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Thursday, April 27, 2006

relative cost of energy

I was amazed to wake up this morning and discover that my computer (XP) had crashed overnight. Gasp! But I'm guessing that it has been weeks (possibly months) since it last crashed. Only five years ago my then computer crashed weekly if not daily. Isn't progress grand?

As I drifted off to sleep last night I was thinking about the relative "cost" of energy. (I'll just note that I disagree strongly with many of the assumptions that underlie the "cost" of energy.) Energy today is insanely cheap (laugh if you like, but only because 5 years ago energy was even cheaper). If you could see where energy prices will be in 25-50 years I'm sure you'd be choking.

I'm not an expert, but the widely accepted "cost" of coal, natural gas and nuclear generated power is somewhere around $0.04 kWh. Of course this number is rising due to fossil fuel volatility and the associated ripple effects. (And yes as a consumer in the US you are probably paying $0.08 or more "at the meter".) For wind and solar widely accepted "costs" are about $0.06 kWh (megawind) and $0.20 kWh (Solar PV), although each of these technologies has dropped by a factor of 10 or more in cost over the last ten or so years. I'd be very interested to see what the "cost" of solar thermal (using sunlight to heat water directly) is penciled out as, since that technology is widely viewed as the most competitive (and has been for decades). Has anyone done/seen this calculation?

In any event, for the last 20 years and continuing on today, everybody with an economic bone in their body "knows" that solar energy is WAY too expensive to solve our energy problems. Still, how many people would pay 100 times the cost of solar for a specific application? how about 1000 times? how about 10,000 times? The question is not rhetorical, if you have ever used disposable AA batteries, you've paid the rough equivalent of $2,000 kWh (assuming $0.55 per AA). [I picked this concept up at last year's Solar World Congress.]
There is a huge amount of value in delivering energy where and when it is needed, a value that quite literally, swamps by a factor of 10,000 the quibbling over which technology is cheapest.

PS I do hope (and expect) renewables to get cheaper, I just don't believe their "cost" is why they cannot be widely adopted.

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