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CONSTRUCTION KNOWLEDGE BLOG

June 17, 2013

What’s Up with Wind Mills?
Filed under: Energy — Tags: — nedpelger

Saw this article today about the US Bureau of Ocean Energy Management proposing a major wind energy installation off the North Carolina Outer Banks. Located just six miles from beach towns Nags Head, Kill Devil Hills, Kitty Hawk, Southern Shores and Duck, these windmills would be visible during the day and have red blinking safety lights at night. Needless to say, the locals oppose the plan.

I spent the weekend in Cleveland and saw lots of windmill out there. From a solitary turbine at the Science Museum (that seemed more show than function) to various wind farms visible along the drive. Having never worked on any wind energy projects, I wonder about the true economics.

Is it like photo-voltaic solar, not remotely close to being economical without big government incentives? Or does the almost constant wind in some locations allow the installations to actually make energy sense?

It’s so difficult to get a straight answer to that type question. Seems everyone writes from their predetermined perspective. Do any of my readers have any insights into this?

CONSTRUCTION KNOWLEDGE BLOG

May 31, 2013

Google Invests $1B in Green Energy Projects
Filed under: Energy — Tags: — nedpelger

I’m a big fan of Google, but this story has me wondering. Yesterday, Google announced they invested $12M US in a South African Solar farm. The 96 MW facility will take advantage of a government program that subsidizes solar.

Here’s a list of green energy projects Google has undertaken.

GOOGLE’s $1 billion in clean energy investments

1. $12 million in the Jasper Power Project, a solar power plant to be built in South Africa

2. $200 million in the Spinning Spur Wind Farm, a 161-megawatt wind farm in West Texas

3. $75 million in the Rippey Wind Farm, a 50-megawatt wind farm in Iowa

4. $94 million in four solar photovoltaic projects being built by Recurrent Energy near Sacramento

5. $75 million to create a fund with Clean Power Finance to help up to 3,000 homeowners go solar

6. $280 million in a SolarCity fund to help 8,000 customers go solar

7. $168 million in BrightSource Energy’s Ivanpah project, a solar thermal plant currently being built in California’s Mojave Desert

8. Investment in the Atlantic Wind Connection, critical transmission infrastructure for offshore wind power

9. $157 million into Alta Wind, a wind farm in the Tehachapi Mountains in Southern California

10. $100 million in the Shepherd’s Flat wind farm in Oregon

11. $38.8 million into two wind farms in North Dakota

12. $5 million in a solar power plant in Brandenburg, Germany

It seems to me most of these investments make no economic sense without huge government subsidies. I wonder why so much gets spent on technologies, from what I can find, aren’t even close to being economically viable.

I hope Google can prove me wrong. I’d love to see some published numbers that show all the lifecycle costs and the true energy rate delivered.

CONSTRUCTION KNOWLEDGE BLOG

March 11, 2013

Opportunities Abound in the Changing Fossil Fuel World
Filed under: Energy — Tags: — nedpelger

Did you know that within a decade, the US should overtake Saudi Arabia and Russia to regain its title as the world’s top energy producer? A delightful article titled, “The Deluge” from Pacific Standard magazine details how America became the fossil fuel giant with Texas and California oil fields.

The article goes on to outline where we are headed with all the fracking gas and deepwater oil. It truly is a brave new energy world out there, folks. You need to be aware of the changes and work them into your plan.

I recall the heady days of the late 1970s when oil was all but guaranteed to be gone by the mid 1980s and alternative energy was the rage. I studied farm based ethanol production. It was clear to me then, and remains so now, that using a food crop feedstock, such as corn, was a terrible idea. The price would almost always be too high.

The promise of using agricultural waste products like corn stalks and cobs had great promise but was technically difficult due to the enzyme needed to break down the cellulose cell to starch. I recall writing in my senior thesis in 1980 that we were only a short time from this becoming viable. 33 years later, we are still supposedly only a short time from this becoming viable.

The construction opportunities that flow from this major shift in fossil fuel production are huge. Where could you fit in?

CONSTRUCTION KNOWLEDGE BLOG

January 19, 2013

Green Energy: Bogus vs Sensible
Filed under: Energy — Tags: — nedpelger

I just spent a couple days skiing with my youngest daughter. Since I was the slowest thing on the mountain, I had some time to reflect as I zigzagged down the slopes. The photo below shows Tessa with a 1.5 MW Wind Turbine behind her.

Jiminy Peak Mountain Resort uses about half of the 4.6M KwHrs the wind turbine produces each year. Figuring the portion they use at retail value of 10 cents/KwHr and the wholesale portion fed back into the grid at 3 cents/KwHr, that yields about $300,000 US of electricity savings each year. But their Wind FAQ sheet shows the install cost at $4M, which goes to a simple payback of 14 years, not including maintenance and replacement.

My first thought upon seeing the wind mill was, “Wow, now there is a good use of green energy.” The quick calculation shown above proves otherwise.

I’ve written previously about the terrible economics of solar photovoltaic installations. They don’t even come close to making financial sense, even with all the government subsidies. So I went looking for another green energy project.

I spend way too much money each month heating an Endless Pool with an electric heater. So I had a whiz kid friend help me design a simple solar hot water heating system that I could put on the roof. I had extra Plexi-Glass sheets from an old construction project, so I figured the costs would work. By the time I got all the plumbing (and especially the copper tubing and sheeting) estimated, though, I found another project that didn’t make sense.

Why install a solar system, that will need a good bit of tweaking and maintenance, for a non-existent payback? As cool and fun as it seemed, I just couldn’t do it. Instead, I will install a gas pool heater that looks to payback in a year or two.

So I’m still searching for a sensible green energy project. Do you know of any that make technical and financial sense?

CONSTRUCTION KNOWLEDGE BLOG

December 31, 2012

To See PA Gas Future, Look to Ohio Boom
Filed under: Energy — Tags: — nedpelger

A natural gas-processing facility is being constructed in Columbiana County, OH. It’s one of seven plants being built in OH with a total construction cost of $7.2B USD.

“You can bring (gas and oil) out of the ground, but it doesn’t do you any good until you can move it and get it processed and get it where it’s needed,” Terry Fleming, executive director of the Ohio Petroleum Council, said. “Midstream is the key. It is critical. … It’s an infrastructure issue. You can only pull as much out of the ground as you can transport and process.

“What’s happening in Ohio is big — and it’s going to get bigger.”

An estimated $5B USD in pipeline projects also looks to be happening in OH in the next few years. Specifics on the many projects are delineated in this Akron Beacon Journal article. If you are looking for work in construction, here’s a list of opportunities.

If you live in PA, understand that the current boom in OH will likely be mirrored here in a few years. Whether shale gas opportunities interest you or not, remember to take this end of the year time to think deeply about where you are and where you want to be.

CONSTRUCTION KNOWLEDGE BLOG

November 12, 2012

Sexy Solar vs Boring Gas
Filed under: Energy — Tags: — nedpelger

As Hurricane Sandy buzz-sawed through the Northeast, knocking out power for 8.5M, we get to examine the electrical grid in crisis. The fragile nature of how our electricity gets delivered is showcased by any natural disaster. We mostly operate from a mid-1900s grid.

With hindsight we can see too many profits went to shareholders and not enough into re-investment. Regardless of where I think we should have been, we are where we are.

ENR had a good article about moving forward with the goal of a more efficient and sustainable electrical national transmission system. I like how ENR summarizes:

Historically, transmission was a relatively simple concept: Powerplants were built near cities, and transmission wires were strung to connect the plants to distribution systems, which delivered power to customers. Rarely crossing states, transmission lines were planned and built on a project-by-project basis.

A lot of these local electric highways were built in the 1960s and 1970s, with little built since. Lynch says there were probably only one or two 500-kV lines erected during the 1980s and 1990s.

The big transmission projects that are being designed now tend to be associated with solar or wind farms, getting that localized power far way to the areas that need it. Of course, those renewable energy projects don’t nearly make sense without huge subsidies from state governments that require certain percentages of renewable power. Functionally, these state laws are an energy tax on business and consumers.

I just ran through a solar design for my house that illustrates an important concept. We spend over $100/month heating an inside Endless Pool. I designed a solar water heating system (since I had scrap Plexi-Glass panels left over from a project) that would use an open, self-draining system to pre-heat our domestic hot water and use the pool as a solar heat sink. This type system is much more cost efficient than solar electric panels.

When I completed the design, though, I ended up with $18,000 of cost, which even with a 30% federal federal tax credit yielded an 8 year payback.  The downsides included increased maintenance, a higher than comfortable pool temperature to make the heat sink efficient and probably lots of time tinkering with the system.

Then I thought of just changing from an electric pool heater to a gas pool heater. The payback time will be less than a year and I expect monthly energy costs to be reduced by about 2/3s. Plus, the long term outlook for gas costs in PA seems great.

As I look at the national energy picture, I see a parallel. What we really need is more power near congested areas. What we have is a cheap long term fuel in shale gas. I think our short term fuel outlook will include lots more gas generation stations near the required areas.

The challenge of getting the new transmission lines permitted and constructed also leads to my conclusion. ENR again says it well:

Utilities often cite local opposition and difficulties in obtaining permits as the main obstacles to building new transmission lines.

Even after the permits are in hand, the on-site construction can be onerous. Everything from birds’ nests to what trucks track in on their tires has to be continuously monitored, according to Seay.

“These projects have become as much environmental projects as they are construction projects,” says Mike Beehler, vice president of transmission and distribution for Burns & McDonnell.

In California, in particular, “You have more people watching the crews work than actually working on the line,” says Rick Pieper, vice president of transmission for Henkels & McCoy.

If crews find evidence of an unexpected species, such as a desert tortoise or an Indiana brown bat, the find can shut down construction for months and send line repair workers scurrying to other jobsites. Regulators and construction crews strive to work around jobsite animals, birds and fauna. “But it’s not easy,” Pieper says. “It’s an issue of good project management.”

Unlike single-site construction with restricted entrances, a transmission site is a continuous, several- hundred-mile construction zone, often in the middle of farmland, woodlands or prairie without access roads.

“Building an individual tower is not terribly complex. But building 1,500 towers along 500 miles of right-of-way” requires managing thousands of logistical challenges, Seay says.

Timing of construction is crucial. In addition to working around animal nesting and mating seasons, crews constructing existing transmission lines often can’t begin until October, when the grid doesn’t have to deliver as much power as in the summer.

So, with the ease of providing gas generation and the challenges of getting new electrical transmission lines installed, I’m betting gas will be most important for our near term future.

CONSTRUCTION KNOWLEDGE BLOG

October 22, 2012

Understanding Fracking
Filed under: Energy — Tags: — nedpelger

I had to make a decision this morning on a HVAC system for a small retail center we are designing and pricing. An all electric heat pump system would be the lowest first cost, but I thought of the likely future fuel costs. I think gas will be a more economical future fuel than electricity or oil. So I decided to go with gas furnaces and a split system for the air conditioning.

The gold rush of Marcellus Shale Gas, in PA and distributed throughout the world, makes me cast my design vote to natural gas as the economical fuel of the future. Right after I made that design decision, I came across this video that does a great job illustrating gas fracking (the controversial aspect of the process). I strongly recommend watching it to better understand the process.

httpv://www.youtube.com/watch?v=VY34PQUiwOQ&feature=related

Traditionally, electric heat costs about three times as much as gas or oil heat. Since electricity is a much higher entropy (think higher energy quality) fuel, it will likely always be more expensive than gas or oil. It’s easy to turn a motor with electricity than with fossil fuels (which require an engine).

For many years, I’ve told customers it isn’t clear which fuel source will be the most economical for the long term. For example, if nuclear reactors got more cost efficient, electricity would have been the winner. Now the uncertainty is over and natural gas will be the winner. Let me know if you agree or see it differently.

CONSTRUCTION KNOWLEDGE BLOG

October 15, 2012

Fracking: From the Wild West to Research Mania
Filed under: Energy — Tags: — nedpelger

As I’ve noted a few times before, if you’re looking for work in construction, think deeply about the Marcellus Shale options. This Gold Rush of our times is spread throughout America and the world. The locations that that have Shale gas are booming.

An excellent article in ENR describes the changing game of the shale gas extraction. A few years ago, fracking was developed with great enthusiasm and little regard for the environmental consequences. There simply were no regulations, technical decisions tended to be left to the conscience of the operator. History teaches that the Wild West model doesn’t work too well.

With the EPA producing a report by the end of 2012 that documents the impact of fracking on adjacent water supplies, more regulations will follow. Fortunately, the technological race for improved methods will likely go faster and farther than the bureaucrats.

The huge amount of water currently used in the fracking process is both a large cost and an environmental challenge. Water treatment and recycling plants are being built and tested. Abandoned mine drain waters are being proposed for the fracking. Even waterless fracking systems, 95% inert nitrogen and 5% water which becomes like foam in use, are being developed and tested.

Shale gas will be an important part of the future world economy. If you’re looking for someplace to jump back in, consider the locations shown in the map above.

CONSTRUCTION KNOWLEDGE BLOG

September 21, 2012

Shale Gas in PA, Half Million Workers?
Filed under: Energy — Tags: — nedpelger

As the debate about the safety of fracking continues, so does the industrial buildup for Marcellus Shale extraction in PA. Gov Tom Corbett spoke at the Shale Gas Insight yesterday in Philadelphia. He warned the industry to take the long economic view, which will maximize the benefits for all involved. He recalled the oil boomtowns in the 1800s that went bust and disappeared.

Most fascinating to me was Community and Economic Development Secretary C. Alan Walker’s statement that the shale gas industry in PA could employ 500,000 workers by 2020. That would be a tenth of the PA workforce. The refineries and processing plants planned near Philadelphia and Pittsburgh would be major construction projects and long term employers.

If you’re of a mind to learn more about this huge shift in PA, the Wikipedia Marcellus Formation article has a great shale gas explanation. I particularly like this graph.

If you live in this region, or if you are looking for work and could get to this region, you should take some time to understand the Marcellus Shale phenomena. Don’t be that guy that misses the fascinating history being made (and opportunities to prosper) because he’s too busy watching TV.

CONSTRUCTION KNOWLEDGE BLOG

August 30, 2012

The Weird Economies of Solar Power
Filed under: Energy — Tags: — nedpelger

Solar panel makers in China face huge market hurdles as global sales slump and a price war heats up. The major solar panel manufacturers have accumulated $17.5B US in debt, creating a likely need for rescue funds from the Chinese Government. To make it worse, 25 European panel makers are trying to invoke anti-dumping measures against the Chinese solar industry.

How did the market get so skewed? How did the manufacturers, in China, Europe and the US, get so far in over their wallets?

A look at the true economies clarifies. I was working on a solar panel project last year to place solar arrays in parking lots at an apartment complex for one of our customers. It was about a $10M project that produced about 2MW of power. That was a respectable rate of $4.80/watt.

Without all the government programs, though, the cost for power was extremely high. Using a low 4% cost of money, the kw hr cost came in at $0.22/kwhr. Which is more than 5 times the wholesale cost of electricity. We never built the project.

Can you imagine the government saying, “Hey, we should all switch to X fuel for our cars, don’t worry that it costs $17/gallon, we’re sure the price will drop at some point…and it’s just the right thing to do.”

Be wary when the numbers just don’t make sense. If you want to bet on the next big winner in energy, I think it may be spelled F-R-A-C-K-I-N-G.

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