Are we humans or are we ants?
I read a bedtime story for my kid lately about a girl who was bored in her garden on a nice summer day. She then got hold of a magnifying glass and started following a group of ants who were collecting small corns of food. The story ends up with the girl pondering over if there is another living form in the universe looking at us humans with a magnifying glass, just like she is doing. And I started pondering if the living forms think we are the intelligent species we think we are when we scurry about our lives. Or will they see us some ants hunting for small drops of oil, coal and other non-renewable consumtions deep under earth when obvious choices of inexhaustible sources of energy are ignored.
One hears a lot of the impending green revolution in the media, with strong views both for and against. The goal of this little googling for information was to make an opinion for myself based on data and engineering reality checks which usually were found absent in media.
Energy usage and human progress have gone hand in hand. Figure illustrates the increasing energy usage as society moves in different phases of development.
Modern energy consumption is both in terms of the electricity used in households, commercial and industrial use and the energy equivalent of the hydrocarbons used in transportation. An idea of the changes happening in energy consumption and their implications can be understood by looking at the US which is based on a market society with a perpetual drive to re-invent itself through market mechanisms. It is also a high technology society where technology which seemingly may seem useless when made can become a worldwide market. Facebook, Google, internet browsers, shale oil are just some examples. Just see link to the 10 yr old interview with then 19yr old Facebook founder March Zuckerberg. Technology made to connect university friend circles has now more than a billion regular users and has defined social networking, and redefined advertising industry.
The total energy consumption of the US and development can be captured from following table.
It can be seen that while electricity consumption stands for 4.1PWh, another roughly 21.4 PWh energy is needed in terms of mainly oil and natural gas for heating and transportation purposes. What is interesting is also the trend over this short period of time. While the population is increasing, the electricity per capita is almost constant and the primary energy per capita is decreasing thanks to efficiency gains of the electricity grid and more fuel efficient transportation.
The electricity generation in US is shown in following table. The most striking observation is that in the 13 year period from 1999, the wind energy has grown 30 times (3000 %) while solar energy has grown 15 times. The question then is how much more can they grow and what is the total energy potential of these sources.
According to the National Renewable Energy Laboratory, the contiguous United States has the potential for 10,459 GW of onshore wind power. The capacity could generate 37 petawatt-hours (PW·h) annually, an amount nine times larger than current total U.S. electricity consumption. This means if one has technology to capture and average out this intermittent source of energy, one can more than supply the total energy needs of US. The U.S. also has large wind resources in Alaska and Hawaii. In addition the US has an offshore wind energy potential of 4000 GW or 4 times current installed capacity from all sources. The U.S. Department of Energy’s 2008 report 20% Wind Energy by 2030 envisioned that wind power could supply 20% of all U.S. electricity.
A 2012 report from the National Renewable Energy Laboratory described technically available renewable energy resources for each state and estimated that urban utility scale photovoltaics could supply 2,232 TWh/year, rural utility scale PV 280,613 TWh/year, rooftop PV 818 TWh/year, and CSP 116,146 TWh/year, for a total of almost 400,000 TWh/year, 100 times current consumption of 3,856 TWh in 2011. Again as the wind energy, the potential is vast.
A typical household has electricity expenses of about $100/month. In addition, considering 30000 miles/yr driving with 2 cars in a family, 20 miles/gallon fueleconomy and a gasoline price of $2.30 gives $3500/yr or $300/month. So a typical household is spending about $400 per month on energy directly. Other consumptions have some energy component in them. Assuming a household income of $4000 a month gives typically 10% cost on energy. As such, an American household can easily afford a slightly higher price for energy if they have to make that choice on a personal level based on moral values like many other choices one makes. The richer the society, the easier the choice or rather obligation to choose long-term solutions.
Growing up in India, I remember coal and wood being a good source of energy in great many households during my childhood. Trains with coal based locomotives were also common. We have moved to diesel based locomotives and LNG based cooking, not because wood and coal were costly, but because they were inconvenient and produced smoke and ash which could not be easily handled. And more importantly, the moment you afford a better solution (diesel or electricity based locomotives and LNG based cooking), the society adopts it.
The green economy potential
The energy conscious already are willing to pay a little more for the greener energy, as seen in the phenomenal increase in wind energy and solar energy production in the US in last 10 years. The political will seems to be in place to encourage this. Inspite of this phenomenal increase in wind and solar energy, hydrocarbons still stand for 66% of electricity production and almost 100% of the primary energy consumption making the share of renewables in the net energy consumption a small 4.5%.
2 key happenings in last years are perhaps the harbinger to what can happen relatively fast. Tesla cars have both the cool and the splash. Tesla’s remarkable share price growth is beaten only by its sales growth, which has enjoyed a remarkable 158% compound annual growth rate over the past three years. While that growth rate isn’t sustainable, analysts are still expecting sales to increase 55% this year and 62% in 2015. Tesla is building the $5 billion Gigafactory, the world’s largest lithium-ion manufacturing plant in Nevada, to provide sufficient batteries for 500,000 vehicles per year. In fact the Gigafactory’s planned output of 35 GWh per year is larger than the entire world’s capacity in 2013. Other major carmakers are following suit and electric cars have the potential to catch on.
How quick is the transformation and how quickly can it make a dent in the hydrocarbon consumption?
According to DOT statistics there are about 280 million vehicles in US, majority of which are cars for private transportation. The median age of cars is about 9 years and annual sales of about 6-11 million vehicles per year. With political and social commitment, a 20 – 30% penetration battery/electricity/renewable based transportation is plausible in a decade, thus significantly reducing the share of non-renawable hydrocarbons in transportation sector. Both the renewable electricity potential and the battery technology is at a takeoff point that rapid changes through game changer technologies can alter the transportation sector.
The other key happening is the launch by Tesla of home battery storage which comes in sizes of 10kWhr and cost $3000. If the 100M homes in US install 3 batteries each, we are looking at the storage capacity of 3000 Gwh which is 30% of daily US electricity production, which opens for higher penetration of renewable electricity generation and opening up for supporting electric cars. The question is how long it will take to produce 3000 GWh storage capacity. Tesla alone can produce 35GWh per year. If one assumes 3 to 4 other competitors with similar capacity plans, one is again looking at a horizon of 10 – 15 years to deliver the needed storage capacity assuming a modest year to year raise in production capacity. The response to the launch of Tesla’s home storage has been overwhelming having an order booking of 800 million dollars in just first week.
Consequences for oil production
Demand for oil from developed and environmentally focused nations can wane in next decade if current trend in US wind energy, solar energy, electric cars and battery storage become sustainable and gain momentum in rest of the developed world. US in fact may want to cash on its oil reserves and start exporting.
Economic development is often accompanied by increasing energy consumption, often with the cheapest energy source available. If battery technology, electric cars, wind and solar energy is made available to developing world, they can leapfrog over the environmentally unfriendly energy consumption increase, just as they did with mobile telephony. India, China already feature in top 5 places on installed wind and solar power.
All these factors make the assumed oil demand growth in developing nations more doubtful. Changes can happen quickly. If the cheap oil producing nations get a hint on new technologies replacing the traditional oil demand, there can be a scramble to offload cheap oil as quickly as possible, leading to the cheap oil being produced first and expensive oil can be and remain stranded.
We will need oil for many decades to come, but perhaps if USA manages to throw away the shackles of oil on its economy, oil demand will not be as aggressive as one expected based on demand growth from developing world where economic progress was associated with increased transportation based on oil.
China and India Oil consumption
Daily oil consumption in USA is about 18 million bbls/day (produces 50% and imports 50%), while that of India and China is 4 and 10 million bbls/day respectively. The daily world oil production in 2015 is 78 million bbl/day compared to about 68 million bbl/day in year 2000. Thus a population of 316 million in USA consumes 25% of world oil. If India and China developed to consume similar per capita oil consumption as USA, the world oil production has to increase by 137 million bbls/day which may be a mathematical, environmental, and sustainable impossibility. If cheap access to energy is the main motor to economic and living standard development and energy use per capita a measure of development, development of India and China and other developing nations will need extraordinary amounts of energy which non-renewable resources cannot supply. An therein lies the contradiction in oil price prognosis by IEA or OPEC which assume increasing demand by developing countries to justify stable and high oil prices.
Already, the long term plans, for example in India, as explained in the ‘Make India’ campaign, is to secure energy security through increased hybrid and electrical mobility penetration by 2020. For any descent developing nation, ambitions of development to standards of the current developed world, will need a concentrated effort to secure energy independence through non-renewable energy use.
It is taming of energy that has led to human progress and allowed the societies which tamed energy to accumulate wealth and invest in technology development and efficiency increases which strengthened the trend of wealth accumulation. The early traders crossed oceans making best use of wind energy and started the wealth accumulation process. The use of oil and coal accelerated trade and also the wealth accumulation but perhaps at a high environmental cost. However now hopefully, part of the world population has accumulated so much wealth that they can afford to tame renewable energy.
Back to where it all started, if there is somebody in the universe looking at us humans with a magnifying glass, I am sure with they will perceive us to be smart, if not currently with the reckless burning of a non-renewable resource, but in a decade or 2 when we have tapped into the infiniteness of renewable energy universe which we are part of.