Why Incremental
Advances are Inadequate
to Solving Climate
Change
@MIT Zero-Carbon Energy Economy Workshop
May 2015
Ross Koningstein, David Fork
RE Breakthroughs: CO2 Emission Reduction,
but doesn’t solve Climate Change
●
●
●
●
●
●
Google/McKinsey Energy Innovation study
modeled many scenarios
All-Tech Breakthrough: aggressive technology
development and deployment on all known RE
technologies (including EV, storage) with $0.03
/kWh nuclear over 40 years
Natural gas becomes fill-in fuel for electricity
Primary energy needs are barely addressed
○ cement, transport, fertilizers* & chemicals, heating…
Outcome
○ CO2 emissions still large
○ CO2 levels continue to increase
Fundamental Challenge:
○ emissions = function(technology)*economy
○ Several things are necessary to reverse climate change
*our food can be 8 Joules energy per Joule food!
Electricity
‘000s TWh
decades of RE technology & cost risk
2010
2030
2050
Business
As Usual
All-Tech
break
through
Goal
Google Confidential and Proprietary
What is the best breed of horse to power flexible transportation?
Perhaps a valid question during
the 1800’s, but a disruptive
breakthrough happened
Google Confidential and Proprietary
It takes Disruptive Breakthroughs to solve
Climate Change
1.
To get the electric grid to zero-carbon by 2150, at peak
deployment in 2037, 56 GW/year equivalent power needs to
be brought online in USA. Roughly 700GW in 25 years
2.
A comparable amount of zero-carbon fuel-replacement
needs to be deployed.
3.
A further 5GT/yr of Carbon removal is needed from
atmosphere and/or oceans
Business
As Usual
All-Tech
Background: IEEE Spectrum Article
What it would really take to reverse climate change
Goal
Disruptive
Google Confidential and Proprietary
Disruptive Logistics curve / ROIC / Capital cost ranges
Sigmoid curve: early growth exponential
Yearly
revenue
from
energy
production
$
T O
A P
X S
E
S
R
I
O
C
25 Year Deployment
year
2026
total
GW
18.25
ROIC
G$/yr
$12.787
added
GW/yr
4.64
a.
b.
c.
-
closed box reinvestment
driven by (profit/unit_cost)
high IRR investment
enough to ramp, but slows
when competing with itself
low IRR investment
capital limited
Pay dividends
target price
kWh
Cost/W targets
invest @6%
return
$11.68
invest @15%
return
$4.67
Low capital cost => Profitability => Rapid Scalability
closed
box
$2.76
@ 50
years
$5.10
@ 100
years
$9.90
revenue post
tax,ops
$0.20
40.00%
Aggressive timeframe and
capital needs puts pressure
on cost/watt target
Policy may kickstart, but don’t
depend
onandit Proprietary
all the way
Google
Confidential
Low capital cost per reliable watt drives economic scalability
●
●
A target of 475 PPM CO2 requires scaling zero-carbon energy in 25 years!
Expect desired use-case characteristics (e.g. dispatchability for electricity)
Examples of cost/watt to scale in 25 years
with / without financing
Not enough
to ramp
Enough to
ramp
Totally
Disruptive
Use Case
LCOE tipping point (US)
Cost/watt
@4% + 2%
IRR INT
Cost/watt
@10% +5%
IRR INT
Cost/watt
organic growth
(no investors)
Diesel Genset Electricity
$0.20/kWh
$11.68
$4.67
$2.76
Electricity Distributed
$0.10/kWh (<retail)
$5.84
$2.34
$1.37
Electricity Grid Large-scale
$0.017/kWh (marginal coal)
$0.99
$0.40
$0.23
Fuel alternative
$5/MMBTU (NYMEX)
*$0.49
*$0.20
$0.11*
Note: Model 40% of revenue into new build and/or dividends
tough targets
Google Confidential and Proprietary
Incremental technology is not even close: LCOE & cost/watt
Energy
Source
Cost
Hydro
$1-$5/watt (hydro.org)
Can’t build much more
Geothermal
$1-$6/watt
Few sources at low LCOE
Coal
~$2.00/watt
CO2, pollution
U235 PWR
Nuclear
~$5.00/watt
~0.025/kWh
Safety/security/waste/construction time,
lacks end-user pull [Pandora’s Promise]
Solar
~$2.50/watt (NREL)+
Wind
~$2.50/watt (NREL)+
Intermittency CF≠1 => $?/W
- storage/alternate adds to cost
- seasonal variation requires alternate zerocarbon power source - more capital efficient
to operate that year round instead?
Hydro
Storage
$1-$5/watt (hydro.org)
Challenges
Addresses daily but not seasonal
intermittency; not a source of energy
Situation
LCOE to
beat
Cost/watt
target to
scale @
10%+ IRR
Fuel
alternative
$5/MMBTU
$0.20
Electricity
Remote,
Large-scale
$0.017/kWh
$0.40
Dispatchable
Distributed
Electricity
$0.10/kWh
$2.34
Electricity
Diesel
displacement
$0.20/kWh
$4.67
Google
Confidential
and Proprietary
Observation: Capital cost of aggressive new energy doesn’t look like it could
include
a steam
cycle
Fund R&D to invent cheap zero-carbon high-CF energy
●
●
●
Energy production will switch to zero carbon when it is better, and makes more money
We need to invent a cheap zero-carbon energy source as part of the energy portfolio
R&D on aggressive-goal technology needs to receive a reliable slice of the national R&D budget
○ Applications need to meet a high bar, otherwise don’t fund
■ insist on the best, encourage non-conventional, entertain “science fiction”
■ will almost certainly include investigation into new technology, stretch science
■ reject research proposals that don’t meet the bar
We need this funded
research program!
Business Focus
Technology
Current Resources
Current % of US R&D $
“70%” core business
Oil, Natural Gas, Coal, Hydro, PW
U235 nuclear, Wind Turbines, Solar
Polycrystalline PV,
XXX billions
90%
“20%” related, new
business
Thin film PV, Solar CSP
X billions
0.1%
“10%” disruptive new
business
?
0.0XX billions
0.0001%
“1%” for the common
good
ITER, NIF
XX billions
10%
Google Confidential and Proprietary
END
Google Confidential and Proprietary