A Fatal Flaw

If T. Boone Pickens can’t make wind power an economic reality, who can?

The famed oil tycoon announced last year that he wanted to build in Texas one of the world’s biggest wind farms.

Under his PickensPlan, he initially signed on to buy more than 600 turbines that would be able to generate up to 1,000 megawatts; the ultimate goal was to quadruple that figure.

But his plan hit a few snags. First, he announced in November that he was having trouble lining up financing. Something kind of global credit crunch was to blame, he said.

But the real hurdle was more fundamental: Pickens said last week he was pulling the plug on the whole project because of a lack of transmission lines that would carry the power from the windswept plains of Texas, where he planned to install the turbines, to the cities, where it’s needed. The power lines aren’t there, nobody is stepping up to build them, and with Pickens having trouble with financing, he couldn’t cover them himself.

We’ve touched on this concept before, and it’s a bit distressing that such an ambitious project would fail because of such a fundamental flaw.

So what does this say about the future of wind power? I guess that it’s still out there, in the future.

A Whale of a Reality Check

It was once considered the only energy source suitable for artificial light. It was one of the world’s first multinational industries, and generated massive fortunes. And it required a global infrastructure connecting the source, in some of the Earth’s most remote locations, to living rooms around the world.

And while some of the key players in this huge 18th century industry said their businesses would thrive indefinitely, a wonderful article in the New York Times Sunday points out that the whale oil business eventually died out for one simple reason. It was based on a finite resource, and when it was used up, there was no more product to sell.

Sound familiar?

And just as whale oil was replaced by petroleum, starting in the mid-1800s, oil can be replaced as well. Yes, the oil barons of today insist there’s enough oil in the ground to last for many more years, but let’s be realistic. Maybe oil has peaked, maybe not, but is there anyone who doubts that the tap will run dry someday?

Chips and Solar

We’re seeing even more connections between the semiconductor industry, which has perfected the art of cost-effectively producing high-tech silicon devices, and the solar panel makers, which need to make their products more affordable.

The latest is IBM, which is one of the world’s leaders in chip-making technology and has also been quietly working on solar technology. Big Blue said this week it would work the Japanese tech company Tokyo Ohka Kogyo to develop a high-output solar cell manufacturing process, which the companies hope to have ready in about two to three years.

Most solar cells today are silicon, just like the vast majority of computer chips, but IBM is planning to use a different material, copper-indium-gallium-selenide. This technology exists now, but CIGS solar cells today typically are less effective than silicon, able to turn about 6 to 12 percent of the solar energy they absorb into electricity, compared to 20 for silicon.

IBM is shooting for 15 percent, which is an improvement for CIGS, but still short of silicon. However, the CIGS cells could offer other advantages, notably price, as silicon prices are on the rise, and weight. Tokyo Ohka Kogyo’s specialty is laying down thin films, and they hope to develop ultra-thin CIGS solar cells that would weigh less than thicker silicon, and could be installed in places where traditional solar panels cannot.

IBM also pointed out that CIGS technology is still developing, and there’s plenty of room for innovation. One researcher has produced CIGS cells with 19% efficiency, in a lab setting, which makes people optimistic that the technology could eventually reach parity with silicon, or even exceed it.

Solar Factories

One of the big issues with solar power has always been cost; producing all those panels makes the up-front expense of a major solar project dauntingly huge. So I’m not surprised to see a growing link between the solar field and the semiconductor industry.

Chipmakers have always been way out in front when it comes to manufacturing technology. Sure, designing a microprocessor is tough work, but that’s only half the job. The other part of the business, which doesn’t get nearly as much attention, is the chip factory where some of the world’s most complicated products are mass-produced. Designing a cost-effective method for turning out products with features that approach the atomic level comes close to a dark art, so if any field can figure out how to make photovoltaic cells affordable, it’s going to be the chip guys.

Today I heard that Intel Corp. is spinning off a solar start-up unit it’s been incubating, SpectraWatt Inc., which will begin building its own advanced production site later this year. Intel noted that the cost of producing electricity with solar power is about twice that of conventional methods, but the advanced solar technologies it is working on could eventually make solar comparable in cost.

And another chip company, Cypress Semiconductor, owns a majority stake in the solar cell company SunPower Corp., and is developing ways to produce the cells in its chip factories. Cypress CEO T.J. Rodgers has said that producing solar cells in a chip plant offers better returns that all but the most advanced microchip designs, and that his own company will probably be better known for solar technology than chips in a few years. The long-term goal, according to SunPower, is to halve the cost of turning out solar cells by 2012.

I wonder if Moore’s Law, the famous observation that the processing power on a chip will double every 18 months or so, has a corollary for the solar market.

Look, up in the air!

We’ve written about algae before, and now it seems like the goop is really gaining some traction in the biofuels world, and especially in aviation.

It’s no secret that airlines have been struggling for the past several years, and the skyrocketing cost of fuel is only making things worse, so it’s encouraging to see several aircraft companies taking the lead in promoting biofuels.

In February, Virgin Atlantic was the first to get biofuels into the air, testing a Boeing 747 running partly on fuel made from coconut and babassu oil, and Air New Zealand said last week it plans to test biofuels later this year. The carrier expects that 10 percent of its fuel needs will come from biofuels by 2013, replacing about a million barrels of jet fuel.

But most of the excitement in the air comes from algae. KLM Royal Dutch Airlines, JetBlue and Airbus have all said they are developing planes that will run on algae-fuel, and the concept got a huge boost last month from Boeing.

The aircraft giant is one of the main backers of a new group, the Algal Biomass Organization, dedicated to commercializing algae as a source of fuel. In fact, it’s the only major company represented on the group’s steering committee; the rest are all academics, scientists, consultants and investors.

There are plenty of plusses to algae: it grows quickly, consumes little water, and can be produced almost anywhere, so it does not compete with food crops. Oh, and as it grows, it can be used to clean the gunk out of polluted water and suck carbon dioxide and other green house gases out of the air. This keeps getting better and better.

According to Billy Glover, Boeing’s managing director for environmental strategy and one of the co-chairs of the Algal Biomass Organization’s steering committee, “Boeing recognizes that algae biomass holds tremendous potential for use as jet fuel, and it fits into our plan to guide aviation toward commercially viable and sustainable fuel sources – fuels with substantially smaller greenhouse gas footprints that do not compete with food or require unacceptable quantities of land and fresh water resources.”

Paying Our Share

Two-and-a-half cents.

That’s how much it will cost me to put my money where my mouth is, according to ConEd, the utility that supplies New York with electricity. ConEd recently sent out a brochure offering to deliver only wind-generated power to my apartment, for the nominal fee of an additions 2.5 cents per kilowatt-hour.

ConEd helpfully points out that 60,000 other households have already done so (making me feel even more like the eco-villain if I decline), and that for the average customer, switching to wind power is the equivalent of not driving 5,763 miles when it comes to generating carbon emissions.

Certainly a few pennies doesn’t sound like much, though the figure seems much higher when you consider that ConEd says that will raise the average New Yorker's electric bill by about 10%. Am I willing to pay 10% more per month to support wind power? To be honest, I’m not sure.

What I find interesting about this offer is the completely shameless way that ConEd is trying to pass the buck to its customers. Does it really cost them more to produce wind power? Well, the wind is free, but installing turbines involves a significant upfront investment.

But contrast that with the expense of running a hydro plant, or a nuclear plant, or even a coal-powered generator. Lots of labor, lots of safety equipment, and (except for hydro), plenty of raw materials. I have to wonder how much utilities spend purchasing coal.

To be sure, green energy is part of an eco-friendly lifestyle, and I am willing to pay my fair share. And that’s exactly the point that ConEd’s brochure wants to drives home: “Together, we can make a difference,” wrote Peter Blom, their manager for renewable energy services.

But what happens when my 2.5 cents per kilowatt-hour, finally pays off its investment in turbines? Is ConEd really going to pass that on to consumers as well, by reducing their rates?

Bad Corporate Citizen

I admit it. I fell for the spin.

Last year I posted an item praising Wal-Mart Stores Inc. for its green strategy. The retailer has built a few stores using all sorts of energy-saving designs, and is pushing suppliers to use eco-friendly packaging, and I went out on a limb to say the company was demonstrating a long-term vision tied to the bottom line, exactly the kind of business decision that can make alt-energy policies viable.

Turns out it was mostly hype.

At the Wall Street Journal’s ECO:nomics conference last month, Wal-Mart’s CEO Lee Scott Jr. all but admitted that the whole point of his company’s green push is mostly hype. “We are not green,” he said.

And despite its efforts to use alt-energy at a few stores, the company’s overall carbon emissions continue to climb, and Mr. Scott said that is unlikely to change since growing the company is his top priority, and other factors, like alternative energy, promoting the environment, saving the world, etc., are less important.

The best part: one conference attendee asked him when, if ever, Wal-Mart might meet its stated goal of eliminating waste and using only renewable energy. “I haven’t a clue,” Mr. Scott answered.

At least he was being honest.

As for me, I guess I can go back to trusting my gut instincts when multinational corporations try to claim they are doing good.

Fuel from Garbage

I really did a double-take when I first heard that the massive meat-packing company Tyson Foods was jumping into the biofuels market, but the more I thought about it, the more I had to give them credit for creative thinking.

Meat and diesel – where’s the connection? Easy. One of the byproducts of butchering thousands of beasts every day is a huge amount of animal fats. And all that natural goop, that horrible-smelling, greasy, slimy fatty slop, can be converted into biodiesel.

Tyson is forming a joint venture operation called Dynamic Fuels, with Syntroleum, a company that specializes in producing fuel from a variety of organic materials, including animal fat. The beauty of this partnership is that it allows the chicken company to get rid of its waste material, stuff that often collects in huge ponds outside meat-packing plants. In other words, it turns garbage into gas, and allows the company to make money from its waste instead of paying someone to take it away. Oh, let’s not forget the potentially significant benefits to anyone who has to live within smelling range of the plant.

Tyson, which already has a well-established network of trucks and trains, will also handle transportation. Even better, Tyson wants to get other meat packers to provide their waste products as well. I’m not sure if Tyson will pay for it, or just offer to take it off their hands for a really attractive rate, but the economics of this arrangement are hard to ignore.

The two companies are expected to kick in $75 million each, and hope to start construction on a new refinery next year. They hope to produce 75 million gallons of fuel per year, starting in 2010.

Green Pioneer: Wal-Mart (really)

Yes, I know their labor practices are truly awful and their business model makes them the poster-child for all that is evil and exploitive about globalization, but I have to give some credit to Wal-Mart for their green strategy. (And yes, I have seen the terrifying documentary Wal-Mart: The High Cost of Low Price.)

The retailer has two experimental stores, one in McKinney, Texas, and one in Aurora, Colo., that are just packed with alternative energy technology. They clearly put a lot of effort into making these buildings environmentally friendly, from the ground up.

To name just a few of the green projects: The parking lot is paved with a porous material, so rainstorm runoff won’t mix with oil and wash pollutants into the sewers. The roof is covered with solar cells, and there’s a wind turbine in the parking lot. The floors have pipes built into them that carry hot water, which helps heat the store. Used cooking oil from the deli is dumped into a furnace, which also helps heat the building. Even the smallest details have been thought through, from low-energy light bulbs to new designs on the freezer cases to hold in cold. I was impressed.

But I wasn’t totally convinced. Let’s get real; Wal-Mart is not exactly known for being touchy-feely, and I wouldn’t be surprised if the entire purpose of this project is nothing more than making the company look good.

But it’s also possible that they are on the right track. Wal-Mart is famous for paying scrupulous attention to its costs. That’s how it’s managed to become the behemoth it is, by trying to shave even fractions of a cent off of anything and everything. And, unlike many U.S. companies, they think long-term; Wal-Mart will spend millions now to save a few pennies tomorrow, as long as they can keep saving those pennies for years to come.

And that’s exactly the kind of thinking that we need when it comes to alternative energy.

The ding factor on green power has always been the cost. Yes, the systems are expensive, and yes, almost all the costs must be paid upfront, which scares off a lot of people.

But the benefits – lower energy costs, less consumption – start from day-one. Green power has to be seen as a long-term play, with long-term benefits.

So I dropped Wal-Mart a note to find out more about their energy strategy.

A spokeswoman wrote back, with some details, though not a lot (I’ve covered Wal-Mart before; it’s a very tough company to deal with, and being forthcoming with the press is not very high on their list of priorities). She wouldn’t say how much the company had spent on the projects, but she did say that the stores were definitely spending less on energy costs, about 8 percent less at the Colorado store compared to standard sites in the same area, and that the savings were expected to be even higher in the winter.

She said that the company sees these stores as labs, to see which alternative energy ideas offered the most savings, in terms of both power and cost, and that Wal-Mart eventually hopes to use that information to develop a new prototype store by 2010 that will be 25 to 30 percent more efficient, and produce 30 percent less greenhouse gas emissions, than standard stores.

In other words, the company does indeed seem to be planning for a green future, a model that other companies might do well to emulate. Now that’s the kind of everyday savings that I can really get behind.