When Solar is Too Cheap to Meter

We are at the point where solar power is down to a solid $0.03-$0.04/Kwh in sunny markets, and it is starting to distort the power market. This is a wonderful thing; it is going to force some really smart brains to come up with solutions for what to do with inexpensive peak power. I think this is a debate where we can all add ideas, and I spent half a day brainstorming ideas. 

https://www.lazard.com/perspective/levelized-cost-of-energy-and-levelized-cost-of-storage-2018/

It reminds me of the promises made by the nuclear industry in the 1950s, when power was going to be “Too Cheap to Meter”. I think the opposite is going to be true. Power, when the sun is shining, will be cheap; but power during the rest of the day is going to cost a lot more, and the meter is going to be needed. 

I have not done full nIR workups on the following, but I am applying the nIR framework mentally. 

• CO2 is worth $50-75 per tonne
• Peak vs non-peak energy cost difference is $0.04-$0.08/Kwh, before carbon pricing
• Real capital cost is 6-8% for long-life assets
• The land is “free” (I know that is not true)
• Solutions have to be simple, or automated 

Home/office ideas: 

Thermal batteries: As this article from Australia pointed out, you don’t have to store energy in electricity form. An Australian university created a thermal battery for the university’s HVAC system with solar. We can store solar energy as ice or as hot water, and time-shift our demand. A/C, heat, and hot water collectively are 40%+ of the energy demand for the average house or office building. I can see the point where every house has a tiny ice house next to it for cooling, which would make ice while the sun shines, and transfer the cooling to the house in off-peak hours. 

Appliances: I know if my washing machine had a time delay setting and my wife knew it ran for free at 2 pm, she would use it. Same with the dishwasher, and I think designing a fridge with a thermal battery built-in would not be that complex. Heck, my freezers are thermal batteries, and I bet they could be designed to operate with 80% of the power consumption over 8 hours a day. Building a thermal ice battery for the back of a freezer to shift energy consumption would not be that hard; it would increase the weight of the freezer, but the value is there. 

Regular batteries: The bigger the gap between peak and off-peak power costs, the more batteries are worth and the more focus we get on regular batteries. I still expect a serious battery breakthrough, and real economic pressure can help us get there. 

Daytime charging for electric cars: I expect that in 10 years, corporate parking lots will be 30% electric car charging spots. There is no better way to store energy; and, bonus: free afternoon charging will reduce the desire to check out early. Just set up the chargers so that the price is free from 2-5pm, and you pay if you want to charge the rest of the day. 

A friend founded Booster Fuel, a company which goes and fills up gas tanks for corporate employees. The social/environmental cost of removing the trip to the gas station is huge, and talking to him about it is fascinating. People go buy gas before and after work and increase transit times. This morning, my wife was out of gas. I know she detoured to get it this morning, adding 15 minutes of peak driving to the Portland city commute. 

Industrial demand: 

Every equipment manufacturing company should be asking the question: what can they do to make their equipment’s power consumption variable versus on a baseload, and what is the cost? 

Hydrogen is a regular theme for a product that can store energy when it is inexpensive, but I also expect to see a push to other industrial plants on a cyclical basis. 

Pumping: If I were to build a new pumping system in the Atacama Desert, I would build the pipes slightly larger and put in extra pumps as batteries. My bet is that there is a point where that pump system becomes a natural battery, and at a fairly affordable price. The water has to be consumed at elevation, and if you pay $0.03 versus $0.12 per KWH to get it there, that really matters to the bottom line. Every water utility in the world has pumps, which could be optimized for peak power consumption and pricing.

BHP Billiton is talking about going “100% renewable," but long-term, they can build in a lot of natural battery capacity. I think investing in solar in Chile makes sense, but storing that variable energy is also required, and pumping uses 30-50% of the energy footprint of a copper mine in Chile. If they designed future desalination/pumping systems for peak power pricing, I think there would be an ROI, as well as a positive nIR impact. 

Transportation: Trains, conveyor belts, pipelines; if they are not operated at 100% of capacity, they have the ability to shift demand. Running a pump at over its optimal design on the energy curve because energy is “free” is not a bad way to store energy, as long as you don’t wear it out or face other issues. 

Pulp/paper: I know very little about the industry except that others have told me that setting up a paper plant for cheap power pricing would be easy. 

Chemical industry: I believe there are many chemical industries in the Middle East and other sunny places where power consumption can be peaked/shaved. Again, you would have to design new plants to take advantage of it, but I expect it will happen as solar gets cheaper. 

Desalination: There is a lot of capital in a desalination plant versus its operating costs, but I bet that if you gave the plant designers the peak/non-peak power options, they could figure out how to take advantage of the infrastructure. Freshwater is a battery like no other; it can be stored cheaply and has a long life. Also, in most of the places in the world where we badly need water, we have abundant solar energy. 

Aluminum/steel: Can we make a smelter or electric arc furnace that does not need continuous power? This is where it gets tricky, but it’s worth figuring out. 

What’s on your list?

I am sure you all have ideas of what to add to this list, so let’s start a debate. What would you do with cheap peak electricity?