Power Plant Efficiency Hasn’t Improved Since 1957
Editor’s Note: Today we are happy to bring to you a guest post from Sean Casten, CEO and President of Recycled Energy Development.
Americans have a habit of framing our scientific history as a series of Great Inventors, from Eli Whitney to Thomas Edison to Afrika Bambaataa. The history books say each was prodded by Adam Smith’s invisible hand to come up with the great technological advances that have made our country a home of innovation.
There’s a problem with this mythology: sometimes there’s no invisible hand. Sometimes short-sighted government regulations give preference to bad technologies over good ones — stifling innovation and blinding us to our own ability to make progress.
Nowhere is this mythology more evident than in our energy system, the most heavily regulated and subsidized industry in the country. A host of bad regulations have made this system grossly inefficient, contributing both to global warming and to high power costs.
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The US today converts fossil fuel into electricity at 33% efficiency, throwing away two-thirds of every unit of fuel we burn in cooling towers and smoke stacks. That’s the same conversion efficiency we had last year. That’s the same efficiency we had in 1980. In fact, you have to go all the way back to 1957 to find a year when the electric sector wasted more energy than they do today.
During the same period, we’ve seen automobile fuel economy skyrocket (especially on a horsepower-adjusted basis). We’ve seen massive increases in the efficiency of our electric appliances. We’ve even seen boring old steam boiler efficiency increases with modern controls, recuperators and preheaters. And yet the efficiency of electricity generation is stagnant.
It’s not stagnant because we’ve hit any fundamental limit. Indeed, studies by the US Department of Energy and Environmental Protection Agency have identified a whopping 200,000 MW of potential (that’s 20% of the peak power demand of the US) for proven technologies that either recover waste energy from industrials and/or cogenerate heat and electricity from a single fuel source.
The worst of these technologies is twice as fuel efficient as the current electric grid. Fully deploying that potential would not only cut CO2 emissions by 20% — about the same as if we took every passenger car off the road — but would also cut our energy costs, simply by burning less fuel. And those are just the technologies we’ve taken the time to quantify.
So what’s holding these technologies back? Nothing more than our regulatory paradigm.
A couple of examples:
- Our century-old electric regulatory model pays utilities a return on their capital investment, but compels them to pass along all operating costs to consumers at zero mark-up. This creates a great incentive to build capital-intensive boondoggles. It completely isolates electric utilities from the economic principles that drive “normal” businesses, wherein capital and operating cost reductions are a route to greater profits. This has conspired to make our electric sector openly hostile to efficient power generation. It explains why their efficiency hasn’t moved since 1957, and why that sector now accounts for 42% of US CO2 emissions.
- The Clean Air Act mandates end-of-pipe pollution control technologies that universally impose
additional parasitic loads on industrials and power plants to run baghouses, catalyst beds, electro-static precipitators and any number of other technologies. All these parasitic mandates have the perverse consequence that our environmental policy mandates reduction in criteria pollution and mandates increases in CO2 emissions. Worse, a facility that has the temerity to improve the energy efficiency of their process will almost certainly trigger New Source Review, under which they will have to come into compliance with new, more stringent permits than the one they currently operate under. These two features of the Clean Air Act conspire to make many industrials openly fearful many otherwise sensible steps to lower their greenhouse-gas signature (and lower their operating expense.)
None of this is to suggest that we should not continue to pursue technological revolutions, of course. But if those technologies bring about cheaper, cleaner, more efficient energy, they will find themselves blocked by precisely the same regulations that are keeping existing technologies out of the market. Technology is important — but regulatory reform to remove our barriers to energy efficiency is the critical path.
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Uncle B the reason that you have the huge cooling towers is so that you can quickly cool the steam back to water so that you can use it to generate more electricity. If you didn’t have them they would be much more inefficient. further more do you want to live within a mile of that power plant ? no well then whoes houses could you heat. By the time you pipe it over to your house it would be cold. Also how much to pump all that water? more or less than the electricity to heat the same house? Industry is too short term to benefit from some warm water. As for snow removal what happens in the summer. Frankly these ideas are so simple compared to the grid balancing optimisation or the physics profs who designed these powerstations. It think most of these views are somewhat naive.
Lozanova’s and Grave’s remarks really put the blinders on the issue, and it’s time we take them off.
First, Lozanova laments (correctly) than the Clean Air Act needs reform, and that the utility industry market model is upside down. The Clean Air Act may need to be reformed to get us a modern version of what we want- clean air. That means a graduated schedule for improvements that drives the industry to implement state of the art technology to meet OUR- that’s us the public’s- desires for air quality. We all breathe the air, and we all have a right to say what goes into it. That being said, the Clean Air Act prevents a lot of crud from getting into the air that was bad…that was why it was passed, folks- not because of some mass anti-capitalist bender in the 70’s. Lozanova’s implication that we need to defer silly clean air legislation to the primacy of CO2 controls assumes we have all been duped into believing the size of the problems with fossil fuel have not grown, but merely supplanted by more modern problems.
Graves, on the other hand, believes in a happy nuclear future. Unfortunately, the nuke crowd refuses to talk about any of the economics of mitigating the problems with nuclear energy. First, the production issue. Mining and refining uranium is incredibly polluting, and the pollution does not go away. The fact that we have not done a huge amount of it in the US in a long time is a testament to the historical record of the uranium mining industry and the misery it has purveyed in the US and elsewhere in the quieter, abandoned corners of our nation. While I am a firm believer that these issues can be mitigated completely, I also know we will never see these come to pass with our current political and industrial climate. I say this based on the experience of watching energy, forestry, agricultural, chemical and petroleum industries keep any mitigation efforts at arms length unless forced at gunpoint, and this rarely happens. The other tall tree in the nuclear quagmire is the waste issue. We lack both the political will and the technology to guarantee a safe future for the nuclear waste yet to come or a context for the abhorrent past we left behind. Breeder reactors, deposition schemes, etc., have all either failed, been too inherently costly to make sense for the foreseeable future, or been a mere piss in the wind of probabilities of failure and cost/benefit analyses.
The idea that buying into these problems as the only problems we are allowed to choose from is crazy. We are willing to invest so much more money into ever more expensive forms of energy- nuclear, more expensive coal, more expensive petroleum resources, etc. Any economist that can keep a straight face in a room of peers knows this scarcity game will end in tears eventually. The truth is there are enormous economic substitutions for our current choices. The problem is they are incredibly boring to the bloated American way of life. The answer is efficiency. It’s simple economics. Instead of spending twice as much money on 20% more energy, spend twice as much money on capitalization to use less than half the energy. It’s not nuclear, it’s not sexy, but this can be done- and we can see returns in years, not decades or generations. Continuing our search for additional wormholes in the scarcity game make us more sensitive to energy as a factor of production, not less. Efficiency breaks that cycle. If every household in the country were 30% more efficient (a numbingly easy target to achieve in 10 years), it would crush even the most wild-eyed estimates of new energy sources out there today.
With one difference.
We would also pass on what is left to the future through sheer brilliance and foresight- a priceless gift, and one that our ancestors have generally not chosen to do very well themselves.
John Mohr - thanks for the compliment. It has been a busy day, so it took me a while before I could do my daily reading. When I got here, there were already 20 comments to read through.
Mr. Casten - you have some reasonably good ideas, but your logic regarding nuclear power economics needs some improvement. As you rightly deduced with regard to fossil fuel plants, utility rate regulation is skewed in the direction of building very large, central station plants with lots of extras that can be rolled into the rate base to earn a rate of return.
The very same rate of return regulations apply to utility nuclear plants, so they exhibit some of the same characteristics. They are enormous, centralized and stuffed with many extras that have been rolled into the rate base to earn a rate of return. Many of them were “required” by regulators, but those regulations were often written by employees of equipment suppliers or utilities on loan to the regulatory agencies.
There is nothing inherently large scale about nuclear power. The plants I learned to operate would fit pretty comfortably in a fire station in a downtown area. They would be safe enough to be placed where heat is needed - I used to live for months at a time within 200 feet of those power plants and I assure you - I care deeply about my own safety.
There is no reason at all why Recycled Energy Development systems cannot be applied to nuclear power projects, especially if they are on the scale that is being financed by venture capitalists in the United States for companies like Hyperion, NuScale, and perhaps one day soon, Adams Atomic Engines, Inc.
Rod Adams
Founder, Adams Atomic Engines, Inc.
Not efficiency improvements in 51 years… wow! Good argument for cap-and-trade here vs. government picking technologies
Jim Whipple,
You may have enhanced at your plant, but the national data doesn’t lie - no increase in efficiency since 1957.
It bears noting that there are Carnot limits on central power stations and so in your role, no matter how hard you try, there’s not much you can do. The big gains in efficiency come from location power plants close to the load, where they can take advantage of locally-available opportunity fuels (waste heat, etc.) and/or recover exhaust heat to displace on-site boilers. These are the approaches included in the 200 GW DOE and EPA data I cited. But they require deployment of new capital under different models.
This isn’t to suggest that you are doing your best as a power plant operator - simply that under a different regulatory model, your employer might not have spent the money to build the plant you currently operate. (I am presuming that you are employed by an investor-owned utility, as they are the ones bound by this model - other generator owners are generally under much more socially rational/responsible regulatory models.)
Sean
Re: the Clean Air Act
I should be clear that reducing criteria pollutants was really important, and not something we want to roll back. But where some commenters have suggested that the choice between criteria pollution and CO2 is inevitable, I’d take serious issue.
The Clean Air Act, and associated state-level policies are based on what is referred to in the trade as an “input based standard”, which is to say that the more fuel you burn (the input) the more you are allowed to pollute. This is inane. But it is inherent to any part-per-million (ppm) standard that sets emissions limits based on exhaust concentration. This is dumb. What we need is to reduce total pollution, not to reduce the concentration in individual stacks.
But watch what this does. If you double the fuel efficiency of your power plant, you cut fuel use in half. You also cut air flow in half, since you only need half as much for combustion.
So now let’s say that you cut fuel use in half, and NOx emission by 40%. Sounds like a great deal all around, right? Wrong. Because this has the effect of increasing ppm, and therefore falling afoul of your permit. Less fuel, less NOx… and yet blocked by environmental regs. It’s dumb, but it’s built into the laws.
And so a plant that has to choose between higher energy efficiency and an efficiency-compromising end-of-pipe control is forced to favor the latter. We could do vastly better, but are limited by the CAA. So it is not innate to criteria pollution that their reduction must increase CO2 - it’s only innate to the way we’ve chosen to regulate them.
Rod,
You’re right, in the sense that if small-scale nuclear power worked with local heat recovery, it makes a heck of a lot more sense than central station nuke. (Indeed, this is essentially what nuclear subs do, since they use their waste heat to heat the sub, and are in much closer proximity to energy users than is politically acceptable on land.)
But there is still a valid question of what the capital cost would be of those facilities. $3000/kW power is hard to amortize, no matter how you slice it - and the potential for huge cost over-runs doesn’t make that risk profile any easier. Maybe it will come down, but - as a guy who is totally technologically agnostic, and happy to deploy any technology that will help us to meet our mission of profitable CO2 reduction - I have a hard time accepting that the capital/operating risk profile is much better than most renewables at present. Does it have potential? Sure - but it’s not ready for prime time yet.
All:
I should clarify the “deregulation” bogeyman, which has the potential to stir up so much emotion. Alfred Kahn, former regulator of the NY Public Service Commission, the Civil Aviation Authority and the Federal Communication has wonderful insights on deregulation, gleaned from the time he spent as a regulator during those times when gas, electricity, airlines and telecoms were deregulated. Kahn’s great insight is that the process of deregulation shifts the burden of the regulator from consumer protection (e.g., rate-setting) to anti-trust enforcement. In other words, deregulation does not equal anarchy - it simply means that the regulatory obligation shifts.
What California (and by extention, Enron) got wrong was to allow new businesses to enter the electricity space, but didn’t then add anti-trust oversight. Note that the regulator deserves as much culpability for this failure as the regulated. Enron certainly didn’t ask for more regulation - but CA public-utility regulators didn’t raise their hand to ask for their jobs to be replaced by anti-trust enforcers either.
But watch what this has done in the electric space. In most US industries, one makes money by conserving costs. In the electric sector, conserving costs isn’t worth bupkus, since those savings are all passed through. And the biggest operating expense in the utility sector is fuel. And the US electricity industry is responsible for 42% of total US GHG emissions. In other words, the single biggest source of US GHG emissions has no incentive to save their fuel.
If there’s a better example of how central planning fails us, I haven’t found it. We need to give electric-sector participants the opportunity to make more money by conserving costs. And yes, we need to make sure that those participants don’t violate anti-trust rules. But by all means, let’s not paint the CA debacle as deregulation, just because that’s what the regulators called it. It was closer to anarchy than deregulation. We need the latter.
Sean:
I am not agnostic. I can also do the math. In today’s market, $3000 per KW is really easy to amortize with fuel that costs 50 cents per million BTU - like commercial nuclear fuel does.
Based on my last discussion with a very well qualified investment banker, the goal that he is seeking is anything less than $6400 per KW for a nuclear plant.
No details here, but we are very confident in our design.
BTW - I hope you read my first comment carefully enough to recognize that I am pretty well versed with submarine designs and their use of waste heat. After 53 years of at sea operation, the technology is definitely ready for prime time.
Rod Adams
Cheap energy only creates waste. Efficiency is good to make our resources last longer (but making energy cheap is counterproductive to society). Conserve energy. We don’t need to be driving and flying so much, buying and using three TVs per household, leaving computers running overnight, etc.