators in reserve in case the wind isn’t blowing or the sun isn’t shining. In the case of Germany, the government is paying billions of dollars to keep inactive coal generators in reserve. However, not only is it expensive to keep up the maintenance of these inactive coal generators, it is also expensive to flip these generators on and off (Porter).

A similar story occurred in South Australia. South Australia became heavily dependent on wind energy, though due to its unreliability, prices were unstable and surged frequently. The surges placed prices as high as $14,000 per megawatt-hour, frequently surged above $1,000 per megawatt-hour, and averaged at about $360 per megawatt-hour. The electrical prices seen in Victoria, Queensland, and New South Whales are around $50-$60 per megawatt-hour. Due to the surging prices, the South Australian government is begging and incentivizing gas-powered stations to begin operation again as reserve.

Cost of Energy Delivery

The cost of delivery is how effectively each energy can be transported to people, particularly high population areas. Since line loss, energy dissipating from electricity lines, occurs, it is important to put electricity generators close to the market it is intended to serve. The closer it is to the market, the less electricity is lost. Furthermore, putting up electric lines and the infrastructure associated with electric lines comes at a cost which is preferably avoided. This means the cost of delivery is highly dependent on where an electricity generator may be put.

Nuclear power plants are very flexible in where they can be placed. According to Lydia DePillis, an energy writer for Slate, the three factors considered in building a nuclear power plant is “state laws, geography, and the disposition of the local community.” Since the dispositions of the local community and state laws are variable and can be changed over a short period of time, they will not be considered in economic analysis, but will be examined further in the political implications section. When it comes to the geography factor, nuclear reactors need to be placed near large bodies of water, whether it is the ocean, a large river, or a large lake. The water source is used as a coolant for the reaction.

Since coal and natural gas are also thermoelectric power, meaning they create steam to spin electric turbines, they have similar requirements as nuclear energy. They require large amounts of water as a coolant, meaning they need to be placed near water sources. In Colorado, this limits us to the natural lakes, reservoirs, and rivers that can be seen in the provided figure. While reservoirs can be created specifically for nuclear, coal, or gas plants, this is an expensive and preferable option. However, there are water features spread out across Colorado, making it possible to construct these plants essentially anywhere.

colorado-river-map

 

For renewables like solar and wind, farms must be placed where they will be most effective. The wind doesn’t blow at the same rate everywhere and the sun doesn’t shine equally across the United States. Solar farms must be placed where they will get the most sun and wind farms must be placed where they will get the most wind. Looking at the map provided by the National Renewable Energy Laboratory, we can see where the sun shines most intensely in the United States and least intensely.   This map shows that the south western area of the United States has the most ideal sun exposure for solar energy, and the north eastern area of the United States is one of the least ideal areas for sun exposure. A majority of Colorado rests in 5.5-6.0  kWh/m2/day. While a lot of Colorado rests in a higher area of sun exposure, some of the most populated areas in Colorado, specifically Denver, Boulder, and Fort Collins, do no fall into, or barely fall into, the higher sun exposure areas, thus creating a higher cost of delivery for solar energy in Colorado.

national_photovoltaic_2009-01

Slide1

For wind, The National Renewable Energy Laboratory provides a map giving the average annual wind speed at 80 meters above ground level. This map shows that the central United States has the highest average wind speeds, making it more favorable to wind farms as compared to coastal areas. Most of Colorado ranges on the lower end of wind speeds from less than 4 meters per seconds to 5.5 meters per second, though the eastern side of the state ha pieces that can range 8.5 to 9 meters per second. These eastern areas would be the most ideal for wind farms in Colorado, but they are also far away from Colorado’s population centers like Denver, Boulder, and Colorado Springs thus creating a higher cost of delivery for wind energy.

USwind300dpe4-11

Slide1

Looking at these geographic implications, we can assess the relative cost differences of the energy sources for delivery. Natural gas, coal, and nuclear all are very versatile, as their only requirement is that they need to be near a water source. Wind and solar energy are less versatile and require higher levels of wind and sun exposure. However, sun and wind exposure do not always line up with areas of population, thus increasing its relative cost of delivery.

Cost of Development for Energy

Cost of development, also called overnight capital cost, is the cost of building the infrastructure and development for different energies. For nuclear energy, nuclear reactors must be built. For natural gas and coal, burning generators must be built. For renewable energy, wind and solar farms need to be built. These costs are not universal, though, and can depend on location and management. Under bad management or inopportune locations, costs can be higher than normal. Under perfect conditions, costs can be lower than normal. Furthermore, what is exactly the “normal” cost of development is difficult to determine precisely since there are so many factors that can go into this cost. To determine costs of development, recent projects for wind and nuclear will be examined as well as data from the U.S. Energy Information Administration for all sources.

In 2016, the first nuclear reactor in 20 years was built in the United States. The reactor, Watts Bar Unit 2, is overseen by the Tennessee Valley Authority and took 44 years to be constructed. However, there was a long hiatus of no construction for 22 of the 44 years. The reactor cost as total of $4.7 billion, and will add 1,150 megawatts of electrical capacity to Southern Tennessee. For every dollar spent on capital in this project, about 0.0002446 kilowatt hours are added in capacity. According to the U.S. Energy Information administration, the overnight capital cost of a dual unit nuclear plant is $5,530 per kilowatt. The fixed operation and maintenance cost is $93.28 per kilowatt-year. Nuclear energy has the most expensive capital and development costs out of the examined energy sources.

In Colorado, Xcel Energy is constructing its first wind energy farm, the Rush Creek Wind Farm. The wind farm is located east of Denver, and is estimated to be finished October of 2018. The wind farm will cost a total of $1.1 billion and will add 600 megawatts of electrical capacity to Colorado. For every dollar spent on capital in this project, 0.000545 kilowatt hours are added in capacity. According to the U.S. Energy Information Administration, the overnight capital cost of an onshore wind farm is $2,213 per kilowatt. The fixed operation and maintenance cost is $39.55 per kilowatt-year.

Coal and natural gas have multiple types of generators that can be used. For coal we will examine a single unit advanced pulverized coal generator and a single unit advanced pulverized coal generator with carbon capture and storage. For natural gas, I will examine a conventional combined cycle generator and an advanced combined cycle generator with carbon capture and storage. How these generators specifically operate is unimportant to this analysis, and only their costs will be looked at.

For a single unit advanced pulverized coal generator, the overnight capital cost $3,246 per kilowatt. The fixed operation and maintenance cost for a single unit advanced PC is $37.80 per kilowatt-year. For the same kind of generator with carbon capture and storage, the overnight capital cost is $5,227 per kilowatt. The fixed operation and maintenance cost is $80.53 per kilowatt-year.

For a natural gas conventional combined cycle generator, the overnight capital cost is $917 per kilowatt. The fixed operation and maintenance cost is $13.17 per kilowatt-year. For an advanced carbon cycle generator with carbon capture and storage, the overnight capital cost is $2,095 per kilowatt. The fixed operation and maintenance cost is $31.79 per kilowatt-year. Natural gas has the lowest capital and development costs out of the examined energy sources.

Lastly, for a photovoltaic, solar array, generator, the overnight capital cost is $4,183 per kilowatt. The fixed operation and maintenance cost is $27.75 per kilowatt-year. With these numbers, it can be seen that nuclear energy has an extremely high overnight capital cost, and a high, though comparable, fixed operation and maintenance cost.

Nuclear: Cost of Source Mining

This post will compare the spot prices of the mineral resources that go into different energy sources, and compare them to the price of uranium, U3O8. The sources that will be looked at are coal, natural gas, oil, and rare earth metals, which are used in renewables like solar energy. Since prices change depending on market conditions, it should be implied that the price indicated is an approximation of what the source fuels cost.

The price of natural uranium, U3O8, is $25.50 per pound, according to Ux Consulting Company. The ten year price ranging from $19 per pound to $139 per pound. The price of coal is $52.05 per short ton. The ten year price ranging from $50 per short ton to about $125 per short ton. The price of natural gas is $3.30 per million BTU. The ten year price for natural gas has ranged from $2.00 per million BTU to $12.00 per million BTU. Indium and tellurium are both rare earth elements that are frequently used in solar panels. Indium costs about $720.00 per kilogram, and tellurium costs about $51.34 per kilogram.

However, these units are all different from each other, and need to be converted to a comparable unit, which will be in heat content measured in BTUs. According to the Energy Information Administration, a short ton of coal produced about 20.16 million BTUs. According to the World Nuclear Associate, one pound of natural uranium in a light water reactor can produce 214,961 million BTUs. Since solar power is a renewable source, it is difficult to figure out how much heat content 1 kilogram of tellurium or indium will provide via energy generated. Not only is the source renewable, but it is also incredibly variable, as it depends how much sun is shining, what kind of solar array is being used, and what kind of maintenance is performed on the arrays.

With the numbers provided, the heat content provided per dollar spent on a fuel source can be calculated. For every dollar spent on coal, about 387,320 BTUs are produced. For every dollar spent on natural gas, about 303,030 BTUs are produced. For every dollar spent on uranium, about 8,429,843,137 BTUs are produced. It is worth noting that this is not the full price of generating this heat content, but just the price spent on fuel only. However, when considering fuel prices, nuclear energy is without a doubt the cheapest source.

Current Energy Production and Consumption in Colorado

Colorado is a leader in the United States for energy production. The state ranks 7th in total energy production with 3,042 trillion BTUs produced in 2014. Of this energy production, a large majority of this production comes from oil, which the state produced 9,200 thousand barrels in November of 2016, and natural gas, which the state produced a total of 1,704,836 million cubic feet of in 2015. There is no nuclear energy produced in Colorado.

For total electricity generation, Colorado ranks 27th with 4,332 thousand megawatt-hours generated in November of 2016. By source, the large majority of this electricity is produced by coal at over 2,500 thousand megawatt hours generated in November of 2016, meaning coal provides Colorado with over half of its electricity production. This is followed by nonhydroelectric renewables, which produced 985 megawatt hours, and natural gas fired generation, which produced 722 megawatt hours.

Colorado’s electricity prices rank 25th highest in the country at an average retail price of $0.1216 per kilowatt-hour.

For consumption, Colorado is not as significant compared to other states as they are with production. Colorado ranks at 34th most energy consumed with 276 million BTUs consumed per capita. According to the US census, the Colorado population was roughly 5,349,648 in 2014. In total this puts Colorado consumption at a total of 1.476 quadrillion BTUs.

Breaking this consumption down by source, the most significant sources of consumption are natural gas and coal. In 2014, natural gas accounted for 497.2 trillion BTUs consumed. Coal accounted for 350.5 trillion BTUs consumed. Gasoline for motors, such as cars, trucks, etc., accounted for 250.3 trillion BTUs consumed. All renewables, biomass, hydroelectric, solar, wind, etc., put together account for 131.4 trillion BTUs. Nuclear energy accounts for none of the energy consumed in Colorado. By sector, the most significant sectors of consumption are industrial and transportation, which account for 29% and 28% respectively. Residential accounts for 24%, and commercial accounts for 19%.

History of Nuclear Energy in Colorado

Colorado’s history with nuclear energy is limited. Only one nuclear reactor has been built in the state, and it has since closed down. The plant was located east of I-25 near Plateville, and was named the Fort Saint Vrain Plant. It was built, owned, and operated, in a limited capacity, by the Public Service Company of Colorado, which now goes by the name Xcel Energy.

The Public Service Company acquired a license to build their high-temperature, gas-cooled reactor in 1973, and invested $240 million to build it. The plant began operating in 1979, and remained in operation for 10 years. Until it was transformed in 1989, it only operated, on average, at about 14.6% it capacity. In 1989, the Public Service Company transformed it into a natural gas electric generator for an additional $340 million, and spent $25 million to build a spent fuel storage. This fuel storage is still on site and is under the discretion of the United States Department of Energy.

Though there have been no other nuclear energy reactors in Colorado, the state has a significant history with uranium mining, which is a primary source of fuel for nuclear energy. The state’s history with uranium mining dates back to the early 1900s, when radium and vanadium experienced a huge production boom, which are accessory minerals to uranium.

During the 1940s due to the emergence of nuclear weapons, uranium was specifically targeted in Colorado in mass, which continued through the 90s due to a potential nuclear energy increase in the United States. One of the most significant producers of uranium in Colorado is the Uravan Mining District in Montrose County which contributed over 850 tons of Uranium to the Manhattan Project. From 1947 to 1970, the Uravan district mined and produced around 24 million pounds of uranium ore. Along with the Uravan Mining District, Colorado has hosted the Schwartzwalder Mine in Boulder, which produced 17 million pounds of uranium ore; the Thornburg mine, which produced 1.25 million pounds of uranium ore; the Cyprus Hill mine at Hansen Creek, which produced 25 million pounds of low grade uranium ore; and many other smaller operations.

According to the Colorado Energy Office, there has been no uranium mining in the state of Colorado since 2009. However, there are still 18 active uranium mining sites permitted, 12 on temporary cessation, and 1 pending approval in the state as of 2014. Though these active mines are permitted, none are actually operating.

Dungeons and Dragons and Central Planning

Table top games like Dungeons and Dragons, Pathfinder, and Traveler are all great ways to stimulate your imagination, bond with friends, and practice your problem solving skills whether you are a game master or a player. The first time I was a player I was surprised by the freedom given to you in the game.

If you are unfamiliar with these kinds of games, just imagine a videogame like Skyrim or World of Warcraft, except there are no limits. In videogames you can run into plastic walls, can’t talk to certain non-player characters, can’t use certain items, etc, but in a tabletop game it is all in your imagination. You tell friends what you are doing, whatever that may be, and the game master describes how the environment or non-player characters react to those actions while other players decide for themselves how they will react to those same actions. As someone who has played role playing videogames, like Guild Wars, and strategy games, like Age of Empires, for my entire life, I was honestly delighted by the liberty you had as a player in a table top game. Of course the only reason this is possible is because a human can make cleverer responses to actions than a program can, especially when dealing in the worlds of fantasy and science fiction.

However, when I prepared for my first time being a game master I had a ‘conflict’ with some of my political ideas. Was I being a central planner for this world to the players? I was directing the “economy” around them and how all social interactions occurred with the players. However, I think you go further than being just a central planner when you are a game master. You aren’t just the mechanics of how players get money and how much any item costs, but you are also the trees, the bees, the deer, and the beer. You are literally all the universe that isn’t directly the players themselves. In this way, you are the god of this imagined universe (but the god of gods since there are gods that exist within most of these universes).

At this point, it should be noted that there is a significant difference between being a game master and being a central planner, which make it significantly easier to be a game master. When being a game master, you don’t have to deal with scarcity of any kind. It is an imagined world. There is no lack of cows, food, sand, water, swords, monsters, or anything else that might appear. I only have to think about it, say it, and it exists. The only thing I have to keep in mind is not creating an extreme rate of inflation for gold or experience among the players or else the numbers become unkind to work with and confusing to the players.

Without there being scarcity to worry about as a game master, directing this world as a planner must be an easy task. It is like writing a story or a book. Just imagine something entertaining or exciting and we will have smooth sailing. Except… Not really. Actually any interesting game for the players is the opposite of smooth sailing. It is frustrating, confusing, and everything is unexpected even as a game master, and it is all because of those pesky human players. They are too volatile of a variable. As players sit at the table, they create a narrative for their characters that have their own desires, motivations, fears, and beliefs. How am I suppose to plan around that?

I planned an entire quest going down the path to the burning Castle of Prince Ralley the Mighty, but then the elf rogue played by my friend decides they feel something calling to them in the forest and runs off the path into a mysterious forest I had only considered for 5 minutes before the session. What if the other players’ characters don’t want to follow him into the forest? What if one decides to attack the other? What if none of them are interested in the burning castle? Human players are a pesky variable that you can never predict.

So in this way, even when I don’t have to deal with scarcity in this world, I still struggle to plan for the players because I am not the players. I don’t have all the knowledge, motivations, and thoughts as the players, so I will never be able to perfectly plan for them. And sometimes, that lack of planning can show for a really crappy sessions, but most of the time I would like to think I am clever enough to rebound.

Regardless, I think tabletop games teach a valuable lesson on humans as a chaotic variable. The main take away for me being that humans are too complicated to plan around. Ludwig von Mises describes this problem to a great extent in his treatise Human Action, but to put it down to small excerpt from the piece:

“Since nobody is in a position to substitute his own value judgments for those of the acting individual, it is vain to pass judgment on other people’s aims and volitions. No man is qualified to declare what would make another man happier or less discontented.” –Ludwig von Mises, Human Action: A Treatise on Economics