Thursday, April 10, 2008

Cost of Iraq War: $3 Trillion;
Cost of Solar Plants to Power all 105 million U.S Households: $500 Billion

Let's cut to the chase on the Iraq War and ask a cold, brutal question: Is the war to secure Iraq's oil a good "investment" of American capital and lives?

First let's nail down the war's cost and what's at stake in terms of "return on investment."

Joseph Stiglitz and Linda Bilmes have written a book The Three Trillion Dollar War: The True Cost of the Iraq Conflict ; Vanity Fair published this excerpt: The $3 Trillion War.
The authors have since posited that the $3 Trillion estimate is actually too conservative: $3 Trillion May Be Too Low Our original estimate of the cost of the Iraq war was too conservative: in reality the cost for the US will be much higher.

Let's not be coy about the hoped-for "return" on the $3 Trillion investment of cash and 4,000+ American lives: it's the oil. Free the U.S. from the threat of weapons of mass destruction, foster democracy, blah, blah, blah. The purpose of the war is obvious: secure Iraq's oil for the West, establish American military hegemony over the region, and create a bulwark that limits Iran's reach/influence.

So how much is Iraq's oil worth? According to this report from the Brookings Institute:
In its 2000 World Petroleum Assessment, the Department of the Interior's U.S. Geological Survey (USGS) presented figures based on extensive geologic studies by a team of more than 40 geoscientists claiming that, as of the end of 1995, Iraq had 100 bbl of proven reserves, of which 22 bbl had already been recovered. Hence, according to the USGS, Iraq's current proven reserves amount to only 78 bbl--only two-thirds of the DOE's more commonly accepted 112 bbl estimate. Let's be generous and assume Iraq has 100 bbl (billion barrels) of proven oil reserves. At $100/barrel, that oil in the ground is worth $10 trillion. But we can't assume the U.S. will have sole rights to the 100 billion barrels; if Iraq sells its petroleum like other oil exporters, then it will sell oil to a variety of customers such as Japan, China, Europe, etc.

Since U.S. demand is about 25% of global demand, then it would be reasonable to assume that at most 1/3 of Iraq's oil would flow to the U.S. That's about 33 billion barrels, which at $100/barrel is worth $3.3 Trillion. Gee, that's a lousy return on an investment of $3 Trillion and 4,000 lives/20,000 seriously wounded Americans.

(Not to mention the Iraqi casualties. Yes, the war saved those who would have been killed/tortured by Saddam's dictatorship, and that is not a small number. But the war caused casualties which by any fair estimate equal or exceed the casualties Saddam's government, hobbled as it was by "no fly zones," would have inflicted on the Iraqi populace had it been left in power.)

If there is one absolute in the price of oil, it is that it is volatile. If a global recession cuts demand for oil by 5% or more, then the price could plummet to $50/barrel or less. That would certainly make the $3 Trillion "investment" a lousy one.

If, on the other hand, supplies plummet far below demand due to Peak Oil, then oil could easily climb to $200/barrel or even $300/barrel. At $200/barrel, then 30 billion barrels would be worth $6 Trillion--a reasonable "return" for the "investment" of $3 Trillion, but not a great return, for the U.S. has to pay interest on the $3 Trillion it borrowed to fund the war.
The only way to judge whether a return on investment is adequate is to compare it with alternative investments.

With that in mind, let's ask: how much would it cost, using today's technology, to build enough solar-generated electrical capacity to power all 105 million U.S. households? And I mean everything: heating, cooling, TVs, refrigerator, etc.

For cost estimates, let's turn to two large solar projects currently in the works:

SoCal Edison to build $875 million solar energy installation (AP)
Southern California Edison Co. plans to build the nation's largest solar energy installation — an array of collector cells covering two square miles of rooftops that could power about 162,000 homes, the utility announced Thursday.

Edison said it asked state regulators for approval to begin installing the technology on the rooftops of commercial buildings throughout the region over the next five years.
The project would cost an estimated $875 million. The array of solar cells placed atop commercial building rooftops across Southern California would generate 250 megawatts of electricity.

A one-megawatt power plant running continuously at full capacity can power 778 households a year, according to the U.S. Department of Energy."

According to my calculations, 250 megawatts X 778 households = 196,250 homes served, so the SCE estimate (162,000 homes) seems conservative.

2 big projects will amp up solar power in Southland (L.A. Times)

Gov. Arnold Schwarzenegger and Southern California Edison plan to announce today the country's largest rooftop solar installation project ever proposed by a utility company. And on Wednesday, FPL Energy, the largest operator of solar power in the U.S., said it planned to build and operate a 250-megawatt solar plant in the Mojave Desert.

FPL Energy's proposed 250-megawatt plant, dubbed the Beacon Solar Energy Project, will be situated on about 2,000 acres in eastern Kern County."

Here are the details on the Beacon solar thermal power plant, which is expected to cost $1 Billion: BEACON SOLAR ENERGY PROJECT FACT SHEET

The basic idea of solar thermal power generation is simple: place thousands of mirrors on 2,000 acres of hot, clear-sky desert and focus them on tubes filled with high-heat-conductivity liquid which transfers the accumulated thermal energy to turbines which generate electricity. The electricity is generated during peak-use daytime hours; surplus power is stored onsite in high-tech systems using molten salt or transferred elsewhere in the electrical transmission grid.

The most important thing to know is that this is not "new-fangled technology": nine plants of this design has been operating in the Mojave Desert since the 1980s.

And these aren't the only such mega-solar projects being planned. According to Wikipedia's article on the topic:

Solel has signed a contract with Pacific Gas and Electric (PG&E) to build the world's largest solar plant in the Mojave Desert. When fully operational in 2011, the Mojave Solar Park will deliver 553 megawatts of solar power, the equivalent of powering 400,000 homes, to PG&E’s customers in northern and central California. The plant will cover up to 6,000 acres (24 km²) of land.

Let's put this information together. SCE's photovoltaic-panels-on-roofs project will cost $875 million and will generate 250 megawatts, enough for between 160,000 and 200,000 households.

The Beacon solar-thermal plant will cost $1 Billion and generate 250 megawatts on 2,000 acres of desert. Once completed, the plant will require 68 staffers to operate and maintain it. (see factsheet link above.)

As you know from previous entries this week, there are 105 million households in the U.S. (Source: U.S. Census Bureau). If we take the Dept. of Energy estimate that 1 megawatt suffices for 778 households, then we can estimate that 525 solar plants each generating 250 megawatts would supply all the power needed for all 105 million U.S. households.

For a more conservative analysis, then reckon 250 megawatts will supply 175,000 households. Then we'd need 600 solar plants. With the mildest attempts at conservation (see below), then 250 megawatts should easily power 200,000 households.

(Note: few households practice strict conservation; just turning off all the adapters and electronics which are not in use would cumulatively shave off hundreds of megawatts of demand. About 5 percent of household electricity in the U.S. is lost to energizing computers, television and other appliances that are turned off, as a result of poorly designed standby circuitry.

According to The U.S. Department of Energy, there are 2,776 electrical generation plants in the U.S. That means 140 power plants do nothing but generate the electricity wasted by DVD players, TVs, answering machines, stereo systems, xBoxes and computers plugged into wall sockets while not in use. One solution: put as many of these devices as is practical on power strips which can be turned off with one switch.)

The cost of current-technology solar plants which generate 250 megawatts each cost between $875 million and $1 Billion.

So if the U.S. built 500 solar power plants each generating 250 megawatts, the total cost would be $500 Billion-- 1/6 of the cost of the war. Even if you refuse to make any conservation effort then you need 600 plants, and the cost is $600 Billion. Throw in another $100 Billion for new transmission lines, and you might spend $700 Billion-- a third of the cost of the war.

The U.S. spends $250 Billion a year on imported oil. The U.S. consumes about 21 million barrels a day and pumps less than 5 million barrels a day domestically.

Note that the 500 solar plants would generate at least 35,000 new jobs (perhaps laid-off oil-industry workers could be retrained?), and that the total land area required would be a trivial (compared to the deserts in Nevada alone) 2,000 acres X 500 = 1,000,000 acres or 1,563 square miles. The Mojave Desert alone is 50,400 square miles; the deserts in Nevada are even larger. Other suitable solar sites include New Mexico, Colorado, Texas, Utah and Arizona.

Fun Fact: The Nevada Test Site (used for nuclear tests) is 1,350 square miles, roughly equivalent to the area needed to power 105 million U.S. households.

Conclusion: as an investment in energy security, the war in Iraq is a poor investment compared to the construction of 500 solar power plants for approximately $500 - 600 Billion. While we have to pay hundreds of billions a year for the privilege of consuming imported oil, the solar plants require only modest maintenance and operating expenses for decades to come.

Yes, I know we still need oil for transportation and industry: but what if urban transportation (buses and compact autos) were converted to electrical or plug-in-hybrid power trains? How many of those 16 million barrels of imported oil could be spurned? We all know the answer: millions of barrels a day.

What would it take to reduce oil imports to zero, and for the U.S. to live off the 5 million barrels a day which it pumps domestically? It certainly looks like $3 Trillion would go a long way toward making that a reality--and that's with existing, off-the-shelf solar technology and a national electrical grid which is already in use.

Here is an excellent overview of solar thermal power generation:

Solar without the Panels Utilities are using the sun's heat to boil water for steam turbines. (Technology Review, published by M.I.T.)

The appeal of solar thermal power is twofold. It is relatively low cost at a large scale: an economic analysis released last month by Severin Borenstein, director of the University of California's Energy Institute, notes that solar thermal power will become cost competitive with other forms of power generation decades before photovoltaics will, even if greenhouse-gas emissions are not taxed aggressively.

Solar thermal developers also say that their power is more valuable than that provided by wind, currently the fastest-growing form of renewable energy. According to the U.S. Department of Energy, wind power costs about 8 cents per kilowatt, while solar thermal power costs 13 to 17 cents. But power from wind farms fluctuates with every gust and lull; solar thermal plants, on the other hand, capture solar energy as heat, which is much easier to store than electricity. Utilities can dispatch this stored solar energy when they need it--whether or not the sun happens to be shining. "That's going to be worth a lot of money," says Terry Murphy, president and chief executive officer of SolarReserve, a Santa Monica, CA, developer of solar thermal technology. "People are coming to realize that power shifting and 'dispatchability' are key to the utility's requirements to try to balance their system."

Here is a paper which concludes solar-thermal is a better investment than PV (photovoltaic) panels:

The Market Value and Cost of Solar Photovoltaic Electricity Production (37 pages; by Severin Borenstein, director of the University of California's Energy Institute)

The market benefits of installing the current solar PV technology, even after adjusting for its timing and transmission advantages, are calculated to be much smaller than the costs. The difference is so large that including current plausible estimates of the value of reducing greenhouse gases still does not come close to making the net social return on installing solar PV today positive."

Here is an excellent summary of standard costs, solar versus coal/oil-gas-fired plants. Please note that these cost estimates fail to consider the rising cost of coal, natural gas and oil; once the solar plant is built, operating costs are low and stable. Will 10 cents a kilowatt be achievable by conventional power plants if coal, natural gas and oil all double in cost? Obviously not.

Shrinking the cost for solar power (CNET)

Conventionally generated electricity ranges between 5 and 18 cents per kilowatt hour (the amount of money to get a kilowatt of power for an hour) but in most places it's below 10 cents, according to the Energy Information Agency. Solar thermal costs around 15 to 17 cents a kilowatt hour, according to statistics from Schott, a German company that makes solar thermal equipment.

A solar thermal plant would need a facility to store the heat harvested in the day by its sunlight-concentrating mirrors so that the heat could be used to generate electricity at night. "You need the kind of system that can run in the evening," Morse said. At some sites, such as Nevada Solar One, excess heat is stored in molten salt and released at night to run the turbine.

The plant, ideally, should be capable of generating about 300 megawatts of electricity. Those plants can churn out electricity at about 13 cents a kilowatt.

That's still a relatively high price, so utilities would need to group two, three or more 300-megawatt plants together to share operational resources, Morse said. "They could share control rooms or spare parts," he said. That would knock the price closer to 11 cents a kilowatt hour.
"Under 10 cents is sort of the magic line," he said.

Dolezalek puts it another way: the plants need to be around 500 megawatts in size. Most solar thermal plants right now aren't that big. The 22-year-old thermal plant in California's Mojave Desert is 354 megawatts. Utility company Southern California Edison is erecting a 500-megawatt plant scheduled to open in 2009.

By 2014, solar thermal plants located in the Southwest could crank out nearly 3 gigawatts of power, estimated Travis Bradford of the Prometheus Institute for Sustainable Development, a nonprofit based in Cambridge, Mass. That's enough for about 1 million homes.

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