The Future Of Clean Power Generation

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The Future Of Clean Power Generation

  1. 1. Breaking the Climate Deadlock the future of clean power generation Vinod Khosla Khosla Ventures Nov 2008 1
  2. 2. Where Does Electricity Come From?
  3. 3. “China and India together account for 79 percent of the projected increase in world coal consumption from 2005 to 2030” EIA 3
  4. 4. “At the end of 2005, China had an estimated 299 gigawatts of coal-fired capacity in operation. To meet the demand for electricity that is expected to accompany its rapid economic growth, an additional 735 gigawatts of coal-fired capacity (net of retirements) is projected to be brought on line in China by 2030 ” EIA 4
  5. 5. Key Issues › Electricity : ~40% of man-made CO2 › Coal: largest culprit › Action needed for 80% reduction by 2050 5
  6. 6. What Can Solar Do? › Solar: near zero-emissions power! › 1% of world’s desert: meet all power demand › US: 100 x 100 mile area in Nevada › India: less than 1% of land area › Europe: Less than 3% of Morocco’s land 6
  7. 7. Scalability: solar Wind waves SOLAR Gas OTEC Oil BIO HYDRO World energy Uranium use COAL R. Perez et al. 7 Source: Gerhard Knies, CSP 2008 Barcelona
  8. 8. Global Solar Irradiance Map 8 Source: Ecole des Mines de Paris / Armines 2006
  9. 9. What Must Solar Achieve to Succeed? › Cost less than fossil fuels › ($0.10-0.12KWh in 2007 dollars) › “Dispatchable” generation › Storage key for intermittent sources › Reliability and uptime equiv. to fossil fuels 9
  10. 10. carbon: irrational policies Germany: 57% world PV US: 7% world PV 10 Source: Creating a U.S. Market for Solar Energy, by Rhone Resch, President of the Solar Energy Industries Association.
  11. 11. carbon: irrational policies › Solar PV installations in the Bay Area ›Moscone Center vs. San Jose; 20% improvement in isolation! › Cost of Moscone center PV: $6,222 per KW › At $0.12KWh, 2.2% return on investment (below inflation!) › Warner-Lieberman bill › giving credits away to today’s inefficient technologies! › Zero-Emission Buildings › UK estimate (40% higher home building cost) 11
  12. 12. carbon: California solar roofs program › California Million Solar Roofs Program › $3.3 billion › Goal: 3,000 MW by 2017 solutions should make a › California generation capacity (2003) ≈ 61 GW material impact! › Best case-scenario – less than 5% of CA capacity! 12
  13. 13. Solar Power: PV › Advantage: distributed power-generation › Ideal where peak demand = max solar radiation › Scaling: no storage, no base-load power › SEIA: Grid parity by 2015 (US) 13
  14. 14. Solar Power: Solar Thermal › Advantage: Base-load power › thermal storage is key › Low technical risk, low adoption risk › California operations since the 1980’s › Primary risk: Cost per KW of installed capacity 14
  15. 15. Solar Thermal Power: 1914
  16. 16. Illustrative Solar Thermal Plant 16
  17. 17. Storage For Time-shifting To Storage Plant Output From Direct Solar Storage From Direct Solar Storage Direct Solar 6 AM 9 AM 12 PM 3 PM 6 PM 9 PM 17 Time of Day
  18. 18. solar thermal: day / night power 18 Source: John O’Donnell
  19. 19. thermal storage is cheap Heat/Air/Hydro Electricity › Flywheel ≈ $4000/kWh › Molten Salt ≈ $45/kWh › VRB batt ≈ $350-600/kWh › Concrete ≈ $25-45KWh increased cost of power lower cost of power › CAES, Pumped Hydro 19 Source: NREL for heat storage (2007), Dr. Doerte Laing, DLR (2008), VRB battery costs from company and Appalachian Power, CAISO estimate for Flywheel costs (Beacon Power)
  20. 20. thermal energy storage › Commercial Available Today › Steam Accumulator › molten salt storage based on nitrate salts › In Testing › Solid medium sensible heat storage - concrete storage › Latent heat - PCM storage › Combined storage system (concrete/PCM) for water/steam fluid › Improved molten salt storage concepts › Solid media storage for Solar Tower with Air Receiver 20 Source: Doerte Laing , German Aerospace center
  21. 21. Policy Needs: Short-Term › Expansion of technology-neutral RPS’ › More economic than feed-in tariffs › Stabilization incentive standards › Low-cost capital availability › Cost of capital is key determinant of cost 21
  22. 22. Policy Needs: Med-Term › Carbon pricing framework › Investment in transmission infrastructure › Focus on regional power transmissions (i.e - DESERTEC) 22
  23. 23. Scalability:Land is not (remotely) a constraint 3000 km world electricity demand (18,000 TWh/y) can be produced from 300 x 300 km² More than 90% of world pp could be served =0.23% of all deserts by clean power from deserts (DESERTEC.org) ! distributed over “10 000” sites 23 Source: Gerhard Knies, CSP 2008 Barcelona
  24. 24. area requirements to power the USA (150 km)2 of Nevada covered with 15% efficient solar cells could provide the USA with electricity ½ as much land with 30% efficient turbines 24 Source: J.A. Turner, Science 285 1999, p. 687.
  25. 25. the right : HVDC encouraging innovation < < < < Hydro Geothermal Wind Solar Biomass 25 25
  26. 26. DESERTEC concept for EU-MENA 10,000 GW from solar! 26 Source: Gerhard Knies, Taipei e-parl. + WFC 2008-03-1/2
  27. 27. price of power – 2011 and 2013 Carbon Tax 200 O&M Charge (Fixed & Variable) Solar Peaking Pricing Energy Charge Capital Charge 150 $/MWh 100 Solar Baseload Pricing 50 0 Gas Peaker Nuclear IGCC CCGT Coal Ausra CLFR Ausra 60% 24% (w/storage) 27 Source: Ausra. All prices are estimated as of April 2008, in 2008$; Carbon tax of $30 is assumed. Ausra CLFR 24% price is as of 2011, and 60% w/storage is in 2013
  28. 28. PuG power requirements Coal Coal Natural Solar Solar Engineered (PC) IGCC+CCS Nuclear Gas Wind (PV) (CSP) Geothermal Scalability High CO2 Med** High Low* Low* High High Storage High Low High High Low* Low* High High Reliability Price Med Med Low-Med Low High High High High Stability Carbon Price Low Low High Med High High High High CSP and EGS meet Utility Needs! Benefits Dispatchable Yes Yes Yes** Yes No No Yes Yes Power Adoption Ease High Low High** High Low Med High High Technology Low High Med Low High High Med High Risk Low Low *Wind and Solar PV are severely disadvantaged due to the lack of storage – power is available when generated, not when needed, stopping them from serving as base-load power 28 generators ** Nuclear energy is “always on”, generating electricity even when it is not needed (and when prices are negative, such as the middle of night). High decommissioning costs and a lack of effective waste-disposal are both significant factors in limiting its scalability
  29. 29. key criteria › Trajectory: “What is” or “What Can Be” › Cost Trajectory › Scalability Trajectory › Carbon Trajectory › Adoption Risk › Capital Formation › Optionality › Carbon Reduction Capacity 29
  30. 30. Cost trajectory: Undesirable (hydrogen fuel cell?) Fossil + Carbon Cost Cost Fossil Fuel Cost Subsidy/Support Needed Ideal (Cellulosic biofuels?) Time 30
  31. 31. Carbon trajectory: Carbon Emissions Trajectory Undesirable (natural gas?) Fossil Fuels Minimum Target Ideal (Cellulosic biofuels?) Time 31
  32. 32. cost: driving down the cost curve 32 Source: “The Carbon Productivity Challenge”, McKinsey – Original from UC Berkely Energy Resource Group, Navigant Consulting
  33. 33. cost: not all technology curves are the same Cost (Normalized) Cheapest now Wind not mean does Coal cheapest later! Trajectory Matters! Solar PV 2010 2015 2020 2025 2030 2035 33
  34. 34. declining technology cost… Generations of Solar Photovoltaics… Crystalline Silicon Amorphous Silicon Thin-Film Thin-Film Multi-Junction 34
  35. 35. but tech cost decline isn’t enough… Total Cost Cost (Normalized) Total cost decline is based on relative proportion of cost “types”… Construction Cost Inputs (Feedstock/Land) Technology Cost 2010 2015 2020 2025 2030 2035 2040 35
  36. 36. adoption risk - $2,500 nano … ICE or hydrogen? …the Chindia test on relevance 36
  37. 37. capital formation › Short Innovation Cycles (3-5 years) › Not “fusion”; Not “nuclear”; Not CCS › Mitigate technical AND/OR market risk quickly and cheaply Private money will flow to › (technical) - solar thermal › (market) – corn ethanol ventures that return investment in › Investor returns-5 year cycles! 3 at each stage of technology development › Unsubsidized market competition: 7-10 years 37
  38. 38. capital formation: pathway for solar thermal › 2008: Proof of concept mitigating technology risk › Costs at $0.16 per KWh › 2010: Deployment as peaking power (vs. natural gas) › Costs at $0.12-$0.16 KWh › Less with low cost loans › Ongoing tech optimization & storage › 2013-15: Deployment as base-load (vs. coal) › Costs at $0.10-$0.12Kwh including storage › Adoption risk: PUG power, cost 38 Note: All costs in 2006 $
  39. 39. optionality: hybrids or biofuels? 100% 0% % of power from electric sources % of power from liquid fuel 0% 100% Tata Nano vs. Honda Hybrid (India) Time 39 2010: >100X the volume?
  40. 40. carbon reduction capacity is key Growth Offers the Greatest Carbon Reduction Opportunity! 1.9 1.7 1.5 Index (2008 = 1) 1.3 1.1 0.9 0.7 Growth stock 0.5 Replacement of old stock Improvement of current stock 0.3 2008 2013 2018 2023 2028 40
  41. 41. carbon reduction capacity: 10X increase in carbon productivity! 10 9 Carbon Productivity = GDP / Emissions 8 Carbon Productivity Growth Required = 5.6%/yr 7 Less reduction now, but World GDP Growth greater capacity to 6 Index (2008 = 1) respond in the future? 5 4 World GDP Growth = 3.1%/yr 3 2 Emission decrease to 20GT CO2e by 2050 = -2.4%/yr 1 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 2005 41 Source: “The Carbon Productivity Challenge”, McKinsey – Original GDP projection from Global Insight through 2037
  42. 42. goal: cost, carbon & scaling trajectory, capital formation, low adoption risk, & optionality 42
  43. 43. …or get to work vk@khoslaventures.com khoslaventures.com/resources.html 43

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