L10: Decentralized of Power Generation

The most common means of generating electricity in most countries around the world is via centralized generation. This electricity is generated large scale and then transmitted at high voltage via transmission lines over long distances. De-centralizing power generation would have several effects for the market.

Decentralizing power generation provides several environmental benefits by displacing electricity that is generated by large scale centralized  power plants. It would also generate power were it is needed, increasing the efficiency of the resource use. This would also open the doors to more local renewable energy power generation.  However, decentralized power generation may also have disadvantages. According to the International Energy Agency it has higher unit capital cost per kilowatt than a large plant. It has lower fuel economy and uses a more limited selection of fuels. For photovoltaic systems, operating costs are very low but high capital costs make it uncompetitive. “Studies by the Congressional Budget Office and the U.S. Department of Energy also point to higher costs as a possible disadvantage (Karger, 2009).

I believe that local renewable energy power generation businesses evolving in this changing landscape, as well as would be a business I can see myself creating to serve this market.

References:

Karger, Cornelia, Hennings, Wilfred. Sustainability evaluation of decentralized electricity generation. Renewable and Sustainable Energy Reviews. Volume 13, Issue 3, April 2009, Pages 583-593.

L8: Understanding the Cost of Capital – Bret Cole

Knowing how to talk money in any business is the ultimate key for explaining business proposals and getting investors interested in a product or service. Especially in the renewable industry, knowing the finances, values, and return on investments of projects is extremely important. Key mechanisms and calculations to explain to a potential investor for a renewable energy project are:
• What is the rate of return of return of the project
• Present, annual, and future worth of the project
• Before tax and after tax cash flow of the project
• and Net Present Value of the project
These calculations will show if the project is even feasible or would generate any cash flow after taxes. With these, finance-based processes like providing the opportunity cost of capital and payback period analysis are also important in explaining the project’s potential for success. Stermole and Stermole describe payback period as, “the time required for positive project cash flow to recover negative project cash flow from the acquisition and/or development years” (Stermole, page 488). A payback period analysis would be a great way to show investors that the project is sound and would be able to recover any initial costs that the investor puts forward.

Works Cited

Stermole, F. J., & Stermole, J. M. (2012). After Tax Investment Decision Methods and Applications. Economic evaluation & investment decision methods (13th ed., p. 488). Lakewood, Colo.: Investment Evaluations Corp..

Lesson 3: Energy Efficiency – Cole

If the goal is to use efficiency improvements to put the United States on a track to potentially use less power than today, there needs to be a cooperation between businesses, the government, and individuals. Governments can promote energy efficiency through a variety of programs and policies. Raising minimum efficiency standards for appliances, offering tax incentives on energy efficiency renovations, and raising energy taxes are some polices that the government can impose. The United States government already requires some appliances like refrigerators and dishwashers to meet certain efficiency standards. However fails to address other major household appliances in terms of energy efficiency. The government should raise the efficiency standards higher for the appliances already included in this policy and expand standards to other major household appliances to put the United States on a better track. Offering more tax incentives for replacing old windows, furnaces, insulation, door, etcetera, and other energy efficiency renovations, would be a another policy. This gives individuals and businesses “incentives” to increase the efficiency of their houses, buildings, or factories while using electricity. Another way of doing this and generating revenue would be to increase energy taxes. That will sure get individuals and business to cooperate and increase their energy efficiency.

I believe that energy consultation and servicing firms already have the potential to move with these types policies. To meet efficiency standards and save money by investing in renovations, individuals and businesses will have to consult with firms that are very knowledgeable in doing research and providing plans to meet with their energy efficiency needs.

L2 Learning Activity: Searching for the Entrepreneurial Niche – Cole

     It is true, some renewable energy projects are failing to receive the same degree of support from the financial community and the government that nuclear does. In my opinion, I believe this is because we can generate much more electricity from nuclear than we can from any other renewable energy resource. With higher capital costs, it is much more expensive to build a nuclear facility and financial backing essential for this industry. With nuclear power generation, it can be built anywhere and relies on two of the most abundant substances of Earth, Water and Uranium, which are not hard to get. While as for other renewables like solar and wind, they rely on radiation and air currents which are best in only specific locations. We have learned in this lesson that no new nuclear power facilities have been built for over 35 years. Yet nuclear power still generates 19% of the nation’s electricity while other renewables generate 10% according to the U.S. Energy Information Administration. I can also imagine a lot of government intervention in and lobbying from this industry which could also have an effect on this degree of support.

     Some niche opportunities I see for entrepreneurs in the global development of renewable energy sources are hydro-kinetic energy, or off shore wind generation, expanded bio-gas generation technology around the world to agricultural areas, and in the near future I see a new renewable source of energy using infrared emissions from the sun. I have included a link about that down below:

http://www.seas.harvard.edu/news/2014/03/infrared-new-renewable-energy-source

Bibliography from EIA:

http://www.eia.gov/tools/faqs/faq.cfm?id=92&t=4

http://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3

Bret Cole Introduction

Hello everyone, my name is Bret Cole. I was born and still living just outside of Pittsburgh, Pennsylvania, in a town called Aliquippa. I am studying in the Energy and Sustainability Policy program, minoring in Energy Business and Finance through the Penn State World Campus. I am hoping to pursue a career in the solar, or Bio-gas technology industries after graduation. My primary interest in this course is not only to fulfill my requirements, but to also get a further understanding on sustainability ethic and the roles that it can play in the energy business industry. There are many great ideas with sustainable practices with and without renewable energy resources. But most of them lack backup in answering the fundamental question, “how is this going to make me money?” No matter what, that is the primary reason businesses are in business is to make money, and it is really important to have proof while either proposing to investors or a board of directors for an idea. I hope to gain some of that insight while working through this course.

I have never started my own business nor have I ran my own business. I have done interviews with small business owners as while as volunteered at small businesses. During those instances, I was introduced to the daily workings, management, finances, and competition of these small businesses. I give praise to owners for all the work that they do. A business that I could imagine having a significant impact on the renewable energy industry would be a Bio-gas technology generating business that can provide this type of technology cheaper and more effectively to dairy, livestock, and poultry farmers. Bio-gas generation has many benefits to farmers and energy creation and getting this technology to farmers would be great impact in the renewable energy industry in the U.S.