Transcript Energy Economics Richard Bixler May 2010 http://www

ENERGY OPPORTUNITIES
RICHARD BIXLER
MAY 2010
HTTP://WWW.SOFTTOYSSOFTWARE.COM/
Quantitative Management
work smart
Energy Summary – 1/3
2

World Consumption



Industrialized Energy Use: 3 Main Paths





US, China, EU are the big, industrial, users.
Primary energy sources 99% of use.
Petroleum: 80% Transport. Chemical feedstock.
Nat Gas: Ubiquitous heating. Chemical feedstock.
Electrical: 90% of coal = 50% of electricity. Nuclear and
Nat Gas follow distantly.
Electricity and Transportation thermodynamic limits
magnify fuel use.
Reserves of Primary Energy




Oil/NatGas: Middle East.
Coal: North America, Asia Pac, EU.
Declining oil discovery rate.
Least expensive reserves used first.
©2009 Richard M. Bixler. All rights reserved.
Energy Summary – 2/3
3

Energy use is correlated with GDP
 Population
with low GDP is poverty
 Poplation with GDP takes energy and credit
 GDP contains trade, benefits all

Comparison of similar GDPs
 US
and EU similar size, construction
 China population 4x US, 3x EU
 China energy use high for GDP
©2009 Richard M. Bixler. All rights reserved.
Energy Summary – 3/3
4

World Consumption Outlook
Industrialized countries (US, EU) flat.
 China, India, ROW 5% growth. Coal growth
even faster.
 Population growth drives economies increasing
energy use.


Energy Return: EROEI
Carbon fuels have highest EROEI by far.
 Relentless decline in EROEI: Higher cost reserves,
lower return from alternative energy sources.

©2009 Richard M. Bixler. All rights reserved.
Economic Driver will be Oil
5



Expect energy usage to double by 2050 based on GDP and population growth.
Oil is the international commodity. Coal, NG, Nuke, Hydro are all produced
domestically.
Oil price likely to be driven up by

International competition (production + replenishment + growth).

Increasing cost of reserves.

7 billion people now; going to 9 billion by 2050, all growth outside US+EU.

Nationalized production and reserves will prioritize their national ends.

Political instabilities and hostilities in oil-producing regions.

Financial Trading.

Market-anticipation, or actual, production peak.

The major mitigating factor would be expectation of economic downturn

Timeframe? TBD...

Oil drives transport. Transport drives agriculture and trade.
©2009 Richard M. Bixler. All rights reserved.
Opportunities Based On Thesis: Oil will be the economic driver
Reduce dependence on oil for transport.
Shift transport fuel to alternate carbon fuels and to electricity, increase grid.


Numerous companies listed on softtoyssoftware.com for each area listed
Transport Fuel (mostly outside SV)



Biomass to liquid (particularly, syndiesel from coal) (Sasol)
Nat Gas (CLNE, automakers, FSYS et al)
Prove NPV and ensure EROI, EROEI



Source-to-use: creation, distribution, vehicle use.
Engine development
Electric Transport





Companies working on EV, PHEV et al (automakers, battery companies)
Battery capacity (range), charge management, cost, materials, standards for
capacity, connectors, form factor (A123, ENER, Firefly, Imara, Johnson, Porous)
Vehicles: Tesla, Better Place (Renault), Automakers, Smith Electric Vehicle,
specialty vehicles
Battery financial instruments
Private charge facility, DC microgrid, battery charge, distribution from rural to
urban, battery change equipment, battery change concession, battery change
vehicles, finance.
Opportunities Based On Thesis: Oil will be the economic driver
Reduce dependence on oil for transport.
Shift transport fuel to alternate carbon fuels and to electricity, increase grid.

Solar (grid and local electricity generation)




Smart Grid (electricity distribution)





PV cost reduction: multijunction, organic, thin film
Module architecture, efficiency, management (SolarMagic)
23 companies listed on website: Thin film, Concentrated, Tower, Inverters,
Cladding, Cylindrical, Plants, Panels
Industrial power control: Echelon
Residential management equipment and service
Host software: See IBM table: call mgmt, load control, market analysis,
billing, DMC, CIS, EMS, Outage, …
12 companies listed on website: meters, controls, networking, software
Industrial charge storage (use of alternative sources on-grid)


Industrial battery, Flywheel, compressed air
Brayton, Deeya, ICE, Imara, Premium
Opportunities Based On Thesis: Oil will be the economic driver
Reduce dependence on oil for transport.
Shift transport fuel to alternate carbon fuels and to electricity, increase grid.

Fuel Cell (grid and local electricity generation)



Nuclear (grid and local(!) electricity generation)





Realize theoretical thermodynamic efficiency: Bloom
Distribution of Nat Gas input vs. distribution of electric output may drive
toward centralized generation
45-70 new plants by 2030. Design, construction, operation
PHWR, multi-fuel: Thorium in particular.
Westinghouse, GE, McDermott, Fluor, Shaw, Exelon (other utilities; Duke
et al.)
Mini-reactors: Hyperion, TerraPower.
Coal Electric Plant (grid electricity generation)



Coal IGCC (integrated gassification combined cycle) plant
CCS (carbon capture and sequestration)
Utilities, McDermott, Fluor, Shaw
Opportunities Based On Thesis: Oil will be the economic driver
Reduce dependence on oil for transport.
Shift transport fuel to alternate carbon fuels and to electricity, increase grid.

Agriculture




Electric/synfuel vehicles for utility, tilling, transport.
Agricultural productivity increase (chemicals, pesticides?).
Increased localization of common agricultural product production.
Trade


Alternate fuel transport: synfuel aircraft, increased train (electric and
synfuel), ship use.
Increased localization of high-value production.
10

Thank You
©2009 Richard M. Bixler. All rights reserved.
Search Tools I Provide
11


My website: www.softtoyssoftware.com
Tutorials + links a steppingstone to
direction + interviewing knowledge.


Primary sources, economics, Renewables,
Smart Grid, Storage, Transmission.
Companies identified, located, linked



Company website
Yahoo! Finance
LinkedIn widget
©2009 Richard M. Bixler. All rights reserved.
Consumption - World
12
China: 50% of Asia Pac total
70% Asia Pac coal
US and Europe similar size, structure
Renewables are
About 1% of total.
©2009 Richard M. Bixler. All rights reserved.
Usage - US
13
Wind and PV
Opportunities vs.
Thermodynamics
AC Optimized grid:
Transmission, step,
and conversion losses
Solar
Nuclear
Hydro
Electricity
Generation
©2009 Richard M. Bixler. All rights reserved.
Steam Turbine thermodynamics:
Carnot: 27% efficiency
Rankine: 60% w/CCG
Wind
Energy
NG
Sources
Coal
Petroleum
Natural Gas
7% Refinery Gases
50% Gasoline
33% Distillates (Diesel, Jet, Heating)
10% Heavy Fuel Oil
Petroleum
Energy
Use
McKinsey: Large
efficiency potential,
but diffuse, long time,
and may not accrue
to spender.
Reserves
14
Government-controlled
companies control 88% of
proved oil reserves
Proved: 90% recovery
Unproved: 50%
ANWR ~+30%
of US oil reserves
• “Proved” ≠ “Economic”
• Least expensive proved
reserves are recovered first.
Deep GOM Tiber:
1 calendar qtr world usage
Deep, 250°F, Pressure, $$
Declining discovery rate
implies “Peak Oil”
hypothesis.
©2009 Richard M. Bixler. All rights reserved.
Shale Oil and NG well
depletion much faster than
conventional
Consumption and GDP
15
“US uses 25% of world energy, has 5% of world population”…
“US produces more carbon per capita than any other country”…
©2009 Richard M. Bixler. All rights reserved.
Consumption and GDP
16
Consumption correlates
to GDP r=86%, r2=74%
to Population r=65%, r2=42%
• Primary energy has much higher
leverage than human labor.
• Energy cost plus capital leverage fuel
growth.
• GDP drives trade.
• Trade benefits both partners.
• (Ricardian model underlies
modern macroeconomics.)
• Economic energy efficiency
(GDP per BTU) measures how
well energy is spent.
©2009 Richard M. Bixler. All rights reserved.
Consumption
17
27 Countries
©2009 Richard M. Bixler. All rights reserved.
Going Forward: More Energy!
18
• Economies depend on growing
energy supply.
• Expect 2x energy use before 2050
• Six new Saudi Arabias needed by
2030
©2009 Richard M. Bixler. All rights reserved.
EROEI Cliff
19
For each unit
of energy
returned…
spend this
much
energy…
give this
much energy
to the
public…
Characterized
by EROEI
=1/prodcost
©2009 Richard M. Bixler. All rights reserved.
Transport Fuel Migration
©2009 Richard M. Bixler. All rights reserved.
20
• 330M US people: 250M vehicles incl. 150M Autos.
• Must affect a significant number of these vehicles to
affect petroleum usage.
• They use about 80% of 6.96 QBTU = 5.6 QBTU
annually.
• Generation capacity US about 12.7 QBTU net
(excluding thermodynamic and distribution losses)
Smartgrid Domains
21
©2009 Richard M. Bixler. All rights reserved.