Energy economics 101

Oil company engineer Ed Bullerdieck takes aim at CONTROL columnist Béla Lipták's recent column on the country's Global Energy Policy and makes the case for dealing with the issue much differently.

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Cost of floating platforms: I do not have a good estimate of offshore platform infrastructure costs, but believe $2,500/ft2, or about $56 billion/square mile is not unreasonable (anyone have a better number?). To support 17,500 square miles of offshore platforms might cost $975 trillion exclusive of costs associated with solar cells and hydrogen generation, compression, and transportation facilities.

There has got to be a cheaper way. Why not mount on existing roofs? It would seem there is a lot of roof already out there. To arrive at a ball-park estimate let's assume 500 ft2 of roof per person by 15 billion people, or about 270,000 square miles of available surface. That's plenty. This has the advantage of keeping energy generation close to the population centers (literally on the roof). Alternately we might mount them in the deserts, there are plenty of these, too, but unfortunately are not as close to the users.

What about hydrogen
Many, including CONTROL’s columnist look towards turning that solar energy into hydrogen. Why convert it? Before we assume anything about conversion and transportation modes for hydrogen we need to determine how the energy gets used. Assuming we use solar energy we also need to determine how to store energy through the night.

Per the EIA, about 27% of U.S. domestic energy usage is for transportation. The remaining 73% represents (for the most part) fixed consumers who's energy needs could presumably be met by electricity. Residential needs could presumably be generated "on the roof" for most homes within 45° of the equator (20% of current usage).

Industrial and commercial consumers (53%) would likely have higher energy demands than could be accommodated onsite, therefore an electrical distribution system would be required (and it already exists!) The probable model would involve sales from production in excess of demand from residential and low power consumption industrial/commercial users (warehouses, malls) and production for purpose (solar farms) to the electrical grid for use by large consumers. The advantage is this uses existing infrastructure; however some technical changes would be required to support decentralized power generation. The advantage here is no conversion (to hydrogen or anything else with its attendant inefficiencies) is required to meet most energy requirements.

Overnight storage does not present much in the way of a technological hurdle and could be accomplished by any combination of electrical, mechanical, thermal, or chemical means (batteries, flywheels, water ponds, etc.).

As mentioned, liquid fuels dominate because they offer ease of distribution and handling combined with a high energy density. Areas with low population densities and/or a low level of technical achievement are not likely candidates for any other type of fuel. Hydrogen (or any gaseous fuel) does not offer the same distribution efficiencies, and when you factor in the weight of the containment vessel, it doesn't offer as high an energy density. Similarly, batteries offer their own set of problems.

Picture this …
A likely scenario would be that liquid fuels would still dominate, but that the sourcing would change from oil to solid fuel (coal, bitumen) liquifaction possibly using hydrogen from water dissociation, agricultural (fermentation to alcohols and/or hydrogenation of cellulosics), and synthesis from CO2 and hydrogen (assumes green house gas emission recovery occurs and CO2 becomes available in high volumes at low cost). High density transportation may very well move away from liquid fuels (electricity for railroads, nuclear for ships, compressed gas or possibly hydrogen–for buses). Maintaining the existing liquid fuels distribution infrastructure and existing technical know how would seem to be much more economic than replacing it with a new infrastructure. (Need we digress into the safety issues of hydrogen - high flammability limits with almost assured ignition from any high pressure leak for example.)

One could see hydrogen taking a part in the future economy as a gradual substitute for natural gas through the existing natural gas transmission system. Hydrogen could be generated at the gulf coast and mixed with natural gas for transport.  Percent hydrogen would be raised by say 5%/decade, a rate slow enough to allow the replacement of natural gas appliances at the normal expected retirement rate, each generation redesigned for use with the current gas composition as required due to the very different air/fuel ratios and fuel flow rates per BTU for natural gas versus hydrogen. Ultra-high pressures, slurries, or other exotic solutions would not be required.

Regardless, let's stay away from statist solutions. No cadre of “experts,” no matter how well educated can reasonably be expected to optimize our energy future and that includes the Global Academy of Science. That experiment has been run and didn't work well. The market works because the guys making the decisions are putting their own money on the line and therefore, have a strong incentive to get it right. There will also be many more people working on (parts of) the problem than any academy could support, and by covering more ground are more likely to find the right solution.  Sure, a lot of people will get it wrong (and lose a lot of money), but some will get it right. Yes, there is a place for government support of research, but no place for coercion.

This is not to say that some aspects of a hydrogen economy will not emerge. However, it will at best be a small part of the overall energy supply and distribution solution. The optimum solution is the one that solves the problem the most economically, not the one with the best toys or sexiest publicity. Economics will (or should) dictate our energy future.

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