Oct 272012
 October 27, 2012  Posted by at 10:09 pm Energy

In recent years, there has been more and more talk of a transition to renewable energy on the grounds of climate change, and an increasing range of public policies designed to move in this direction. Not only do advocates envisage, and suggest to custodians of the public purse, a future of 100% renewable energy, but they suggest that this can be achieved very rapidly, in perhaps a decade or two, if sufficient political will can be summoned. See for instance this 2009 Plan to Power 100 Percent of the Planet with Renewables:

A year ago former vice president Al Gore threw down a gauntlet: to repower America with 100 percent carbon-free electricity within 10 years. As the two of us started to evaluate the feasibility of such a change, we took on an even larger challenge: to determine how 100 percent of the world’s energy, for all purposes, could be supplied by wind, water and solar resources, by as early as 2030.

See also, as an example, the Zero Carbon Australia Stationary Energy Plan proposed by Beyond Zero Emissions:

The world stands on the precipice of significant change. Climate scientists predict severe impacts from even the lowest estimates of global warming. Atmospheric CO2 already exceeds safe levels. A rational response to the problem demands a rapid shift to a zero-fossil-fuel, zero-emissions future. The Zero Carbon Australia 2020 Stationary Energy Plan (the ZCA 2020 Plan) outlines a technically feasible and economically attractive way for Australia to transition to a 100% renewable energy within ten years. Social and political leadership are now required in order for the transition to begin.


The Vision and a Dose of Reality

These plans amount to a complete fantasy. For a start, the timescale for such a monumental shift is utterly unrealistic:

Perhaps the most misunderstood aspect of energy transitions is their speed. Substituting one form of energy for another takes a long time….The comparison to a giant oil tanker, uncomfortable as it is, fits perfectly: Turning it around takes lots of time.

And turning around the world’s fossil-fuel-based energy system is a truly gargantuan task. That system now has an annual throughput of more than 7 billion metric tons of hard coal and lignite, about 4 billion metric tons of crude oil, and more than 3 trillion cubic meters of natural gas. And its infrastructure—coal mines, oil and gas fields, refineries, pipelines, trains, trucks, tankers, filling stations, power plants, transformers, transmission and distribution lines, and hundreds of millions of gasoline, kerosene, diesel, and fuel oil engines—constitutes the costliest and most extensive set of installations, networks, and machines that the world has ever built, one that has taken generations and tens of trillions of dollars to put in place.

It is impossible to displace this supersystem in a decade or two—or five, for that matter. Replacing it with an equally extensive and reliable alternative based on renewable energy flows is a task that will require decades of expensive commitment. It is the work of generations of engineers.

Even if we were not facing a long period of financial crisis and economic contraction, it would not be possible to engineer such a rapid change. In a contractionary context, it is simply inconceivable. The necessary funds will not be available, and in the coming period of deleveraging, deflation and economic depression, much-reduced demand will not justify investment. Demand is not what we want, but what we can pay for, and under such circumstances, that amount will be much less than we can currently afford. With very little money in circulation, it will be difficult enough for us to maintain the infrastructure we already have, and keep future supply from collapsing for lack of investment.

Timescale and lack of funds are by no means the only possible critique of current renewable energy plans, however. It is not just a matter of taking longer, or waiting for more auspicious financial circumstances. It will never be possible to deliver what we consider business as usual, or anything remotely resembling it, on renewable energy alone. We can, of course, live in a world of renewable energy only, as we have done through out most of history, but it is not going to resemble the True Believers’ techno-utopia. Living on an energy income, as opposed to an energy inheritance, will mean living within our energy means, and this is something we have not done since the industrial revolution.

Technologically harnessable renewable energy is largely a myth. While the sun will continue to shine and the wind will continue to blow, the components of the infrastructure necessary for converting these forms of energy into usable electricity, and distributing that electricity to where it is needed, are not renewable. Affordable fossil fuels are required to extract the raw materials, produce the components, and to build and maintain the infrastructure. In other words, renewables do not replace fossil fuels, nor remove the need for them. They may not even reduce that need by much, and they create additional dependencies on rare materials.

Renewable energy sounds so much more natural and believable than a perpetual-motion machine, but there’s one big problem: Unless you’re planning to live without electricity and motorized transportation, you need more than just wind, water, sunlight, and plants for energy. You need raw materials, real estate, and other things that will run out one day. You need stuff that has to be mined, drilled, transported, and bulldozed — not simply harvested or farmed. You need non-renewable resources:

• Solar power. While sunlight is renewable — for at least another four billion years — photovoltaic panels are not. Nor is desert groundwater, used in steam turbines at some solar-thermal installations. Even after being redesigned to use air-cooled condensers that will reduce its water consumption by 90 percent, California’s Blythe Solar Power Project, which will be the world’s largest when it opens in 2013, will require an estimated 600 acre-feet of groundwater annually for washing mirrors, replenishing feedwater, and cooling auxiliary equipment.

• Geothermal power. These projects also depend on groundwater — replenished by rain, yes, but not as quickly as it boils off in turbines. At the world’s largest geothermal power plant, the Geysers in California, for example, production peaked in the late 1980s and then the project literally began running out of steam.

• Wind power. According to the American Wind Energy Association, the 5,700 turbines installed in the United States in 2009 required approximately 36,000 miles of steel rebar and 1.7 million cubic yards of concrete (enough to pave a four-foot-wide, 7,630-mile-long sidewalk). The gearbox of a two-megawatt wind turbine contains about 800 pounds of neodymium and 130 pounds of dysprosium — rare earth metals that are rare because they’re found in scattered deposits, rather than in concentrated ores, and are difficult to extract.

• Biomass. In developed countries, biomass is envisioned as a win-win way to produce energy while thinning wildfire-prone forests or anchoring soil with perennial switchgrass plantings. But expanding energy crops will mean less land for food production, recreation, and wildlife habitat. In many parts of the world where biomass is already used extensively to heat homes and cook meals, this renewable energy is responsible for severe deforestation and air pollution.

• Hydropower. Using currents, waves, and tidal energy to produce electricity is still experimental, but hydroelectric power from dams is a proved technology. It already supplies about 16 percent of the world’s electricity, far more than all other renewable sources combined….The amount of concrete and steel in a wind-tower foundation is nothing compared with Grand Coulee or Three Gorges, and dams have an unfortunate habit of hoarding sediment and making fish, well, non-renewable.

All of these technologies also require electricity transmission from rural areas to population centers…. And while proponents would have you believe that a renewable energy project churns out free electricity forever, the life expectancy of a solar panel or wind turbine is actually shorter than that of a conventional power plant. Even dams are typically designed to last only about 50 years. So what, exactly, makes renewable energy different from coal, oil, natural gas, and nuclear power?

Renewable technologies are often less damaging to the climate and create fewer toxic wastes than conventional energy sources. But meeting the world’s total energy demands in 2030 with renewable energy alone would take an estimated 3.8 million wind turbines (each with twice the capacity of today’s largest machines), 720,000 wave devices, 5,350 geothermal plants, 900 hydroelectric plants, 490,000 tidal turbines, 1.7 billion rooftop photovoltaic systems, 40,000 solar photovoltaic plants, and 49,000 concentrated solar power systems. That’s a heckuva lot of neodymium.

In addition, renewables generally have a much lower energy returned on energy invested (EROEI), or energy profit ratio, than we have become accustomed to in the hydrocarbon era. Since the achievable, and maintainable, level of socioeconomic complexity is very closely tied to available energy supply, moving from high EROEI energy source to much lower ones will have significant implications for the level of complexity we can sustain. Exploiting low EROEI energy sources (whether renewables or the unconventional fossil fuels left to us on the downslope of Hubbert’s curve) is often a highly complex, energy-intensive activity.

As we have pointed out before at TAE, it is highly doubtful whether low EROEI energy sources can sustain the level of socioeconomic complexity required to produce them. What allows us to maintain that complexity is high EROEI conventional fossil fuels – our energy inheritance.

Power systems are one of the most complex manifestations of our complex society, and therefore likely to be among the most vulnerable aspects in a future which will be contractionary, initially in economic terms, and later in terms of energy supply. As we leave behind the era of cheap and readily available fossil fuels with a high energy profit ratio, and far more of the energy we produce must be reinvested in energy production, the surplus remaining to serve all society’s other purposes will be greatly reduced. Preserving power systems in their current form for very much longer will be a very difficult task.

It is ironic then, that much of the vision for exploiting renewable energy relies on expanding power systems. In fact it involves greatly increasing their interconnectedness and complexity in the process, for instance through the use of ‘smart grid’ technologies, in order to compensate for the problems of intermittency and non-dispatchability. These difficulties are frequently dismissed as inconsequential in the envisioned future context of super grids and smart grids.


The goal of modern power systems is to balance supply and demand in real time over a whole AC grid, which is effectively a single enormous machine operating in synchrony. North America, for instance, is served by only four grids – the east, the west, Texas and Quebec. System operators, who have little or no control over demand, rely on being able to control sources of supply in order to achieve the necessary balance and maintain the stability of the system.

Power systems have been designed on a central station model, with large-scale generation in relatively few places and large flows of power carried over long distances to where demand is located, via transmission and distribution networks. Generation must come on and off at the instruction of system operators. Plants that run continuously provide baseload, while other plants run only when demand is higher, and some run only at relatively rare demand peaks. There must always be excess capacity available to come on at a moment’s notice to cover eventualities. Flexibility varies between forms of generation, with inflexible plants (like nuclear) better suited to baseload and more flexible ones (like open-cycle gas plants) to load-following.

The temptation when attempting to fit renewables into the central station model is to develop them on a scale as similar as possible to that of traditional generating stations, connecting relatively few large installations, in particularly well-endowed locations, with distant demand via high voltage transmission. Renewables are ideally smaller-scale and distributed – not a good match for a central station model designed for one-way power flow from a few producers to many consumers. Grid-connected distributed generation involves effectively running power ‘backwards’ along low-voltage lines, in a way which often maximizes power losses (because low voltage means high current, and losses are proportional to the square of the current).

This is really an abuse of the true potential of renewable power, which is to provide small-scale, distributed supply directly adjacent to demand, as negative load. Minimizing the infrastructure requirement maximizes the EROEI, which is extremely important for low EROEI energy sources. It would also minimize the grid-management headache renewable energy wheeled around the grid can give power system operators. Nevertheless, most plans for renewable build-out are very infrastructure-heavy, and therefore energy and capital intensive to create.

Both wind and solar are only available intermittently, and when that will be is only probabilistically predictable. They are not dispatchable by system operators. Neither matches the existing load profile in most places particularly well. Other generation, or energy storage, must compensate for intermittency and non-dispatchability with the flexibility necessary to balance supply and demand. Hence, for a renewables-heavy power system to meet demand peaks, either expensive excess capacity (which may stand idle for much of the time) or expensive energy storage would generally be required. To some extent, extensive reliance on power wheeling, in order to allow one region to compensate for another, can help, but this is a substantial grid management challenge.

Little storage currently exists in most places, although in locations where hydro is plentiful, it can easily serve the purpose. Where there is little storage potential, relatively inflexible existing plants may be required to load-follow, which would involve cycling them up and down with the vagaries of intermittent generation. This would greatly reduce their efficiency, and that of the system as a whole, reducing, or even eliminating, the energy saving providable by the intermittent renewables.

Not all renewables are intermittent of course. Biomass and biogas can be dispatchable, and can play a very useful role at an appropriate scale. EROEI will be relatively low given the added complexity and energy input requirement of transporting and/or processing fuel, and also installing, maintaining and replacing equipment such as engines.

Biogas is best viewed as a means to prevent high energy through-put by reclaiming energy from high-energy waste streams, rather than as a primary energy source. This will be useful for as long as high energy waste streams continue to exist, but as these are characteristic of our energy-wasteful fossil fuel society, they cannot be expected to be plentiful in an energy-constrained future. The alternative – feeding anaerobic digesters with energy crops – is heavily dependent on very energy intensive industrial agriculture, which translates into a very low EROEI, and will not be possible in an energy-limited future scenario.

Smart grid technology, large and small scale energy storage, smart metering with time-of-day pricing for load-shifting, metering feedback for consumption control (active instead of passive consumption), demand-based techniques such as interruptible supply, and demand management programmes with incentives to change consumption behaviour could all facilitate the power system supply/demand balancing act. This would be much more complicated than traditional grid management as it would involve many more simultaneously variable quantities of all scales, on both the supply and demand sides, only some of which are controllable. It would require time and money, both in large quantities, and also a change of mindset towards the acceptability of interruptible power supply. The latter is likely to be required in any case.

Greater complexity implies greater risk of outages, and potentially more substantial impact of outages as well, as one would expect structural dependency on power to increase enormously under a smart-grid scenario. If many more of society’s functions were to be subsumed into the electrical system – transport (like electric cars) for instance – as the techno-utopian model presumes, then dependency could not help but be far more deeply entrenched. In this direction lie even larger technology traps than we have already created.

In Europe, where indigenous fossil fuel sources are largely depleted, there has been a concerted move into renewables in a number of countries, notably Germany and Spain, since the 1990s. The justification is generally climate change, but security of supply plays a significant role. Avoiding energy dependence on Russia, and other potentially unstable or unreliable suppliers, by developing whatever domestic energy resources may exist, is an attractive prospect. Public policy has directed large subsidies into the renewable energy sector in the intervening years.

Feed-in tariffs, offering premium prices for renewable power put on to the grid, were introduced, with different tariffs offered for different technologies and different project sizes, in order to incentivize construction and grid connection of all sources and sizes of renewable power. In addition, in a number of jurisdictions, grid access processes have been streamlined for renewables, and renewable power has preferential access to the grid when the intermittent energy source is available. Other power sources can be constrained off if insufficient grid capacity is available.

The European Dash for Off-Shore Wind – Germany


Middelgrunden wind farm – Kim Hansen, Wikimedia

Recently emphasis has been placed on developing large-scale off-shore wind resources in countries, such as Germany and the UK, where these are available. The advantages are that it is a stronger and more consistent resource than on-shore wind, and that planning hurdles can be avoided. Germany, which has decided to phase out nuclear power by 2022, has been particularly interested in taking this route, and plans to build 10GW of off-shore wind installations by 2020 and 26GW by 2030. It has been more challenging than expected, however, particularly in relation to the exceptionally expensive grid connections and extensions required to bring power from a different direction than the grid had been designed for:

Germany’s power-transmission companies have tabled plans to build four electricity Autobahns to link wind turbines off the north coast with manufacturing centres in the south … Tennet, Amprion, 50 Hertz and Transnet BW said that building 3,800km high-voltage electricity lines – at a cost of around €20-billion – over the next decade was possible if politicians and public rallied behind the so-called energy transformation…

…In a first blueprint for the government, the companies proposed 2,100km of direct-current power lines – similar to those used for undersea links like that between the U.K. to the European continent – to connect the North Sea and the Baltic coasts to the south. On top of that, 1,700km of traditional alternating-current lines would have to be built, they said. These would complement 1,400km of this type of line already planned or being built – at a cost of €7-billion – under the government’s decade-old network plan.

Since Ms. Merkel closed eight of the country’s 17 nuclear reactors last summer and brought forward the phase-out of the energy source to 2022 from 2036, her biggest headache has proved the stability of the electricity network, which was designed to pipe nuclear electricity from south to north, not renewable electricity from the coast.

The cost and financial risk associated with building off-shore grid connections is so high that power companies are struggling to fund them. They are liable to wind farm developers if the latter are unable to sell their electricity for want of a grid connection. Significant connection delays are occurring, described by the German wind industry as “dramatically problematic”. Delays could potentially leave completed wind installations unable to deliver power to the mainland, and worse, requiring fossil fuel to run them in the meantime:

The generation of electricity from wind is usually a completely odorless affair. After all, the avoidance of emissions is one of the unique charms of this particular energy source. But when work is completed on the Nordsee Ost wind farm, some 30 kilometers (19 miles) north of the island of Helgoland in the North Sea, the sea air will be filled with a strong smell of fumes: diesel fumes.

The reason is as simple as it is surprising. The wind farm operator, German utility RWE, has to keep the sensitive equipment — the drives, hubs and rotor blades — in constant motion, and for now that requires diesel-powered generators. Because although the wind farm will soon be ready to generate electricity, it won’t be able to start doing so because of a lack of infrastructure to transport the electricity to the mainland and feed it into the grid. The necessary connections and cabling won’t be ready on time and the delay could last up to a year.

In other words, before Germany can launch itself into the renewable energy era Environment Minister Norbert Röttgen so frequently hails, the country must first burn massive amounts of fossil fuels out in the middle of the North Sea — a paradox as the country embarks on its energy revolution.

The situation has since worsened since:

What started out as a bit of a joke – last December Der Spiegel noted how RWE’s Nordsee Ost wind farm, far from delivering clean energy, was burning diesel to keep its turbines in working order – has rapidly turned serious. Siemens, the contractor for Germany’s offshore transformer stations, has booked almost €500 million in charges, according to Dow Jones. RWE is set to lose more than €100 million at Nordsee Ost. And E.ON’s head of Climate and Renewables, Mike Winkel, is on record as saying that no one, at E.ON or anywhere else, will be investing if the network connection is uncertain.

Investment in wind farms is drying up on growing risk and uncertainty:

Sales of offshore wind turbines collapsed in the first half, a sign the power industry and its financiers are struggling to meet the ambitions of leaders from Angela Merkel in Germany to Britain’s David Cameron. One unconditional order was made, for 216 megawatts, 75 percent less than in the same period of 2011 and the worst start for a year since at least 2009, according to preliminary data from MAKE Consulting, a Danish wind-energy adviser…

…”The industry in Germany has been frozen for a few months because of grid issues,” said Jerome Guillet, the Paris-based managing director of Green Giraffe Energy Bankers, which advises on offshore wind projects…

…Grid operators and their suppliers in Germany underestimated the challenges of connecting projects, Hermann Albers, head of the BWE wind-energy lobby, said in an interview earlier this year. Albers expects Germany won’t reach its 10- gigawatt goal by 2020, installing not more than 6 gigawatts by then.

Shares of Vestas, the world’s biggest wind turbine maker, have fallen 80 percent in the past year, underperforming the 56 percent decline in the Bloomberg Industries Wind Turbine Pure- Play Index (BIWINDP) tracking 14 companies in the industry. Siemens, which with Vestas dominates the offshore business, dropped 27 percent over the same period.

In order to mitigate the risk and prevent the wind programme from stalling, German power consumers are to be on the hook to compensate wind farm owners for the cost of grid connection delays:

The draft bill endorsed by Chancellor Angela Merkel’s Cabinet of Ministers would make power consumers pay as much as 0.25 euro cents a kilowatt-hour if wind farm owners can’t sell their electricity because of delays in connecting turbines to the grid. The plan is aimed at raising investments after utilities threatened to halt projects and grid operators struggled to raise financing and complete projects on time.

The cost of consumer surcharges to maintain the ‘Energiewende’ (the shift to renewable energy) appears set to become an election issue in Germany:

Germany’s status as a global leader in clean energy technology has often been attributed to the population’s willingness to pay a surcharge on power bills. But now that surcharge for renewable energy is to rise to 5.5 cents per kilowatt hour (kWh) in 2013 from 3.6 in 2012. For an average three-person household using 3,500 kWh a year, the 47 percent increase amounts to an extra €185 on the annual electricity bill.

“For many households, the increased surcharge is affordable,” energy expert Claudia Kemfert from the German Institute for Economic Research told AFP. “But the costs should not be carried solely by private households.” Experts have pointed out that with many energy-intensive major industries either exempt from the tax or paying a reduced rate, the costs of the energy revolution are unfairly distributed.

Meanwhile, the German Federal Association of Renewable Energies (BEE) maintains that not even half the surcharge goes into subsidies for green energy. “The rest is plowed into industry, compensating for falling prices on the stock markets and low revenue from the surcharge this year,” BEE President Dietmar Schütz told the influential weekly newspaper Die Zeit.

Grid instability is of increasing concern in Germany as a result of the rapid shift in the type and location of power generated. The closure of nuclear plants in the south combined with the addition of wind power in the north has aggravated north-south transmission constraints, which are only marginally mitigated by photovoltaic installations in Bavaria.

With a steep growth of power generation from photovoltaic (PV) and wind power and with 8 GW base load capacity suddenly taken out of service the situation in Germany has developed into a nightmare for system operators. The peak demand in Germany is about 80 GW. The variations of wind and PV generation create situations which require long distance transport of huge amounts of power. The grid capacity is far from sufficient for these transports.

As the German grid is effectively the backbone of the European grid, and faults can propagate very quickly, instability is not merely a German problem. Instability can result from a combination of factors, including electricity imports and exports and the availability of fuel for conventional generation. Germany narrowly avoided, causing an international problem in February 2012 due to power flows between Germany and France and a shortage of fuel for gas-fired generation in southern Germany.

Many new coal and gas-fired plants are to be built in the south in order to address the problem. Old coal plants are likely to have their lives extended and emission limits loosened in order to maintain needed generation capacity. Thermal plants are being effectively forced to operate uneconomically, as they must ramp up and down in order to make way for the renewable power that has priority access to the grid. Operating in this manner consumes additional fuel and produces accelerated wear and tear on equipment. Price volatility is increased, making management decision much more difficult.

On days when there is a lot of wind, the sun is shining and consumption is low, market prices on the power exchange can sometimes drop to zero. There is even such a thing as negative costs, when, for example, Austrian pumped-storage hydroelectric plants are paid to take the excess electricity from Germany….

….Germany unfortunately doesn’t have enough storage capacity to offset the fluctuation. And, ironically, the energy turnaround has made it very difficult to operate storage plants at a profit — a predicament similar to that faced by conventional power plants. In the past, storage plant operators used electricity purchased at low nighttime rates to pump water into their reservoirs. At noon, when the price of electricity was high, they released the water to run their turbine. It was a profitable business.

But now prices are sometimes high at night and low at noon, which makes running the plants is no longer profitable. The Swedish utility giant Vattenfall has announced plans to shut down its pumped-storage hydroelectric power station in Niederwartha, in the eastern state of Saxony, in three years. A much-needed renovation would be too expensive. But what is the alternative?

German industry is already taking precautionary measures as the risk of power interruptions is rising rapidly. Even momentary outages due to minor imbalances can result in equipment damage and high costs, and it is unclear who should shoulder the losses:

It was 3 a.m. on a Wednesday when the machines suddenly ground to a halt at Hydro Aluminium in Hamburg. The rolling mill’s highly sensitive monitor stopped production so abruptly that the aluminum belts snagged. They hit the machines and destroyed a piece of the mill. The reason: The voltage off the electricity grid weakened for just a millisecond.

Workers had to free half-finished aluminum rolls from the machines, and several hours passed before they could be restarted. The damage to the machines cost some €10,000 ($12,300). In the following three weeks, the voltage weakened at the Hamburg factory two more times, each time for a fraction of second. Since the machines were on a production break both times, there was no damage. Still, the company invested €150,000 to set up its own emergency power supply, using batteries, to protect itself from future damages….

….A survey of members of the Association of German Industrial Energy Companies (VIK) revealed that the number of short interruptions to the German electricity grid has grown by 29 percent in the past three years. Over the same time period, the number of service failures has grown 31 percent, and almost half of those failures have led to production stoppages. Damages have ranged between €10,000 and hundreds of thousands of euros, according to company information.

Producers of batteries and other emergency energy sources are benefiting most from the disruptions. “Our sales are already 13 percent above where they were last year,” said Manfred Rieks, the head of Jovyatlas, which specializes in industrial energy systems. Sales at APC, one of the world’s leading makers of emergency power technologies, have grown 10 percent a year over the last three years. “Every company — from small businesses to companies listed on the DAX — are buying one from us,” said Michael Schumacher, APC’s lead systems engineer, referring to Germany’s blue chip stock index….

….Although the moves being made by companies are helpful, they don’t solve all the problems. It’s still unclear who is liable when emergency measures fail. So far, grid operators have only been required to shoulder up to €5,000 of related company losses. Hydro Aluminum is demanding that its grid operator pay for incidents in excess of that amount. “The damages have already reached such a magnitude that we won’t be able to bear them in the long term,” the company says.

Given the circumstances, Hydro Aluminum is asking the Federal Network Agency, whose responsibilities include regulating the electricity market, to set up a clearing house to mediate conflicts between companies and grid operators. Like a court, it would decide whether the company or the grid operator is financially liable for material damages and production losses.

For companies like Hydro Aluminium, though, that process will probably take too long. It would just be too expensive for the company to build stand-alone emergency power supplies for all of its nine production sites in Germany, and its losses will be immense if a solution to the liability question cannot be found soon. “In the long run, if we can’t guarantee a stable grid, companies will leave (Germany),” says Pfeiffer, the CDU energy expert. “As a center of industry, we can’t afford that.”

The expectation of uninterruptible power, and the extreme dependency it creates, is the problem. Consumers do not feel they should be required to provide resilience with expensive back up options, yet this is increasingly likely in many, if not most, jurisdictions in the coming years. In emerging markets, it is common for power supply to be intermittent, and for fall-back arrangements to be necessary. We recently covered this situation in detail at The Automatic Earth, using India as a case study.

The European Dash for Off-Shore Wind – The United Kingdom


North Hoyle Offshore Wind Park

The UK’s Renewable Energy Roadmap has plans on a similar scale to Germany, proposing 18GW of wind capacity by 2020 (or some 30,000 turbines). Scotland is particularly keen to emulate, and surpass, Denmark, which generates 30% of its power from wind. Denmark is able to do this because it does not operate in isolation. It is effectively twinned with with Scandinavian hydro power, which provides the energy storage component, albeit at a price. On windy days, Denmark can export its surplus power to its neighbours, which have large enough grids to absorb power surges, but it does so at a low price. When the wind is not blowing, Denmark imports power at a high price. Ownership of the storage component makes a significant difference to the economics.

Unfortunately for Scotland, it currently has no access to a comparable hydro resource, either within it own borders or in the English market where it would be selling surplus power. As things stand, if wind power were developed at the proposed scale, it would have to be twinned with gas plants, but North Sea gas is already in sharp decline. For this reason, Britain and Scandinavia are planning to build NorthConnect, which would join Britain and Norway in the world’s longest subsea interconnector (900km) at an estimated cost of £1 billion (€1.3 billion), supposedly by 2020. This would follow on from the BritNed interconnector linking Britain and the Netherlands as of 2011 – a 260km line developed at a cost of £500 million (US $807.9 million).

“Using state-of-the-art technology, the interconnector will give the UK the fast response we will need to help support the management of intermittent wind energy with clean hydro power from Norway,” Steven Holliday of the National Grid says. “It would also enable us to export renewable energy when we are in surplus. At this very moment a seabed survey is underway in the North Sea, looking at the best way to design and install the cable, which would run through very deep water.”

If the project were completed as projected, it would allow the British, like the Danes, to subsidize the Norwegian power system, as the economic advantage lies with the owner of the storage capacity. The odds of completing such an ambitious project on time, however, and within budget, have to be regarded as low even if we were not facing financial crisis. Given that we are, those odds fall precipitously. The likelihood of having to twin whatever off shore wind is actually built with gas therefore increases. UK gas production is falling and storage is limited.

The shale gas reserves touted to provide affordable gas in the future amount to a mirage, thanks to the very low EROEI and high capital requirement. The UK is facing a future as a gas importer at the wrong end of a long pipeline from Russia. This is not a secure position to be in, especially given the UK’s gas dependence following the 1990s dash for gas. Developing wind power will make little difference if there is no flexible generating plant to provide back up.

The cost of building the turbines, their grid connections, back up gas plants and additional gas storage would be over ten times the amount required to build a fossil fuel alternative. According to a recent report to Britain’s Department of Energy and Climate Change, the cost of the grid connection alone would be greater than the entire cost of the alternative option.

The cost would have to be borne upfront, while the payback would come over a long period of time. This has significant implications for the net present value, and ‘effective EROEI’, of wind energy, especially in a scenario where the applicable discount rate is likely to skyrocket due to growing instability:

When introducing a discount rate of 5%, which can be considered very low both in non-financial and in financial realms, and represents societies with high expectations for long-term stability (such as most OECD countries), the EROI of 19.2 of this particular temporal shape of future inputs and outputs is reduced to and ‘effective’ EROI of 12.4 after discounting.

But discount rates are not the same in all situations and societal circumstances. Investing into the same wind power plant in a relatively unstable environment, for example in an emerging economy, where discount rates of 15% are more likely, total EROI for this technology is reduced to a very low value of 6.4, nearly 1/3 of the original non-discounted value.

Currently stable states are far more likely to resemble developing countries in a future of upheaval.

The investment choice is having to be made at a time when financial crisis is beginning to bite, thanks to Britain’s disastrous financial position as the ponzi fraud capital of the world. While wind is currently the preferred option, it is very likely the decision will be revised over the next few years, with relatively few turbines ever having been built, and perhaps even fewer actually connected to the grid. Neither the turbines nor the gas alternative, if there turns out to be sufficient capital to build either one, would last more than perhaps thirty years, so both represent medium term solutions only.

The CEO of the National Grid, in an interview last year with the Today Programme on BBC Radio 4, informed listeners that they would have to get used to intermittent power supply. No one seemed to be paying attention. It is interesting to note that under the old nationalized and vertically integrated CEGB in Britain, there was a responsibility to keep the lights on. When the CEGB was broken up, the National Grid inherited only the responsibility to balance supply and demand.

The UK power regulator, Ofgem, has also issued stark warnings of blackouts:

Millions of households are at risk of power black-outs within three years because coal stations are being replaced with wind farms, the energy watchdog has said. In its strongest ever warning, Ofgem said there may have to be “controlled disconnections” of homes and businesses in the middle of this decade because Britain has not done enough to make sure it has enough electricity. The regulator’s new analysis reveals the risk of power-cuts is almost 50 per cent in 2015 if a very cold winter causes high demand for electricity. Ofgem believes the lack of spare power generation “could lead to higher bills”, which are already at record high of £1,300 per year.

Whitehall sources said there is very little the Government can now do to avoid the risk of black-outs in the middle of the decade. It will take around three or four years to build any new gas plants and it would be very difficult to build more coal plants under European rules.

Alistair Buchanan, chief executive of Ofgem, said Britain’s energy system is struggling under the pressure of the “unprecedented challenges” of a global financial crisis, tough environmental targets and the closure of ageing power stations. Currently, Britain has 14 per cent more power plant capacity than is strictly necessary to keep the lights on. However, this crucial buffer will fall to just four per cent by the middle of the decade. Its report shows the risk of power-cuts begins to increase sharply from next year onwards.

Given the time scale for changes in generation and in infrastructure, preparations based on joined-up thinking have to be made well in advance of any looming crunch points. We are essentially experimenting with changes in a sporadic and haphazard fashion, and finding we are running risks we had not anticipated due to our failure to understand infrastructure requirements and dependencies. The risks are building rapidly, and it may already be too late to avoid unpleasant consequences.

Essentially, what appears to be happening across Europe is that nations are falling in love with offshore wind, permitting grand projects far out to sea – and then belatedly realizing that it is not so easy to get the energy back to shore. It is a bit like building hotels in the desert and forgetting to put the roads in. How come some of the world’s most advanced and industrialized countries are committing such a colossal oversight?

The problem is one of mindset. Ever since the first days of electricity, there has really only been one model for energy distribution. You build a generating center, more or less wherever you want it, and then create outbound distribution links to whoever needs power. This hub-and-spoke model is deeply ingrained in every aspect of energy distribution, from how utilities and grid operators work to the way regulators and policy makers think. But for renewable energy, it does not work.

You cannot just put a wind farm wherever you want. In fact, in the case of offshore wind, the locations you have could hardly be more inconvenient from an energy transport point of view. That means grid connections almost need to come first in the thinking about offshore wind. How expensive will they be? How feasible? How can the costs and installation timeframes be reduced?

These questions are fairly obvious, and are nothing new. One renewable energy veteran remembers speaking to an oil and gas representative a few years ago, who said that if we were really serious about renewables then the first thing we would have to change is the grid. Needless to say, that has not happened. If the issue is not addressed soon then every offshore market runs the risk of having an experience like Germany’s.

A European Supergrid?


Image: Airtricity

A European supergrid, with many cross-border transmission lines, has long been a European goal. The idea is to share power as widely as possible, evening out disparities in supply and demand across Europe. It is intended to be particularly applicable in terms of evening out the effects of intermittent renewable energy, notably off-shore wind, which could be linked with distant storage capacity. The vision even includes integrating Icelandic geothermal power.

Initial steps are already being contemplated with regard to integrating off-shore wind in north west Europe:

The North Sea Grid Initiative consists of Germany, Denmark, Norway, Sweden, Belgium, France, Luxembourg, and the United Kingdom. These countries signed a memorandum of understanding back in 2011 to help spur offshore wind development and tap into the ideal types of renewable energy in different parts of Europe within the next decade. More than 100 gigawatts (GW) of offshore wind are in the development or planning phases throughout Europe.

Pooling grid connection costs between countries by linking wind farms is projected to bring costs down substantially. Interconnectors are extremely expensive, hence the incentive to reduce costs wherever possible.

To make offshore wind work in northwest Europe, policymakers may have to adopt even more ambitious plans for the technology, gathering individual projects into hubs further offshore to capture more wind and pool connection costs, in a potentially high risk strategy.

The approach could shave 17 percent off an estimated 83 billion euros to connect 126,000 MW of offshore wind by 2030, according to a report produced last year by renewable energy lobby groups, consultancies and university research departments, “OffshoreGrid: Offshore Electricity Infrastructure in Europe”.

Groups such as Friends of the Supergrid envisage an exceptionally ambitious scaling up of power system integration, with a view to transitioning to an electrified economy by 2050:

“Supergrid” is the future electricity system that will enable Europe to undertake a once-off transition to sustainability. The concept of Supergrid was first launched a decade ago and it is defined as “a pan-European transmission network facilitating the integration of large-scale renewable energy and the balancing and transportation of electricity, with the aim of improving the European market”.

Supergrid is not an extension of existing or planned point to point HVDC interconnectors between particular EU states. Even the aggregation of these schemes will not provide the network that will be needed to carry marine renewable power generated in our Northern seas to the load centres of central Europe. Supergrid is a new idea. Unlike point to point connections, Supergrid will involve the creation of “Supernodes” to collect, integrate and route the renewable energy to the best available markets. Supergrid is a trading tool which will enhance the security of supply of all the countries of the EU.

The stated goal is to a achieve a transition to sustainability, while providing for a low-carbon, high-growth scenario. This is an obvious contradiction, given that high growth not sustainable by definition. The plan appears to be the pinnacle of techno-utopia, and a clear example of fashionable energy fantasy. Unfortunately unrealistic dreams can be sold as safe long term investments:

Despite these uncertainties, others believe the supergrid is a smart investment. ‘There are pension funds and many investors looking for safe returns,’ Julian Scola, spokesman for the European Wind Energy Association in Brussels, said to the New York Times. ‘Electricity infrastructure, which is a regulated business with regulated returns, ought to and does provide very safe and very attractive investment.’

Pension funds, while they still exist in their current form, could be lured into backing something too good to be true, as happened so extensively during the initial phase of the credit crunch. Such investments are highly unlikely to pay off.

The Broader European Energy Context


In addition to the problems with off shore wind and grids, knock on effects are anticipated in other energy markets with greater reliance on wind power:

There will be an increase in gas-price volatility across Europe as markets with more wind capacity, such as the U.K., Spain, France, Germany and the Netherlands, are linked to those with less, James Cox and Martin Winter, consultants at Poyry in Oxford, England, said in a research report published today. Wind will be the main source of irregular supply, as output can still fall to zero no matter how much capacity is installed, while solar continues to produce even under cloud cover.

“If it’s cold and still, it’s much more extreme for the gas network because you get the heating demand response to the cold weather and the power response to the still weather,” Cox.

The European Union has reached 100 gigawatts of installed wind-energy capacity, equivalent to the output of 62 coal-fired power stations, the European Wind Energy Association said Sept. 27. In the EU, about 5 percent of electricity came from wind last year.

The winners in this scenario will be owners of so-called fast-cycling gas storage, which can respond rapidly to falling wind generation, and traders who can take advantage of diverging prices at Europe’s trading hubs as weather patterns vary by geography, Cox said.

Once again, ownership of key energy storage components is critical. In our financialized world, it is also small wonder that traders playing an arbitrage game would be expected to enjoy great opportunities for gain. This dynamic has already threatened power supplies and is likely to do so repeatedly:

Germany’s electricity grid came to the brink of blackout last week – not because of the cold, but because traders illegally manipulated the system. They tapped emergency supplies, saving money but putting the system at risk of collapse.

Normal supply is maintained by the dealers acting as go-betweens for the industrial and domestic electricity consumers and the generators so that the latter know how much to supply. The Berliner Zeitung said the dealers were legally obliged to continually order enough electricity to cover what their customers need. But this was not done earlier this month, according to the regulator’s letter. Instead dealers sent estimates which were far too low, meaning the normal supply was almost completely exhausted. Several industry insiders told the Frankfurter Rundschau daily the tactic was deliberately adopted to maximise profits.

The dealers systematically reduced the amount they ordered for their customers, avoiding the expensive supply and forcing the system to open up its emergency supply – the price for which is fixed at €100 a Megawatt hour. This is generally considered very expensive – but compared to what else was on offer at the time, it represented huge savings – yet put the entire electricity supply system on emergency footing for no reason.

The Global Clean Tech Bubble


Those who advocate for a complete shift to renewables often state that it would be possible if only the political will to fund the transition were available. In fact, funding programmes have been introduced in many jurisdictions, often on a very large scale. Capital grants and long term Feed-In Tariff (FIT) contracts have been introduced in many European countries and in other regions. Feed-In Tariffs, which typically offer a twenty year guaranteed income stream in order to overcome the investment risk, have often been the economic tool of choice. Some of these have been very generous, and the subsidy regimes have driven large investments in renewables for many years. The costs have been in the hundreds of billions of dollars, with projections for many times that much in the future, both for generation capacity and for the necessary infrastructure to service it:

In 2005, VC investment in clean tech measured in the hundreds of millions of dollars. The following year, it ballooned to $1.75 billion, according to the National Venture Capital Association. By 2008….it had leaped to $4.1 billion. And the [US] federal government followed. Through a mix of loans, subsidies, and tax breaks, it directed roughly $44.5 billion into the sector between late 2009 and late 2011. Avarice, altruism, and policy had aligned to fuel a spectacular boom….

I….Investors were drawn to clean tech by the same factors that had led them to the web, says Ricardo Reyes, vice president of communications at Tesla Motors. “You look at all disruptive technology in general, and there are some things that are common across the board,” Reyes says. “A new technology is introduced in a staid industry where things are being done in a sort of cookie-cutter way.” Just as the Internet transformed the media landscape and iTunes killed the record store, Silicon Valley electric car factories and solar companies were going to remake the energy sector. That was the theory, anyway.

With the much of the risk safely lodged elsewhere, at least apparently, a sense that one could not lose became increasingly entrenched. This is dangerous, because this is the psychological underpinning of a speculative mania. When investors begin to throw money at something regardless of cost, believing that the investment can only go up, a self-reinforcing spiral leading into an epidemic of poor decision making tends to be the result. The sector over-reaches itself and the boom ends in bust, trashing the economic reputation of the sector for many years.

Productive capacity that had been built out in order to service the artificially-stimulated demand is then abandoned, often without having recovered its costs. Demand suffers an undershoot as the stimulus is withdrawn, typically for long enough that productive capacity has degraded to unusability before demand can recover. In this way, bubbles encourage the conversion of capital to waste.

Bubbles are inherently self-limiting and do not require a trigger to burst. They simply reach the maximum expansion, run out funds to tap to keep the expansion going, and implode. In the case of cleantech, the day of reckoning has been aggravated by lack of infrastructure, specifically grid capacity, as we have see above. Projects in some jurisdictions were facing years or more of delay for want of the physical ability to move the power from where it was proposed to be generated to where it could possibly be used.

For instance, the available grid capacity in Ontario (Canada) was oversubscribed in the launch period the the FIT programme. Ambitious grid expansion plans are planned, but over a period of decades. Even if we were not facing financial crisis, the financing for specific projects would have long since disappeared before the projects could expect to receive at FIT contract. Similarly in Europe, the grid connections necessary to build out off-shore wind on a large scale simply do not exist, and cannot be brought into existence in less than several decades time. Time is a major factor for high tech investors used to a rapid, or even explosive pace of development:

There was an additional factor at work: impatience. Venture capitalists tend to work on three- to five-year horizons. As they were quickly finding out, energy companies don’t operate on those timelines. Consider a recent analysis by Matthew Nordan, a venture capitalist who specializes in energy and environmental technology. Of all the energy startups that received their first VC funds between 1995 and 2007, only 1.8 percent achieved what he calls “unambiguous success,” meaning an initial public offering on a major exchange. The average time from founding to IPO was 8.3 years. “If you’re signing up to build a clean-tech winner,” Nordan wrote in a blog post, “reserve a decade of your life.”

The truth is that starting a company on the supply side of the energy business requires an investment in heavy industry that the VC firms didn’t fully reckon with. The only way to find out if a new idea in this sector will work at scale is to build a factory and see what happens. Ethan Zindler, head of policy analysis for Bloomberg New Energy Finance, says the VC community simply assumed that the formula for success in the Internet world would translate to the clean-tech arena. “What a lot of them didn’t bargain for, and, frankly, didn’t really understand,” he says, “is that it’s almost never going to be five guys in a garage. You need a heck of a lot of money to prove that you can do your technology at scale.”

The bubble is now bursting, especially for solar, which had benefited from the largest subsidies, but increasingly for wind as well. Investments in renewable energy companies, formerly seen as a no-lose bet, have often been failing to live up to expectations, to put it mildly. Early entrants did very well, but late comers are the empty bag holders, as with any structure grounded in ponzi dynamics:

Renewable energy is the future, say environmentalists. But for green and ethical investors it has turned into a nightmare, with makers of wind and solar power systems among the worst-performing stocks in recent years. Take Vestas, the Danish wind turbine maker. Early investors enjoyed sparkling returns, with shares leaping from 34 Danish kroner in 2003 to 698 in 2008 – a 20-fold rise. But since then, beset by the loss of government subsidies, cost overruns, production delays and competition from China, the price has collapsed. Today it is trading at 35 kroner – so someone investing in 2008 will have lost nearly 95% of their money. In August Vestas revealed it had slumped into losses and shed another 1,400 jobs, bringing total redundancies for the year to more than 3,700. It had planned to construct a plant at Sheerness docks in Kent to supply turbines for expected deep-water North Sea wind farms, but this was axed in June.

Solar panel manufacturers have also burnt a hole in investors’ pockets. Look at SunTech, the world’s biggest maker of PV (photovoltaic) panels, based in Wuxi, China. Its private equity backers (notably Goldman Sachs) made a fortune when it listed on the New York Stock Exchange in 2005, making well over 10 times their original investment. So did the people who bought at the initial share launch, with the shares shooting from $20 to $79 in late 2007. And today? They are changing hands at just 92 cents. First Solar, another one-time darling of Nasdaq, collapsed from $308 in April 2008 to $23 last week. Solar is an industry awash with overcapacity in China, falling prices and declining government subsidies.

Solar is particularly expensive in comparison with currently available alternatives. Grid parity – cost competitiveness with other sources – is a distant dream, hence the requirement for disproportionately large subsidies:

“Today, you’d need to charge $375 per megawatt hour to justify investment in new solar equipment—nearly four times the average US retail price of electricity,” writes Catherine Wood of AllianceBernstein….And these calculations don’t include the cost of backup power or energy storage to supply power when the sun isn’t shining. A backup power system or battery would add roughly 25% to the electricity price required to justify new investment in solar power.

“Finally, these calculations ignore the cost of the real estate upon which a solar panel sits, because most smaller scale installations are on a rooftop that would otherwise go unused. For utility-scale installations, however, ignoring real estate costs is not fair. The cost basis for what will be the largest utility-scale solar power installation in Japan more than doubles if you take into account the value of the real estate that the solar panels will occupy.


China has made a very large investment in renewables and energy storage technologies, and their productive capacity has expanded so quickly that companies in other countries have struggled to compete, particularly in photovoltaics. The sharp fall in panel prices has been very hard on non-Chinese solar manufacturer, dropping capacity significantly. The Chinese developmental state has been building out infrastructure of all kinds for many years, hence this determined move is no exception. Subsidies at the national level were vastly larger than those given by western states, and a national feed-in tariff was introduced. Additional support was given at the provincial and local levels in the form of tax incentives and access to real estate at subsidized cost.

Even in China, however, huge losses are now being incurred:

China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.

But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war. The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy. The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.

Even as costs fall on a bursting bubble, renewables have not achieved grid parity. That quest has been greatly aggravated, particularly in North America, by the shale gas mirage, which promises so much gas for the foreseeable future that it has crashed the price of gas in the meantime:

The price of natural gas peaked at nearly $13 per thousand cubic feet in 2008. It now stands at around $3. A decade ago, shale gas accounted for less than 2 percent of America’s natural gas supply; it is now approaching one-third, and industry officials predict that the total reserves will last a century. Because 24 percent of electricity comes from power plants that run on natural gas, that has helped keep costs down to just 10 cents per kilowatt-hour—and from a source that creates only half the CO2 pollution of coal. Put all that together and you’ve undone some of the financial models that say it makes sense to shift to wind and solar. And in a time of economic uncertainty, the relatively modest carbon footprint of natural gas gets close enough on the environmental front for a lot of people to feel just fine turning up the air-conditioning.

Unconventional fossil fuels (shale gas, coal bed methane, tight formation gas, shale oil and oil-shale etc) are well entrenched in their own bubble, as we have repeatedly documented at TAE (see for instance Shale Gas reality Begins to Dawn and Unconventional Oil is NOT a Game-Changer).

People are currently believing the hype, and perception is what moves prices. The current perception is of glut, when in fact the unconventional fossil fuel boom is likely to be short-lived thanks to very low EROEI, a high capital requirement and huge amounts of leverage. The artificially low price of natural gas is on the verge of putting over-leveraged gas producers out of business en masse, at which point the North America will be set up for a supply crunch and price spike. By the time that scenario plays out, there will no longer be the time or the money to shift back to investment in renewables.

Fracking is getting underway in many other jurisdictions as well, and will very likely be similarly disappointing. In Europe, the mirage offers the hope of gas independence from Russia, but this potential is likely to be illusory. Ironically from an environmental point of view, given that gas is perceived to be acceptable from a carbon emission perspective, gas produced by fracking is very much more carbon intensive than conventional production – likely worse than coal.

The boom and bust dynamic is, for the time being, alive and well in the energy sector. Any part of the real economy which has become heavily financialized will be subject to the rapid speculative swings of finance. Such swings can devastate vital economic sectors. The bust which is coming courtesy of the bursting the largest financial bubble in human history will be one for the record books.

Austerity and the Future of Renewable Energy Subsidies


The feed-In tariffs that stimulated so much investment in renewable energy for sale to the grid have been suffering cutbacks in many, if not most, jurisdictions that introduced them. Solar tariffs in particular have been deemed too generous, especially in an era of increasing austerity. We covered this dynamic at TAE back in early 2011 in The Receding Horizons of Renewable Energy.

The financial benefit of a feed-in tariff accrues to a few relatively wealthy renewable energy entrepreneurs, while the cost of the subsidy is borne by electricity consumers. It will become increasingly difficult to justify high levels of private payments as times get harder and electricity bills become less affordable for the masses. The costs, for tariff payments, for back up generation capacity, and for infrastructure build out, have escalated rapidly on increasing installed capacity in early adopter countries. Cutting feed-in tariffs, or whole programmes, is likely to become a means of scoring easy political points once we move from general support for green initiatives towards a greater focus on a shrinking economy. Environmental concern peaks with the economy, in that people who do not have immediate worries of scarcity place more importance on wider issues with a longer timeframe. Once an economy is in contraction, however, societal discount rates skyrocket and the focus on broader issues rapidly disappears. Considering what the future holds economically, a loss of concern for the environment is sadly highly likely.

Ironically, installing renewable generation under a feed-in tariff often does little or nothing in terms of energy security for the person installing it. All power is typically loaded on to the grid and paid for, and all power consumed is purchased from the grid. Separate storage systems are often explicitly disallowed, meaning the the owner of the renewable energy system is as vulnerable to blackouts as anyone else. Generation installed in this way is effectively a money generating system from the point of view of the installer, rather than an energy generating system.

One group of countries aggressively cutting renewable energy subsidies is the European periphery. Both Greece and Spain, for instance, championed renewable energy regardless of cost, but are now being forced to retreat from the sector. In both countries, subsidy uptake exceeded expectations, hence the future costs are projected to be far larger than had been anticipated.

In Greece, a lack of funding and a substantial regulatory burden has delayed much of the mass of applications to the point where they are unlikely ever to be built, but substantial investments, mostly in wind power, have already been made and the projects commissioned.

Since George Papandreou came to power in the October 2009 elections in Greece, a central policy priority has been the promotion of “green energy.” As part of this policy, between EUR 10-15 billion in renewable energy (RE) projects have been licensed. These include large, industrial-scale wind and photovoltaic projects, as well as smaller installations of up to 1-5 MW…

….Unfortunately, there has been no prior control over either the number or location of the applications permitted, nor has there been a cap on the energy generation capacity licensed. As a result, investors have responded in far greater numbers than imagined.

The process has not been without its political clientilism. In an effort to appease farmers, for instance, the Ministry of Agriculture made extraordinary efforts to get farmers to apply for RE production licenses, with many public assurances that their applications would be approved. As a result, thousands of farmers responded, with the result that the number of applications is at least double the original forecast. These farmers already benefit excessively from EU Common Agricultural Policy subsidies, and will soon increase their reliance on the state through renewable energy generation.

Reliance on payments from the state is not a good position to be in, in a country where the economy is seizing up, as it currently is in Greece. Greece is experiencing a liquidity crunch, and we covered what that really means several months ago at TAE in Crashing the Operating System – Liquidity Crunch In Practice. The power system is no exception. Back in June, in the run-up to the general election, the financial crisis became acute:

Greece’s debt crisis threatened to turn into an energy crunch on Friday, with the power regulator calling an emergency meeting next week to avert a collapse of the country’s electricity and natural gas system. Regulator RAE called the emergency meeting after receiving a letter from Greece’s natural gas company DEPA, dated May 31 and seen by Reuters, threatening to cut supplies to electricity producers if they failed to settle their arrears with the company….

….According to an energy industry source who declined to be named, DEPA has no cash to settle gas supply bills worth a total 120-million euros (US$148.4-million) with Italian gas firm Eni , Turkey’s Botas and Russia’s Gazprom, which fall due this month. DEPA CEO Haris Sahinis declined to comment on the company’s cash position but told Reuters: “DEPA is taking every action to avoid owing anything to its suppliers.”

If DEPA cuts off supplies, Greece’s independent power producers such as Elpedison, Mytilineos, Heron and Corinth Power — which cover about 30 percent of the country’s power demand — would be forced to stop operations. Greece’s grid operator ADMIE would then have to proceed to rotating power cuts to avoid a general blackout, just as the country’s summer tourism season, a rare foreign exchange earner for the country’s uncompetitive economy, goes into full swing.

These producers use natural gas, much of it supplied by DEPA, to produce about 70% of their electricity output. Greece’s dominant electricity company PPC uses natural gas to a much lesser extent than the other producers, but PPC’s coal and hydro units would not be able to cover the shortfall. Power companies have failed to pay their bills to DEPA because they, in turn, have not been reimbursed by LAGHE, a state-run clearing account for the nation’s energy transactions.

In recent months RAE has repeatedly urged the government to shore up the accounts of LAGHE, which is sitting on a deficit of more than 300-million euros. The account went into deficit because its receipts have not matched the generous subsidies it pays out to renewable energy producers, particularly for solar panels. LAGHE’s deficit deteriorated earlier this year when two electricity retailers, PPC’s biggest rivals, went bust without honoring their obligations to the account, leaving authorities scrambling to find cash….

….Greece could also boost the LAGHE account by using about 100-million euros sitting in the accounts of the two power retailers that went bust earlier this year, Zervos said. But energy authorities have no access to that money because it has been frozen as part of a criminal investigation into the bust. “It’s absolutely crazy. This is money that power consumers paid into the energy system,” the source said.

In a highly interconnected system, the potential for knock-on effects is very significant. The system is only as strong as its weakest link, and when there is little money to go around to settle accounts, there are many weak links are exposed. The risk is cascading system failure.

By September, Greece was responding to the threat by, among other factors, axing the feed-in tariff programme and targeting previously favoured renewable energy producers:

Greece, aiming to stave off a fresh energy crisis, plans to support its main electricity market operator through a temporary tax on renewable power producers and by extending an emergency loan, a senior official said on Friday. Deputy energy minister Asimakis Papageorgiou told Reuters that Greece’s international lenders had dropped their opposition to the loan plan [previously seen as illegal state aid] in view of the country’s critical energy situation.

The electricity system came close to collapse in June when market operator LAGHE was overwhelmed by subsidies it pays to green power producers as part of efforts to bolster solar energy. LAGHE was already suffering in Greece’s debt crisis as bills were left unpaid by consumers protesting against the collection of an unpopular property tax via the bills of PPC, the country’s sole electricity retailer.

Papageorgiou also said that Greece would unveil by the end of 2012 plans for a market-based retail electricity network. He said PPC, due to be privatized under a massive government sell-off plan to ease Greece’s budget crisis, will probably spin off some power stations and distribution lines to create one or two rival companies. PPC itself would find a strategic partner.

The state-run Loans and Consignments Fund, a key lifeline for the country’s energy system, will give LAGHE a one-year loan of 140 million euros ($180 million), Papageorgiou said. “The troika (EU, IMF and ECB) approved it because they realized that these actions are necessary for the market to survive and return to a normal state,” he said.

Earlier this year the fund extended 100 million euros to state-owned natural gas supplier DEPA and another 110 million to dominant state-controlled utility PPC (DEHr.AT).

The temporary charge on renewable energy producers was a further measure to plug LAGHE’s deficit of more than 300 million euros. “I’d call it a solidarity levy,” Papageorgiou said. “It will be in force over a very specific period… and set at such a level that will allow them to operate normally with satisfactory returns.”

Greece has slashed the guaranteed feed-in prices it pays to some solar operators and is no longer approving permits for their installation.

Greek consumers, who can ill-afford to pay more for anything as unemployment skyrockets, are being asked to cover a 19% hike in electricity prices. The power system framework is a byzantine mess, and the last few years of attempted transition have added enormously to the complexity of the predicament. It is unclear in what form the system may ultimately survive, but in the meantime, the population is very likely to have to get used to interruptible supply at best.

When feed-in payments are cut, and windfall taxes imposed instead, those who took on loans to build projects will not be able to service the debts they incurred. Their eventual default will add to the illiquidity of the system. Further investments in renewables will dry up on risk of so many kinds at once. A twenty year guaranteed payment, meant to overcome that risk and stimulate investment, is a promise too good to be true. When governments make reckless promises they cannot keep they will simply repudiate the contracts unilaterally. There are no risk free investments, but many people have acted as if there were and have structured their investments, or even their lives, around promises destined to be broken:

The Spanish and Germans are doing it. So are the French. The British might have to do it. Austerity-whacked Europe is rolling back subsidies for renewable energy as economic sanity makes a tentative comeback. Green energy is becoming unaffordable and may cost as many jobs as it creates. But the real victims are the investors who bought into the dream of endless, clean energy financed by the taxpayer. They forgot that governments often change their minds….

….The austerity programs have piled on additional difficulties in the form of subsidy reductions. No government would announce “temporary” subsidies, for fear of scaring off investment in renewable energy. Still, that’s exactly what the subsidies are turning out to be. Investors everywhere are going to get slaughtered as debt-swamped governments trim or eliminate the freebies.

The renewable energy bubble was inflated by government subsidies. Those same governments are now deflating them. Turns out the subsidies were too good to be true.

In Spain, renewable subsidies were generous and achieved a huge increase in installed capacity, at a consumer cost of 6 billion euros a year by 2009 (compared to 5.6 billion in Germany where the economy is four times the size). Approximately half the subsidies went to solar, which produced 2% of the power. However, when financial crisis began to bite, cuts were inevitable. Initially, tariffs on new projects were reduced 45%, and later a new decree retroactively limited the number of production hours qualifying for subsidies for existing projects with feed-in tariff contracts:

Spain’s solar industry lobby group, the Asociacion Empresarial Fotovoltaica, estimated that the second decree would effectively reduce tariffs received by PV plants by 30 per cent, forcing many of the PV companies to default on their debt. Infrastructure Investor magazine called the second decree “the Christmas Eve massacre.”

Investment began to dry up almost immediately on greatly increased regulatory risk, and companies were left with no domestic market for their products:

Spanish renewable-energy companies that once got Europe’s biggest subsidies are deserting the nation after the government shut off aid, pushing project developers and equipment-makers to work abroad or perish. From wind-turbine maker Gamesa Corp. Tecnologica SA (GAM) to solar park developer T-Solar Global SA, companies are locked out of their home market for new business. These are the same suppliers that spearheaded more than $69 billion of wind and solar projects since 2004 that today supply more than 50 percent of Spain’s power demand on the most breezy and sunny days….

….”They destroyed the Spanish market overnight with the moratorium,” European Wind Energy Association Chief Executive Officer Christian Kjaer said in an interview. “The wider implication of this is that if Spanish politicians can do that, probably most European politicians can do that.”….

Industry Minister Jose Manuel Soria, who is preparing a wholesale redesign of the pricing for Spain’s regulated energy industry, described the January move as a “first step.” The nation’s energy regulator in March suggested scaling back incentives for solar thermal plants. The government also may impose temporary taxes or caps on renewable plants, Standard & Poor’s said in February….

….T-Solar, which became the world’s biggest solar-farm operator by leveraging its Spanish business, currently has more than 40 running in Spain, Italy and India. While it still makes solar panels in Orense, Spain, they’re bound for Peru. “We have an important pipeline of projects, and it’s 100 percent outside Spain right now,” T-Solar Managing Director Juan Laso, who also heads the country’s photovoltaic power association, said in a telephone interview. “If you take such a brutal measure, what you do is oblige the industry to move out,” he said of the January moratorium.

For the time being, there are still other markets to be served, but as financial crisis spreads, that will be less and less the case. Many other jurisdictions are cutting, or contemplating cutting, subsidies. The remaining market is set to shrink relentlessly, squeezing overcapacity of supply.

A Decentralized Renewable Reality?

Renewable energy is never going to be a strategy for continuing on our present expansionist path. It is not a good fit for the central station model of modern power systems, and threatens to destabilize them, limiting rather than extending our ability to sustain business as usual. The current plans attempt to develop it in the most technologically complex, capital and infrastructure dependent manner, mostly dependent on government largesse that is about to disappear. It is being deployed in a way that minimizes a low energy profit ratio, when that ratio is already likely too low to sustain a society complex enough to produce energy in this fashion.

Renewable electricity is not truly renewable, thanks to non-renewable integral components. It can be deployed for a period of time in such a way as to cushion the inevitable transition to a lower energy society. To do this, it makes sense to capitalize on renewable energy’s inherent advantages while minimizing its disadvantages. Minimizing the infrastructure requirement, by producing power adjacent to demand, and therefore moving power as little distance as possible, will make the most of the energy profit ratio. The simplest strategy is generally the most robust, but all the big plans for renewables have gone in the opposite direction. In moving towards hugely complex mechanisms for wheeling gargantuan quantities of power over long distances, we create a system that is highly brittle and prone to cascading system failure.

In a period of sharp economic contraction, we will not be able to afford expensive complexity. Having set up a very vulnerable system, we are going to have to accept that the the lights are not necessarily going to come on every time we flick a switch. Our demand will be much lower for a while, as economic depression deepens, and that may buy the system some time by lowering some of the stresses upon it. The lack of investment will take its toll over time however.

While a grid can function at some level even under very challenging conditions – witness India – it is living on borrowed time. We would do well to learn from the actions, and daily frustrations, of those who live under grid-challenged conditions, and do what we can to build resilience at a community level. Governments and large institutions will not be able to do this at a large scale, so we must act locally.

As with many aspects of society navigating a crunch period, decentralization can be the most appropriate response. The difficulty is that there will be little time or money to build micro-grids based on local generation. It may work in a few places blessed with resources such as a local hydro station, but likely not elsewhere in the time available. The next best solution will be minimizing demand in advance, and obtaining back up generators and local storage capacity, as they use in India and many other places with unstable grids. These are relatively affordable and currently readily available solutions, but do require some thought, such as fuel storage or determining which are essential loads that should be connected to batteries and inverters with a limited capacity. Later on, such solutions are much less likely to be available, so acting quickly is important.

Minimizing demand in a planned manner greatly reduces dependency, so that limited supply can serve the most essential purposes. It is much better than reducing demand haphazardly through deprivation in the depths of a crisis. Providing a storage component can cover grid downtime, so that one no longer has to worry so much when the power will be available, so long as it is there for some time each day. Given that even degraded systems starved of investment for years can deliver something, storage can provide a degree of peace of mind. It is typically safer than storing generator fuel.

Some will be able to install renewable generation, but it will not make sense to do this with debt on the promise of a feed-in tariff contract that stands to be repudiated. Those who can afford it will be those who can do it with no debt and no income stream, in other words those who do it for the energy security rather than for the money, and do not over-stretch themselves in the process. Sadly this will be very few people. Pooling resources in order to act at a community scale can increase the possibilities, although it may be difficult to convince enough people to participate.

It is difficult to say what power grids might look like following an economic depression, or what it will be possible to restore in the years to come. The answers are likely to vary widely with location and local circumstances. Depression years are very hard on vital economic sectors such as energy supply. Falling demand undercuts price support, and prices fall more quickly than the cost of production, so that margins are brutally squeezed. Even as prices fall, purchasing power falls faster, so that affordability gets worse. Consumers are squeezed, leading to further demand destruction in a positive feedback loop.

Under these circumstances, the energy sector is likely to be starved of investment for many years. When the economy tries to recover, it is likely to find itself hitting a hard ceiling at a much lower level of energy supply. With less energy available, society will not be able to climb the heights of complexity again, and therefore many former energy sources dependent on complex means of production will not longer be available to simpler future societies. Widespread electrification may well be a casualty of the complexity crash.

We are likely to realize at that point just how unusual the era of high energy profit ratio fossil fuels really was, and what incredible benefits we had in our hands. Sadly we squandered much of this inheritance before realizing its unique and irreplaceable value. The future will look very different.


Home Forums Renewable Energy: The Vision And A Dose Of Reality

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    Nicole Foss

    In recent years, there has been more and more talk of a transition to renewable energy on the grounds of climate change, and an increasing range of pu
    [See the full post at: Renewable Energy: The Vision And A Dose Of Reality]


    I appreciate the huge amount of energy that you put into this article.

    Problem was well highlighted.
    Possible solutions were well enunciated.
    (No s-f scenarios.)

    Thanks. Again.


    Wonderful article – I will be drawing as much attention as possible to it, as its essentil reading for all partcipants in a democracy, which, worldwide, is facing its biggest challenges ahead with a looming 2nd great depression complicated by peak oil (and all resources other than ‘spin’), peak world population and climate change, all destined to synergise malevalently in the not too distant future.
    Green politics all too often has equal measures of scientific and technological illiteracy and moral superiority of ‘natural solutions’ which laughably include the idea that mans inate goodness and brilliance will always find a way — god give me strength ! Only yesterday, I read that enough solar energy falls on Australia to satisfy our electricity requirments 10 times over – no mention of cost, land requirements, grid issues etc that your article outlines so well — ignorance is bliss, but disturbingly green politics is the tail that wags many a dogged political system, resulting in more ‘dream solutions’ instead of confronting the hard reality — less will be more, more common.
    Cheers, GasMan.


    I enjoyed the article. I especially liked the terminology of energy inheritance and energy income.

    Unsubsidized rooftop solar right now seems like it has a reasonable payback period at about 12 years, with expected equipment lifespan of 20-25 years. However the concept of living a powered life only while the sun is shining is going to be quite the adjustment to make if we don’t find some good storage technology pretty soon.

    And its important to ask just how much oil goes into making each solar panel. Until the solar factory (and all the suppliers) are run by solar power…all we have is an oil-to-solar-electricity converter at a certain conversion rate.

    The holy grail has always been some local low-cost storage technology (my favorite are PEM stack hydrogen) that allows us all to timeshift the power use (with some hopefully low loss rate), unfortunately its all just too expensive right now.

    All those issues with grid management really says to me how critical it is to keep power solutions as local as possible.


    I have been writing about this for years and I lived off grid for 30 years.
    Solar and wind energy capturing devices as well as nuclear are not alternative energy sources. They are extensions of the fossil fuel supply system. There is an illusion of looking at the trees and not the forest in the “Renewable” energy world. Not seeing the systems, machineries, fossil fuel uses and environmental degradation that create the devices to capture the sun, wind and biofuels allows myopia and false claims of renewable, clean, green and sustainable.

    There is a massive infrastructure of mining, processing, manufacturing, fabricating, installation, transportation and the associated environmental assaults. Each of these processes and machines may only add a miniscule amount of energy to the final component of solar or wind devices yet the devices cannot arise without them. There would be no devices with out this infrastructure.
    A story in pictures and diagrams:
    From Machines making machines making machines
    An oak tree is renewable. A horse is renewable. They reproduce themselves. The human-made equipment used to capture solar energy or wind energy is not renewable. There is considerable fossil fuel energy embedded in this equipment. The many components used in devices to capture solar energy, wind energy, tidal energy and biomass energy – aluminum, glass, copper, rare metals, petroleum in many forms to name a few – are fossil fuel dependent.

    Wind used by sailing ships and old style “dutch” wind machines is renewable and sustainable.
    From: Energy in the Real World with pictures of proof.

    Roger Yates

    This article is basically arguing that the present economic and political power structure is inviolable. Of course this is not true. It may be that people are not willing to challenge it. That is likely. But I think it is nonsense to suggest that, given our technical abilities and organisational scope, we cannot build a system of renewables, and quickly. Political and economic systems CAN be changed. All the material resources are in place. It is simply a question of will and organisation. To suggest that the present power structures cannot be changed, as if they were some natural force like gravity or entropy is risible. This whole issue can, and should be reduced to this kind of fundamental debate. All you are saying is that we are behaving like idiots. We already know that.


    Of course, an argument could be made that the non-renewable energy industries have been the beneficiaries of even more generous subsidies. Much, much more generous subsidies. A topic for another day, perhaps.

    Good distillation of these issues, Nicole. Thanks for putting this article together and publishing.

    The electric grid seems to be a good analogue for the issues of centralized/authoritarian vs. distributed/local organizational scales. Or perhaps Tainter’s view that big complicated things become unmanageable at some point.

    And of course there’s the little matter that, once exponential growth is no longer possible, the only thing left to do is collapse…


    Spot on, Nicole.

    I raised the issue of the sustainability of ‘renewables’ in a blog post entitled Bootstrapping Sustainability over a year ago.

    It’s not a patch on sunweber’s excellent blog posts mentioned in these comments, but I have a few interesting links for additional reading.

    Transnational electricity Supergrids etc will have an effect on simple things like trade deficits/surpluses. This’ll need to be factored in to any cost/benefit analysis (but probably won’t be).

    Nicole Foss

    Roger Yates wrote: “This article is basically arguing that the present economic and political power structure is inviolable. Of course this is not true. It may be that people are not willing to challenge it. That is likely. But I think it is nonsense to suggest that, given our technical abilities and organisational scope, we cannot build a system of renewables, and quickly. Political and economic systems CAN be changed. All the material resources are in place. It is simply a question of will and organisation. To suggest that the present power structures cannot be changed, as if they were some natural force like gravity or entropy is risible. This whole issue can, and should be reduced to this kind of fundamental debate. All you are saying is that we are behaving like idiots. We already know that.”

    I am left wondering if you read the article, since you raise a straw man argument. I have, in fact, argued that no amount of political will can achieve the physically impossible, no matter what kind of political system is in place. This would be true even if we were not facing financial upheaval and an economic depression. Since this is exactly what we are facing, the task is even more insurmountable.

    St. Roy

    Hi Nicole:

    Great sequel to “Searching For A Miracle” by R. Heinberg.


    “E-Cat” invented by Andrea Rossi
    Check it out Ms Foss
    You’ve apparently not heard of it, its been one year now, and the technology checks out just fine.
    It works, doesn’t pollute, runs for 6 months till it needs refueling.
    Low Energy Nuclear Reaction (LENR)
    It uses powdered nickel as a fuel.
    The reaction involved changes nickel into copper.
    Check it out, it doesn’t make wind and solar obsolete, but it will fill in the gap.
    THe inventor says he’ll soon have personal units available.
    Each personal (home) unit will have a 5 kw output.
    Larger units are in the megawatt range.
    You’ll be pleased once you learn about the E-Cat (energy catalyzer)~!


    Thanks for a brilliant yet chilling analysis. Clearly a human society of 7 billion and rising cannot continue in its current form. The future appears bleak indeed for most.


    Shedding some light humor on a dark subject.

    Philosophy is like being in a dark room and looking for a black cat.
    Metaphysics is like being in a dark room and looking for a black cat that isn’t there.
    Theology is like being in a dark room and looking for a black cat that isn’t there and shouting “I found it”.
    Science is like being in a dark room and looking for a black cat using a flashlight.



    I understand that social change can seem impossible for some, particularly energy change. However, there has been some interesting new developments in the field of “cold fusion,” now called LENR, Low Energy Nuclear Reactions.

    I realize many will dismiss this out of hand as nonsense, on the basis of scientific reaction to Fleishmann and Pons 1989, but NASA and many others have been investigating these new claims, particularly the claims being made by Italian inventor Andrea Rossi about his E-Cat invention, as well as those made by Defkalion Green Technologies of Greece/BC Canada.

    I think, given the threat that climate change presents to humanity, one would be a fool to dismiss these claims outright without doing your due diligence. Perhaps The Automatic Earth can write an article about these developments? That would be appreciated.

    There are many online sites that talk about LENR, but e-catworld, Cold Fusion Now!, and the Vortex discussion group at https://www.mail-archive.com/[email protected]/msg72408.html are good places to visit to get informed.

    Rossi also has his own blog, where you can ask him questions. Search for “Rossi Journal of Nuclear Physics.”

    There is a great deal of controversy about this subject, as the Forbes article by Mark Gibbs, referenced by Rothwell at the Vortex link above, shows.

    Whatever might come of these new claims, it is certainly a lot of fun to follow this story.

    Social change does happen, believe it or not, and when it does, it happens a whole lot quicker than most people would ever imagine possible.

    Something tells me that the Rossi Energy Catalyzer, or E-Cat, is, in fact, that “Google of energy,” that Daniel Yergin talks about in “The Quest.”


    Sojourner Soo post=5882 wrote: I understand that social change can seem impossible for some, particularly energy change. However, there has been some interesting new developments in the field of “cold fusion,” now called LENR, Low Energy Nuclear Reactions.

    Rossi also has his own blog, where you can ask him questions. Search for “Rossi Journal of Nuclear Physics.”

    LENR is a big “maybe” at this point. Two or three nuclei fusing over the course of a day does not make it anything more than a laboratory curiosity.

    As for Rossi’s invention, don’t you think it is telling that he keeps, as a closely-held secret, the contents of his magic box? In public demonstrations, it has been hooked up to a standard, industrial-sized cylinder of hydrogen — and the simple reaction 2H2 + O2 -> 2H2O could easily account for the demonstrated energy output of the box.

    Whether Rossi is deliberately defrauding investors, or whether he has deceived himself as well, history and peer review will eventually tell; history can be the harshest judge of such diversions.


    Thanks for the article Nicole.
    AND Remember that 40% the worlds people are subsistance horticulturists.
    They could use things like solar hot water heaters and cookers.

    The root of most problems is bigness.

    that the felicity of purported “heights of social complexity” is a chimera. Better to just drop into your heart


    Oops here’s Kohr’s Wiki
    and one of his books”Breakdown of nations”


    DIYer: I’m not at all surprised that Rossi refuses to divulge the contents of his “magic box.” He hasn’t yet received his US or International patents, after all. As for the chemical reactions, that has already been ruled out as the explanation. I think, in this case, a lowly engineer has the traditional physicists over a barrel. He’s already received a safety certificate for his latest “Hot Cat” from SGS in Europe. Apparently, he is about to announce the validation certificate has been received, according to rumour. By the way, DGT’s energy catalyzer, the Hyperion, has been validated by a NASA scientist. In any event, as I said, it’s a story well worth watching. We’ll know for sure in the very near future.


    As Carl Sagan used to say, “extraordinary claims require extraordinary proof.”
    Where’s the copper? In one demonstration they claim to have used one gram of hydrogen — stoichiometry dictates that they would have made fifty-something grams of copper in the claimed reaction. That would be a couple ounces of copper, enough to see the silver color of nickel give way to the red color of copper. Or if they are present as oxides, you could dissolve a sample in a strong acid and see the green color of nickel salts change to the blue color of copper salts.

    Until the boxes can be taken apart and analyzed, it is just another perpetual-motion machine.

    [edit] It’s worth noting that, if Rossi wishes to prove his claims in a neutral setting, he can have the lab/scientists sign a non-disclosure agreement. Pretty much a standard legal form in the technology bizzniss. Rossi can strictly control what information is revealed.
    And the patent offices of the world, even though the occasional frivolous invention slips through, have a policy of not granting patents to perpetual-motion machines any more.

    [edit 2] Going to Wikipedia, and looking over the isotope tables for nickel and copper, and considering Rossi’s proposed LENR, I have concluded that his invention is 100% fraud. No other conclusion is plausible.

    Roger Yates

    “No amount of political will can achieve the physically impossible”.
    This is a political statement. By physically impossible you mean that it is not possible to maintain our present profligate lifestyles with other than cheap fossil fuels. We will therefore need to change our expectations.That is a political task. Humanity has been through worse. It is doable. We really are able to get off the tiger’s back of consumerist growth and reorganising society in a sustainable way. You appear to take the present modal of profligacy as a given. I am disputing that.


    Some wishes your posting left me with: that you had addressed the possibility of hydrogen as a renewable energy source; that you had addressed the recent (30 Sept 2012) press release of the U.S. Naval Research Laboratory about its being very close to a breakthrough process that extracts carbon dioxide (CO2) and produces hydrogen gas (H2) from seawater; that fuel cell technology lacks only two major items to be a totally sufficient source of energy for planet earth: cheap hydrogen and investment in fuel cell production. Major innovations are, to be sure, opposed and suppressed by vested interests in existing set-ups, but it is demonstrably true that huge innovations are sometimes obtained through the (“bad”) military-industrial complex — eg, the Interstate Highway system which Ike wanted for military reasons.


    “We are likely to realize at that point just how unusual the era of high energy profit ratio fossil fuels really was, and what incredible benefits we had in our hands.”

    All that riches never made us happy, as it never can. The Netherlands is one of the richest countries in the world. Out of 16,7 mil inhabitants, 1 mil are on anti depressants, .3 mil are alcoholic.

    The simple truth is that happiness comes from inside.

    jal post=5881 wrote: Shedding some light humor on a dark subject.
    Philosophy is like being in a dark room and looking for a black cat.
    Metaphysics is like being in a dark room and looking for a black cat that isn’t there.
    Theology is like being in a dark room and looking for a black cat that isn’t there and shouting “I found it”.
    Science is like being in a dark room and looking for a black cat using a flashlight.


    Wisdom is like being in a dark room and not looking for a black cat.



    It is revealing that you chose not to give us a link – ensuring that we got hundreds of results on Google so that you could let us know that the one we read is not THE one.

    Anyway, here is one of them

    “Australian sceptic Dick Smith has offered $AU200,000 for proof that the device works.”


    Non-Australians should know that this Dick Smith has managed/owned a huge number of electronic shops around Australia. He is not a sceptic, more likely a realist.


    Nassim, this is Rossi’s website


    video search


    Its a provably safe non-polluting heat generating device.
    The prize will never get paid out, because quite a few corporations and govt institutions proved it this year during the trial run.
    He offered a trial for any corp that want to try it.
    Quite a few took him up on the offer. A US firm in NJ and others from many other countries. They paid in, and got a single 20ft unit (I think 10kilowatt but not sure).
    The reaction produces immense heat, stable for the 6 month life span of the feul.
    Boil water, drive turbine, etc.
    Some buying into the trial thought they were getting an electric generator at first. When the water in the machine didn’t boil, they thought it was a failure. The machine creates massive heat output, safely.

    Boil the water with the heat, duh.

    Search “hot-cat” on his site.
    The latest videos show the details.

    Worth a watch.


    StoneLady of Enlightenment!
    I thought I would likely never post a comment online again, but I cannot refrain from thanking you very much for all the time and effort you have made–not only regarding this article–but in all that you do, researching, writing, and speaking around the world.
    I look for this piece to appear on other relevant sites on the web, even those sites whose main subject matter is not energy, but including finance, politics, peak everything, survivalists, and other related and entertwined entities.
    As for the E-cats! LOL Those who believe that should form a new religion.


    sorry, meant to say

    prize won’t get paid out to any one because so many participated in he trial and simultaneously proved his claims about the reaction and the heat.

    Not sure what the Aussie scientist thinks about it now.
    It just makes heat, lots of it, for 6 months, before it needs shutting down and a new unit installed.
    He says eventually it should be a matter of simply refeuling one reactor, but at the moment its in its infancy and each box needs to get hauled away with a new one re-installed.

    They’re very modular. So its very easy.

    Otto Matic

    Check this article out. I think TAE has been a victim of these techniques in the past and present.

    COINTELPRO Techniques for Dilution, Misdirection and Control of an Internet Forum


    “…An anonymous writer posted an important new report on disruption at Pastebin. It is in the style of a leaked law enforcement memo, although we cannot vouch for its authenticity as a document produced by a whistleblower. However, we have seen these techniques repeatedly used to disrupt Internet debate, and so – even if only copying the style of a real memo – it contains valuable information which all web user should know…”


    Thank you Otto. I will try not to fall for that so I am not taking any further the bait presented using perpetual motion suggestions 🙂


    These are two of the clips worth a view. 90min each.
    Anybody with questions about the actual performance of Rossi’s device should take the time to see the results.
    They were repeated independently across the planet.
    It concerns me how – at the moment a new tech is developed – “authorities” in the field step in to immediately claim it *cannot* be true. Skepticism is one thing but some of these reactions seem obsessive.

    Doesn’t seem to be an issue generating over 2500f heat.


    not a perpetual motion machine, it runs out of fuel
    not sure why you think its an overunity claim?

    the prejudice isn’t neccesary
    And it’s very telling how easily some choose to shout ‘troll’ as soon as there understanding is challenged.

    Live & learn
    Learn & grow


    “Something tells me that the Rossi Energy Catalyzer, or E-Cat, is, in fact, that “Google of energy,” that Daniel Yergin talks about in “The Quest.””

    I agree Sojourner Soo, strange how some poo poo anything they know nothing about.


    Maybe David Matherly could explain in his own terms what is happening in this amazing new energy generator. I fell for it three years ago. You’ll get over it Dave.


    majormocambo – fell for it? Before it was tested?
    Tested this year, and the results were verified.
    All this admitted according to Rossi and his people.
    But have you brushed up on the newest results?
    Those were discussed last month, so I’m not sure how you could’ve “fallen for it” 3 yrs ago??


    And no, I cannot explain – I’m not involved.
    They can, and you can listen to what the results were.
    Or you can ask Rossi yourself about the test.
    Keep in mind, about 1 yr ago investors actually paid for units and fuel, and followed his instructions, and reported they worked exactly as he claimed.
    The Sept 2012 press conference in Europe is in the videos.

    The hotcat didn’t exist 3yrs ago, so you couldn’t have fallen for that either.
    It sustains the temps found in a kiln. 2500 range.

    Working from memory here; but as far as the nickel to copper issue, I’m pretty sure they say there is less nickel in the spent fuel but they found copper where there had been none.
    So they surmise some of the nickel became copper.


    Dave Matherly post=5893 wrote: Nassim, this is Rossi’s website


    Boil the water with the heat, duh.

    Search “hot-cat” on his site.
    The latest videos show the details.

    Worth a watch.

    I hate to be all Debbie Downer about this, but after watching the videos and looking at the science on the ecat site, it doesn’t look like a useful source of energy. I didn’t have a lot to do this afternoon.

    There’s a .pdf file from a physicist, with lots of greek letters in it and good sounding theory. Except that, from what little I know about nuclear science, he has beta decay running in the wrong direction. So I’ll neglect that for this post.

    Even if we assume that the claims made by Dr. Rossi are correct, he is only claiming a modest EROI for the operating units. And his claim does not account for the consumables used by them, nor for the cost of constructing the units. He was only comparing heat output to the electricity consumed. Hydrogen and nickel are also consumed (if the theory is correct) — apparently the nickel does not have to be isotopically pure, but still, you’d need an awful lot of those “fusors” to generate enough power to make the hydrogen and refine the nickel. In the video, it looked like they could just barely boil water.

    At that EROI, Rossi’s device makes my rooftop solar array look like the first gushing oil well drilled at Spindletop.


    Sorry Dave, I can’t exactly say how long ago, my bad. Please check out other resources before getting too excited. One might be here (below), there are many more. I realize its hard to convince people one way or the other, but do try to look at both sides.

    When your done researching the e-cat, move on to the thorium reactor. Have fun!!

    Nothings going to replace the transportability and energy density oil has. Our civilization is based on it. It would be a better use of our time to figure out how we are going to unwind this huge energy bubble we are in and get people to realize we are on the downslope of our industrial civilization. No more growth economies, mass consumption, etc….


    Unsubsidized rooftop solar right now seems like it has a reasonable payback period at about 12 years, with expected equipment lifespan of 20-25 years.

    Then why are all those companies, GE, Siemens etc., closing their solar divisions?


    So we have almost an entire thread devoted not to what Nicole writes, but to the pros and cons of snake oil, a discussion that seemingly originates in a persistent inability to understand the laws of thermodynamics. One would think Homer Simpson made that already very simple topic accessible to just about anyone, but the probably archetypical dream of free, clean and virtually unlimited energy proves too much for many people’s critical thinking.

    Who would do much better paying attention to what the original article has to say.

    PS: When in a thread there’s one mention of the next one in an endless line in brilliant inventions that upset the status quo and can save the planet, that’s one thing. When there’s more than one and they pretend to be independent from each other, I get suspicious.

    Otto Matic

    I was helping to install PV panels in the early 70’s on roof tops when they were frightfully expensive and much less efficient than present ones. That was more than 40 years ago.

    Do you see them covering the roof tops of Clusterphuck American Suburbia by any chance?

    Of course not.

    I was lobbying to get the U.S. military in the 70’s to cover the rooftops of their bases world wide with PVs, you know, for security reasons, keep everything running when the natives inevitably tried to cut off their fuel supply chains and such (for Imperialistic behavior)

    A series of huge PV panel orders from the military back then would have enormously helped to drop the UNIT COST of each PV panel AND stimulated techno development of the PV panel (after all we had $600 toilet seats in military transports), paving the way to offer MUCH lower and higher quality PV panels to the unwashed masses. They when ahead and bought those huge 12′ satellite TV dishes instead to better bring the Vast Wasteland of Network TV Propaganda into their ticky-tic Mac-burbia Malinvestment ‘homes’.

    And instead of cheap affordable solar electric power from the MIC, we got killer drone technology and still no vast installation of PV panels on military bases or Clusterphuck Suburbia, 40 years later.

    Wow, humans ARE clever, and insightful and ‘forward thinking’ and ‘adaptable’

    Forty years pissed down a hole on just one aspect of the alt energy dilemma.

    ALT energy will never get off the ground because the funding mechanism has now been completely destroy by the global financial PONZI, for DECADES, an impressive HUMAN accomplishment all by itself.

    What ever techno wizardry humans pull out of their ASSES, it’s way too little and too late.

    Credit as a viable funding mechanism is dead for decades and will be for at LEAST a full 60-80 year generational memory span.

    Bankers and credit will be reviled and associated with EVIL for decades, read up on the psychological aftermath of the South Seas Bubble and it’s effect on funding countries and their operations.

    The BUBBLE we are in now is the Mother of All Bubbles, dwarfing the South Seas one by several orders of magnitude, dude.


    illargi –

    Then why are all those companies, GE, Siemens etc., closing their solar divisions?

    I’m sorry, did I miss your factual response to what I said, which was that rooftop solar seems to have a payback period now of about 10-12 years?

    Likely the payback period (without incentives) is not attractive if you aren’t paying normal residential rates, but at that rate, assuming an annual built-in rate increase, and given Mom is in San Diego, it really does work. It pencils out even more attractively if you try to look for other investments that can get you a guaranteed 5% ROI on invested capital while capping your power bill inflation risk, and you end up not finding any.

    Aha. I found a paper backing me up, from bloomberg new energy finance:


    As of April 2012, the factory-gate selling price (ex-VAT) of modules from ‘bankable’ or “tier 1” manufacturers was $0.85/W for Chinese multicrystalline silicon modules, $1.01/W for non-Chinese monocrystalline silicon modules, with thin film modules and those from …

    And on an installed, fully loaded basis assuming 6% financing:

    The LCOE for PV c-Si has declined by nearly 50% from an average of $0.32/kWh early 2009 to $0.17/kWh early 2012, while that for PV thin film experienced a drop from $0.23/kWh to $0.16/kWh in the same period. According to BNEF, the current (Q1, 2012) levelized cost ranges from $0.11/kWh to $0.25/kWh

    And even at those prices, First Solar is still making money. Just not as much as they did before.

    Naturally, location matters a great deal. San Diego is a much better candidate than Frankfurt.

    But I stand by what I said before. Rooftop solar, even unsubsidized, is starting to look attractive – depending on location, especially in the low interest rate environment.

    And in three years? I think it will be an even clearer win by then.

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