Interesting Mixed Metaphor - BP Oil Spill and Energy Efficiency

This story from Treehugger highlights an interesting quantification of the BP Oil Spill in terms of energy being wasted.

• The estimated cost to clean up the oil spill ($40 B) is many times greater than the cost to retrofit 75,000 houses ($1 B) and save the energy equivalent of the gulf oil spill every year.
• 75,000 houses = mid-sized U.S. city or large suburb of a major city, like Chattanooga, Tenn. or Providence, R.I.
• A typical home energy retrofit costs around $10,000 per house -- before any utility or governments energy rebates are applied.  

Of course, wasted energy is only a small part of the problem. There is the matter of millions of barrels (>114 million gallons = ~2.7 million barrels in worst case estimate or ~30M gal for a more conservative estimate) of crude oil in the water:

• Oil washing up in coastal habitats killing animals, destroying ecosystems and heading towards Florida and the Atlantic Ocean.
• Tons (>1.2 Million gal) of toxic chemicals being sprayed on it (dispersants) with unknown long term impact
• The effect of the dispersed oil droplets sinking in the water column impacting sub-surface life.
• Tons of methane, >20x more potent than CO2 as a green house gas, that have been released (around 2900 cu ft of methane per barrel of oil = 7.8 billion cu ft = ~112,000 metric tons = ~ equivalent to green house gas effect of emissions from 20,400 cars)
• Increased hyopxic "dead zone" in the gulf (between 8% and 30% larger than normal) possibly from all the methane being pumped into the water along with the oil, further impacting the ecosystem.
• The short and long term cost of health effects from the oil, chemical and gas exposure on clean up volunteers.
• The resulting economic and job loss throughout the market chain as people cannot catch fish, sell fish, buy fish, so fishermen can't buy things thereby hurting local businesses which rely on the fishermen's income. (1% of Lousiana's economic output according to NPR)
• More economic loss from the moratorium on deep water drilling (16% of the economic activity of Louisiana according to NPR).
• The loss in stock value of BP impacting the retirement income and viability of retirement portfolios for large numbers of people, bringing further economic hardship on people already in the middle of one of the worst recessions in recent history.

So interesting comparison: yes... but sort of missing the big picture.

Daylighting with "Alternative" Financing (PTO)

I tried to persuade my management to consider a daylighting experiment in our office. A small area covering around 18 workers' desks would require ten 21" solatubes to achieve a minimum 25 ft-candle illumination level. Total estimate ~$16.5k.
Among other reasons for not proceeding (e.g. it wouldn't be fair to everyone else, we've looked at ROI and electricity savings would be marginal, etc...) , no budget had been set aside for this kind of thing.

$16.5k is in the rounding error for the finances of a company the size of where I work, but assuming that it was not, is there another to pay for it? What about Paid Time Off (PTO) hours? Would employees be willing to give up a certain number of accrued hours to fund daylighting? It certainly seems more likely than asking them to give up cash to do it. Especially if you have a substantial  PTO balance and little prospect of using it all in the near future. PTO is a bit like funny money that way.

If I assume that those PTO hours are worth ~$48/ea ($200k/yr*employee with half as salary and half as benefits and taxes which must be paid), that means each employee would need to give up ~19 hours to fund the project.

Two and a half days in exchange for improved mood and productivity for years to come.
Sounds like a trade you could convince many people to make.

Mo' money, Mo' Money. Mo' Money.

A difficulty of the triple bottom line is the entrenched position that only profit matters. So justifying sustainability expenditures must occur in the context of return on investment (ROI). Redrawing the sustainability system diagram in terms of the profit aspect shows that not much actually changes:

Most of the considerations and feedback loops are still included because they all affect profitability in one way or another. However, since the focus is now on ROI, the message changes slightly to focus on comparing what each aspect costs vs what it brings. At a high level:

Contingency expenses vs Materials Cost

• Does it add more in materials or procurement costs than it saves in insurance, continuity plans, taxes / cap & trade costs, relocation costs and opportunity costs (business disruptions)? 
• Admittedly, the impact of one company on the overall environment is probably small which is why pricing the externalities helps (e.g. carbon pricing) as it focuses everyone on those externalized costs in a consistent, material way.

Utilities Costs vs Building Cost

• Does it cost more to add energy and water efficiency capabilities than it saves in operating costs? Studies say that the payoff is positive (3% - 7% increase in building costs for 10% - 50% decrease in energy usage)
• Not shown here but important for builders is the question of whether green buildings demand a premium in rental rates or have higher occupancy rates (they do by ~13% in $ and 3.5% in vacancy rate).

Productivity Gains & Decreased Training Costs vs Building Costs

• Does it cost more to add indoor environmental quality improvements (e.g. daylighting, thermal controls, exterior views, higher ventilation rates) than you gain through improved worker productivity and retention?
• It helps to consider that payroll costs are generally a much larger fraction of business costs than facilities + real estate costs. So if you can spend 7% in building cost to improve productivity of payroll by 2%, you will still come out very much ahead. Something like:
• For 1000 employees @ 250 sq. ft /ea in office space built in San Francisco is ~ $50M. Amortize over 30 years = $1.6M/yr. A 7% increase is ~$117k/yr.
• For the same 1000 employees @ $150k/yr in payroll costs = $150M/yr. If you can improve productivity by 2%, that is ~$3M/yr.
• ROI ~ 24.

So Mo'Money, Mo'Money, Mo'Money and sustainability really do get along.

Solar Thermal in the Desert - A Design Optimization Problem

Solar thermal power is an efficient, well proven method for generating power from sunlight by concentrating sun light in order to heat up a working fluid that, in turn is used to generate steam to run turbines. You need to put these things where there is a lot of sun. Such places are usually hot and dry... e.g. deserts.

But, running a power plant typically requires significant amounts of water to run and cool the turbines.
This 2002 report summary puts the number for wet cooling at around 15,000 gal / MWh.
Fortunately, there are technologies to use much less water: 200 - 250 gal / MWh, a >90% drop. However these technologies are:

• Expensive: ~7x to 17x the wet cooling system cost 
• Less efficient: 
• power output must be reduced at times when the ambient temperature exceeds the design temperature (to avoid damaging the turbines) 
• Output of the heat cycle drops when the output temperature is high.

So, in this context, when you hear about a project like Ivanpah, a 400MW solar thermal plant to be put in the CA desert, near (~60miles from) Death Valley National Park, you should be wondering where the water will come from.


View Larger Map

Fortunately, BrightSource Energy is using dry cooling so that they "Will use 100 acre feet [~32 million gal] per year, the equivalent of 300 homes’ annual water usage."  If every power plant did this, following the logic of my previous post,  it would:

• easily beat the ~20% improvement you'd need to be equivalent to all buildings being LEED 3.0 for water efficiency
• would be enough to meet the ~46% improvement you'd need to replace all the water used domestically and industrially.

So at least you know where much of the $1.4B in loan guarantees from the DOE must be going and it's a good thing.

Systems Thinking about a Problem at Work

This is an analysis of a situation I saw playing out at work. It revolved around off-shoring labor in an attempt to reduce costs having unintended consequences. In particular, one heroic worker was fixing incoming quality problems in an attempt to "be good" but was, in fact, making the problem worse by hiding the impact of the off-shoring decision.

See the embedded presentation below to step through the problem. I suspect this will look familiar...


I've used a systems dynamics based diagram to sketch out the factors and feedback. I've found this to be a very powerful approach for looking at complex problems to understand the underlying factors.

This site has a pretty good tutorial on how this works.

Differentiation vs Importance

Upon re-reading my last post, I realized that I was fairly unclear about a few important points and that it could easily be misinterpreted as saying I was against renewable energy.

To clarify:

• There is differentiation between traditional grid sources and renewables 
• There is clearly differentiation here beyond price: CO2 generation, fuel security at the very least.
• That differentiation becomes more important as regulatory structures (carbon tax or cap & trade), popular opinion, regional politics or peak oil make it so.

• There is differentiation between various renewable sources (E.g. solar thermal vs solar PV vs wind vs biofuels vs tidal)
• Each technology has characteristics that differentiate it from other technologies: where it can be located, is it distributable, is it carbon free or carbon neutral, social justice concerns (e.g. does it raise food costs, impacting the poor?), impact on wild life and local ecosystems, etc.
• Different vendors of a particular renewable source, though, are largely, I think, competing on price / kW. I'm sure there are exceptions.

• Saving the world as a niche - It is big enough
• Taking 2009 total power usage as 3297 TWh, 90% of which is from non-renewable sources.
• A 30% reduction in demand (989 TWh) from conservation, assuming all existing renewable generation stays in place, still leaves 1978 TWh of non-renewable energy that could be replaced by renewables. 
• Put in terms of solar PV installations, that's $5780 Billion... That's a huge market.

My original point was:

• I decided I wanted to focus on conservation not because renewables are unimportant or non-viable, but because conservation is a higher leverage route to sustainability.
• Differentiation between solar PV generation companies seemed, in the long run, to be a commodity situation where price ruled.

Changing behavior is big leverage: electric bill example.

Expanding on the story from Treehugger.

Buried in the bottom of this TED speech is an example of behavioral economics at work and how you can use an inexpensive approach to leverage large changes in consumption.

The bit of interest is at 10:32 - 11:20


According to this, real world testing has shown results of about 2-3% reduction in energy usage.
Using the numbers from USGBC and DOE (per earlier post):

• a 3% savings in electricity is ~2.1% reduction in total electricity usage which is ~69TWh/yr.
• Assuming the same 2.5kW per installation, 8hrs/day of peak generation & $21.4k/installation
• That's $201B to replace with solar PV.

... and changing the information printed on you bill would cost a few hundred $k to a few $M in software, training, admin, development, rollout, etc...
Say $2M.
So an ROI of  > 100,000?

How many solar panels would that be?

If I wanted to generate all of that electricity using solar PV panels instead of by saving it through conservation, what would that look like?

If you assume 2.5 kW is the average installation size and you can get 8 hours/day of power at that peak level. To generate 231 TWh of energy would take ~31.6 million buildings.

According to the US Census and Dept of Energy, there are about 124 million residential + commercial buildings in the US. That means you'd need an average installation of solar panels on ~26% of all buildings in the US.
That's 1 in 4.
That's a lot.

If you estimate the average install cost at ~$21.4k (assuming Jan 2010 prices and 50% of total installed cost is the module), then that is ~$676 billion.
That's a lot too.

Saving the planet with leverage

According to the United States Green Building Council (USGBC):

In the United States alone, buildings account for:
•    72% of electricity consumption,
•    39% of energy use,
•    38% of all carbon dioxide (CO₂) emissions,
•    40% of raw materials use,
•    30% of waste output (136 million tons annually), and
•    14% of potable water consumption.

 And according to the US Dept of Energy:

• For 2009, total electrical generation was ~3297 TWh. Of which:
• 2960 TWh (90%) was from non-renewable sources
• 337 TWh (10%) was from Hydroelectric and other renewables.

 And if you believe this research result is typical:

The norm is for savings from direct feedback (immediate, from the meter or an associated display monitor) to range from 5-15%.

Then 10% savings of 72% of electricity consumption is 7.2% of 3297 TWh = 231 TWh.
That's 69% of the total renewable energy generated in 2009.

So if you wanted to make the carbon from 231 TWh of electricity disappear, would it be cheaper to spend your money on:

1. increasing the renewables capacity by 69% 
2. putting a smart meter and feedback display / system in every home and business?

And which one could be done more quickly?

That's part of why energy efficiency and control systems is my focus instead of energy generation. They'll both get you there but one seems much more cost effective and possible in the short run than the other.