A Fast Path to Greener Energy

by Lawrence Roulston, GreenTech Opportunities. November 13, 2009

Much of the effort in the green energy sector is focused on methods of producing energy in more sustainable ways. Hundreds of billions of dollars are being directed to constructing facilities that generate electricity from wind, solar, geothermal and other renewable sources. Over the coming years, as those facilities come into production, they will lessen dependence on carbon fuels.

Few people seem to realize that reducing energy consumption is vastly cheaper than producing more of it. Furthermore, saving energy has an immediate benefit. Switching to a more efficient light bulb, for example, saves money and reduces carbon from the moment the bulb is screwed in. Building a wind farm can take years to permit, finance and construct.

Few households have the skills or take the time to work out the payback period or the internal rate of return that could be earned by investing in energy efficiency. For those individuals who make the efforts, they can find paybacks ranging from months to a few years and rates of return that can be many times higher than the returns on the average investment portfolio.

Conservation efforts are largely dictated by offers of free money from governments to subsidize investments in energy efficiency. While somewhat useful in certaincases, most programs involving governments are anything but efficient.

Corporations around the world are routinely conducting energy audits. Teams of engineers and analysts are formally quantifying the savings that can be realized by investing to save energy. It has now become fashionable for annual reports to carry accounts of how investments to save energy have favorably impacted the bottom line. Those accounts are intended more to secure social benefits points, but certainly speak to the enormous investment potential and the immediate returns available to conservation measures.

Multi-billion dollar corporations are finding meaningful earnings improvements by employing existing technologies to cut energy consumption. The savings in hard dollars provide a compelling motivation to invest to save energy. The growing pressure from customers and shareholders of big corporations to become green provides an added impetus that will propel corporations to seek greater savings.

Much of the energy savings can be achieved with little effort: better insulation for example. Most inhabitants of cold regions are conscientious about insulation to keep the heat in. But, people in warm climates often ignore the enormous waste of energy as they crank up the air conditioning in a poorly insulated home , store , or warehouse.

Energy has been so cheap and so abundant that little or no effort was devoted to energy efficiency over the past century. The incandescent light bulb, for example, is fundamentally the same as the design that Edison developed 130 years ago. Incandescent light bulbs waste 95% of the energy supplied to them. Yet, incandescent bulbs still account for a high proportion of lights. Switching to fluorescent bulbs can result in big savings, and a good return on investment. Yet, even fluorescent technology is pathetically inefficient, as those lights still waste 80% of the energy they draw.

The waste heat that is thrown off by light bulbs provides some benefit in winter in cold climates. However, in many cases, the waste heat from lights increases the amount of energy required for air conditioning.

Light emitting diodes (LEDs) are far more efficient. Those little blue lights on virtually every electronic device made in the past few years throw off light using only tiny amounts of electricity. Screw-in LED bulbs that are 90% efficient are commercially available. However at $50 each, they are not about to fly off the shelves, no matter how much guilt is imposed on consumers by the green movement. Surprisingly, even at $50 each, an LED bulb in a high use area would represent a good investment to a consumer, especially to those living in places with a high energy cost.

The interesting point is that we already have technology that will convert 90% of electricity to light (19-times more efficient than incandescent!). With further research and development, that technology will be implemented in a way that dramatically reduces electricity consumption. Clearly, more work is required to take the early stage LED bulbs to a state where they can be mass produced at a more favourable cost.

Yet, instead of fostering the development of LED bulbs, governments are actively promoting and subsidizing the use of a technology that is only one fifth as efficient.

Fridges, air conditioners, furnaces, pumps and virtually all devices that use energy are pathetically inefficient. Over time, innovations will enhance the efficiencies of all of those devices.

Energy savings at the user level are far more important than it might appear on the surface. Since coal is the biggest producer of electricity, let’s look at a coal-fired facility feeding into a power grid to understand the whole power cycle.

A typical coal-fired power plant converts about 30% of the energy contained in the coal to electricity. The balance of the energy available in the coal is lost to inefficiencies in the combustion chamber, the boilers, the turbines, the generators and to energy used by the facility itself. That 30% efficiency level has come after a century of fine-tuning every part of the system to improve efficiencies. Of course, those tweaks have been applied to a fundamental design hasn’t changed in a century. Coal has been so cheap and so abundant that a 30% efficiency level has never been a concern.

The transmission and distribution system consume, on average, 9% of the energy fed into the electric grid. Therefore, if a volume of coal has an energy content of 100 units, only 30 units is converted to electricity and makes it into the transmission line. Only 27 units of energy of the 100 units initially available are delivered to the user.

Then, if the user turns on an incandescent light bulb, those 27 units of energy produce 1.4 units of light energy. Looked at from the view of the whole system, the 100 units of energy available in the coal are converted to a mere 1.4 units of light. Overall, 98.6% of the energy released in burning the coal is simply released to the atmosphere, having contributed nothing of value.

Looked at another way, to get a certain amount of light from an incandescent bulb, it requires burning coal with 73 times as much energy content as the amount of light produced. That is an obscene waste of energy.

Admittedly, the incandescent light bulb is an extreme example. Few other products are 95% inefficient. Compact fluorescent bulbs are only 80% inefficient. Typically, appliances and industrial machines convert in the order of 30% of input to useable power, as in the example of the power plant.

Several important points emerge from this analysis. First, consumers and business owners around the globe stand to achieve enormous savings by investing and taking other steps to reduce energy consumption. A simple way to achieve that is to retrofit existing equipment with power saving devices. We will look at one such device later in this issue and others in later issues.

A second important consideration is the impact of conservation to the whole energy system, recognizing the inefficiencies in the generation and distribution systems. Following the above analysis, for every unit of energy used, 3.7-times as much energy must be burned. Conversely, by not consuming a unit of energy, 3.7-times that amount will not have to be burned.

Policy makers have clearly not fully factored in that multiplier effect on conservation. Over time, we are likely to see a growing awareness of the importance of conservation in public policy toward green energy. One can only hope that the government efforts will be aimed at fostering innovation, as opposed to efforts mandating particular applications.

By far, the most effective way to get people to change their behaviour is providing a clear monetary benefit. There is a growing wave of awareness of energy efficiency. Consumers and corporations alike are now seeking alternatives that will allow them to save energy (be green) and save money. Companies that develop energy saving products will be selling into a rapidly growing level of acceptance.

We are looking at several small companies that have developed, or are developing devices that can generate immediate energy savings and provide attractive paybacks for consumer and corporate customers. The first of these companies is introduced in this issue.

The Biggest Waste of ENergy

One of the biggest uses of energy is in transportation: cars, trucks, buses, trains, and all the other mobile equipment. With probably the worst score in energy efficiency, transportation easily ranks as the biggest overall waste of energy.

Shockingly, automobiles have not improved their fuel economies from the 1920s! Henry Ford’s Model T averaged a healthy 25 miles per gallon – roughly what the vehicle sitting in your driveway uses. Today, the average North-American mid-size vehicle gets 27 mpg on the highway and 21 mpg in the city.

That is a huge improvement from 1973 when the average fuel efficiency was a paltry 12 miles per gallon. Yet, after decades of efforts, cars remain notoriously inefficient, no better than the first mass-produced cars in the 1930s.

Only 13% of the energy in a vehicle’s fuel tank even reaches the wheels: 87% is lost to mechanical inefficiencies and heat losses in the engine and drive train as well as losses to idling and to operating accessories such as air conditioners. Of the energy delivered to the wheels, more than half is lost to friction of the tires, road and air. Just 6% of the energy in the fuel actually moves the car. When you consider that a typical car has a mass of 2,000 to 4,000 pounds, most of that energy is directed to moving the car. Of the amount of energy that was released in burning the gas or the diesel, only about a half of one percent actually accomplishes the objective of moving the driver down the road.

Clearly, the only way we can come anywhere near to full energy efficiency in transportation is with bicycles, hardly a practical solution in most instances. However, starting from a test score of 0.5 out of 100, the auto industry has enormous scope for improvements. Of course, consumers can contribute enormously to the solution, through car pooling, public transit and the like.

The automobile has benefitted from more than a century of engineering effort. Cars today provide every imaginable creature comfort and can even park themselves. Yet, the lack of progress in fuel use vividly illustrates how unimportant energy efficiency has been until very recently.

After the recent near-death experience of the North American auto industry, with the European industry not doing so well either, don’t expect miracles in the near term. Much of the industry is in survival mode and will do little more than struggle to meet the incremental improvements mandated by the government. No doubt, intense One of the biggest uses of energy is in transportation: cars, trucks, buses, trains, and all the other mobile equipment. With probably the worst score in energy efficiency, transportation easily ranks as the biggest overall waste of energy.

After the recent near-death experience of the North American auto industry, with the European industry not doing so well either, don’t expect miracles in the near term. Much of the industry is in survival mode and will do little more than struggle to meet the incremental improvements mandated by the government. No doubt, intense lobbying from a nearly bankrupt industry will be successful in softening even those modest standards.

Hybrids have become popular among energy conscious consumers. By recapturing some of the energy in decelerating and in going down hills, hybrids are roughly 25% more efficient than regular cars. Hybrids are also typically offered in smaller models, so they may lure some people to downsize a little.

Electric cars are significantly more efficient than gas-powered cars. The electric drive system is inherently more efficient. In an effort to extend the range available from existing battery technology, a great deal of effort has been placed into making the cars lighter, the drive systems more efficient and in gaining aerodynamic efficiencies.

Replacing gas guzzlers with electric cars would reduce the overall energy consumption. However, in the near-term, a wholesale switch to electric cars would do little to reduce the fundamental energy problem.

At this time, coal is the leading producer of electricity, and still the source most likely to be developed for incremental power production. A complete changeover now from gas to electric cars would merely substitute coal for gasoline or diesel, with a small overall improvement in energy use. The era of electric cars awaits a big build-out of sustainable energy production.

The modest roll-out of electrics that is underway is extremely important in setting the stage for the eventual transition of the industry. The auto industry is fine-tuning the technology and the public are gaining familiarity.

In addition to expanding green electricity production, there is an enormous amount of work to be done in several other fields before electric cars begin to dominate the auto market. For example, battery technology still needs a lot of work. A great deal of thought needs to go into the charging systems, especially away from home. More needs to be done to implement smart grids. We will have more to say on these topics in future issues.

Lawrence Roulston, editor of Resource Opportunities, is a geologist, with engineering and business training, and more than 20 years of hands-on experience in the resource industry. Lawrence conducts frequent property visits as part of his due diligence and has toured mining and exploration projects in many parts of the world. Lawrence is frequently quoted and interviewed in the media, including national television. He is renowned as a headline speaker at mining and investment conferences around the world. Mr. Roulston's years of hands-on experience and extensive personal contacts in the industry provide unique insights that have generated an impressive track record for Resource Opportunities.

After completing his studies at the University of British Columbia in 1975, Mr. Roulston worked as an analyst for the major mining company Cominco Ltd. He also worked in a management role for several years with a mid-sized Calgary oil group. In 1984 he became the vice-president of a group of mineral exploration companies. He was also vice-president of an investment management firm focused on the resource industry. From 1994 to 1997, he was president and CEO of a mineral exploration company. Since then, he has been a resource industry consultant and independent mining analyst. He began writing Resource Opportunities in 1998.

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