A newly published research paper out of Oxford suggests that a rapid energy transition will not "cost" anything -- it will save nearly a trillion dollars relative to the no-transition case. And the faster we move, the more money we save. I talk with complex-systems scientist and co-author Doyne Farmer about his optimistic projections.
At about 50:55, it is said that electricity costs may decline "to the point where the actual generation cost is fairly negligible, the main cost is going to be distribution and storage."
In much of the US, homeowners' electric and gas bills already show that per-unit Supply rates (e.g. cost per unit of energy or commodity) are now lower than the per-unit Delivery rates. Splits of 40% supply and 60% for delivery are common. This relationship is likely to get much worse for gas particularly as per-unit gas delivery rates rise dramatically due to electrification.
Because the cost of delivery is primarily the cost of long-lived fixed assets, a utility's delivery costs are largely fixed and unrelated to actual volume of sales. As gas demand declines, the fixed cost of existing gas delivery infrastructure will be shared among a shrinking number of ratepayers who will be driven to use less and less gas. If gas use declines by 50%, the per-unit rate for gas delivery MUST rise at least 200% because the total cost of delivering gas won't decline significantly. So, even if the gas commodity became free, the cost of using gas will still increase. (Note: This is likely to cause a "death spiral" as reduced consumption forces delivery rates to increase and those increases will motivate additional demand reduction.)
Gas utilities have never before been faced with the problem of cost recovery during a time of declining demand. Today's cost recovery methods (depreciation, etc.) were all designed with the assumption that demand would either be stable or grow over time. The problem of "cost recovery during a time of declining demand" will undoubtedly become a significant focus of rate proceedings in the very near future.
The history of learning curve eco systems for semi conductors, computers, cell phones is pretty remarkable. Example:1 Billion transistors on a $100.00 microprocessor compared to 100,000 transistors in the 80's for the same price. For clean energy the decline may be faster than past industries. Why? Basically the automation of design improvements (simulation, computer aided design, AI) is accelerating development. Tesla achieving higher margins than Toyota is an example. To accelerate the pace, the public needs information to embrace this change just like they did the internet and cell phones. Vote for candidates that embrace funding clean energy to save the public $Trillions, invest in EV's and home conversions to heat pumps knowing the transition is accepted as normal/the way the world is now.
This was a great podcast. Doyne Farmer really did a good simulation paper. It is nice hearing that it looks like the complete solar transition can be finished in less than 10 years. I have one comment when Farmer said that he is currently looking at what sites, world-wide, can deliver solar. As I have commented before, the 2021 DOE NREL, pg 32, Solar Futures Study states that by 2035, the entire nation (USA), in every state, can deliver up to 280GW of solar power per some states (some states can power 30 - 70 GW). These values are with Electrification. Even Sweden does solar.
This is a fascinating development, and it touches on many of the things we have been working on at Solutionary Rail (www.solutionaryrail.org). The big problem with a transition is so many people are coming at it from different directions; if we can all get some kind of alignment on this to get our efforts working in a common direction, we can punch above our weight.
Given the clout of fossil fuel interests, we pretty well have to.
What an outstanding conversation, absolutely fabulous, heartening, and illuminating. One question for both of you - in discussing the future of painting solar on rooftops, impregnating windows with solar, and presumably on boats, vehicles, and many parts of physical infrastructure throughout the Technosphere, what are the human and biosphere implications of these cumulative broadcast nanoparticles, i.e., health impacts, ability/inability for circularity of resources? thanks!
Learning curves will lead to extremely cheap clean energy
At about 50:55, it is said that electricity costs may decline "to the point where the actual generation cost is fairly negligible, the main cost is going to be distribution and storage."
In much of the US, homeowners' electric and gas bills already show that per-unit Supply rates (e.g. cost per unit of energy or commodity) are now lower than the per-unit Delivery rates. Splits of 40% supply and 60% for delivery are common. This relationship is likely to get much worse for gas particularly as per-unit gas delivery rates rise dramatically due to electrification.
Because the cost of delivery is primarily the cost of long-lived fixed assets, a utility's delivery costs are largely fixed and unrelated to actual volume of sales. As gas demand declines, the fixed cost of existing gas delivery infrastructure will be shared among a shrinking number of ratepayers who will be driven to use less and less gas. If gas use declines by 50%, the per-unit rate for gas delivery MUST rise at least 200% because the total cost of delivering gas won't decline significantly. So, even if the gas commodity became free, the cost of using gas will still increase. (Note: This is likely to cause a "death spiral" as reduced consumption forces delivery rates to increase and those increases will motivate additional demand reduction.)
Gas utilities have never before been faced with the problem of cost recovery during a time of declining demand. Today's cost recovery methods (depreciation, etc.) were all designed with the assumption that demand would either be stable or grow over time. The problem of "cost recovery during a time of declining demand" will undoubtedly become a significant focus of rate proceedings in the very near future.
Thanks for this! Question: Has a similar analysis been done on cost curves for heat pumps?
The history of learning curve eco systems for semi conductors, computers, cell phones is pretty remarkable. Example:1 Billion transistors on a $100.00 microprocessor compared to 100,000 transistors in the 80's for the same price. For clean energy the decline may be faster than past industries. Why? Basically the automation of design improvements (simulation, computer aided design, AI) is accelerating development. Tesla achieving higher margins than Toyota is an example. To accelerate the pace, the public needs information to embrace this change just like they did the internet and cell phones. Vote for candidates that embrace funding clean energy to save the public $Trillions, invest in EV's and home conversions to heat pumps knowing the transition is accepted as normal/the way the world is now.
This was a great podcast. Doyne Farmer really did a good simulation paper. It is nice hearing that it looks like the complete solar transition can be finished in less than 10 years. I have one comment when Farmer said that he is currently looking at what sites, world-wide, can deliver solar. As I have commented before, the 2021 DOE NREL, pg 32, Solar Futures Study states that by 2035, the entire nation (USA), in every state, can deliver up to 280GW of solar power per some states (some states can power 30 - 70 GW). These values are with Electrification. Even Sweden does solar.
This is a fascinating development, and it touches on many of the things we have been working on at Solutionary Rail (www.solutionaryrail.org). The big problem with a transition is so many people are coming at it from different directions; if we can all get some kind of alignment on this to get our efforts working in a common direction, we can punch above our weight.
Given the clout of fossil fuel interests, we pretty well have to.
David and Doyne,
What an outstanding conversation, absolutely fabulous, heartening, and illuminating. One question for both of you - in discussing the future of painting solar on rooftops, impregnating windows with solar, and presumably on boats, vehicles, and many parts of physical infrastructure throughout the Technosphere, what are the human and biosphere implications of these cumulative broadcast nanoparticles, i.e., health impacts, ability/inability for circularity of resources? thanks!