The Return of the Make-Your-Own Steam Age

At the beginning of the industrial revolution, right when Watt was getting his steam engine going, there were no centralized power plants. It was hard to move steam, so you put the coal-fired engines right where you needed the power.

Electricity changed all that because it was easier to move electrons. But the old model of making your own power held strong. In the early days of electricity, say, around 1905, it wasn’t clear whether centralized power systems would gain the technological momentum necessary to rearrange the long-standing method for factory functioning.

There were some obvious advantages to making your own power — it was under your control, you could make or less as needed, it might be a competitive advantage, etc. But eventually the hassle of it all and the efficiencies gained by spreading the capital cost of building a plant over more customers won out. By 1915, it was clear that Edison’s model of one power station serving all the customers in a geographical area via an electric grid had won.

Now, we read in the Times’ Green Inc blog that Ausra, a once-hot solar thermal startup, is planning to bring the old model back. They want to sell the hot steam they produce with their concentrating solar systems directly to industrial plants, bypassing the grid altogether. It’s an interesting move by their CEO, Bob Fishman, who is an old Calpine natural gas utility executive.

“Ausra says it will now focus less on solar power generation (which put it in competition with other power generators),” we read, “and more on providing solar-thermal technology and equipment for industrial customers — including fossil fuel power plants — in need of steam.

Who needs steam? Well, for one, traditional fossil fuel plants could use that steam to reduce the amount of coal or natural gas they have to burn. You’d end up with a hybrid system, which sounds like it could be complex. But some regular old industrial customers might want steam as steam. Ausra’s release notes advanced oil recovery and food processing.

For a fossil fuel plant, they could offset a considerable amount of their emissions with one of Ausra’s 50 megawatt equivalent plants. Remember that they lose about two-thirds of the heat content of the coal they burn in turning that heat into electricity. So, you’d really be offsetting something like 500 million BTUs per hour of coal. Different coals generate more or less CO2, but the US average is around 215 pounds per million BTUs. Doing the math for a coal plant that’s running about 90 percent of the time, you’d get a decrease in CO2 emissions of about 423 thousand tons. That seems like a lot, but even if every coal plant in America installed one — an unlikely scenario — that would only reduce the coal industry’s emissions by about 15 percent.

Still, it’s an interesting business model to work with the fossil fuel plants and not against them. It shows how flexible green tech companies are willing to be to succeed and how often they revive earleir models of power production.

Image: The “derelict steam boiler” from an old steam-driven sawmill in Alaska.

 

The Middle Ages of the Electric Utility Industry

The utility industry has been in decline for half a century, according to a mid-80s book by a Merril Lynch analyst, Leonard S. Hyman.

In America’s Electric Utilities: Past, Present, and Future (which, now would be distant past, past, and recent past, of course) Leonard S. Hyman lays out a narrative for America’s electric utilities that goes roughly like this:

1900 or so: Edison and Westinghouse put the industry together, but there’s substantial competition on all fronts, including the customers themselves, who might very well choose to make their own power.

1907: The utilities get regulated, supposedly because they were a “natural monopoly.” Utilities, in effect, get the government to guarantee that their investors will get a “fair rate of return,” which no one defines. The interesting thing about Hyman’s argument here is that he thinks the utilities allowed/pushed for regulation largely as a way of reducing risk so that they could borrow money more cheaply. It’s yet another way in which financing the kinds of huge project that is an energy plant has affected the structure of the industry.

1915: Things settle down. The electric utility model we know is firmly established. Now, it’s just a matter of making more demand, so that plants can get bigger and run more efficiently.

1915-1935: Holding companies grow as a form of leverage and an easy asset with which to swindle sucker investors. Actually, the form of these companies look a lot like our real estate investment vehicles.

1935-1945: Roosevelt Administration smashes through the holding companies, requiring that they actually have a reason to exist aside from skimming money off the public good. It takes a while to break up all those companies. And there’s a lot of other stuff going on.

1945-1965: These were “the good old days,” Hyman says. “The industry increased the size of power plants, and those new plants utilized fuel more efficiently.” Coal prices went up but were swamped by efficiency increases. Demand rises steadily, something like 7-8% each and every year. All you do to plan is say, “Well, Bob, I say we build more.” Bob assents, each and every time.

1960-1973: The use of oil for electric generation skyrockets. Growing from just 6.1% of generation in 1960 to a peak of 16.9% of generation in 1973. Utilities were trying to get away from burning all that nasty sulfur-heavy coal. Meanwhile, conventional coal plants stop getting more efficient. Demand stops growing. Nuclear power sucks up all the money in the industry as huge plants hit major cost overruns. BUT, here’s the bright side: the use of coal falls to about 44% of the electric mix. And right in the middle of this period, power goes out for 30 million northeastern customers. Everyone says, “WTF? I thought you had this figured out.”

1973: Energy prices skyrocket, consumers pull back. The utilities are stuck with all this excess capacity and cost overruns and all that noise. It’s important to note here that the ‘73 embargo was just the match that lit the powder keg.

1974: Investors start to realize that perhaps utilities are a little riskier than they thought. Too big to fail, but certainly small enough to lose money. That heavily influences how much money they have to pay to borrow more money.

1979-1983: Three Mile Island. Oops. Even if it didn’t kill a whole bunch of people, it sure scared everyone. Another strike against nuclear power. The bigger one, though, was the costs. Here’s an amazing quote, written like a truly outraged analyst, “On October 5, 1983, Cincinatti G&E shocked investors by announcing that the Zimmer nuclear station, supposedly 97% complete, would required $2.8-3.3 billion in additional investment and two to three years of work to be finished. That news was the first of many disastrous nuclear crises that followed.” $6 billion in construction was “written off to oblivion” and stock prices plunged 60-80%.

What went wrong? Here’s Hyman’s short list:

The nuclear crises of 1983-1984 pushed a number of utilities close to bankruptcy. Demand for power was unpredictable. Development of nuclear power had been arrested. Many utilities had excessive capacity. The concept of central station power was under attack. New methods of regulation [he means environmental regs] seemed to put a premium on discouraging demand for central station power… Many utility executives and government officials concluded that electric utilities must turn to smaller power stations (some owned by non-utilities) and must exchange power from surplus to deficit regions as much as possible… Utilities could no longer run as monopolies.

Who won in all this? There’s really no one to cheer for but the anti-hero: Coal.

And now, things look just as grim as they did back in the 70s and early 80s. All those coal plants that provide baseload power for the U.S.? Well, they’re getting old. The Edison Electric Institute says the industry will have to spend between $1.5 and $2.0 TRILLION over the next 22 years just to keep the lights on. Who is going to pay for all that? Probably not the utilities themselves. Take a look at Xcel: they had net income of about $500 million. That’s not much. And Xcel is one of the big utilities.

On the other hand, as they like to say in Silicon Valley, it’s the big problems that present the big opportunities.

 

Coal the Anti-Hero

Gregor MacDonald, of Gregor.us, left an outstanding comment on my previous post, What about the C in RE < C? which looked at how the cost of coal electricity generation has actually fallen during this past century of heavy coal use.

In this comment, he imagines coal as an “anti-hero” stuffed with “cheap BTUs.” It’s brilliant stuff, really. Check out this excerpt:

You’ll find that Coal, to the curious and open researcher, keeps inserting itself into just about every energy equation, both historically and contemporaneously. For a writer on a the trail of a narrative arc, coal is potentially both a protagonist and nemesis. An anti-hero, really. And it’s of course not for nothing nemesis coal appears again in such late iterations of advancement like google.org. I mean, you’d think one could simply ignore coal by now. That coal would have been rendered useless, dumb, mute. But no. There is anti-hero coal stuffed with cheap BTUs. And here is the cool thing about coal: coal causes so many problems, while being so useful, that it triggers the search for alternatives. And yet, coal has this really nasty habit of continually pricing–either in nominal “money” terms or in energy terms–just a notch or two below other fossil fuels.

Sigh.

Kind of mirrors what Steven Chu said a while back when he called coal his “worst nightmare.”

Image: flickr/untitledprojects

 

The Population of Mechanical Iron Slaves

The tendency of early 20th century writers to equate machines with slaves was disturbing. Here’s one characteristic example from A History of Commerce (1907). Clive Day writes:

A simple operation in arithmetic will show the amount of work, in human equivalent, now done by steam. Taking, for example, a modern country, Germany, we find engaged in industry and transportation slightly over ten million people, while we find engaged beside them another population of mechanical iron slaves (steam-engines), variously estimated as equivalent to one hundred to two hundred and fifty million people. These slaves cost for food (coal), attendance, doctor’s bills (repairs), and burial expenses (including the cost of replacing them once in twenty-five years), only about $2.50 a year apiece.

Burial expenses? Doctor’s bills? In this passage, machines are actually an army of slave-ghosts, two hundred fifty million of them, laboring side by side with their human counterparts, fed by fossilized sunbeams.

Which actually rhymes with the real history of industrialization. As coal power grew through the 19th century, powering textile manufacturing, it created enormous demand for cotton. And you know who grew and picked cotton? Millions of actual slaves — and later poor sharecroppers — who created the raw materials which coal-fired industries turned into products.

 

Histories of Steam and Capital

I’ve added a bunch of new resources to the “Steam” reading list, drawn from Google Books’ excellent scans of a series of histories from the early 19th century through the early 20th.

In particular, I’d draw your attention to the biography of Watt, who everyone knows, and Boulton, who far less people know. Watt made the steam engine work, but Boulton put up the money and built the business model — leasing their machines to coal miners — that allowed it to prosper. Boulton was part of the Lunar Society, which was a group of scientific thinkers that modern day investors like Andy Kessler want to claim as their forbears.

I’m interested in all this because the history of green tech is lousy with inventors who built prototypes, mockups, designs, pilot plants, or otherwise showed their ideas would work, but who never got the funding they needed. One type of money seems particularly lacking: commercialization capital, like what Silicon Valley provides today. The investors take on tons of technological risk knowing that if it works, there will be a market (i.e., if you can make ultracheap electricity, people will buy it). Just a flag to keep an eye on that part of the social history of green technology.

Image: CC/Chris Allen. “Grazebrook Engine: This is a Boulton & Watt beam blowing engine re-erected on the Dartmouth Circus Roundabout, on the A38(M) in Birmingham, UK.” It was originally built in 1817.

 

What about the C in RE < C?

After a recent discussion with an agent, I’ve been thinking really hard about the narrative arc of Inventing Green. Connecting a bunch of different types of people, technologies, and eras takes time and effort, it turns out. Particularly if at the end of the story, I want to give you something beyond a few dozen amazing anecdotes about the green tech of the past.

I’ve been kicking around a ton of ideas about how to tell this story — and what the takeaways will be. First, I said to myself, “Why am I interested in green tech, not green?” The answer is that “tech” is about progress, disruptive progress, often, but that works within the framework of a society. It’s end point is not (necessarily) a change in consciousness, but an industrial-technological change. In the simplest terms, the apotheosis for green tech is Google’s useful formulation, RE < C, Renewable Energy less expensive than Coal.

That’s important because while the public consciousness can and sure has changed over the last several thousand millenia, I’m not sure I can make the argument that the change in social consciousness precedes technological change. And the history of people trying to direct the public will away from consumption is pretty abysmal.

So, then I started thinking that my green tech story stems from tech. And tech stems from Silicon Valley and the ecosystem of capital and resources that’s developed.

The interesting thing about all the people making the jump from information technology to green technology is that the products in both cases couldn’t be more different. Electrical energy is the most commodity of commodities. It is exactly the same everywhere you plug into an outlet and 99.9% of Americans use it. You’re trying to make a direct replacement of one electrical energy with the same electrical energy just with a different, cleaner backstory. What a challenge! There is no differentiation possible; in fact, any differentiation would be a bad thing because people could not be more used to the awesome simplicity of the electrical outlet.

So what do you do? Well: RE < C. It becomes a cost game. That’s interesting because renewable energy technologies have improved substantially through the years. Some say that the cost of wind power from 1980 to 1990 dropped by 80 percent. It certainly fell from Palmer Putnam’s turbine or Marcellus Jacobs turbines before that. But here’s the problem: those cost drops have been outpaced by fossil fuel efficiency increases. In RE < C, the C hasn’t stayed constant. In fact, despite the inefficiencies and waste that remains, the C-folks have done a remarkable job increasing the efficiency of their means of converting C into KWh.

One historian shows that the maximum power output of a steam turbine skyrocketing from 4 kilowatts in 1885 to 5000 kilowatts in 1910. Try keeping pace with a 1000-fold increase in the total power availability. While wind and solar could do it now, they sure as hell couldn’t do it then. Meanwhile, the amount of steam consumption (directly related to the amount of coal you needed to burn) per kilowatt hour dropped from 200 to 13.2 pounds.

As laid out in a 1918 letter to the New York Times, check out the following numbers for the pounds of coal it was necessary to burn to get one horsepower (1 horsepower is about 3/4 of a kilowatt):

Twenty years ago [1898] a consumption of ten pounds of coal per horse power was not considered excessive; to-day the average will be between five and six pounds, and in the best plants about two and one-half pounds. It is anticipated that… [new] engines are capable of producing one horse power for each pound of coal burned.

In 1933, an economist estimated that on average, throughout the world, 4 pounds of coal were necessary to generate one horsepower-hour of work. (He used that to compute the daily work output of the world per day, which is kind of awesome, so I reproduced that chart to the right.)

Nowadays, a pound of coal produces about a kilowatt-hour of electricity, about 1.35 horsepower-hours. In 1885,  when fossil fuel power plants took dozens of pounds of coal to make a few horsepower, all kinds of people were working on solar and wind machines — because they were damn near competitive with the wonky early steam turbines and engines. But improvements in the thermal efficiency of steam plants drove down the cost of power below what the working renewable technologies of the day could compete with. By deriving more power from the same amount of fuel, fossil fuel electricity generators could offset almost any increase in the cost of fossil fuel, keeping their technology cheaper than renewable alternatives.

A hundred years later, though, that type of efficiency increase had leveled off. As a Power Engineering article stated back in 2002, “In the 20th century, steam turbines became the most powerful electric power generators available, accounting for more than 50 percent of the world’s installed power generation capacity. However, many people, even some power engineering professionals, had come to view steam turbines as a mature technology that would not experience any remarkable achievements in the near future. Indeed, by the late 1980s, the thermal efficiency of new steam turbines had practically stabilized.”

The same article, however, goes on to note that turbine efficiencies might be increasing again because of “new heat-resistant high-chromium-percentage ferritic-class steels” and better “steam path design.” Still, these gains seem likely to be incremental — and certainly nothing like the massive drops in the cost of wind and solar power.

But Vaclav Smil, one of the world’s primary energy analysts, has a nice chart in his Energy at the Crossroads, showing that despite the hopes of industry analyst types, the average efficiency of US generation, after huge increases from 1900-1960, has been stagnant since the early 1960s. He also points out that the average energy content of coal pulled out of the ground is dropping because we’re using lower-quality seams.

Which raises the question, and I don’t have answer to this yet: when was the exact moment when renewable energy started getting cheaper faster than traditional sources were getting cheaper on a kilowatt-hour basis?

The likeliest place to look, it would seem, would be during the 70s energy crisis when coal prices skyrocketed, as seen in the chart below, which the Energy Information Administration adjusted for inflation. My guess is, too, that the rising price led to some increases in efficiency in the burning of coal. The price came back down, so that in 1997, you see the cost of coal right back down where it was pre-70s. This is another tough thing about the RE < C. There are two steps in making energy from fossil fuel, extraction and production. The fuel cost goes up and down, even if RE can get out ahead for a while, C can suddenly plummet. The volatility of the entrenched power production methods makes it really difficult for investors who can suddenly find themselves wiped out. It takes a certain kind of risk-loving investor, a certain kind of disruptive capitalist to make that kind of investment. And I’m not sure they existed until the last 5 or 10 years, post-tech boom.

Anyway, I’m going to be looking for this type of information over the next week or so, mining my burgeoning green tech library. My completely uneducated guess is that 2005 might have been the year when RE costs started falling fast enough to jumpstart investment in that, as opposed to continuing to push down the price of C, as the logic of power pushed money towards the technologies most likely to generate cheaper energy.

 

Chinese Power Generation Growth 2002-2008

The non-2008 growth rates are why people like Michael Shellenberger tell a certain tech magazine things like, “”If China burns all the coal that it is set to burn between now and 2050, we are super-deeply fucked.” The 2008 growth rate is why people like the environmental economist, Alan Randall, say things like, “These are not ordinary times, but there is a silver lining – recessions tend to be good for the environment.”

This data is coming out of Richard K. Morse’s group at Stanford, who told the New York Time’s Andy Revkin that even though China “had seen slowdowns in the growth in electricity supplies recently, often because of shortages of coal or the ability to get the fuel where it was needed,” the jump off the cliff beginning “in the last few months is new.”

Via > Andy Revkin’s DotEarth
Image Credit: Richard K. Morse, Stanford University. Data from China’s National Bureau of Statistics

 

Foreshadowing Google: Coal, Advertising, and the Cost Per Inquiry

“ENGINEERS have found that 43 percent of the coal used by the average industrial plant fails to produce power,” begins this advertisement for advertising, which compares the trials of engineers looking for efficiency with the tribulations of ad men trying to prove their worth.

“In advertising, as in fuel,” we read, “the big problem is to get maximum results at the lowest cost.”

The advertising copy writer, placing himself in the mocassins of the average businessman, reasoning, “Is every dollar I spend for advertising bringing full returns in sales or good will?”

Of course not, he answers himself, but not before placing advertising in the realm of economic prime movers. “Like coal, advertising is a basic industrial force that always has at least partial value — no matter how wastefully it is used.”

The following case study is presented. A certain manufacturer was running an advertising campaign with a coupon attached. Through this data collection method, they found that for every set of feet in the door, it cost them $3.50. BUT, through the genius of the J. Walter Thompson Company, the Cost Per Inquiry dropped all the way to $0.03.

This is a brilliant advertisement, I think, for an industry that was/is obviously considered kind of fluffy. Attaching metrics like Cost Per Inquiry, a Google-special, makes the functioning of consumer desire prodded by words and images sound like simple engineering. Not alchemy but science.

Google talks algorithms, J. Walter Thompson talks coal efficiency, but really it’s the same idea: clothing your business in the language of a dominant and respected industry.

Image: Library of Congress, American Memory: Advertising collection

 

The Amnesiac Civilization and Energy

I picked up Vaclav Smil’s Energy at the Crossroads yesterday at Moe’s in Berkeley. A historian of technology at the University of Calgary, he points out that our large-scale “prime movers” were created before 1920. Turbines and internal combustion engines do almost all human work — and that gives them incredible social and technical inertia. Here’s a taste of his outlook from a presentation (pdf) he gave a couple years ago:

Appraisals of long-term prospects of technical and economic developments have become increasingly devoid of appropriate historical perspectives. But this blindness of progressively more amnesic civilization will not force a different outcome: future technical developments will not conform to simplistic notions of accelerated development and exponentially declining costs of new conversions. Recent costs of many renewable techniques have been actually increasing (Makower, Pernick and Wilder 2006). PV silicon prices have more than doubled, cost of structural steel, aluminum and plastics for wind turbines has been rising as has been the cost ethanol fermentation from corn because all of these techniques depend on large inputs of more costly fossil energies.

Image: The Georgetown Steam Plant, completed in 1917. Library of Congress: Built in America collection. “The Georgetown Steam Plant is an early reinforced concrete structure housing America’s last operable examples of the ‘first generation’ of large scale, vertical steam turbine electric generators. The structure contains sixteen, 500 horsepower stirling boilers which supply steam to two vertical turbines. The smaller 1906 unit generates 3000 kilowatts and a larger 1907 unit generates 8000 kilowatts. In 1917 Seattle Electric installed a 10000 kilowatt horizontal turbine generator unit manufactured by the General Electric Company. The Georgetown Steam Plant was used primarily as a standby and peaking facility. It provided alternating current for general use and direct current for the Seattle streetcar system. It is the last operative example of vertical curtis turbines in the United States.”

 

Coal: Solidified Sunbeams (Planted for Humanity)

Here we have one of the most poetic descriptions of coal that you’re likely to see. It’s from a National Geographic article written in the throes of World War I and titled, “Coal—Ally of American Industry.” The picture is captioned: Beneath These Bare Rocks Lie the Solidified Sunbeams Stored by Provident Nature for Resourceful Man. Solidified Sunbeams!  In the hands of this able chronicler and evangelist of/for coal, he — like the science he loves — transforms coal into much more:

Under [Man's] touch coal becomes comfort in the home or death at the battle front; yields a corrosive acid that burns lie fire or a sweetness that makes sugar seem insipid; gives off a gas that smells like a bad egg, but is as harmless as chicken; is transformed into colors that make the rainbow envious of their brightness and variety, and into explosives the thunderbolt jealous of their power.

Dang! No wonder we use so much of it. How many other substances do you know that can make both rainbows and thunderbolts jealous? Tell you what, potassium chloride isn’t gonna do that for you.

And indeed William Joseph Showalter puts his finger right on the problem with fossil fuels: they are just too damn useful. They are energy dense — so you can do a lot of work with them – and relatively abundant — so you don’t have to pay a lot for them. Put it together and you have enormous productive power at relatively low cost.

The problem is that we have run out before. First it’s happened locally, like Pennsylvania basically running out of coal. Then it’s happened nationally, like American oil peaking in 1970. Globally, we’ve never really run out of the major fossil fuels — oil, natural gas, and coal — but it’s looking increasingly likely that we will and not in a long, long time, but soon.

Clearly, my reading — and reporting from the world’s biggest geology conference — have me thinking about the previous energy busts in history. David Rutledge, a Caltech professor ranging outside his field, came up with a new way to calculate the world’s reserves of a given resource. The shocking conclusion of his research is that we might actually pull — and burn — a lot less coal out of the ground than we previously thought. That has all kinds of implications for global warming, climate change policy, the future of the planet, the necessity of creating alternative technologies, etc. You can check out my story for Wired Science, if you want to here more about that stuff.

More importantly for my book is that he developed his method based on the history of previous energy production. He went back and looked at previous cases of resource exhaustion – whale oil, British coal, American oil (which peaked in 1970, if you hadn’t heard) — and fit curves to the data, looking for the “ultimate” amount that would ever be produced of the given resource. It turns out that using this model, which admittedly is pretty speculative, you could have predicted these previous peaks just based on how much coal or whale oil was coming out of the ground or oceans. He’s got a great set of slides that detail his methodology and provide a brief tutorial of the great busts of energy history (ppt).

It just so happened that I also began reading Petrolia, by Brian Black, which details the very first oil boom (and bust). From 1859 to 1873, the Allegheny mountains of Pennsylvania were the number 1 oil producing region in the world. Mostly because they had the petroleum market to themselves there at the beginning. What they were actually competing against was whale oil, increasingly scarce as whalers were forced to search more and more ocean to kill and eviscerate the same amount of whale, and various animal lards (I know: gross). By 1850, there was an $8 million whale oil market and a bustling trade in the stuff. Whalers would go out for three to five years to bring back a few thousand gallons of burnable oil.

In this early section of the book, Black presents some excellent evidence that earlier oil distribution systems and some lamp design innovations allowed for the rapid introduction of petroleum into the American economy. Because all these companies were playing in the same space: the light market. Something to burn to get out of the dark.  Illumination!

“Creating affordable lighting possessed the divine potential of increasing time in the day,” we read.

There is something godly about transforming geological history into human time, to taking these “solidifed sunbeams” that were “planted for humanity by a bounteous Providence in the Carboniferous Age” and turning them into the extension of human time, a few more hours allotted to each of millions of individuals.

The scale and size of the industry that arose seems totally out of step with the simple convenience that light provided.

To see them gathered at a rate of more than two million tons a day, transported hundreds of miles, and then, under the alchemy of science, transmuted into a thousand forms—heat for the fireside, light for the darkness, motion for the railroad train, power for the factory, fertility for the soil—is an illuminating lesson, showing how man, the creature of Nature, through science makes her wonderful forces his servants.

And then you run out. The year before Showalter wrote — though he probably didn’t know this — Pennsylvania anthracite coal hit its peak and has been declining ever since.

Images: National Geographic.