The big kid on the internet block, Google has vast sums of money and a larger than life vision for how to make clean energy cheaper than coal.
Making clean energy cheaper than coal through investments in game-changing innovation is the critical path to a low-carbon energy future, according to Bill Weihl, Google's "Green Energy Czar" and a Breakthrough Institute Senior Fellow. In today's New York Times Green Inc blog, Weihl answers a few questions about what it's like to be on the frontlines of the push for clean energy.
As a consumer of large quantities of energy -- used to run its ever growing data centers -- Google has a personal stake in the business of energy politics. It also has vast sums of revenue from its sponsored ad business, and the kind of creative culture that urges its engineers to think beyond the short-term, profit-centric model that too-often paralyzes large corporations.
From the NYT:
Q: Google is obviously best-known as an Internet company. Why is Google involved with alternative energy in the first place?
A: I'd say there are two reasons. One is that we use a moderate amount of energy ourselves: we have a lot of servers, and we have 22,000 employees around the world with office buildings that consume a lot of energy. So we use energy and we care about the cost of that, we care about the environmental impact of it, and we care about the reliability of it. The other reason is that, starting with the founders and filtering down to many of our employees, people care about environmental issues.
...
Q: Google's stated aim with regard to energy is to make renewable energy cheaper than coal. How did you arrive at this particular goal?
A: We've learned that a small team of smart people with basic technical expertise and the freedom to really innovate can do something quite remarkable, and we wanted to see if that really could be true for alternative energies. One of the keys there is the freedom to go after a really aggressive goal, and so we set a goal of making renewable energy cheaper than coal - it's a very simple, kind of audacious and crazy goal.
Coal is the energy source of about half the electricity we consume in the U.S. and is responsible for about 82 percent of the greenhouse gas emissions in the electricity sector, so until you've done something about the emissions coming from coal, you've made only a tiny dent.
Putting a price on carbon can help level the playing field, but to actually deploy renewables to the extent that we stop burning coal, I believe that's only going to happen if they can compete economically without any substantial price on carbon or substantial subsidies, because I don't think that people will tolerate that. I hope they will; I would be willing to pay that extra cost, but I can afford it. There are lots of people in the developing world who probably would say, I'm not going to pay that.
So that's why we took as our direct goal that we're aiming for, let's make renewables cheaper than coal, and let's make that happen as quickly as we can.
Q: Which technologies do you think are most likely to beat coal?
A: There are three areas we're looking at: concentrated solar thermal, enhanced geothermal and high-altitude wind.
On the concentrated solar side, we've invested in two companies: eSolar and BrightSource, both of which are working on power tower platforms where a field of swiveling mirrors reflects sunlight toward a central tower with a receiver.
We're doing some internal R&D work on the mirrors -- things that eSolar and BrightSource aren't looking at and really shouldn't be looking at: they don't need to take the risks to explore these kinds of designs and materials.
We're also looking at the receiver and turbine technology, looking at some ideas about going to higher temperatures which just from a thermodynamic point of view can give you higher efficiency. But again, I think these are things that both eSolar and BrightSolar are interested in, and if we're successful with the R&D we're doing, they would be natural places to pick it up and start to deploy it.
Enhanced geothermal is based on the idea that pretty much anywhere on earth, if you drill deep enough, it's hot. If it's hot enough and you have the right kind of rock, then you inject water and cycle that water through the system, and it produces energy from steam just like a normal hydrothermal reservoir.
One really nice thing about enhanced geothermal is that it's base load power: the fuel's always there, whereas for solar and wind, sometimes the sun doesn't shine or the wind doesn't blow and you can't produce any energy. So we think enhanced geothermal is very promising, and we've invested in AltaRock Energy and Potter Drilling. It has a ways to go before it gets to be really cost-competitive with coal, and it might never quite get there, but it's got a big upside.
The other one that we're looking at is high-altitude wind -- ways to capture the stronger and steadier winds that are at 500 or 1,000 or 2,000 meters high, or potentially even up in the jet stream. Internally, we've been looking at taking traditional wind turbines and putting them on much taller towers so you can get to much stronger steadier winds. Today, with the way people build towers, it would cost a lot more to go up to 200 meters compared to the usual 80 meters. We've been looking at some ideas that would let you go up and build a turbine at 200 meters at very little extra cost. If that pans out, it would be a way to knock 20 or 30 percent off the cost of wind, and wind is pretty close to the cost of coal today.
We've also invested in a company called Makani Power that is doing high-altitude wind using an airborne platform. They've been looking at using a kite or a wing under autonomous control, where the wind pulls the kite out and you change the angle of the tack so you can wheel it back in at less cost than the energy would make going out. The other approach is to use some kind of wing with propellers on it and the generators on the wing. So you're flying a kite through the wind and it's making the propeller spin so it's acting like a wind turbine, and then you have to get the power down the cable back to the ground. There are other companies in that space with some similar ideas. ...
Google has the audacity and the vision to spend money on long-term projects such as these without the need to recoup it immediately, but even Google will not continue pumping money into investments such as these without clear results. Weihl elaborates a little more on the timeframe for its clean energy investments here:
Q: How quickly are you expecting results from your investments?
A: I think we have a higher tolerance for risk and somewhat more patient capital than the typical venture capital firm -- we don't have partners who want their return and exit within three to five years. We've been more willing to take technical risk and more willing to really dive in and understand the technology at a deep technical level.
That said, there definitely is a time horizon in the sense that to really develop the breakthroughs and innovations that are needed to deal with the climate crisis, we need to make renewable energy cheaper than coal in years, not decades. So we may be patient, but we're not saying it'd be fine if it takes 25 years. That's not fine. But our goal was to invest both internally and through equity investments in things that have the potential to really bear fruit in the three-to-seven-year time frame, and hopefully at least one or two will.
Q: What does the pathway to cheap renewable energy at scale look like? Do you think there's enough political and societal will to make it happen?
A: As a society, we have chosen to invest too little in alternative energy over the years, and that has made some of the choices much harder than they should be. We should have been investing much more in solar [photovoltaics] since the 1970s than we have. We should be investing in new wind technologies that promise substantially lower cost. We should be investing in enhanced geothermal, we should be investing in cheaper, safer, cleaner nuclear. We should be investing in figuring out how to do carbon capture and sequestration for coal plants in a way that's cheap and energy efficient. We should be investing in all that stuff, and that's even before you get to the stuff that's outside the mainstream.
But to do that, it means you're not going to invest very much in any one of those areas, and that is a huge problem. As a country, we're investing $1-3 billion per year in clean energy R&D depending on how you count it; with the stimulus package, I think we're up to $6 billion for a couple of years. But at the end of 2010, when the stimulus ends, we're going to drive off the biggest funding cliff the energy field has ever seen. So I think as a society, we need to be investing much more to drive innovation and help new products get to full-scale commercialization. We need to invest across the spectrum.
I believe that the problems we're facing are solvable, but they're not going to solve themselves. And solving them is either going to require spending a lot more money on energy than we're spending today, which I think is probably a non-starter, or it's going to require major technological innovation. That's where I think Google can help.
Dear Sir/Madam,
I read this article with great interest as I am now currently working on a similar Coal replacement project in Malaysia. As such, would appreciate it very much if you could please forward this correspondence to Mr Weihl
Cheers /// Stephen
Dear Bill,
My name is Stephen Siah from Malaysia. I am sending this email with the hope that it will eventually be able reach your goodself.
I read with interest the article in The New York Times about Google’s plan to accelerating the development of renewable energy technologies that can prove more cost-effective than coal power, as a means of both curbing carbon emissions and trimming its own giant energy bill. It just so happens that we are working on a project with similar aims which is elaborated below.
As you might be aware, Malaysia is the largest producer and exporter of Palm Oil in the world in 2007, 18mT and 17mT respectively, which is now widely recognised as the most productive vegetable oil crop with outputs of up to 2tons per acre. Inevitably, as a result of this activity, very substantial amounts of waste products or agricultural residues is produced, which in turn has given Palm Oil a less than deserved reputation for un-environmentally friendly. These residues have been estimated to be responsible for the annual emission of up to 25mil tons equivalent of Carbon Dioxide CO2.
The residues mentioned above are in either solid form, which is currently mainly land-filled, leading to long-term emission of methane which 23 times more potent as a greenhouse gas (GHG), or as liquid effluent, which is currently 'crudely processed' using anaerobic digestors. It is anticipated that after the final stage of this project at the end of the 5th year, at least 12mil tons of CO2 equivalent emission per year would have been prevented from entering the atmosphere.
This project involves the collection of solid residues from palm oil mills, value adding via the anaerobic Torrefaction process to produce what is commonly called Green / Bio Coal which is totally renewable, has energy values and handling properties that is quite similar to coal, and, best of all, it is almost carbon-neutral. The targeted customers are the home users in Europe as well as coal burning utilities worldwide which will assist in helping these utilities meet their carbon reduction commitments as well as providing their customer a 'Green Energy' alternative. Rule of thumb is that for every ton of fossil coal substituted with this Green / Bio coal, it will reduce CO2 emission by up to 2.5tons. This is a project that will, in the interim until the costly "Carbon Capture and Sequestration" (CCS) process has been proven, will provide immediate carbon reduction for coal burning utilities to meet agreed Emission Reductions.
The major advantage of this project as it is planned is the availability of cheap and readily accessible biomass which can be collected from the palm oil mills, and not from the outlying fields. Also, the biomass used here is an agricultural residue that will be value added rather than an energy crop that has to be grown and harvested before usage as has been planned in Europe and the US, thereby greatly reducing, not only the cost involved, but the carbon footprint of the operation as well. There is sufficient biomass available from the oil palm industry, at this stage, to produce up to 15mil tons of this Green / Bio Coal per year. As the palm oil mills, in excess of 420 plants and still increasing, are located at all corners of the country, instead of just having 2 mega Torrefaction plants, 1 each in West and East Malaysia, which is separated by the South China Sea, we plan to have 8 plants that is optimally located logistically, i.e. 80% of the palm oil mills will be within 100miles or 160km from the plant, yet of sufficient production volume capacities, to maximise production economies of scale & minimise equipment redundancies, and efficiencies of supply chain. Barring any unexpected circumstances and providing that the necessary financing is in place, we expect to be able to roll out the last of these 8 plants by the end of year 5.
This project will be registered under the United Nations Framework Convention On Climate Change (UNFCCC) Clean Development Mechanism (CDM) which will entitle us to Carbon Emission Credits (CER) for the amount of CO2 that has been prevented from entering the atmosphere, which is currently being traded at app USD15/ton. Similarly, utilities or other larger users such as cement plants, steel or other metal plants, district cooling systems, glove factories amongst others using this Green / Bio Coal will also be eligible for the CERs due to the reduction in the carbon emission from fossil fuel.
At this stage, we are seeking the Malaysian Government's blessing and support for this project as well as negotiating long term contracts for the supply of raw material from plantation groups throughout the country.
The purpose for our initiating this contact to your goodself is that we feel that our Project will be able to provide significant returns, one that will be able to meet your stringent investing returns requirement as well as the fact that our product, Bio / Green Coal can be used to substitute a portion of the fossil coal, up to 30% without any modification to existing infrastructure, currently used in power production. As mentioned earlier, every ton used will reduce CO2 emission by up to 2.5tons, thereby potentially going a long way to assisting MidAmerican meet their emission reduction requirements. Also, the use of this Bio / Green Coal, will allow Google to start or to increase the amount of premium "Green" energy available to their more environmentally conscious customers from your new energy venture. The by-product of this project, the Carbon Emission Credits (CERs) can be sold to Google or other companies that need to reduce the carbon footprint in their business. As mentioned above, as an additionality, participating organisations, on joining the CDM themselves, will also be entitled for CERs by using our Bio / Green Coal at a rate of 2.5CERs/ton.
Sample Financials
Rated Plant Output 360 kTon
(USDmil)
Cost Of Plant 200
Sales 54
Cost Of Sales 22
EBITDA 32
Tax 0
Depreciation 20
Nett Profit 12
Loan Repayment 18
CashFlow 14
1.44mil CER@USD15 22
Payback Period 3.7 years
Assumption
Product Pricing=Thermal Coal + 3CER ~ USD150/ton
Cost Of Sales ~ 40% of Sales
CER ~ USD15
80%Loan@9%Int Over12yrs
Payback(yr)=Project Cost/(EBITDA+CERs)
The figures used above are conservative, and in actuality, when the project commence, we expect the total cost of the project to come in below budget, local interest rate charged to be significantly lower than the current commercial 9% used in our financials, CER price to be above USD15 per certificate, and as a consequence of all the points mentioned above, the payback period on the investment can be further reduced.
Further to the above, the torrefied product has other usages which are higher valued besides being used just as fuel, e.g. it can be used as a raw material for producing Activated Carbon, which has a value of USD300-USD500/ton, and, it has also been proven to be an effective soil improver, ala terra preta. This concept, also known as Bio-Char has been globally recognised as a viable and feasible of carbon sequestration. Value for this purpose ranges from USD100-USD1,000/tonne based on yield improvements achieved as per article:-
http://www.businessday.com.au/business/we-can-bury-our-problems-and-do-the-planet-a-favour-20090531-brp3.html
As shown above, the market for our torrefied product is extremely large and is only limited by our imagination. Diverting any part of the eventual output will significantly increase revenue and profit of this venture as well as further reducing the payback period.
I hope that this project will be of interest to you, and on request, I will be more that happy to forward a copy of our Executive Summary for your reference.
Please do not hesitate to contact me if you should have any questions.
I look forward to your favourable reply.
Best Regards,
Stephen Siah,
60193182503
cheesoon.siah@gmail.com
Posted by: Stephen Siah at January 20, 2010 8:54 PM