Google's Energy Ventures - Can Computer/Programming Companies Tackle the Commanding Heights?

The "Commanding Heights" of the economy were what Vladimir Lenin referred to as the segments and industries in an economy that effectively control and support the others: energy, banking, and transportation/shipping. Google and other so-called 'tech' companies (note: it is a misnomer to call technology only concepts that involved computers and programming) are aiming at solving both their own and others' energy cost problems.

In all likelihood, companies venturing in this space see their future growth limited if energy does not stay cheap and abundant. Venture capitalists see the large amount of dollars possible for finding the next major contributor to the energy mix. But tackling the Commanding Heights takes a lot of physical capital - the steel, silicon, wires, etc. that actually exist on the ground somewhere - and the paybacks times are historically slower than what Google and others are used to.

In the case of Google, their servers have grown at such a rate that they likely see limitations in their ability to continually increase their offers for free hosting services. Since providing the energy to power servers is critical to many of Google's business aspects, they Google executives have decided it is worth their while to try to solve the problem for themselves. They likely can do that, but making a new renewable energy technology (besides wind power) go mainstream will be tough, but I'm glad they are taking this challenge.

The fact is, that for almost any building in the United States, putting photovoltaic panels (for example) at the facility to offset electricity purchases will provide a payback on the investment within the lifetime of the building, and likely in less than 15 years, and possibly in less than 10 years depending upon location and incentives. The reason why this is typically not done (except on government buildings) is that there are other investments to be made with the same money that have higher paybacks in shorter time frames: this is the crux of the issue.

As long as the paybacks in energy investments take longer than other investments, companies will fulfill their fiduciary duty to make the non-energy investments. Energy simply does not cost enough to change the economics. Making renewable energy generation cost less than coal can be done by two ways: (1) cheaper renewable energy and/or (2) more expensive coal energy. The latter is not likely to happen anytime soon, even with a possible future carbon, or carbon dioxide, price. One way for the former to occur is to allocate semiconductor factories toward building solar cells instead of microchips. But then this means more expensive servers (because of less supply of chips and processors) for Google ... a catch 22.

Pros and Cons of Wind Energy

Here is a link to another article in an ever increasing list of discussions about wind power and its pros and cons. More and more negative or problematic points about wind energy are surfacing, and it is mostly because wind energy is starting to have a measurable impact instead of just being 'in the noise' of the electricity generation mix.

Essentially, because utility and grid operators don't know exactly when wind power will be getting generated due to the unpredictability in wind speed, there are additional actions that need to be taken in operating a reliable electric grid. As the amount of installed wind capacity (the MegaWatts installed if all wind generators were operating at maximum power) gets to over 10% of the entire grid capacity (wind, nuclear, coal, natural gas, hydroelectric, etc.), the other electrical generators are required to operate to account for the increased wind capacity. This assumes, of course, that you are going to allow the full available wind power onto the grid at any given time.

A study by GE (see http://www.ercot.com/meetings/ros/keydocs/2007/1022/Variablity_and_Predictability_draft_dlvd_2a.zip, or link on page http://www.ercot.com/calendar/2007/10/20071022-ROSWIND.html), done for the Electric Reliability Council of Texas (ERCOT)
shows that the dispatchable generators (those that can be turned on at any time) have to be able to ramp up and down faster the more that wind is integrated into the grid. Interestingly, the predictability of the total load that needs to be served by the dispatchable generators stayed about the same as without wind. This is because there is already enough uncertainty in the electricity demand throughout the day such that the added uncertainty of wind generation was not incredibly influential.

Basically, with more wind, we are deciding how many other additional aspects (higher generation ramp rates, more transmission lines, etc.) we are willing to deal with to have a clean source of electricity. The fact that wind energy is getting questioned for its newly-perceived (though not new at all) drawbacks is a testament to the wind industry already solving many problems to become a mainstream source of electricity.

Top 10 Arguments against Global Warming Rebutted

This story by the BBC discusses some point-counterpoint discussions of the "Top 10" counterarguments for global warming. It is a pretty good short mention of some of the main points.

Click the title to go to the BBC site.

Time Scales and Quality of Life: How they define our Future

Since before Roe vs. Wade (1973) …

the United States populace has been divided on how to treat the current/potential “quality of life” of the unborn who are not capable of expressing will of their own.

For the past 20 years …

the world has been hotly debating on the short and long term consequences of trying to preempt and mitigate effects of global warming.

Quite recently …

an electric utility executive told me the way he attempts to express the tradeoffs of his job to environmental advocates is to define “quality of life” as a tradeoff among three areas: health (environment), affordability (cost), and availability (abundance of supply and grid integrity).

And still more recently …

a diabetes research [Huang et al., 2007, Diabetes Care] study indicated that, for some, the cumulative burden of diabetes treatments (pills, insulin shots, etc.) is so great, that they claimed they were willing to forgo some years of living with treatment for a better “quality of life” during less years without treatment. Essentially, they said they were willing to risk having longer term ailments, including blindness and amputation, resulting from stopping medications in lieu of continuing traditional medical treatment and its associated side effects in the shorter term.

What do all of these instances have in common? They are all defining, or struggling to define, what and when they mean by the term “quality of life”. In fact, this discontinuity in timescales underscores much of the political and social debate on these topics, and almost everything else.

Albert Einstein told us that space and time were one in the same. In a similar vein, when we neglect timescales in political and social discussions, we miss part of the argument and prevent people from coming together on compromise.

Short time scale (0-1 year)

Pro-life advocates want to speak for those that cannot speak for themselves and are not yet born. The time frame of debate focuses from the time period from conception to birth.

Short-Medium time scale (1-10 years)

Some patients with chronic illnesses wish to make the remaining years of their life as enjoyable as possible rather than as long as possible. The time frame of debate focuses upon the last decade or so of expected life for the individual.

Medium-Long time scale (5-50 years)

Energy and electric utility companies and municipalities need to plan for infrastructure investments that economically depreciate over several decades. The time frame for the internal economic debate usually focuses upon the lifetime of the assets.

Long time scale (> 50 years)

Environmental sustainability advocates concerned about climate changes want to speak for those that cannot speak for themselves and are not yet born. Because of concerns about the emissions and wastes (e.g. CO₂ and radioactive materials) of fossil fuel energy sources, the time frame for debate focuses on time spans greater than 100s of years.

As a society we are struggling to define the quality of life for different people and timescales. Until we settle on how we view these different timescales, our social policies will fluctuate with no apparent purpose or guidance.

Some elements of a proper energy policy

A proper Energy Policy in the United States would promote (1) clarity of purpose, (2) diversification of use of energy resources, and (3) more transparent and accurate pricing of energy such that the market (consumers and energy companies) can properly make both short and long term decisions.

How to promote each item above:

(1) CLARITY – State, through actions and rules in the Energy Bill, that the U.S., being the largest energy consumer in the world, and the largest energy user per capita, must always consider the tradeoffs of such a large amount of energy. These tradeoffs are environmental stewardship, security/accessibility of energy resources, and costs that don’t cause disruptive economic conditions (but that if changing slowly over time in the right direction can work to our benefit). For example: The fact that private banks will not underwrite new nuclear facilities is testament to how high they perceive the risk. Does this mean that the U.S. should have no new nuclear facilities? Not necessarily, BUT if the taxpayers underwrite (through government loan guarantees) the high infrastructure costs (for nuclear plants and disposal), then the taxpayers should also reap the economic benefits of this underwriting. I don’t want a “national energy company” (i.e. U.S. government running a nuclear facility), but I might rather have that than the U.S. citizens taking the risk of a nuclear facility without directly benefiting from the cheaper operational costs of generating electricity from nuclear facilities.

(2) DIVERSIFICATION – The oil shocks of the 1970’s took petroleum out of the mix (almost, but not entirely) of electricity generation. We are benefiting from this decoupling today with higher oil prices. Consumers will generally benefit when there are multiple competing sources of fuels/energy for various applications ranging from heating/cooling homes to fueling cars. The market is NOT SET UP to take into account these concerns, so it is the responsibility of the government to set up the rules such that various companies end up filling the need for a diverse energy supply that includes ALL fuels renewable, fossil fuels, and nuclear. THE MOST IMPORTANT thing to do regarding this concept, and energy policy in general, is to promote higher CAFE fuel standards for cars AND LIGHT TRUCKS AND SUVS. We, the United States, can do this, and should. More fuel efficient cars are being made, and can be made. Also, the more fuel efficient a car is, the further it can go ON ANY FUEL (electricity, hydrogen, gasoline, diesel, etc.). AND, higher fuel standards do not mean people will buy less cars, so I’ve never been sure why automakers are so concerned about this issue as long as the time for transition is appropriate.

(3) TRANSPARENT PRICING – Every energy usage today is subsidized in some way by the government at both the state and federal levels. This is not inherently bad as the governments have concerns and perspectives that the players in the economic market do not have. The U.S. has established over long time scales that it is willing to promote and fund expansion of fuels that are BOTH NEW (wind, solar) AND WELL-ESTABLISHED (coal, petroleum exploration). Arguments abound such as (1) fossil exploration is “new” and R&D is needed, or (2) wind energy is starting at a disadvantage and needs R&D to compete as well as new transmission lines and rules, (3) etc. on other energy resources. All of this is generally true, and people are just bickering over who is not getting their fair share. Everyone has an argument because the coupling between energy subsidies and subsidies in other areas of the economy are sufficiently blurry. There are some areas where U.S. investment can have a more direct effect upon pricing than others. For example, the U.S. is only one player in indirectly dictating (by consumption, production, and intervention in oil-rich areas) the price of oil. But investing in resources that exist within the U.S. (renewables, coal) a more direct effect will be had upon how much citizens spend on energy. We can make a start to people understanding this by making some basic information available in a simple and straightforward manner: 1. Government dollars given to promote each fuel (wind, oil, coal, etc.) 2. Amount of energy consumed from each fuel (absolute values and percentages) 3. Dollars per energy consumed 4. List of externalities that are and are not accounted for in prices of energy. Examples include SO2 is not sufficiently internalized for coal plants (due to technology for scrubbing) and nuclear waste disposal is not sufficiently internalized for nuclear power.

Politics and Science: A Different set of Units, not Values

With the awarding of the 2007 Nobel Peace prize to the Intergovernmental Panel on Climate Change and Al Gore, don’t get confused on the distinction between science and politics. Be sure not to read more into this award than is actually there.

Bjorn Lomborg, an ardent critic of climate change mitigation, was quoted as saying “Awarding it to Al Gore cannot be seen as anything other than a political statement. Awarding it to the IPCC is well-founded”.

To quote Alfred Nobel’s will regarding the awarding of the Peace prize bearing his name:

“… and one part to the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.”

Why are Lomborg and others irked that Gore shares the award with the IPCC? How can Peace be seen as anything other than political? The Norwegian Nobel Committee in fact acknowledges Gore as “one of the world’s leading environmental politicians” and says his commitment is “reflected in political activity.” So of course the award was political. If Gore were awarded the Nobel Prize for physics or chemistry, then I would join the side denouncing that act.

The fundamental issue is that as time goes on it is becoming more and more difficult to draw the line between science and politics, but there is an easy test. If a person discusses what is happening or how things are happening by the use of units (e.g. ‘meters’ for distance, ‘centigrade’ for temperature, ‘parts per million’ for concentration, etc.) then that person is reporting science. If a person discusses what is happening and what should next happen without the use of units, but by only using words (e.g. great, accelerating, harm, chaos, etc.), then that person is acting political.

So, can a person act both scientifically and politically? Of course. Forcing a scientist to subside political thoughts is a reduction in his or her civil rights. And neglecting a politician’s input into the ramifications of scientific revelations is a reduction of duty.

The fact is that given a single number or trend, even with 100% certainty in its validity, people will disagree about its ramifications and importance in directing action. The measurements and numbers have to exist before we can even debate them. Considering topics such as climate change there are many numbers and measurements to sift through. Thus, there are many opinions and interpretations to sift through.

Gore may or may not be stretching the validity of some of the results of IPCC and other climate change researchers, but his intentions are inline with the purpose of the Nobel Peace Prize. Whether you agree with Gore or not, he is causing people, on both sides of the issue about whether to plan ahead for global warming effects, to speak their minds and contribute to the political discussion. And politics is a substitute for violence. Hence, the definition of peace.