Viewing 15 posts - 76 through 90 (of 93 total)
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  • #3582
    Rematog
    Participant

    Brian,

    Well, First, I still disagree with the assumed installed cost of $250k/ 5 MW module. With all costs (land, roads, buildings, cooling tower, transformers, etc.) I would argue between 1 to 2 million per FF module, IF modules sold for $500k FOB site. But, even with my upper estimate ($400/kw installed), many towns and cities would likely become their own utilities. With the low capital ($400/kw is dirt cheap) and operation costs (almost no cost for fuel), this would be very attracative. But, this would also require these entities to have service contracts with someone to provide high tech maintenance. And this facility would not be located downtown, but outside of town, probable near the local distrubution sub-station.

    Plus, that town would have to buy the distribution assets of the utility currently servicing the area. Even using eminate domain, the govenment, local, state or national, can’t just take property. It must pay for it, likely the utilites book value for those assets. If the utility is dropping rates, due to the utility replacing it’s old plant’s with FF power, then the incentive is less.

    Lastly, remember, that part of the “Pact” of a regulated utility with the government is that in return for giving up the ability to determine what it will charge for power (the rates are set by state commissions in most cases), the Utility is guaranteed a fair return on investment. In the past, this has resulted in “stranded assets” (plants that can’t be run due to new laws) owned by the utility being charged to the consumer. You can be sure that the utilities lawyers will file to have that town’s portion of the “stranded assets” included in the book value of the assets the town would have to pay for.

    When all is said and done, these small city owned “utilities” running local FF modules, would be looked on by the town govenment as a revenue source for the city (like a lot of small water districts…I’ve been to city council meetings and seen this). The town council would set rates based on the old fear and greed model. I.e. “How much can we charge the voters before they get too mad at us and vote us out.” Also, these local run gov. agencies often become full of patronage jobs….

    Regarding a unit in the basement of a shopping mall…… FF is not likely to get that well accepted in my lifetime. I’m in my fifties, and doubt that they would be allowed in urban areas for at least 20-30 years. The attitude that these are as safe and easy to use as an air conditioner, well, I just don’t buy it. They are certainly way more complex. They generate X-rays and some level of nuclear contamination, and the fuel is a pretty hazardous material. Not something to put in a basement and run by someone that can’t fix their own air-conditioner or plumbing.

    #3585
    Brian H
    Participant

    Maybe. But the Fear-and-Greed factor has another side to it. Once the base cost of generation becomes common knowledge (which might take a day, perhaps two) the end users would demand pricing as close to that as possible, and be damned to the regulators and town-hall-fixers et al.

    #3586
    JimmyT
    Participant

    From Wikipedia “Independent power producers”

    “Section 210 of PURPA now requires utilities to purchase energy from NUGs (non utility generators) which qualify at the utility’s
    avoided cost. This allows NUGs to receive a reasonable to excellent price for the energy they produce and insures that energy generated by small producers won’t be wasted.”

    Comments?

    #3589
    Rematog
    Participant

    I’ve worked at a PURPA “Shark”. That was the name for small NUG’s that were built in California in the 80’s and 90’s in response to the very attractive “avoided cost” set by the State of California.

    The key question is “What is the avoided cost?”. Remember, the “avoided cost” was meant to be the cost of the power plant not built and operated by the utility due to the NUG supplied power. This becomes a political issue, generally settled by state legislatures and rate commissions.

    If properly done, it is a good way to encourage innovation and efficiency. If not, it either leads to “Sharks” (the plant I worked at was, by 1995, receiving OVER the residential rate for power being sold to the utility wholesale, we were, in effect, being subsidized. Or, the utility can get (they have considerable political power) “avoided costs” set low enough to prevent “competition” from NUGs.

    If the Utility was deploying FF modules, they would likely argue (with some merit) that the avoided cost was the cost of FF generated power.

    #3590
    Rematog
    Participant

    The public knowledge is currently available. But the media is very bad at reporting technical issues. They often don’t understand, or even want to understand, technical issues. They see engineering and science as “mechanic’s work” that they, as members of the 4th Estate, are above. And they often (mis) report things for their own reasons.

    Two examples from first hand experience.

    1) A truck driver was burned when he tried (stupidly) to walk across the tarp on a truck load of ash, and fell in. Flight for Life was called to rush him to a hospital (he survived). The TV news reported an explosion at the plant. When I called and asked the reporter, she said she had assumed that if someone was burned, there must have been an explosion. I asked if she had called to confirm her assumption, and was told no, she “didn’t have time”. I got the impression that an explosion sounded “sexy” and she wanted her story to air.

    2) Shortly after the TV movie “The Day After” aired, a local university’s Student government voted to stockpile poison in case of nuclear war. The local TV news reported on this legitimate story. Immediately after, nothing between, they reported that the local utilities nuclear (fission) plant had “Run at full power for the last 30 days.” They had NEVER, to my knowledge, reported on the air that any plant had run with no problems for the last month. To my mind, the station’s news staff had wanted to tie nuclear power to nuclear war and death in the minds of the public. I called and spoke to the stations News Editor, and was told “it was never their intention to do that, it was COINCIDENCE”. He would not admit that they had any agenda against nuclear power. I told him that they had every right to editorial opinion, but that it should be aired as such, not put forth as innuendo. He hung up on me.

    #3594
    JimmyT
    Participant

    Question:

    Wouldn’t the generation costs with focus fusion probably be less than the “unfavorable” avoidance rates established by some commission? Wouldn’t this make recovering stranded assets difficult?

    At the same time I’m aware that all this could be changed with the stroke of a pen.

    Somehow I knew I’d be talking to Rematog bout’ this. ( I must be psychotic!)

    #3595
    Brian H
    Participant

    Those cost comparisons aren’t in the same universe as the discrepancy between FF and current sources. It’s no longer a matter of a few 10s of percentage points. It’s around an order of magnitude. I think most of the sharpie fiddling would be burned away in that environment. Call me an idealist. :gulp:

    #3598
    JimmyT
    Participant

    Hope you are right.

    #3599
    Rematog
    Participant

    Brian H wrote: Those cost comparisons aren’t in the same universe as the discrepancy between FF and current sources. It’s no longer a matter of a few 10s of percentage points. It’s around an order of magnitude. I think most of the sharpie fiddling would be burned away in that environment. Call me an idealist. :gulp:

    Brian,
    You seem to be neglecting my last statement regarding PURPA. The “avoid cost” if FF becomes commercial, would be the cost of new FF modules…. So an independent generator wouldn’t have any advantage under PURPA. In fact, an independent generator would have several likely disadvantages compared to the utility.

    1) Cost of capital. A large utility generally has an investment grade bond rating. So they can borrow money cheaper then a small start-up company. People invest in start-up companies hoping for a high rate of return.

    2) Physical infrastructure. The utility will likely own land (on which the old plants sit) that has good transmission access, a source of water (for cooling system make-up), roads, are graded and fenced and have office and maintenance buildings. These sites almost always have rail access, which would make shipping equipment easier and cheaper.

    3) Human Resources. The utility already has management, engineering, accounting, etc. staff in place, and these are already being covered under the rates charged to customers.

    One another subject. as previously stated, large power consumers, such as industry, would likely be second phase deployers, perhaps in a few cases, even first phase.

    And, FF could, no, would, provide process heat, not just power. This would be of great value, as most process heat is currently generated burning natural gas, oil, or in very large facilities, coal. The process heat market represents a large fraction of the total energy consumption in the US and rest of developed world. One co-advantage of this on-site generation, would be freeing transmission systems of this load, freeing it up for almost certain increase in residential load.

    Remember, if FF power is relatively cheap, home heating as well as cooling would turn to electric power. Either heat pumps or, with low enough power costs, simple resistive heating, would replace natural gas or fuel oil for home heating. And, quite simply, with power becoming cheaper, and perceived as no longer having a great environmental cost, people would not work nearly as hard to conserve power. Leave the lights on, FF power is “too cheap to meter”……

    #3600
    Brian H
    Participant

    Rematog wrote:

    Those cost comparisons aren’t in the same universe as the discrepancy between FF and current sources. It’s no longer a matter of a few 10s of percentage points. It’s around an order of magnitude. I think most of the sharpie fiddling would be burned away in that environment. Call me an idealist. :gulp:

    Brian,
    You seem to be neglecting my last statement regarding PURPA. The “avoid cost” if FF becomes commercial, would be the cost of new FF modules…. So an independent generator wouldn’t have any advantage under PURPA. In fact, an independent generator would have several likely disadvantages compared to the utility.

    1) Cost of capital. A large utility generally has an investment grade bond rating. So they can borrow money cheaper then a small start-up company. People invest in start-up companies hoping for a high rate of return.

    2) Physical infrastructure. The utility will likely own land (on which the old plants sit) that has good transmission access, a source of water (for cooling system make-up), roads, are graded and fenced and have office and maintenance buildings. These sites almost always have rail access, which would make shipping equipment easier and cheaper.

    3) Human Resources. The utility already has management, engineering, accounting, etc. staff in place, and these are already being covered under the rates charged to customers.

    One another subject. as previously stated, large power consumers, such as industry, would likely be second phase deployers, perhaps in a few cases, even first phase.

    And, FF could, no, would, provide process heat, not just power. This would be of great value, as most process heat is currently generated burning natural gas, oil, or in very large facilities, coal. The process heat market represents a large fraction of the total energy consumption in the US and rest of developed world. One co-advantage of this on-site generation, would be freeing transmission systems of this load, freeing it up for almost certain increase in residential load.

    Remember, if FF power is relatively cheap, home heating as well as cooling would turn to electric power. Either heat pumps or, with low enough power costs, simple resistive heating, would replace natural gas or fuel oil for home heating. And, quite simply, with power becoming cheaper, and perceived as no longer having a great environmental cost, people would not work nearly as hard to conserve power. Leave the lights on, FF power is “too cheap to meter”……

    OK, here’s your thought experiment for today.

    You have $XXX,000,000. You can spend it either:
    a) maintaining and expanding plant with a 20:1 underlying cost of marginal production disadvantage,
    or
    b) Building a few hundred FF generators selling into the same market with a 20:1 cost advantage.

    If you choose (a), someone else will choose (b) and eat your lunch. And breakfast. And dinner. And midnight snack.

    #3603
    Rematog
    Participant

    Brian,

    I don’t understand your point. I’ve always maintained that utilities would be in the FIRST wave of deployment of FF. And, as I’ve said twice, the avoided cost most likely to be used by a state for PURPA purposes would be the cost of FF generated power.

    I’ll say it again, the first mass deployment of FF modules would be utilities and wholesale generators repowering fossil fuel sites with FF. Nuclear FISSION sites would only be repowered when the TOTAL cost of purchase and operation of FF is less then the operating cost of the fission plants (the capital cost of the fission plant is a sunk cost).

    Hard on heels of the utilities would be heavy industry for both power and heat.

    Load growth, caused by decreased price, fuel switching (electric heat replacing natural gas and fuel oil for heat and hot water) in residential, commercial and light industrial plants would require additional FF generation stations, likely installed at substations and other “nodes” of the transmission system. As this progressed these new FF stations would get smaller and closer to loads (urban areas). But I continue to maintain that true distributed generation would be a long time coming and never completely replace the “last mile” of electrical transmission/distribution.

    NOTE: This assumes the “current” technology status of FF modules. If FF modules could be shrunk to the side of an AC unit, packaged and made to run for years without service, ALWAYS fail safe and be (externally) radiation free, then that “mature” technology might make the idea of power distribution obsolete. But I’d guess it would be a generation before we see “Mr. Fusion”.

    As an example of this type of historical improvement in technology, the internal combustion engine was over 75 years old before an engine could be expected to run 100,000 miles in a car without a major rebuild. I date the IC engine from 1876, and it was the 1950s before lubrication, design and materials improvements would allow the engine to not need routine “de-coking”, and valves, bearings etc. last the way we now take for granted.

    #3604
    JimmyT
    Participant

    Rematog,
    Yeah, I can see that you are right on this. I guess I was thinking that the regluated sales price of electricity would occur before the regulated purchase price was adjusted.
    NOT LOGICAL!

    Just the opposite is more likely, right? So the utilitys would reap a windfall.

    #3605
    Lerner
    Participant

    It’s a political decision. If people let the utilities reap a windfall, they will. But people can decide that every dime of savings from FF is passed through to users. The question is how “sunk costs” are treated–you can wipe them out, or preserve them. And ,by the way, small investors hold like 1% of untility stocks.

    Of course the cost of electricity will not fall overnight because as FF is phased in we will still be burning a lot of fossil. But the speculative premium will get wiped out fairly quickly. Oil would fall to around $10 or less.

    You also have to take into account that things will change far more rapidly over the next few years due to the crisis, before FF can be a factor. The depression might already have bankrupted most of the utilities, we don’t know.

    #3606
    JimmyT
    Participant

    I’m not sure that I have a particular problem with a few months lag time to allow the utilities to recoup some stranded costs. Years of delay I would have problems with. We do need the utility companies for terminal distribution, billing services, etc. if nothing else.

    #3607
    Rematog
    Participant

    “We need utilities for….”

    Not to mention tax collection.

    Utility taxes are a big source of revenue in most states. When I worked for a utility in a midwestern state, that utility was the biggest single tax collector for the state, after state income tax.

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