What's wrong with energy conservation?

On the same day the Wall Street Journal was reporting on  a US court throwing out a conservation program, Ross McKitrick was writing an explanation of what's wrong with conservation policies.

What's wrong with energy conservation? | Ross McKitrick

A correspondent on Twitter has asked me to explain what is wrong with conservation policies, namely, if output stays the same but we use less energy, what’s the problem?

The answer has to do with the fact that firms don’t just use energy, they also use capital, labour and materials. If we enact policy to force down the firm’s use of one input, it can lead to waste in the use of the other inputs.

This is best illustrated with a numerical example...

US Court throws out Energy Saving Rule

Appeals Court Throws Out Energy Saving Rule Ruling is a Blow to Electricity Conservation Efforts | WSJ (subscription)

A federal appeals court dealt a blow to electricity-conservation efforts on Friday when it struck down a rule allowing big energy consumers to reap special payments in exchange for cutting their power use.
The D.C. Circuit Court of Appeals nullified a 2011 order by the Federal Energy Regulatory Commission that promoted paying businesses to reduce electricity consumption during heavy times of demand. The court ruled that as a federal regulator FERC had gone too far, encroaching in retail electricity markets that are under the exclusive jurisdiction of states.

Idea: Wirelessly Charging racecars

I was reminded, by some typical Memorial Day Weekend events today, of some interesting projects charging vehicles.
Ontario's demand hit a record low, for the month of May, this morning - at the time Ontario was curtailing about 2500MW of supply and exporting, at no charge, another 2700MW.
This is race weekend in a couple of places: the Indianapolis 500 and F1's Monaco.

Formula E is coming ...how about an induction-powered racetrack too?

In South Korea, Wireless Charging Powers Electric Buses | Wired (summer 2013)

The city of Gumi, South Korea has debuted a wirelessly charged electric bus, becoming yet another municipality to embrace induction charging. Where we’re going, we don’t need cords…
The Korea Advanced Institute of Science and Technology (KAIST) developed the Online Electric Vehicle (OLEV) platform, which is already in use on trams at the Seoul Grand Park amusement park and shuttle buses on the school campus. Now, the passenger route between the Gumi train station and the In-dong district is now plied by two induction-powered buses.
...the buses will be able to use batteries about a third the size of what you’d find in an electric car ...because of public transit’s fixed routes, engineers can ensure that buses get a proper charge every trip without a need to stop and recharge

Local Manufacturer’s $62,000 Monthly Hydro Bill Is... $10,000 too high

An article in a local Cambridge publication displayed, upon closer inspection, more than just a rant about electricity costs.

The company's bill reveals they were billed $10,199.31 more for December's electricity consumption than they would have if the global adjustment charge was based on December's final class B rate, instead of the 1st estimate it is based on.

Local Manufacturer’s $62,000 Monthly Hydro Bill Is Off The Charts Says MPP Rob Leone Cambridge Ontario Cambridge & Area News News on Cambridge Now!:

view as .pdf

Bill and Brenda Mechar, owners of Integrated Packaging Films (IPF) are stunned by their monthly hydro bill. Their January energy usage was $12,050.37. However, by the time they paid the debt retirement charges, regulatory charges, Global Adjustment charges and delivery charges, IPF's bill had ballooned to (are you ready for this?)$62,653.34.
In fact, from the excess charges IPF pays over and above their actual usage, they could hire a new employee every month throughout the year

Money for Nothing: Bad conservation programs

Severin Borenstein on a pricing scheme he refers to as "Peak-Time Rebates" (PTR)

Borenstein notes the programs are popular - and poor. Ontario's Class A Global Adjustment program - a.k.a. the Industrial Conservation Initiative (ICI) - may be considered a cousin to the PTR programs in the United States.

Money for Nothing? | Energy Economics Exchange:

If PTRs are so bad, why are they so popular? Because they hide the cost. Rather than a higher price on the hottest days of the year — reflecting the truly higher cost of providing electricity on those days – PTR pays out for conservation (real or imaginary) on those hot days and raises the price a bit on all other days to cover the cost. Thus, customers who consume a higher share of their electricity on non-peak days (e.g., those who use less, or no, air conditioning) subsidize heavy peak-time users who manage to be slightly less heavy users on a specific peak day.

Some defenders of PTR say it is the way to transition to time-varying electricity pricing. I’m very skeptical. Once a customer gets used to being paid for reducing consumption on peak days, it is very difficult to change to a system that just charges higher prices on those days. There may be a utility that has managed to move from fully-implemented PTR to time-varying pricing, but I’m not aware of any example.

Nextera/FPL: Nuclear at home, wind where subsidized

Nextera is one name, Florida Power and Light (FPL) another - same folks.

They are in the news a number of times today - none of which will be news to followers of my blogging.

At home, they are pursuing new nuclear.

Power line issue puts governor, Cabinet, in political quandary | Tampa Bay Times:

"TALLAHASSEE — Gov. Rick Scott and members of the Cabinet face what may be the most controversial and politically delicate decision of their term Tuesday, when they will decide whether to give Florida Power & Light permission to build two new nuclear power generators and 88 miles of new transmission lines in South Florida."
The proposed high-voltage lines, which would be hoisted on towers which could rise as high as 150 feet, have generated opposition in the cities in Miami-Dade County through which the lines would traverse — a region of the state that Gov. Rick Scott has deemed crucial to his re-election bid.
While cities have questioned the need for the power plants, their main objection has been on where to locate the 230-kilovolt lines on 80- to 100-foot poles.

Continue reading at the Tampa Bay Times

Nextera is voracious in it's pursuit of subsidies.

Vattenfall Latest to Ditch Carbon Capture and Storage Research

Vattenfall Ditches Carbon Capture and Storage Research - IEEE Spectrum:

Vattenfall, one of Europe’s largest energy producers, announced this week that it will discontinue its research and development activities in carbon capture and storage (CCS) for coal-fired power plants.
The move comes as Vattenfall looks to shore up costs as profits fall considerably for European power producers. Vattenfall said in a statement that research will continue in smart grid, wind, hydro, coal, and nuclear.
"Tough market conditions are expected to continue for another few years, and we are restructuring our research and development operations as it is becoming increasingly important to have the right knowledge at the right time to meet the ever-changing needs of business," Karl Bergman, head of R&D Nordic for Vattenfall, said in a statement.

Energy Prices, the Climate and the Nuclear Bubble

The IAEA should withdraw support for ALARA (and for LNT, Linear No-Threshold, the scientifically unsupported argument that accompanies it). Released from the nuclear Zeitgeist of the Cold War, our children and grandchildren should receive explanatory education for their future, firmly based on trust and science, not blame and fear.  -Wade Allison, Emeritus Professor of Physics at the University of Oxford

Energy Prices, the Climate and the Nuclear Bubble (pdf)

Those who would attack nuclear in the name of the environment use inverted arguments –nuclear waste is very small, captured, solid, does not spread and causes no casualties. Compare this to human waste or fossil emissions, discharged into the environment with acknowledged death tolls measured in millions. In the 1950s worldwide public fears of radiation were fanned by threats of WMD – this lead to ALARA. This policy, sanctioned by the United Nations, attempts to appease public fear by recommending farcically low radiation levels – today in Japan you would have to eat 5 tonnes of “contaminated” food in 3 months to get as much radiation as a single CT scan, itself 100 times lower than a life-giving radiotherapy treatment.

Comparison of monthly doses shown as areas 

Dark circle, treatment to cancer tumour (40,000mSv);

Light circle, recoverable dose to healthy tissue (20,000mSv); 

Small circle, conservative and safe (100mSv a month); 

Tiny dot, safety recommended by ALARA (0.08mSv a month or 1mSv a year)

Exelon's Crane signals nuclear power sale with Pepco deal - or not

Exelon's Crane signals nuclear power sale with Pepco deal - Joe Cahill Business Blog - Crain's Chicago Business:

A hardened cold warrior thawed U.S. relations with China. A pain-feeling Democrat ended welfare as we knew it.
And a nuclear engineer just set the stage for Exelon Corp. to exit the nuclear power business.
CEO Christopher Crane's agreement this week to acquire Washington's Pepco Holdings Inc. for $6.8 billion would shift Exelon's center of gravity decisively toward regulated utility operations, and away from the fleet of nuclear power plants that has been the centerpiece of company strategy for the better part of two decades under Mr. Crane and predecessor John Rowe. If the Pepco acquisition proceeds as planned, Exelon would get well over half its profit from utility ratepayers in Illinois, Pennsylvania, Maryland and the District of Columbia. A far smaller share will come from nuclear operations that once generated as much as two-thirds of corporate earnings.
The deal speaks volumes about Mr. Crane's view of the nuclear business he oversaw...

The entire Joe Cahill article can be read at Crain's Chicago Business

Iberdrola Renewables' Spanish profit down 91%

Despite record production, net profit from wind business in Spain fell 91% and Ebitda by 63% as a result of new regulatory decision  - Iberdola Press Release

Iberdrola Renewables' Spanish profit down 91% | Windpower Monthly:

SPAIN: Iberdrola has blamed a 91% decrease in Q1 net profits for its Spanish renewables operation on government regulation.
Last year, the cash-strapped Spanish government ended existing feed-in tariffs for renewables and replaced them with a 7.5% remuneration on profits.
Iberdrola said wind projects were worse affected by the changes rather than other renewable technologies such as solar.

full article at Windpower Monthly

While Iberdola lead the news release of its first quarter report with the lament on wind subsidy changes, that didn't even warrant a mention in a Bloomberg article on the company's earnings - nor are Spain's policy changes particularly apparent in the stock chart.

Perhaps Spain's government has had some success in rolling back the expensive contracts that lead to its enormous tariff deficit.