In my last post on energy conservation, February Follow up on Green Technology that pays for itself, it appeared that my energy savings was well on its way. Then came the shock of my March bill. The price the electrical company charges for electricity jumped by 18%. How did that happen? In a time of dropping gas and coal prices, the cost of electricity goes up! My all inclusive price for electricity in 2011 averaged out to 9.6¢. My current rate which is a flat rate for two years looks like it will average out to 10.6¢ for a 10.4% increase. I will pay a lot more in the heating months and a little less in the cooling months. With my recent lack of wage increases I doubt I will feel better about it in 2013.

For kicks I decided to estimate the cost of 6 KW solar array using the online calculator at Wunderground.com. The price came in $25,000 just for the panels. I re-priced the panels using www.solarpanelsonline.org and came up with $12,570 with a 15 year payback. This confirms previous solar panel calculations that I made in the past. Although the cost of solar panels have dropped dramatically, I need either the efficiency to improve by 100% or drop the cost  by 50% to entice me into a project like this. This amount of efficiency improvement in the next ten years is not impossible but it is unlikely.

When we look at the government report, Estimated Levelized Cost of New Generation Resources, 2016, we can see that gas and coal are the low cost power generating sources. Photovoltaic generation is one of several high cost sources. It is safe to say that coal and gas power generators are going to be with us for the foreseeable future and the question is what are we going to do to make the situation better. In a non-partisan way it would seem that we could craft a reasonable 10 year plan for Ohio that would take advantage of our competitive advantage of lower electrical rates, replace aging power plants, improve employment opportunities, and lower pollution. This is a winning issue for a lot of people including people like me who want lower electric bills when coal and gas get cheaper. I have been by several coal power generating plants and I believe their pollution risk is over-hyped. Although you can make a pretty good business case that improving existing plants is good for almost everyone, I was pretty pessimistic about the politics until I saw this post.

But Catherine Wolfram, an economist at UC Berkeley’s Haas School of Business, says that we too often ignore simpler solutions, such as wringing more efficiency out of our existing fossil-fuel and nuclear plants. Many of those power plants, after all, are likely to stick around for decades to come. And there are quite a few minor tweaks that can be made to these plants that can cut greenhouse-gas emissions dramatically ”” tweaks that can have as much impact as building hordes of new wind farms or solar panels.

Why we ignore low-tech fixes for the climate – The Washington Post

When you combine Marc Thiessen’s argument that Energy Department investments in green energy reek with political favoritism with the CBS allegation that $6.5 billion of the $30 billion of Energy Department guarantees for green energy is at risk for immediate default, it is easy to conclude that government involvement in green energy is bad for America.

The interesting question is whether “crony capitalism” will be bad for green energy development over the long term. When I lived in Houston we had a saying that the oil boom is over when the lawyers and doctors start investing in the oil partnerships. Something similar can be said about the government involvement in green energy. Although I am mildly enthusiastic about green energy prospects, I am very suspicious of green energy proposals with government involvement. The green energy bubble has popped.

In his outstanding book, Throw Them All Out, Hoover Institution scholar Peter Schweizer goes through Obama’s 2008 campaign finance records and cross references Obama’s list of donors against the list of those who got grants and loans under the green energy program. Here is what he found:

”¢         71 percent of Energy Department grants and loans went to Obama’s political cronies. 71 percent!

”¢         Collectively, they raised about $457,834 for Obama’s campaign.

”¢         And they were in turn approved for grants or loans of nearly $11.346 billion.

”¢         That means they got $24,783 in taxpayer dollars for every $1 they gave to Obama’s campaign.

Now that is one heck of a return on investment.

Here’s a ”˜rigged system,’ Mr. Vice President « The Enterprise Blog

When I lived in Texas cogeneration was a popular option with chemical plants who required high pressure steam for their processes. When I moved to Ohio I was surprised that steel plants were not taking advantage of their process. Today I found this article in the Dayton Daily News, Bill clears path for $310M AK project.

Senate Bill 289 would allow AK Steel Corp. and Air Products and Chemicals Inc. to build a $310 million facility to capture waste gas vented from an AK Middletown Works blast furnace to generate steam and electricity as part of the state’s renewable energy market.

Today, the gas is burned off. But with this proposed facility, it could be used to generate steam and electricity for AK’s Middletown plant ”” about one million megawatt hours annually, enough to serve more than 85,000 Ohio homes, according to Air Products, which would own and operate the facility.

State Sen. Bill Coley, R-Middletown, who introduced the bill, wants to amend Ohio law so the blast furnace gas would qualify for the renewable energy market.

Companies that generate power from renewable energy sources ”” usually wind and solar ”” can sell Ohio renewable energy credits to other, less energy-efficient companies or to organizations that want to support renewable energy. The credits are meant to be incentives to pursue renewable energy creation.

The interesting twist in this bill is that the flue gas will qualify as a "Renewable energy resource". This allows the company to get a little more profit by selling renewable energy credits. It seems an odd match but it looks like a win-win situation. We get cleaner air, possibly lower electrical rates, and AK Steel gets a little more profit from the plant. Every day it stays open is a good day for the folks whose jobs are dependent on the plant. Although opening the “Renewable energy resource” credits to flue gas seems to be a stretch, there really are not that many feasible solar or wind projects in this part of the state. Although I think renewable energy credits is a dumb idea that should quietly go away, I understand why the Senator sponsored the bill. The wording in the bill is pretty restrictive on who qualifies. Here is what the bill says:

energy produced by cogeneration technology for which more than ninety per cent of the total annual energy input is from a waste or byproduct gas from an air contaminant source in this state, which source has been in operation since on or before January 1, 1985

From the Spiegel Online we get this update on solar power and subsidies in Germany. For people who have done the solar power calculations for northern latitudes the findings in this article are not surprising. The math is pretty easy. What is newsworthy is that it took €8 billion ($10.2 billion) in subsidies in 2011 before someone in Germany finally spoke up.

The Baedeker travel guide is now available in an environmentally-friendly version. The 200-page book, entitled "Germany РDiscover Renewable Energy," lists the sights of the solar age: the solar caf̩ in Kirchzarten, the solar golf course in Bad Saulgau, the light tower in Solingen and the "Alster Sun" in Hamburg, possibly the largest solar boat in the world.

The only thing that’s missing at the moment is sunshine. For weeks now, the 1.1 million solar power systems in Germany have generated almost no electricity. The days are short, the weather is bad and the sky is overcast.

As is so often the case in winter, all solar panels more or less stopped generating electricity at the same time. To avert power shortages, Germany currently has to import large amounts of electricity generated at nuclear power plants in France and the Czech Republic. To offset the temporary loss of solar power, grid operator Tennet resorted to an emergency backup plan, powering up an old oil-fired plant in the Austrian city of Graz.

Solar energy has gone from being the great white hope, to an impediment, to a reliable energy supply. Solar farm operators and homeowners with solar panels on their roofs collected more than €8 billion ($10.2 billion) in subsidies in 2011, but the electricity they generated made up only about 3 percent of the total power supply, and that at unpredictable times.

Last month I wrote a follow up, Follow up on Green Technology that pays for itself, in which I said that the additional insulation I put in the ceiling resulted in a 10.2% drop in kilowatt hours and a $29.78 drop in the total bill. Another month has passed and I was hopeful that the January bill would show an even larger drop. The January bill has arrived and I am disappointed. The bill came in much lower, $63.92, but most of the lower cost can attributed to a warmer January. The amount of money I can attribute to the insulation is only $7. I have a couple ideas on how we used more electricity. Oh well!

For kicks I decided to run the 2011 data(minus the air conditioner months of June through September) through a linear regression. A polynomial equation fits the data better, but the linear equation gives me a nice multiplier to work with. Here is my graph.

A few weeks ago I made a comment on an article, Energy Efficiency: Cheapest Power Around, but Getting More Expensive, about my belief that we were wasting money on some of the energy efficiency initiatives sponsored by electric utilities. In the article they state,

IEE’s report didn’t get at how each dollar of utility energy efficiency money was spent, though it’s clear that the majority is still coming from simple steps like replacing lights and appliances with newer, more efficient models, as well as encouraging people to change behavior in energy-saving ways, Wood said.

In my comment I pointed out that when our heat pump broke down in 2010, we were going to buy a high efficiency heat pump regardless of the rebate. Although the rebate was appreciated it was not very important in our decision. The other major energy efficient effort by our utility was to give away compact fluorescent lights(CFL). Since I already had extra CFLs on my shelf I will probably not use these new CFLs for a couple of years. From my experience rate reduction was a better use of money that more people can take advantage of.

In a subsequent comment I was surprised to find that this comment offended someone and he attempted to defend the policy by claiming that he knew what I would really do. Here is the quote,

How can you really say you would have purchased the high efficiency model? What people say is often not what they do – despite what classic economic theory says about rational behavior.

So I went back and reviewed the marketing brochures, cost estimates, and the decisions made by my wife and myself in replacing the heat pump. My conclusion is unchanged except I am now convinced that the energy efficiency experts slept through their Marketing 101 class. The most important reason my wife and I were going to buy a high efficiency model is that buying a low cost, inefficient model was not an option. Using the 2010 Bryant brochure as an example we were offered three different models that varied from the less expensive model with a 13+ SEER and  9 HSPF to the most expensive model with a 16+ SEER and 9 HSPF. It is interesting to note that all of the brochures talked primarily about performance, warranty, and special additions available on the more expensive models.  None of the brochures used the rebate as a selling point. By chance one of the brochures mentioned  that the Energy Department had decided in 2006 that all new AC units or heat pumps would have a minimum of 13  SEER. When I look at various 2010 brochures it appears that all of the manufacturers complied. From a general viewpoint it is easy to conclude that the 2006 Energy Department decision was primarily responsible for the energy efficiency gains. It is this simple stuff that "green" investment advocates cannot get a handle on.

Even if we delve into more specifics, the argument for energy efficiency rebates does not get any better. At our house we consume half of our annual electric power in the three coldest months. Naturally the most important energy efficiency specification is the heating system performance(HSPF). Since our old heat pump had a 9.2 SEER and an unknown but undoubtedly low HSPF, I was happy with all of the models offered by Bryant. All of the specifications were much better but the heating system performance had improved dramatically for heat pumps in the last ten years. My wife had an additional requirement, she wanted a heat pump with a good warranty. She wanted the moderately expensive model since it had a good warranty. It was nice that it qualified for the energy rebate but as you can see it was not an important factor in our decision making. Since the HSPF numbers for the different models were the same, our annual kilowatt usage was going to be about the same regardless of the model we selected.

Whichever way I looked at energy efficiency rebates, it was primarily a political idea that was not going to change our behavior. I suspect other people replacing AC and heat pumps came to the same conclusions. The rebate was 3% of the total bill. Since the rebate is no longer being offered in 2012, I have to conclude that the saner minds in government agree that this an incentive we can live without. I chalk this up as another #greenfail like the bankrupt firms of Solyndra and Ener1. Much ado about nothing!

A few weeks ago I wrote a post about installing additional insulation in the ceiliing, Green Technology that pays for itself. Recently I was pleasantly surprised when I received my December electric bill. It was down 38.8% compared to last year. The drop was larger than I expected so I decided to update my spreadsheet with the heating degree days, kilowatt hours, and cost. The largest contributor to the drop comes from a 25.7% drop in heating degree days. This year has been warmer than last year. When we adjust the numbers for the lower number of heating degree days, we can see the effect of the insulation in a lower amount of kilowatt hours used per heating degree day. This year I estimated that the additional insulation resulted in 10.2% drop in kilowatt hours and a $29.78 drop in the total bill. Here is my updated chart.