Author Archives: David Mark Westsmith

Lesson 11.7 Decentralized Power: The Future Of Real Consumer Power

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Decentralization is independence and brings more control immediately into the hands of consumers.  Farmers markets are a decentralized method for food distribution. It unbinds us of the traditional methods of sustainability.  This is what decentralization is all about.  Taking control and thumbing your nose, so to speak, at utilities and the powers that be.  I think the greatest benefit of decentralization is independence and user control. Those participating in a micro grid can in theory, establish their own rates. The dynamic distribution system outlined in the Wisconsin Energy Institute paper seems the most feasible. “Benefits of a dynamic distribution system can include improved reliability, lower power losses, increased use of renewable energy sources, and lower total cost-per kWh.”(1)  Additionally, power needs can be determined locally. “By allowing the customer or micro grid operator to manage itself according to its needs, and then acting as an aggregated single entity to the distribution system operator allows for a number of innovations and custom operations; the interconnect point only needs to know whether power needs to be sent into the micro grid or whether power is flowing out.”(2)

I think it is important to mention Enron.  One of the downsides of deregulation, according to the lesson, was the debacle at Enron. The fault didn’t lay in deregulation.  Rather, it was corrupt management.  Deregulation set up the circumstances that allowed Enron to manipulate grids.  First buying power stocks at lower rates, shutting off grids, driving the stock values of power upward and then cashing in.  This is not evolution or cooperation.  Its crime.

Decentralization in its current forms cannot be avoided and utilities will cooperate in order to survive .  Utilities must recognize emerging consumer controlled power options such as the micro grid.  Additionally, micro grids without individual battery backup cannot truly be independent of utilities. A bipartisan existence must exit. “Most micro grids of the future won’t be making and storing enough power to be grid-independent all of the time. Instead, micro grids will maintain a constant and complex relationship with the utility” (3) As the article implies, utilities will be evolving with local micro grids to provide power during low light and no light scenarios.  Evolution has been slow in the United States.  However, decentralized power generation could save millions in capital investment, reduce power costs, reduce vulnerabilities, and cut greenhouse gas emissions in half.  In regulated power markets competition is nonexistent. However, in a decentralized market, competitive pressure should demand efficiency in the industry and increase profits while simultaneously saving households and businesses utility costs.  Decentralization also introduces new business opportunities.

Decentralized utility needs management.  The local grid needs to have an administration to handle the shared costs such as maintenance.  Third party facilitators could be hired to handle this and a local board of trustees could be hired from a pool of users who are stakeholders.  As for myself, I have already participated in solar array installs all over central California.  To be able to participate in furthering this technology and movement, either as a business owner or involved in a limited partnership, seems exciting.  There will be different and more complex challenges involved in micro grid installs and during its evolution business owners must be ready to adjust.  The lean business plan might do well in this environment.

 

(1)Beihoff, Bruce, Tom Jahns, Robert Lasseter, and Gary Radloff. “Transforming the Grid from the Distribution System Out.” Transforming the Grid from the Distribution System Out.The Potential for Dynamic Distribution Systems to Create a New Energy Marketplace (n.d.): n. pag. Https://energy.wisc.edu. University of Wisconsin – Madison, July 2014. Web. 7 Nov. 2014. <https://energy.wisc.edu/sites/default/files/Transforming-the-Grid-from-the-Distribution-System-Out.pdf>.

(2)Villarreal,  Christopher, and David Erickson. “Microgrids: A Regulatory Perspective.” Microgrids: A Regulatory (n.d.): n. pag. Microgrids: A Regulatory Perspective. California Public Utilities Commission, 14 Apr. 2014. Web. 7 Nov. 2014. <http://www.cpuc.ca.gov/NR/rdonlyres/01ECA296-5E7F-4C23-8570-1EFF2DC0F278/0/PPDMicrogridPaper414.pdf>.

(3)StJohn, Jeff. “Microgrids: Utility vs. Private Ownership.” Gigaom. Gigaom Research, 24 Feb. 2010. Web. 07 Nov. 2014. <https://gigaom.com/2010/02/24/microgrids-utility-vs-private-ownership/>.

David Westsmith Lesson 8 Blog

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David Westsmith                                                                                  ENGR 312

Lesson 8

Considering what I know about renewable energy, what are some of the key things I need to be able to explain to a potential funder of my project?

A Solar Installation Business

The “sell” to the investor is just as critical as the sell to the buyer.  Both has similar concerns however with a few exceptions.  The sell to the investor I would begin with discussions on the market  I would begin by trying to answer what are influences are now and what they are likely to be.  The local market will be highly influenced by the cost of local utilities.  Here in El Dorado County, there is no natural gas.  Two options are available to homeowner’s and both are expensive, propane and electricity provided by PG&E.  Both are disliked and the customer base is constantly complaining.  This is a tool and works in the business’s favor and needs to be disclosed to the financier.  :People are looking for alternatives so doors are open to the customer base.  Moving to labor, there are no more than three personnel needed to install even a large array.  For the sake of this paper, the average array is 5 kilowatts.  One install I participated in was  a 10 kilowatt array in Lodi, California and still there were no more than 3 of us on the job at any time.  Labor typically consists of a higher paid electrician and two laborers and lasts 3 days for a roof mount and a week or more for a ground mount.  For our business, we want to focus on roof mounts if possible as material and labor costs are significantly cheaper.  Discussing materials, it can be said that the cost is rapidly falling. Panels are much cheaper as are inverters, fuse boxes and other components. “The cumulative installed capacity of solar PV grew by around 70% in 2011. Combined with the high learning rate for solar PV and overcapacity in the manufacturing base, this growth has resulted in significant price declines over recent years.” (1) Copper wiring is the only cost that remains expensive.

 

What finance-based processes would I use to explain our potential for success?

Capital Budgeting and Net Present Value

 

Net Present Value formulas will show the basic investments made to begin and can give a decent example of future earnings.  As long as material supplies remain consistent with current trends and labor doesn’t increase   In other words, other numbers need to be considered but NPV will show what we need to have in returns with current inflation.  I do not see labor costs increasing out of proportion with the increase in installs.  Meaning that labor in installs can be very flexible.  A project can begin and while waiting for inspections and permits your crew can be moved to another install.  This eliminates labor investments when the business is expanding. Capital Budget is extremely important while in operation.  Fixed assets are trucks, tools and other sturdy, reliable measurement devices that have long term durability.  Fixed assets are unlikely to largely effect your bottom line in the short term. However, fixed costs will be considered in the capital budget.  In spite of that, I don’t see high replacement or maintenance costs effecting the capital budget severely.  Additionally, I believe the profitability index will be above one.  I also need to mention that already possess most of the fixed assets so start up is significantly lower for me.

Works Cited

(1)”Renewable Power Generation Costs in 2012: An Overview.” Www.irena.org. The International Renewable Energy Agency, 2013. Web. 20 Oct. 2014.

 

David Westsmith – What we have learned

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New Developments in Policy Encourage Green Investments

 

The government most recently have been promoting more efficient use of energy and our limited resources.  However, dollar for dollar, it is still much easier to obtain subsidies for nuclear power.  Nevertheless, green energy investments are on the rise.  In my home state of California, the profitability of green investments such as those in the dry, hot and arid California deserts, have generated large investment and intense focus.

In  Mojave, California exists the Ivanpah solar power facility.  A 377 megawatt net thermal concentrating solar plant, (CSP), focusing the power of the sun on solar receivers atop power towers.  The facility consists of three separate plants and the combined output provides clean electricity to serving more than 140,000 homes in California and will reduce CO2 emissions by more than 400,000 tons per year.  The construction of Ivanpah supplied 2,600 jobs and in full operation only needs 65 fulltime and part-time staff.

What we have learned from Ivanpah is that virtually un-farmable, and arguably useless land can be developed by installing CSP power facilities that provide sustainable, profitable and environmentally clean energy.   It helps to answer the question of how can this type of land be used most efficiently.  Using this land for CSP plants provide far more profit than would be attainable if farming, for example, was used in its place.   Furthermore, none of the environmentally hazardous waste associated with running other forms of power, such as nuclear exists.

Ivanpah and plants like it are economically feasible as well.   After the cost of construction, support staff is minimal and maintenance costs are a fraction of nuclear power plants because less highly skilled, highly paid technicians are needed.  Expensive governmental regulatory safety checks necessary for nuclear are un-necessary.   Governmental policies are encouraging this form of investment and have made projects like Ivanpah that much more fundable.

Business Developments

In California we are in the process of designing and adopting greener building codes.  These building codes are suggested as incentives.  However, they have been becoming mandatory.  Greener building is better for the environment and a good sell but it is the adaption and transition to greener mandatory building codes that will bring new interest and therefore retrofits, the adaption in new construction and business opportunities.

As information of the cost savings of installing a 4 to 5 kilowatt roof top or ground mount solar panel array for example becomes available, homeowners, whether involved in new construction or retrofit, will want to participate.  This combined with the lower costs of panels will make the decisions to greener technologies even easier.  There are large opportunities in consulting in commercial as well as residential.  Many large commercial real-estate holders are loading roof tops with  solar arrays.  Ohlone College at Newark, California has one of the largest roof top solar arrays in Silicon Valley.  At 600kW the system covers 38,000 feet of roof space.   Examples such as this, lead the way to further investment by commercial real estate owners who have the resources to spend for the long term.

Works Cited

Doris, Elizibeth, Jaquelin Cochran, and Martin Vorum. “Energy Efficiency Policy in the United States: Overview of Trends at Different Levels of Government.” Http://www.nrel.gov/. National Renewable Energy Laboratory, 1 Dec. 2009. Web. 16 Sept. 2014.

 

David Westsmith – Lesson 2 – Renewable Support and Finding the Niche

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Why less support for renewable’s when compared to nuclear.

There exists real competition for example in the solar panel market.  Solyndra went bankrupt because it seriously underestimated the foreign, specifically the Chinese, solar panel market.  Why should the government subsidize renewable energy projects when the history is still so very young and can likely be underbid by foreign suppliers?  Additionally nuclear power can achieve output that renewables cannot achieve.  “The cost of building and operating the Finnish nuclear plant over the next 20 years will be $15 billion. Over that time period, the plant will generate 225 terawatt-hours (twh) of electricity at a cost of 7 cents per kilowatt hour.”(1)  There simply is a larger return with nuclear at this time.

 

Niche business opportunities in the global development.

I discovered this amazing article from MIT regarding the recycling of automobile batteries and the production of Perovskite based photovoltaic cells.  The typical process used to obtain Perovskite uses lead from raw ores which can produce toxic residues and therefore is considered a drawback.  However, the power conversion efficiency of Perovskite cells is running 19% which is on par with silicon based cells.  Thus began a search for “cleaner”, methods to obtain the lead.  Old, used automobile batteries fit the bill perfectly.

With newer ion based batteries coming into mainstream use, there will be a surplus of lead cell batteries that would be destined for landfills.  This is a win-win because it adds significant value to a retired, soon to be obsolete toxic material.  Lead based batteries will be recycled into another form of energy that can be sustained for years.  I see this as an excellent opportunity to evolve a form of moderately efficient energy storage into an energy producer whilst keep a very toxic substance out of landfills.

 

 

Works Cited

(1)Nicks, Denver. “Nuclear vs Solar Q&A with Dr. Corradini of the American Nuclear Society.” Power Engineering. Pennwell Power Sites, 12 July 2014. Web. 9 Sept. 2014. <http://www.power-eng.com/blogs/energy-matters/2013/05/nuclear_versus_solar.html>.

Chandler, David. “Recycling Old Batteries into Solar Cells.” MIT News. MIT News Office, 18 Aug. 2014. Web. 9 Sept. 2014. <http://newsoffice.mit.edu/2014/recycling-batteries-into-solar-cells-0818>.

 

David Westsmith – Intro

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I’m a returning student who was confronted with the reality of the ever changing blue collar job prospects.  I am a licensed contractor and its a fight to maintain that I am truly tired of. So I decided to finish school.  I am an ESP major.  This is an interesting major and to me its a combination of a BA and a BS.  There is more science in the major than I was aware.  I think it is an excellent major.  I collect one specific guitar from only 1 year of manufacture. 1983 Ibanez Roadstar 2’s.  I have 13.  I have the largest collection in the United States which I am proud of.  I have an RS 1100 that was only released in West Germany.  Besides that I have traveled all over the place and lived on and off in the Philippines for 14 years and have a cheap hotel room there that I keep stuff in. Cebu is a great bouncing point.  cheap flights to anywhere asia.  I’ve been to many South East Asian countries. Too many to list.  My first semester at Penn was from that hotel room in Cebu via wi-fi, a toggled nokia E-51, a usb simm gsm stick and sometimes various coffee houses in malls in Cebu.  I can say I am truly a member of the world campus if you get my meaning.  I play music, (drums), and played in a sort of motown/funk/70’s band ala james brown, aretha etc…That was in the Philippines with other expats and a brit.  too much fun!! I made good money too.  Lots to blab about….I better stop.