Memo ideas

- Renewable energy technology costs, histories and projections. Learning curves.
- State of national RE promotion legislation. Current energy bill.
- Corporate RE initiatives (Google)
- RE and investment (UNEP report)

Jamasb and Kohler 2007 Learning curves for energy tech

Jamasb, T. and J. Kohler (2007). "Learning Curves for Energy Technology: A Critical Assessment," in Delivering a Low Carbon Electricity System: Technologies, Economics and Policy, Ed. M. Grubb, T. Jamasb, and M. Pollitt. Cambridge: Cambridge University Press, Forthcoming. Available online at (accessed 30 Nov 2007).

• INTRO
• 1 Cites Schumpeter's invention-innovation-diffusion paradigm of technical change
• 1-2 Developments in macro (endogenous technical change) and micro (learning curve)
• 2 Need for innovation in environmental and energy technology revived interest in learning curve concept
• 3 Learning curve originally had labor as dependent variable and manufacturing/production as independent. Using price (DV) and capacity (IV) requires attention to determinants of innovation
• LEARNING CURVES AND TECHNICAL CHANGE
• 5 Bar chart showing estimated learning rates in electricity production technologies, from survey of studies. Varies widely. Generally higher for newer technologies.
• 6 Incorporating learning curves can change outcomes of cost of climate change models, but all depends on assumptions
• 6 Important assumption in experience curve is what "floor cost" is thought to be - so cost doesn't decline to 0 as time goes to infinity, floor cost must be specified. But how do we know??
• 7 Benefits of endogenous technical change beyond direct Pigouvian benefits of carbon abatement - spillover/technology diffusion effercts. "This will result in a positive spillover that will offset the negative spillover usually hypothesized to result from the migration of polluting industries."
• 7 Need menu of policies in addition to carbon caps
• THEORY-INFORMED MODELS OF TECHNOLOGY LEARNING
• Questions remain about causal links between experience and cost
• Authors really like two-factor learning curves (2FLCs) that incorporate R&D.
• This is what Klaassen (2005) did, but since R&D funding was only public funding, seemed like results gave too much credit to R&D.
• 10 "A simultaneous equations model with capacity and R&D as well as endogeneity of capacity on cost transforms single-factor models from partial empirical functions into learning-innovation-diffusion models that conform to basic elements and feedback of technical change process and invention-innovation-diffusion paradigm."
• 11 Problems: development of technologies unlikely to look list past progress; lack of long-term, detailed data.
• 12 Still, evidence for some degree of experience-based cost reduction overwhelming.
• LEARNING CURVES FOR LOW-CARBON ELECTRICITY SECTOR
• Can help determine whether funds for tech promotion allocated in proportion to their relative effectiveness (assumes 2FLC - help tell us relative effectiveness of R&D and deployment, i guess)
• Can also be used to estimate total required investment on R&D and capacity support for bringing tech cost down to given level
• CONCLUSIONS
• 15 Incorporation of learning curves can change estimates of costs of stabilization and policy conclusions (e.g., used in Stern review)
• 16 Recommends models that include R&D, but acknowledges lack of suitable data
• 17 Learning models can be used to analyze effect of international policy coordination and pooling R&D resources or deployment initiatives in order to accelerate technical progress. (How?)
• 17 Extension: non-electricity energy sources, other environmental technologies, energy storage technologies. Also, use to answer shorter-term questions (not necessarily doubling of capacity).

Wuppertal Institute Request - China, CC, Employment

1.) Is there any economic world model that you can recommend to use
in order to quantitatively estimate employment impacts of climate
change/adapation/mitigation with a focus on China (different sectors
and regions are taken into account, GDP and non-GDP sectors,
technological progress and intertemporal changes of financial
investment are considered in an adequate manner, etc.)? Or are there
"adhoc aproaches" (based on scenarios and different indicators as
drivers) which you recommend to use?

2.) According to your point of view, to what extent is such a
quantification of emplyoment impacts for China possible (where are
the limitations, what could be challenges, etc.)?

3.) How do you judge the data situation for China?

4.) What are the potential costs of such a project? Would 100.000 US
$ be enough?

5.) Can you recommend further contact persons (inside and outside
China)?


My response:

1. The DICE (Dynamic Integrated Model of Climate and the Economy) model, developed by William Nordhaus, is a non-proprietary integrated assessment model that is downloadable online. As I mentioned before, I'm not sure it would be possible to use a model like this to estimate something as specific as employment impacts in particular sectors, but it might be possible to make some assumptions about employment as related to GDP and use the model to estimate macro effects.

2. Regarding ad hoc approaches, the Global Development and Environment (GDAE) institute has published two regional studies on the economic impact of climate change: one for the UK and one for the state of Florida, neither of which used a formal model. These are available on their website: http://www.ase.tufts.edu/gdae/policy_research/ClimateChange.htm. They aren't about employment effects specifically, but they may provide guidance on how to develop climate change scenarios.

3. Frank Ackerman at GDAE coauthored the reports mentioned above, and he has also worked with the DICE model. He may be a useful contact for ideas about the China study. His email is frank.ackerman@tufts.edu.

30 Nov 2007, Morning

1. Spend a little time looking at China, climate, employment
2. Finish Jamasb and Kohler (2007) chapter on learning curves for energy technology
3. Make a list of memos I could write with current information + little additional research

Papers citing Papineau (2006), mostly on learning curves in RE tech

Power Generation Technology Choice in the Presence of Climate Policy
http://epubl.ltu.se/1402-1757/2005/76/LTU-LIC-0576-SE.pdf
Thesis from a student at a Swedish university
How will future investments in Swedish power sector be affected by Kyoto protocol carbon pricing policies? Also looks at impacts of technology learning/cost decreases in presence of climate policy.

Choice of Environmental Policy in the Presence of Learning by Doing
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V7G-4J7B118-1&_user=1516330&_coverDate=03%2F31%2F2006&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000053443&_version=1&_urlVersion=0&_userid=1516330&md5=fe09284bdd3ec97c480ca6151c0a49ac
Entirely model-based; no empirical tests. Concludes that environmental policy should be market based, not regulatory.

Analysis of Energy Technology Change and Associated Costs
http://www3.interscience.wiley.com/cgi-bin/fulltext/112608246/PDFSTART
Complex mathematical model used to predict when market breakthroughs would happen for several technologies - looks like it might have some good cost info nonetheless.

A methodology for validating the renewable energy data in EU
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V4S-4MHPBN5-2&_user=1516330&_coverDate=10%2F31%2F2007&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000053443&_version=1&_urlVersion=0&_userid=1516330&md5=6a92e1cfcca67bd2f19408eb8ae581da
Not much new information, but good review of existing methods of evaluating RE implementation.

Empirical challenges in the use of learning curves for assessing the economic prospects of renewable energy technologies
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V4S-4N5CSJD-1&_user=1516330&_coverDate=12%2F31%2F2007&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000053443&_version=1&_urlVersion=0&_userid=1516330&md5=8aced6dac1fb2f0f8b371fa9078bc10e
Estimates various econometric specifications of LBD models using data on wind installations in 4 European countries.

Learning curves for energy technology: a critical assessment
http://www.electricitypolicy.org.uk/pubs/wp/eprg0723.pdf
Says learning curves have been applied uncritically in past. Paper looks mostly theoretical, but some review of past studies.

Papineau 2006 Experience curves in RE technologies

Papineau, M. (2006). "An economic perspective on experience curves and dynamic economies in renewable energy technologies," Energy Policy 34, 422-432.

• Unlike Klaassen et al (2005), this paper uses price of the equipment (turbine, module, etc.) rather than total investment costs per kW (though one regression did use price of wind power as the DV).
• Depending on the data available, uses either cumulated capacity (MW), cumulated electricity GWh), or cumulative output (total industry shipments) as independent variables.
• Estimates learning equations of the form logP = a + blogX for individual countries and for panels.
• Implies that a 1% increase in X (capacity, electricity, or output) will result in a b% decrease in the dependent variable - usually price.
• The progress ratio (PR=2^b) gives the percent of the previous price the new price will be after each doubling of the independent variable. The learning rate (LR) is 1-PR.
• Regressions of price against any of these dependent variables give statistically significant b parameters, and show learning ratios of between 10% and 20% for solar and 5-10% for wind.
• However, adding time trend (year) variable reduces significance and reduces learning ratio.
• Possible reasons for results: Use of price (rather than cost) as DV; price and cost changes affected by entry of new competitors and changes in industry concentration; price may change as result of gov't subsidies without change in production efficiency; since output determined by price AND price determined by output, the random disturbance term will be correlated with the regressor and estimated parameters will be biased and inconsistent.
• Learning equations with R&D (and R&D expenditures divided by annual sales, and RD/S*cumulated output) instead of capacity were estimated, and the only results shown included the time trend variable. Coefficients on R&D variables were very small, significant only in the case of PV in the US, and occasionally were positive (wrong sign). Doesn't say where R&D data came from, but seems to be IEA gov't expenditure on R&D on various RE technologies.
  
• Concludes by saying the results support introduction of "imperfect foresight and stochastic uncertainty of learning rates in energy system models."
• Also says increased funds should be allocated to R&D, though this conclusion can't be based in the results of her econometric results, since R&D funding (when time trend variable included) apparently had very small impact on price reductions. However, author was not explicit about the measurement of the independent or dependent variables in these estimations.
  

Klaassen et al 2005 Impact of R&D on wind innovation

Klaassen, G., A. Miketa, K. Larsen, T. Sundqvist (2005). "The impact of R&D on innovation for wind energy in Denmark, Germany and the United Kingdom," Ecological Economics 54, 227-240.

• 227-8 Policy intervention to help RE justified on basis of "technological learning" - phenomenon of cost decreasing as cumulative installation increases.
• Extend this argument to learning effects of R&D.
• 228 Uses two-factor learning curve (2FLC) model to look at effe3cts of cumulative capacity AND knowledge stock (from past R&D expenditures.
• 229 Review of Denmark policy: Test station that tested every wind turbine for market release, and timing of shift of funds from R&D to market introduction through FITs important.
• 229-30 Germany: Says early R&D programs generally considered failures. Small Germany windmill manufacturers benefited from Danish expertise.
• 230 UK: Seems not to recognize that the RO and the NFFO were two different systems.
• These policy reviews seem poorly researched.
• Commonly used formulation of learning curve: SPC = A*CC^-alpha where SPC is investment cost of technology per unit (1990US$ per kW); CC is cumulative capacity (MW); -alpha is learning index; A is specific cost at unit cumulative capacity.
• Implies that for each doubling of CC there is constant percentage decrease in costs, called the learning rate. Typical learning rates calculated from studies on wind turbines range from 4% to 32%.
• This formulation ignores that CC is a function of demand, which itself depends on factor prices and total output produced.
• Implies that costs are function only of installed capacity, and subsidies should be used to this end.
• KS(t) = (1-delta)KS(t-1) + RD(t-x) Knowledge stock at time t is the knowledge stock at time (t-1), adjusted for depreciation, plus R&D expendtures in time (t-x).
• New two-factor learning curve (2flc) is SPC = A*CC^-alpha*KS^-beta where -beta is learning-by-searching index.
• 233 Data: Public R&D expenditures for wind energy from IEA. Wind capacity installed from various sources. Average investment costs per kW from various sources. Investment cost data for UK only for one project (!)
• 233 "...the non-turbine part of the investment costs might amount to 10-40% of the overall investment costs."
• 234 Assumptions about depreciation of knowledge stock (3%) and lag with which R&D expenditures contributed to knowledge stock (2 years).
• Uses the data and specifications above to econometrically estimate alpha, beta, and A (for each country). Finds that beta (the knowledge stock exponent) is almost 2.5 times as big as alpha (the CC component), indicating that R&D more important for cost reductions than installed capacity.
• 236 Find that results robust wrt alternative depreciation rates and time lags.
• PROBLEMS: Does not take into account private R&D. (notes on p237 that private expenditures on wind energy in 1974-1999 might have been 75% more than public). Spillover effects! Most of UK's turbines, for example, come from Denmark.

Projections for Wind Capacity

Renewable Energy Access news post: "Global Wind Power Base to More Than Triple by 2015," 26 Nov 2007.
http://www.renewableenergyaccess.com/rea/news/story?id=50650

Cambridge, Massachusetts [RenewableEnergyAccess.com]

According to recently-released global wind energy country forecasts from Emerging Energy Research (EER), global wind power capacity is predicted to more than triple by 2015, with cumulative installed base expected to rise from approximately 91 gigawatts (GW) by the end of 2007 to over 290 GW by the end of 2015.

"The global wind power market continues to diversify geographically from Europe to North America and Asia Pacific, with short-term supply bottlenecks giving way to longer term sustained growth," according to Senior Analyst Joshua Magee.

Significant new supply chain capacity is coming online, while Texas and California are preparing for additional massive wind build-out as transmission expansion projects move through permitting. Canada is also set for an RFP-driven boom in the coming years mainly in Ontario and Quebec, according to EER. And China is also expected to surpass its goal of 5 GW before 2009.

Europe will remain the world's largest regional market in terms of annual growth, according to EER, transitioning from established markets such as Spain and Germany to new, growing regions, the UK, France, Portugal, and Italy. Significant wind expansion is expected to occur in Eastern European markets as well, with larger markets in Poland and Turkey poised to average over 500 Megawatts of production capacity installed annually.

With demand for wind power growing around the world, most major wind turbine suppliers are increasing production capacity. New fabrication and assembly facilities are currently planned in North America, Europe, Asia Pacific and South America.

"Long-term global energy demand drivers continue to favor wind build-out," according to Magee. "Steady global electricity demand increases show no sign of easing, and global emissions reduction initiatives are likely to become more prevalent beyond the current 2012 Kyoto period and will diversify into the US and Asia. Fossil fuel price volatility is likely to continue to stimulate long-term demand, with wind serving as a quickly deployable hedge against natural gas and petroleum power generation."

Watt, Megawatt, Gigawatt

Wikipedia entry for watt: http://en.wikipedia.org/wiki/Watt#Megawatt

The watt is the SI unit for power, equal to one joule of energy per second. It is already a rate.

A kilowatt (kW) is 1,000 watts.
A megawatt (MW) is 1,000,000 watts.
A gigawatt (GW) is 1,000,000,000 watts.
A terawatt (TW) is 1,000,000,000,000 watts.

The entry says that a typical modern nuclear plant produces a peak output on the order of 500 to 2000 MW.

--According to the IEA publication Renewable Energy Information 2007, the U.S. in 2005 produced 4268.4 TWh of electricity and 392.81 TWh of renewable electricity.
--In 2005, there was 8,706 MW of wind generating capacity, 388 MW of solar thermal generating capacity, 21,347 MW of geothermal generating capacity, and about 121,000 MW of hydro generating capacity.

Goggle RE initiative

Renewable Energy Access post on Google's RE initiative:
http://www.renewableenergyaccess.com/rea/news/story;jsessionid=8AA3AAA0D74352B373860E4200B5842B?id=50683

November 28, 2007

Google Mounts Renewable Energy Initiative

Mountain View, California [RenewableEnergyAccess.com]

Google has announced a new initiative to develop one gigawatt [THAT'S A LOT!] of electricity from renewable energy sources. The newly created initiative will focus primarily on advanced solar thermal power, wind power technologies, enhanced geothermal systems and other potential breakthrough technologies.

The initiative will be known as REGoogle will make investments in and provide grants to a variety of organizations in the renewable energy field, including companies, R&D laboratories and universities. eSolar Inc [SOLAR THERMAL POWER] and Makani Power Inc. [HIGH ALTITUDE WIND ENERGY] have already been named as two of Google's partners in the initiative.

"We have gained expertise in designing and building large-scale, energy-intensive facilities by building efficient data centers," said Larry Page, Google Co-founder and President of Products. "We want to apply the same creativity and innovation to the challenge of generating renewable electricity at globally significant scale, and produce it cheaper than from coal."

************
Google website: http://www.google.com/corporate/green/energy/index.html
RE

• Hiring engineers and energy experts to do R&D
• Expects to spend "tens of millions" in 2008 on R&D and related investments + "hundreds of millions" in breakthrough RE technologies
• Says 1 GW can power San Francisco
• Company intends to be carbon neutral in 2007 - has 1.6MW corporate solar panel installation

*******
1-pager on eSolar, one of the two companies Google is working with
http://www.google.com/corporate/green/energy/esolar.pdf

• Solar thermal technology
• Developed modular power plant architecture to take advantage of mass manufactured components, in order to make capital cost of the solar field less than capital costs + fuel costs of traditional system
• Modular, scalable plant with generating capacities of 25MW to 500MW
• Minimizes installation time and cost
• Replications of components within modules and repetition of modules within plant provide energy security

**********
1-pager on Makhani Power, Inc., the other company Google is working with
http://www.google.com/corporate/green/energy/makani.pdf

• High altitude wind energy - avg wind energy 10 times greater than well-sited terrestrial turbine
• Dependable energy source
• Graph showing increase in power with increase in altitude (increasing returns to height 0-6km then decreasing 6-10km)

********************
NYT article: "Google’s Next Frontier: Renewable Energy," by Brad Stone, 28 Nov 2007. http://www.nytimes.com/2007/11/28/technology/28google.html?hp

• "Mr. [Jordan] Rohan of RBC Capital Markets said that the returns were not obvious. “The only positive byproduct of this project that would be anything other than environmental,” he said, “is that it might make Google managers and executives even prouder of the fact that they work there, and it may help retain key employees who think their goal is to do good in the world. But I’m really stretching.”"
• Gist of article is that analysts think Google venturing too far afield from their business.
• But reminder that "In their Letter From the Founders before the company’s 2004 initial public stock offering, Mr. Page and Mr. Brin wrote: “Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near-term financial returns are not obvious.”"

****************

San Francisco Chronicle article, "Google to spend hundreds of millions on developing renewable energy," by Verne Kopytoff, 28 Nov 2007. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/28/MN8UTJR7P.DTL

• "Google also hopes to license any technology spawned from the effort to other companies so that they, too, can reduce their reliance on more polluting forms of energy while saving money. Co-founder Sergey Brin raised the possibility that the fees will be a new source of revenue for his company, but insisted that the goal isn't to rake in big profit."
• Other companies investing in clean energy include Walmart, Cisco Systems, Hewlett Packard
• Google's financial contribution relatively minor when measured against total investment in RE
• "Ron Pernick, co-founder of Clean Edge, an energy research company, said U.S. venture capital investment alone in clean energy was $2.4 billion, according to a joint study by Clean Edge and Nth Power, a venture capital firm."
• Not clear whether investment will fund anything new - Google announced few specifics
• Goal of making RE cost competitive with coal IS new commitment
• Coal costs 2-4 cents per kWh, depending on location. Google execs say RE will have to drop 1-3 cents per kWh to make it cost competitive.
• "If a large fraction goes to investing into companies that are being created anyway, then it's a big drop in a bucket," [James Sweeney, a Stanford professor and director of the university's Precourt Institute for Energy Efficiency] said. "But if it's funding basic research, which isn't getting enough funding, then it's probably a significant force in moving this forward."

28 November 2007, Morning

Today:
1. Check REA.com for any updates.
2. Look for information on cost of wind that divides expense between equipment and non-equipment costs (a la the CA PV report).
3. Check the article on non-fixed coefficient I-O analysis.

RAND Study on Cost effects of increasing RE use

Bernstein, M.A., J. Griffin, R. Lempert (2006). Impacts on U.S. Energy Expenditures of Increasing Renewable Energy Use. Santa Monica: RAND Corporation.
In Z:// drive under RAND 2006 RE use and RE expend

• This report was pulled off of RAND's website. Why?
• Assesses impact of 25% of electric and motor vehicle energy by renewables by 2025 on total national energy expenditures and air pollution. Conducted for Energy Future Coalition, 25X25' alliance.
• Based on 1,500 simulation runs, covering variety of cost scenarios. RE shown to lower total energy expenditures in almost all cases where current energy price and technology trends continue.
• Even with bad assumptions, percent price increase is small: "Indeed, the most extreme of the 1,500 scenarios produced no more than a 6-percent change in energy expenditures, or about $75 billion in 2025. This includes the most favorable scenario for nonrenewable energy simulated—in which the costs of renewable energy technology rise 30 percent during the next 20 years, while natural gas, oil, and coal prices fell 50 percent from current projections." p. xii (12) "Similarly, in the best-case scenarios for renewable energy, our renewables case could reduce energy expenditures by about 3 percent, or $40 billion." Relatively narrow range.
• EIA uses National Energy Modeling System (NEMS) to make energy market forecasts. This study uses simplified version that requires less processing time.
• Assume most favorable renewable sites are used first; therefore costs increase after a point in some of the projections.
• p6 (24): Table of Technologies and Issues (sort of a pros and cons list for each)
• p7: "...the global market for wind, solar, and biofuels is about $40 billion, according to Clean Edge, a Bay Area marketing firm (Makower, Pernick, and Wilder, 2006)."
• Assumes significantly higher costs as wind penetration increases, since cost of transmission from site of good wind resource to site of use is assumed to increase. In fact, wind section is mostly discussion of problems: intermittancy, aesthetic problems, bird killing, noise.
• Assessment of solar PV more favorable: intermittant, but more predictable. Installed close to source, though many small modules will require changes in planning and management of grid.
• Section on ethanol also favorable. Says recent review by Farrell et al. (2006) in Science shows that corn ethanol production produces more energy than it consumes. Unlike past studies, "the Farrell et al. analysis accounted for the economic value of by-products from corn ethanol production, notably dried distiller grains (used for animal feed), gluten feed, and corn oil" p.10, but unsure whether these markets will remain robust if ethanol production amped up. Seems that these byproduct markets necessary for ethanol to yield positive net energy benefits. Also, soil erosion and nutrient runoff are significant environmental costs.
• Notes that corn-based ethanol production can only expand so far before impinging on food supply. Hopeful about cellulosic ethanol, though "Cellulosic ethanol is currently produced only on a precommercial demonstration
• scale in one plant in Ottawa, Canada." p.11
• Renewables help curb price volatility in energy markets: "Some recent studies (e.g., Berry, 2005; Bolinger and Wiser, 2005a; Owens, 2003; Awerbuch, 2003) have attempted to assess the value that renewables can provide to reduce volatility." p.12
• "the EIA (EIA, 2003b) has used NEMS to estimate the effects of an RPS of 10 percent in 2020, concluding that it would have a negligible impact on energy expenditures within the United States (slight increases in the price of electricity would be offset by reductions in the price of natural gas)." p17
• Cost assumptions begin on p.46 in the appendix

PV Cost Trends in California

Wiser, R., M. Bolinger, P. Cappers and R. Margolis (2006). “Letting the Sun Shine on Solar Costs: An Empirical Investigation of Photovoltaic Cost Trends in California.” Berkeley, CA: Lawrence Berkeley National Laboratory, LBNL-59282, January 2006.
Saved in Z:// drive under NREL 2006 PV Cost Trends in CA.pdf

• Uses data on PV panel installations under two California subsidy programs: CEC (CA Energy Commission), which has provided rebates for small (<30kw)>30kW systems. Size and structure of programs have varied over time. 17,889 data records, 5,033 of which are just approved and the rest installed.
• "In particular, the CEC initiated five gradual reductions beginning in 2003, while the CPUC imposed a single large reduction in late 2004 and a more recent reduction in mid-December 2005. On January 12, 2006, the CPUC ordered a dramatic expansion of these programs with a $3.2 billion, 11-year program of declining incentives." p. i
• Uses Wac (alternating current) rather than Wdc-stc (DC Watts and standard test conditions)
• Finds that costs have declined substantially over time, but less so under CPUC's program. Module costs have declined somewhat (from what looks like about $4.75 in 2004$ in 1998 to about $3.50 in 2005), but biggest cost reductions from installation and balance of systems costs.
• Economies of scale: average costs lower for larger systems, with systems above 300 kWac between $7.75 and $7.90 per watt (2004$).
• Finds that thin film modules reduce costs for CEC projects (by avg of $0.70 per W), but raised them slighty for CPUC projects.
• Says reducing non-module costs should be primary goal of local PV programs. To this end, author recommends business development funding for installers, supporting standardized PV products, installer training and certification.
• Also recommends longer-term programs to facilitate cost reductions.
• 50% cap on rebate induced cost inflation in some cases - says cap should be removed.
• "A sizable literature has developed that explores historical PV cost trends. Much of this literature has used learning or experience curve theory to explore how increases in cumulative PV production have driven costs down over time. Findings from this literature vary, but most studies show that each doubling of cumulative production has historically led to a reduction in module prices of approximately 20% (see, e.g., Kobos et al. in press; McDonald and Schrattenholzer 2001; Neij 1997; IEA 2000; Schaeffer et al. 2004). Others have extrapolated these findings to argue that government deployment support for PV may be warranted to drive the industry down its learning curve and ultimately achieve costs that are comparable to or better than the cost of conventional electricity sources (see, e.g., van der Zwaan and Rabl 2004; Duke and Kammen 1999; Duke 2002).3" p.2
• CEC program funded by ratepayers of CA's invester-owned electric utilities. CPUC program same, but funded by electric and gas ratepayers.
  
• Silicon shortage driving prices of modules up. What's the prognosis on this?
• Regression results for CEC sample on p. 21 (35). Coefficient on "module cost index" is very close to 1 in three different versions, supporting claim that module cost increases and reductions consistently passed along 1-1.
  

Items of Interest, found while searching for RE Cost Trends

NREL's REPiS Database: Provides info on RE plants (biomass, geotherm, hydro, PV, solar thermal, wind) and installed capacity.
http://www.nrel.gov/analysis/repis/

NREL's Renewable Energy Technology characterizations: From 1997, describes state of technology and makes predictions for 2000, 2005, and out to 2030. Would be interesting to study how actual developments correspond to predictions.
http://www1.eere.energy.gov/ba/pba/tech_characterizations.html

NREL: Power Technologies Energy Data Book: March 2006. Chapters on technology profiles, state incentives that came with restructuring, forecasts of RE capacity, GIS maps of RE resources and installed capacity.
http://www.nrel.gov/analysis/power_databook/

RAND Corp study "Impacts on U.S. Energy Expenditures of Increasing Renewable Energy Use," saying that 25% of America's energy could be supplied by renewable sources by 2025, using plausible assumptions about cost trends for fossil and RE, was withdrawn from website.
http://www.25x25.org/index.php?option=com_content&task=view&id=157&Itemid=56
Report still available here: http://www.energyfuturecoalition.org/pubs/RAND.pdf

U.S. EIA Report on Solar Thermal and PV Manufacturing Activities, 2006
http://www.eia.doe.gov/cneaf/solar.renewables/page/solarreport/solar.html

26 Nov 2007, Morning

Possibilities for next study:
1. U.S. State analysis
2. Analysis of cost trends in various RE technologies
3. Investigate non-fixed coefficient I-O models
4. Cost of renewable policies discussed in report
5. Interaction between RE policies and CO2 policies

19 Nov 2007, Afternoon

Today:

• Checked out current energy bill status
• Checked REA.com
• Sifted through recent issues of Energy Economics, Energy Policy, and Ecological Economics to get handle on what is going on in field. First two publish a ton of papers, using mostly mainstream methods, most of which are quite technical. Ecological Economics is, as expected, less neoclassical. Lots of case studies and articles about well-being. Not sure I have a much better handle on anything than when I started looking.

Next time:

• Begin a U.S. state analysis. Look through DSIRE and figure out which states are doing what. Find articles, perhaps, on how effective different policies have been. Find resource maps of which types of RE would be most effective where.

Journal Article Review

Searched for "energy" in journal titles through UMASS online journals

Annual Review of Environment and Resources
1. "ENERGY EFFICIENCY POLICIES: A Retrospective Examination." Annual Review of Environment & Resources; 2006, Vol. 31 Issue 1, p161-192, 32p.
Synopsis of programs related to appliance standards, financial incentive programs, information and voluntary programs, management of government energy use.

Energy
Spring 2007 issue alone had articles on lots of different energy-related things, including grid computerization, green buildings, biofuels, EU carbon trading.

Energy and Environmental Management
UK-themed journal published between 2000-2004

Energy Economics

• January 2008 issue has a lot of articles using Data Envelopment Analysis methodology (don't understand what it is). An article titled " Energy use efficiency in U.S. manufacturing: A nonparametric analysis" uses DEA to measure energy efficiency. Talks about energy intensity as traditional measure of energy efficiency and discusses different methods.
• November 2007 has several articles on relationship between GDP and energy/electricity, within and across countries. "Energy consumption and GDP revisited: A panel analysis of developed and developing countries" talks about how previous studies often contradictory. Says change in country's energy policy can bring about structural change in relationship between energy and GDP. Right! Not sure about their results - don't seem much more convincing than previous studies.
• July 2007. Issue on modeling industrial energy consumption. Article on decoupling CO2 emissions from industrial growth in EU, using decomposition analysis. "The above shortly presented findings can be summarized in one sentence stating that the countries that showed the best environmental performance in the EU in 1990 continue to move faster in successfully implementing emission abatement measures and thus the gap between forerunners and followers has become larger in 2003." Another on the macroecon effects of efficiency policies for energy intensive industries in UK: "The results show that incentivized energy-efficiency improvements for energy-intensive industries yield positive macroeconomic effects in economic terms, with small increases in GDP (0.12% above base by 2010) and employment (0.03%), and negligible changes in general inflation. The system-wide final energy reductions is estimated to be 4.2 mtoe, or 2.6% of total final demand for energy by 2010, with a rebound effect of 19%, and a reduction of 3.3% in CO₂ emissions, a significant amount in view of the UK's Kyoto commitment of 12.5% in greenhouse gases below 1990 levels. "
• May 2007 has article titled " On the importance of equity in international climate policy: An empirical analysis." Survey data shows that equity more important to developing countries, while richer countries less in favor of polluter-pays rule. Richer countries in favor of incorporating egalitarian rules in long run. Another article: " A combined input–output and sensitivity analysis approach to analyse sector linkages and CO₂ emissions."
• January 2007 has article on "Increased energy efficiency and the rebound effect: Effects on consumption and emissions." "Briefly, the rebound effect can be described as the direct and indirect effects, such as substitution and income effects, induced by a new energy-saving technology. This rebound effect may then partly, or entirely, offset the initial or direct energy saving resulting from a new technology."... "The RE is usually discussed in connection with “new energy-saving technology”. A new energy-saving technology essentially implies a lower energy bill, which can be viewed as a reduction of the real price of energy services. Thus, if petrol costs less per transport unit, car use may increase, which partially offsets the initial energy-saving potential. Furthermore, lower energy costs increase real income, which leads to an increase in consumption of other goods. This in turn offsets the emission reductions from the initial energy saving. A third effect may be denoted general equilibrium effects, since changes in aggregate consumption patterns may lead to structural change and changes in relative prices. Taken together, these effects can be denoted the rebound effect."

Energy Policy

• Dec 2007 issue: "International passenger transport and climate change: A sector analysis in car demand and associated CO₂ emissions from 2000 to 2050." "A sector wide approach to emissions mitigation may—in certain cases—be more successful than national approaches, as competitiveness risks and carbon leakage can be overcome."... Figure 3 shows income elasticities of car consumption over time for different regions. Car consumption most inelastic in US - fell below 1 by 1970. Another article, "Energy productivity improvements and the rebound effect: An overview of the state of knowledge," surveys evidence of macroeconomic rebound effect and says effect shouldn't be underestimated. Concludes..."Therefore, energy efficiency policies ought to be considered as short-term policy instruments that cannot, in any case, substitute for long-term policies that promote carbon-free or carbon-neutral energy sources." First article in issue: "Bioenergy expansion in the EU: Cost-effective climate change mitigation, employment creation and reduced dependency on imported fuels." From abstract: "Maximizing climate benefits cost-effectively is in conflict with maximizing employment creation. The former perspective proposes the use of lignocellulosic biomass in the stationary sector, while the latter requires biofuels for transport based on traditional agricultural crops." From conclusion: "Estimates of the employment creation potential for various bioenergy options differ substantially. However, liquid biofuels based on traditional agricultural crops seem to be the most employment-intensive option, especially when the biofuel conversion plants are small. The production of biomass for energy has the potential to contribute to employment creation at a magnitude that is significant in relation to total employment in agriculture, but small compared to the total employment in industry in a country."
• Nov 2007 issue: "Is the choice of renewable portfolio standards random?" What are explanatory variables for adopting an RPS (in US)? Education, political party dominancy, GSP, GRP. Article: " Investment risks under uncertain climate change policy."
• Oct 2007 issue: Article on GIS assessment of RE potential in Spain. Another article, "The economics of climate change and the change of climate in economics," talks about getting away from mainstream economic analysis and using more evolutionary model. Cites this article: Toman, 2006 M. Toman, Values in the economics of climate change, Environmental Values 15 (3) (2006), pp. 365–379.
  

Ecological Economics

• Oct 2007: "Using Monte Carlo analysis to investigate the relationship between overconsumption and uncertain access to one's personal utility function." "In this paper, I seek to incorporate recent findings in hedonic psychology in order to ask the question of whether specific biases may lead to overconsumption not only from an ecological perspective, but from that of the individual as well."..."That said, under the circumstances described in this paper, workers will engage in overconsumption with respect to well-being. By this I mean that they will overengage in income-producing work and underengage in other activities, leading to a depression of well-being relative to the optimum. This is an important result because it indicates that a certain amount of pernicious consumption can be reduced through optimal policies or education, leading not only to significantly reduced ecological harm, but social benefits accruing from increased resources available for social interactions (and positive externalities from increased participation), at the same time as happiness is increased relative to the market equilibrium."
• Sept 2007: Theme is valuation and C/B analysis. Editorial on Stern report critiquing its use, despite noting all problems, of a global cost benefit analysis. Another paper: " Technological change in energy systems: Learning curves, logistic curves and input–output coefficients." Questions appropriateness of learning curve, where cost declines are power function of cumulative production. "So far there are few critiques of the learning curve in energy modelling, probably because the relationship described by learning curves is derived from empirical observations. However, Cory et al. (1999) and Ibenholt (2002) in studies of wind power technology argue that the learning effect is not the only factor determining costs; other factors such as R&D investment, process innovation, input prices, economies of scale, and others can affect costs as well."... "the learning curve implicitly assumes that technology can change instantly with installed capacity, which is implausible." Possible application to non-fixed coefficient I-O tables: "We show that the top-down Leontief representation of technology can be connected with bottom-up technology, whether described as learning curves or logistic curves, by using the curve to adjust input–output coefficients."
• May 2007: " Why we need a commitment approach to environmental policy"..."The second purpose is to explain why the neoclassical model is deficient as a basis for environmental policy and to explicate the nature of a more appropriate model."
• March 2007: " Quality of life: An approach integrating opportunities, human needs, and subjective well-being" coauthored by half the professors at UVM

UMASS Center for EE&RE

Center for Energy Efficiency and Renewable Energy at UMASS
http://www.ceere.org/index.html
Team of engineers working on renewable energy and energy efficiency. Government money and public-private partnerships. Publications on website seem to end in 2004.

Fact sheet on wind turbine economics - estimating the simple payback time using assumptions about capacity factor, subsidies for wind energy, electricity prices, costs:
http://www.ceere.org/rerl/publications/published/communityWindFactSheets/RERL_Fact_Sheet_2b_Wind_Economics_Intro.pdf

Jim Boyce mentioned that James Manwell - director of the Renewable Energy team at CEERE - was local expert on FIT.

19 Nov 2007, Morning

Review of Renewable Energy Access to find out state of Energy Bill. Plan to get something through conference committees before Thanksgiving has apparently been scrapped, and there seems to be new hope for both RPS and CAFE standards in the bill. A letter to Pelosi signed by 20 congress members supports these more stringent renewable/efficiency measures.

Mendonca editorial on renewable energy in EU
http://www.renewableenergyaccess.com/rea/news/businessre/story;jsessionid=3C621C341A24E091CE4D892DA0104F8C?id=50605
Says UK New Labour gov't is at risk of sabotaging feed-in tariffs around the EU. Won't be able to meet it's EU RE target by 2020, so pushing to have targets reduced and certificate trading system that will allow it to purchase certs rather than produce energy. Cites an EU legal expert on how bad cert trading system would be for Germany. Conventional energy industry very opposed to FITs - like cert trading - allows only themselves to produce RE, not lots of independent producers.

Report from GAO office shows how R&D funds and tax support have been distributed among different types of electricity producers since 2002. Still much more support to fossils than RE.

Interview about the downsides of biofuels production with author of OECD's "Biofuels: Is the cure worse than the disease?"
http://www.renewableenergyaccess.com/rea/news/reinsider/story;jsessionid=3C621C341A24E091CE4D892DA0104F8C?id=50616

• Biofuels consumed as low-percentage blends won't substantially lower GHG emissions (maybe 15%)
• Still very expensive - subsidized up to 50% (compared to 3-10% for oil)
• May not pave way for second generation biofuels - this is argument of first gen producers
• What about all the infrastructure that's being built in response to subsidies? Author says gov't shouldn't throw good money after bad. Let subsidies expire.
• Says policies probably won't change unless big crop failure or drop in oil prices.

14 Nov 2007, Afternoon

Today:

• Kind of disjointed
• Did some research on energy bill, apparently in conference committee and should be up for a vote soon
• Also read UNEP report on RE and Investment

Next time:

• NEed to think about where to go next. US and policy? Something more about jobs? Cost of technologies?

Sustainable Energy Investment 2007

UNEP (2007). Global Trends in Sustainable Energy Investment 2007. UNEP Sustainable Energy Finance Initiative and New Energy Finance Limited.

• Reviews high and growing levels of private investment in RE&EE, with wind, solar, and biomass biggest targets.
• Emphasizes that investment is driven by policy.
• Volume of investment flowing into clean energy sector dwarfs the dotcom boom. Has also lasted longer.
• Asset financing largest source of sustainable energy investment - 40% of 2006 total of $70.9 billion. Wind is area with most asset financing. Biofuels dominated venture capital/private equity investment in 2006, followed by solar.
• US has more VC/PE than any other region. EU27 has more assets financing.
• RE accounts for 18% of power generation investment but only 2% of installed capacity.
• Notes China's "bias" toward domestic manufacturers - says it is a source of uneven RE development
• Marine technology not attracting much investment yet
• 26 "Experience form other industries, such as telecoms, software and biotech, has shown that the rate of innovation and speed of commercialisation are dramatically accelerated by the presence of a healthy population of earlier-stage companies."
• Talks about U.S. and Israel as countries with strong incubator traditions
• 29 "The 'Kyoto Effect' can be observed, with quoted renewable energy companies in countries that have ratified the Protocol outperforming those in non-ratifying countries by 41.3%"
• Competition for wind asset financing driving innovation in financial markets
• Mergers and Acquisitions: Vertical integration - large wind companies buying suppliers. India and Australia net buyers of RE companies in 2006; EU-27, US, China and Latin America net sellers
• UK is clear leader in carbon fund management; US second
• Efficiency: EU aims to cut energy use by 20% by 2020 (not sure what baseline is). China wants to cut energy consumption by 20% w/in five years. Energy intensity four times US's in 2004.
• Multilateral dev't banks important source of funding for energy efficiency; also, public sector backed venture capital funds
• Small sections on China, INdia, Brazil, Africa

Concentrated Solar Power

All About: CSP
http://www.cnn.com/2007/WORLD/asiapcf/11/12/eco.about.csp/

• Combined solar power collects heat from the sun and heats liquids to high temps. Steam is used to drive turbines to create electricity.
• Needs direct sunlight, but in deserts, creates electricity much more cheaply than PV."
• Over in Europe, however, a group of scientists, politicians and renewable energy experts who call themselves The Trans-Mediterranean Renewable Energy Cooperation (TREC) have made claims on a much bigger scale and with far bigger ramifications. TREC is backing an ambitious project straddling Europe, the Middle East and North Africa (EU-MENA), which is based on the calculation that an area less than 0.3% of the Sahara Desert filled with CSP plants could power the entire region -- and could slash the EU's electricity-generated greenhouse gas emissions by 70% in the process."
• Waste heat can be used to desalinate sea water.

U.S. RPS Coalition

Coalition of US environmental groups for a 20% national RPS, led by UCS:
Blue Green Alliance, Environmental Law and Policy Center, Greenpeace, League of Conservation Voters, National Audubon Society, National Environmental Trust, Natural Resources Defense Council, Public Citizen of TX, Sierra Club, Sierra Club Cool Cities, Southern Alliance for Clean Energy, United Steelworkers of America, US PIRG, and the Western Organization of Resource Councils (WORC).

from http://www.ucsusa.org/clean_energy/clean_energy_policies/res_campaign.html#supporters

ASES Green Collar Jobs Report

http://www.ases.org/ASES-JobsReport-Final.pdf

• 3 Developed a definition of what the RE&EE industry is: direct and indirect jobs contained in these sectors. (Is this an improvement?) Says vast majority of jobs are "standard jobs for accountants, engineers, computer analysts, clerks, factory workers, truck drivers, mechanics, etc"
• 4 EE hard to define - theirs is eclectic: e.g., includes vehicles that get 10 mpg higher than CAFE stds
• 5 Around 8 million indirect and direct jobs created by EE; 452,000 by RE
• Case study of Ohio

Energy Bill Notes

Sklar, S. (2007). "Lessons from the political process: Energy Bill Woes." Renewable Energy Access website: (accessed 14 Nov 2007).

• Pelosi says house intends to pass energy bill by end of week of 11/17/07
• CAFE increase passed by senate in June: 35 mpg average for domestic fleet by 2022 (meaning all cars made in USA or all cars driven here?)
• RPS failed in a Senate vote but is included in the House bill. Low (non-existent) budgetary impact of RPS is hailed. Compared to wind PTCs, which could cost $1 billion/year.
• Union of Concerned Scientists leads coalition of national environmental groups in pushing for national RPS. Electric utilities trade group, EEI, lobbying against.
• Solar and fuel cell industries pushing for longer expansion of ITC (what can ITC be used for?). Only 2 years in EPACT05 - industries say it isn't long enough for large generation plants.
• Technologies disregarded in EPACT05 that may be again: small wind, ground coupled heat pumps, solar daylighting, combined heat and power, and water energy (such as freeflow hydropower, tidal, wave and ocean currents and thermal)
• Talks about legality of the "offsets" - which appear to be taxes or royalties collected on oil and gas leases, but not described in detail here.
• When the PTC was first renewed in Dec 1999, poultry-waste facilities were included with wind and closed-loop biomass as facilities eligible for the tax credit. Power generated through offgasing of poultry waste?

Lacey, S. (2007). "U.S. Energy Bill - Early Christmas Present or Lump of Coal." Renewable Energy Access website:
(accessed 14 Nov 2007).

• According to this author, the RPS and all tax provisions were removed from the bill so it could be passed before Thanksgiving
• "The renewable portfolio standard, which would set a target of getting 20-25% of the nation's electricity from renewable resources by 2025, will no longer be in the bill."
• Mentions this REE&E jobs report from ASES, which Heidi said is similar to the Apollo jobs report in presenting a lot of big numbers and not explaining where they came from.

UCS (2007). "Clean Energy Update - 09/2007." Union of Concerned Scientists website: (accessed 14 Nov 2007).

• House apparently passed an RPS with a 220-190 vote - not yet law.
• "If passed into law, the Udall-Platts-Gonzalez renewable electricity standard would require large, investor-owned utilities to acquire 15 percent of their power from clean, renewable sources like solar, wind or biomass by 2020."
• Lowered 20 percent to 15 percent, allowed states to meet 1/4 through EE
• UCS and PIRG publicized environmental and jobs benefits. Says a 15% std would save consumers a total of more than $16 billion by the year 2020.
• Issue seems to be getting the Senate and House bills to agree. Senate bill does not include RPS (it was blocked) and House bill does not include CAFE stds.

Clayton, M. (2007). "In Big U.S. Energy Bill, Who Will Pay?" Christian Science Monitor, 7 Nov 2007. CSM website: http://www.csmonitor.com/2007/1107/p01s01-wogi.html?s=yaho (accessed 14 Nov 2007).

• Want to give bill to Bush to sign before xmas - need to reconcile House and Senate versions and avoid veto
• RPS and CAFE stds controversial parts. Stds requiring more ethanol in gasoline, tougher efficiency standards for lighting and appliances, and the PTC have "broad legislative support."
• To be paid for by repealing tax incentives to oil and gas industries, to tune of $16 bill (House version) or $32 bill (Senate).
• Half the states already have RPSs, some stricter, but states that don't complain that regional differences aren't being taken into account (Southern Company, ATlanta-based utility company)
• The 35 mpg CAFE std by 2020 is a 40 percent increase
• Letter from Allan Hubbard, director of the president's National Economic Council, said senior advisers would recommend presidential veto for any RPS and if separate CAFE stds for cars and light trucks were not included
• Says 35 mpg CAFE std would cut US oil use by 2.5 million barrels per day and save 495 MMT of CO2 emissions. 15% RPS would save 36 MMT of CO2. But this is assuming overall demand doesn't rise! Not much historical evidence for supposing it won't.

Kho, J. (2007). "Renewable Tax Credit and Portfolio Standard Could Get Cut From Energy Bill," Greentech Media website: http://www.greentechmedia.com/articles/renewable-tax-credit-and-portfolio-standard-could-get-cut-from-energy-bill-283.html (accessed 14 Nov 2007). 11 Nov 2007.

• Senate Majority Leader Harry Reid and House Majority Leader Nancy Pelosi discussing taking PTC and RPS out of energy bill.
• "Stricter fuel economy standards for vehicles also might be endangered as Reps. Barron Hill, D-Ind., and Lee Terry, R-Neb., sent a letter Friday saying they wouldn't support such standards"
• RE stocks dropped: Evergreen Solar (NSDQ: ESLR) shares dropped 11.84 percent to $14.08 per share Friday, SunPower Corp. (NSDQ: SPWR) shares fell 9.4 percent to $128.66 per share and Suntech Power fell 5.6 percent to $61.55 per share. The WilderHill Clean Energy Index, which tracks U.S. clean-energy stocks, dropped 5.19 percent Friday to 252.09.
• Quotes from representatives of the solar industry say that industry will not die in U.S., but because of state standards and business from overseas.

Snow, N. (2007). "Energy bills would cost $1 trillion, 5 billion jobs, study says." Oil and Gas Journal, 14 Nov 2007. Available online at http://www.ogj.com/display_article/312060/7/ONART/none/GenIn/1/Energy-bills-would-cost-$1-trillion,-5-billion-jobs,-study-says/ (accessed 14 Nov 2007).

• American Petroleum Industry-commissioned study finds proposed energy bills could cost 5 billion jobs and drain $1 trillion from US economy. [Almost as many jobs as there are people in the world!] Study performed by CRA International. Update: Checked the api.org website, and the correct number is there: 5 million.
  
• Study examined "potential economic impacts of requiring a 10 million b/d reduction from projected 2030 US oil consumption, the use of 36 billion gal/year of renewable transportation fuels by 2022, and more than $15 billion in increased oil and gas industry taxes over 10 years."
• CRA's study used the US Energy Information Administration's 2007 Annual Energy Outlook as a starting point and did not assume higher oil prices.
• Authors point out shortcomings of using ethanol as substitute: uses fossil fuel to produce, 70% efficiency of gasoline, effects on food supply

14 November 2007, Morning

Haven't blogged much in the past couple weeks - busy writing the comparative report draft, which is now with Bob in Kenya. Today, I'll get my desk in order and start researching again. Not sure quite where to go from here. The comparative study was interesting, but I'm not sure how much relevance the experience from other countries has for the U.S., except for broad principles (e.g., those captured in Mallon's introductory chapters on features of successful RE policies.) It's also clear that overall energy use will have to be reduced, since if RE just keeps up with growing demand, we'll no better off environment-wise.

I think I'll begin by looking into the energy bill - supposed to be passed this week? According to this piece in Renewable Energy Access, CAFE standards, an RPS, and the PTC are all on the cutting block. A'researchin' I will go...

5 November 2007

Today:
Good day! Continued working on comparative study.

Next up:

• Write U.S. policy history (skim EIA and Swisher first) - 1.5 hrs
• Finish policy analysis sections for all countries - 3.5 hrs
• Write conclusion segment, containing trends, lessons, what's missing - 2 hrs
• Put together and print - 1 hr