The Future Looks Electric

Electric Car that is.

If you ever doubted the effect of political resolve in the direction of the US energy just look at the very recent and profound changes I'm seeing with the current Obama Administration and it's current "Stimulus" monies floating around.

In the span of a month electric cars and infrastructure went from a P.R. play thing for electrical utilities to an audacious effort by Oregon's Governor. Last week I started hearing rumblings of a big effort out of Oregon Department of Energy. It seems to be moving big in this direction with the announcement of a 500 recharging station goal in the next two years. More to the point is that in Oregon the cost looks like it will be under $2,000 to field your own recharging station with the grants, tax credits and other offerings in Oregon's planning.

Wired Magazine covered Shai Agassi's vision for an electric car infrastructure. It's talked about, glowingly received, brainstormed, and then just kind of out there. Add a few billion dollars of Federal political resolve and BOOOOM! The electric car is a reality.

Now lets just see if Tesla, Chevy, and Nissan can deliver their electric cars.

I am really intrigued and interested. I have a few friends who have been betting big on electric power-trains, battery controls, and importing foreign I.P. around this sphere. Before last week I never really thought about the market potential for electric infrastructure. Specifically recharging station.

That has now changed!

My gears have really been spinning about how this market development will need to take place and I'm fascinated. In particular how do you charge for the refill of the vehicle (which current technology will likely take 2 hours). You have a capital cost to recoup, the variable electric bill to charge for, the space (which takes hours per customer), and of course how do you scale a regional, national, or international system so an electric car owning fleet can recharge simply in NYC, LA, or PDX regardless?

This moves the business model away from just electric recharging stations (on a real scale) to be a business model that fits with a traditional regional petroleum jobber. Those wadding away from one-off customers to a wide deployment are now wadding into my waters.

Its really got me thinking about the future of the markets I serve and its an exciting subject. It really reminds me of dealing with early supply issues of Biodiesel and Ethanol. Where those without any fleet supply experience were trying to build businesses without any context or understanding of their market's needs.

Its going to be fun over this summer.

EPA and RIN's Clearing House

OPISnet reports a turn of events around RINs (so did a recent RINstar webinar).

It looks like the EPA will be creating (or at least proposing) their own RIN clearing house. We don't know what this clearing house will look like but of course I'm pretty pessimistic. Guaranteed it will be brought to the industry by the same folks who invented the DMV. Hopefully I'm being a little over dramatic but that's just my gut instinct.

My initial thoughts on this was that you can tell the Obama Administration would be abandoning the market based approaches of the last eight years. Good for CPA's bad for the industry is my prediction.

Natural Gas vs. Diesel

It's happended for the first time in a while. Diesel is competitive with natural gas.

Wholesale diesel is under $1.20 a gallon which places it below retail natural gas at over $1 a therm (or $10 per million Btu). If you buy gas look at your utility bill. Its significantly cheaper to go oil for the first time in four or five year.

I don't pay attention to Nymex Natural gas costs but I understand those are way down. That's good sign for commercial users buying their own gas and paying the utility for delivery. Regardless for a heating oil distributor like myself this might be a ray of sunshine in a recession as the smaller dual fuel boilers and heating oil customers see value in staying oil.

Heating Oil at $1.20 a gallon is cheaper than natural gas.

$1.20/ 131,000 btus = .000009160305344 per btu

.000009160305344 x 100,000 btu's per therm of Natural Gas = $ .916 per therm equivalent

Future Fuel TV

About a year ago a TV crew from SyndiKast came to Portland to cover the retail biodiesel market in our city. Their project was called Future Fuel TV and the finished product was really good.

They also created a video which I think is a real good time-specific look at what Portland's biodiesel market was like a few years ago. Right before Portland's B5 mandate and the optomistic growth of voluntary adopters.

SyndiKast covers the gamut of biofuels and alternative energy. They produced the segments to be good stock footage as well as a good primer on the subject.

You can see SyndiKast website on biodiesel (I don't believe they have the finished video up currently).

Some more of my thoughts on Food vs. Fuel

Please consider a few thoughts I regularly mention when presenting on biofuels and the food-versus-food debate is brought up by someone who simultaneously thinks that biofuels are a net-energy loser but somehow agriculture is more energy positive without it.

Propose the question: "Where does ethanol come from?"

Corn carbohydrate.

Or to be exact something likely to be processed into corn-syrup (a process that takes energy as well) and then sold as a cheap filler to real food. This processed food being most aptly described recently in the book In Defense of Food as being a "food-like-substance".

The only thing sustained by corn-carbohydrate in the US is diabetes. Corn protein on the other hand is highly sought by any agricultural process feeding animals. The corn mash is the real value of corn and it is preserved in the process passed along as a value added good to feed lots.

Ethanol allows a growing corn market with a safer off-take partner in our vehicles appetites versus that of the low-price-leader junk food manufacturer. It also provides more high protein for the market with a wider future market mix for this agricultural input. In short, I don't weep for Lil Debbie's price pressures at my local 7-Eleven.

The next step, sustainability, is to improve our process. Reduce the inputs of petroleum fertilizer, water, and ultimately CO2 emissions while increasing our productivity. To reduce the inputs while maintaining or growing crop yields is the definition of wealth creation. This is the crux of business sustainability and the 'Lever of Riches' presented to us by the new clean tech movement afoot. Making more with less and improving the overall quality of life for those at every step of the value chain.

In the past the focus has always been on more. More calories, more weight, more yields. Now we must focus on quality and ethanol gives us a floor to work with. A floor for the transition from MORE to BETTER.

I realize that there are many who see no value in American mainstream Agriculture. They only see mono-crops, GMO's, and a spendthrift approach to consuming inputs in the ever expanding welfare state of Corporate farming. I on the other hand tend to look at modern American agriculture similarly as to how I consider the Egyptian pyramids. A giant monument of what human ingenuity can achieve. Overlooking the issues of human bondage and destruction these monuments to Pharaoh ego represent. Between the pessimist and optimist positions there is a huge middle ground of progress that can be achieved.

Food versus Fuel is the definitive issue of this middle ground. Where today is not a position of optimum results but it is definitely worth building upon. Progress can be had and I believe that ethanol moves us further towards a total better result than a farm and energy policy that doesn't include it.

Purdue's Library of Sustainable Energy

Purdue University Extension has put together and launched a website on "Renewable Energy" which showcases a great collection of information.

I really liked was the collection of simple and easy to read information. Purdue seems to even give Wikipedia a run for its money on some subjects. I really like the platform of PDF's and whoever put this together did an awesome job.

If you are doing research on the subject it provides a great resource in one place. I would rank this collection of information up there with the Oregon Environmental Council and Northwest Biofuels Association similar efforts. One difference though. Purdue covers new ground.

I don't agree 100% with what I've read so far. Regardless, Purdue's website is worth the bookmark!

Cascade Grains Files for Chapter 11 Protection

Its been a rough few months for the ethanol industry. First with falling commodity pricing washing away the protective assumptions of a hedged position. Then a recession reduced fuel consumption further reducing not only the price of gasoline but the mandate blend usages expected in Oregon.

To compound this Cascade Grain also shipped some product with (from what I've been told second hand) ASTM spec fuel that exceeding a sulfate content that threw the ethanol out of specification use by a major refinery selling E10 gasoline to retail users. This same (less than reliable rumor) source told me that the cause was the well water used in the manufacture of the product which had sulfur in it to begin with .

(NOTE: I have no idea if the above is true this is all second hand information that sounded plausible enough to post. If incorrect I will gladly pull this down and apologize).

This being reported in far less detail as part of the Chapter 11 story in the following news papers.
See it in the Portland Business Journal, Seattle Post Intelligence, an AP mention in the Oregonian (where I first saw the story this morning) and the local community to the plant the Longview Daily News

The best reporting on the subject is the local Longview Daily News. I recomend reading that first.

Algea from city waste. A common idea actually going forward.

In biofuels there are few unique ideas. What really constitutes a breakthrough (much like artistic projects) isn't the concept but finding a patron to move a project from the drawing board to demonstration.

Reuters UK reports a Dutch experiment going forward. Dutch biotechnology firm Ingrepro is the project developer moving waste streams into biomass.

"The waste of biomethane (biogas) plants has very rich nutrients left over. At the moment they just pump it to the river or throw it away -- but we say next to these biomethane plants you need to build algal ponds to grow biomass."

What I like about this is the co-locate with an existing methane recovery program. The fact that you already have an existing successful energy project sweetens the deal. In a future where CO2 off-set projects are going to be looking for easy to utilize methane to capture I see this as a nifty model to move algae projects forward as well.

So if the capital costs of a algae project are covered by an existing methane project with experienced technical staff capable of managing an algal operation that only leaves the cash value of monetizing the algae biomass. Ingrepro claims their market will be jet fuel.

Tesla Motors is on Track

It looks like it might really happen for Tesla Motors.

Wired Magazine's blog shows a teaser photo (shown above) and quotes the CEO Elon Musk as claiming that they are on track to be delivering vehicles shortly as well as providing electric power-trains for other auto manufacturers. This delivery of real, live, operating electric powered cars in turn making them profitable before the end of the year.

Looks like its either time for doubters to double down their negativity bets or start getting as excited as the rest of us.

The Babe Ruth of Soy Beans and a Story of Competitve Corn Growing

I've been meaning to put this Wired Magazine article up for over a month.

Here is a great story talking about real industrialized commercial agriculture. Its rare that you get a lay person's article about mono-culture agriculture and what they are wrestling with. The perspective touched on here is one worth reading.

Especially looking at the every expanding productivity of US soil, seeds, chemicals, manpower and on the ground intellect that is our mainstream agriculture.

One excerpt that really gets to the heart of the new development of GMO crops that caught my eye is below.

Cullers never went to college, but he rises at 3:30 each morning to study plant genetics online. Right now, he's urging Pioneer to genetically weave a bit of stiffening fiber into soybean stalks. Cullers plants 300,000 soybeans per acre, double the national average. In these super-dense fields, he explains, soy plants grow taller, fighting for sunlight. "They fall down a lot," he says, "and you lose photosynthesis. The trifoliates don't pump nutrients to the beans. And you get disease, too. It's crowded and humid out there, down low."

Something about it reminds me more about the development of a race car with experience in the Pit rather than the further development of an agricultural crop. This is obviously engineering with a specificity reserved up till now for mechanical systems not organisms.


NOTE: To those who are adamant and hostile to GMO. I understand, I've seen and read both sides of this debate in depth for years. Being on the sidelines and outside of the issue I am an agricultural agnostic. I do buy certified organic and local food as a rule as well. Please don't flame me just because I gave ink to what I view as a relevant article.

Oregon a Geothermal Power Wild West

Yeah I know. The title is a little bigger than the real article linked below. Either way I like using "Wild West" any time I can.

I am not as familiar with Geothermal power as I would like. Regardless its kind of outside the main buzz and gossip circles for biofuels, wind and solar power here in Oregon. I've never met a single person developing or involved in any way with a geothermal project. Though again and again I here from other sources (such as the Oregonian the most blunt of industry reporters) that Oregon is poised to be a player in geothermal projects.

Over the weekend I cam across an interesting Oregonian article from back in April. It just kind of popped up while I was looking from an article I had just read in the print edition. Thought I would share it. The best portion is a simple description of what geothermal power really is:

Modern geothermal power plants are more efficient than past versions. They draw hot water from the ground, using it to heat another fluid -- often isopentane -- that turns to vapor at a lower temperature than water. The isopentane vapor drives a turbine, which spins a generator to produce power. Afterward, the isopentane cools and condenses back into liquid form so it can go through the heating cycle again. The water, meanwhile, is reinjected into the ground to be reheated again.

Unfortunately the article does not talk about the specifics of what makes geothermal profitable. What the scale required would be. And of course other types of harnessed uses. My old trusty Wikipedia on the other hand has a little bit more and a few promising links. But no real discussion of cost of production and the capital cost of building a plant.

Well it looks like this advertising concept won't have the staying power we expected this year.

Oregon Transmission Lines

I came across this really good statewide image of Oregon's wind resources and transmission system (thanks to the 25x25 Coallition). The transmission system being a critical item to refer back to from time to time. With all this talk of potential actually having a road to market is even more critical than if the wind blows, the tide rolls, or the sun shines.

Whole Energy in the News

My Google Alerts shot back an interesting article.  Reading it I see one thing at play.  Atul and my friends at Whole Energy have walked head first into a political hornets nest.  

"They always try to put it on consent," said Mark Stechbart, outspoken biodiesel plant critic. "They hijacked a 12-year-old environmental impact report to gloss over the issues. I don't think Whole Energy has the finances to do this. The city is buying into a real bad fiscal situation. If they believe this is a legitimate thing to do, they should have known about this months ago and had a full public hearing. It's another midnight, last-minute (Mayor Jim) Vreeland deal." 

It looks like there are powerful players in this project rooting for their failure in an effort to take political swipes an the Mayor responsible for getting their project into place.  I know talking with Atul and Kevin from Whole Energy this project is a huge opportunity and a ripe project.  They describe the facility and the community as the best opportunity they've seen.  I wish them luck.  The west coast will need more product and I know the bay area is very interested in waste stream biodiesel.

Check out the complete article here.

My Opinion of New Gas Taxes for the Sake of New Taxes

Wired Magazine (as well as many others) are advocating for a motor fuel tax increase. Or in Wired's words:

We've already shown we can live with gas at $4 a gallon (less than half what some European countries saw during the price spikes last summer) without inviting the apocalypse. That pretty much shoots down the argument that people won't stand for higher gas prices. And, as Time magazine notes, an increase in the gas tax could be offset by a cut in the payroll tax, which has a far greater impact on our pocketbooks, anyway.

This argument (because we can afford it) is a horrible way to build a consensus around energy. Often referred to as an Apollo Project like grand marshaling of effort. That is what the US and world need now. A grand wide-ranging effort.

This argument though is unconvincing to me. In fact its the height of ivory tower belligerence in my opinion. As someone who has taken the bad debts of bankrupt businesses recently unable to cover the cash flow needs of high prices I differ about how "we can live with gas at $4" compared to those disengaged with the actual customers of this product. Its hard to justify a tax simply to improve the policy goals of our government in conflict with the actual cost of operating effect of small business and the low rungs of our economy.

Seeing the impact of $4 a gallon heating oil to my elderly customers it is painful. It hurts emotionally and stuns me reconciling my own belief in the free-market with a desperate want of an affordable option for these customers impacted. When you need to talk to trucking companies and other industrial diesel users with decades of good credit history now struggling to pay for the fuel cost of operating requires a tough choice on my end is also equally as hard.

High energy prices is dangerous and hard. It is not something we can live with. Especially if its just to tax and then spend. We need an actual policy. One that doesn't solely raise prices but allocates the incentive for a diverse, domestic, and sustainable portfolio of energy.

Our energy shouldn't be that high prices are okay. Our policy should be as inexpensive as possible with an ever improving requirement for reducing impact. I have no doubt that we can have extreme-low-impact energy at a cost far below $4 a gallon. All it takes is more competition and improved technology.

To move our energy infrastructure forward is not the job of a gas tax. A Btu tax maybe. A CO2 tax probably. Those would allow the market to support long range innovation and more importantly a wider/smarter grid to allow for more players. These would work if the money was directly placed in off-setting the Federal tax deductions for utility and refiners investing in new capital and infrastructure.  Regardless of what tax though it needs to be evenly distributed on those sources of energy that come from outside North America and bolster an incentive for new locally produced energy.  

A gas tax to rebuild infrastructure for gasoline users. That I agree with if it is connected (users of roads paying for improved roads is good policy). The real catch is that legislators (be they Federal or State) don't connect a $1 or revenue with a $1 of infrastructure.  Even when mandated usually the added revenue gets sucked up by the Administration of departments long before it sees the laying of asphalt or raising of bridges.  

Don't fall for those knee-jerk taxation lovers looking for an angle for any more revenue to dole out. Ready, shoot, aim with the US tax code will not move us forward.  Likely only backward. Without a clear results oriented policy taxes rarely accomplish anything but more special interest involvement restricting further progress.