Domestic Fuel

Biodiesel consulting firm Lee Enterprises of Little Rock, Ark., has announced plans for expansion in 2012 into ethanol, biomass, wind, solar and geothermal, and the addition of consultants and strategic partners.

“We are currently the world’s largest biodiesel consulting group, and most of our consultants and strategic partners are already very involved in the other alternative fuels,” said principal owner Wayne Lee.

Lee notes that the group’s current appraiser, environmental expert, QA experts, and grant writers have backgrounds and experience in these areas, and that the group’s larger strategic partners – Stoel Rives (legal), Christianson & Associates (accounting), IMA of Kansas (insurance), FCStone Merchant Services (feedstock financing), and Executive Leadership Solutions (staffing) – already have very significant presences in these other alternative fuels sectors. “Our goal over the past several years has been to put together a top notch team of the best biodiesel experts in the world”, says Lee. “I am quite satisfied that we have accomplished that goal and now address almost every need in the biodiesel sector.”

“I am a firm believer in biodiesel as the best alternative to diesel fuels and I strongly believe in its future” says Lee. “But, the overall solution to the world’s oil dependency rests with all the alternative fuels working together”. As a result, Lee wants his consulting group to be able to provide the same depth of assistance for all kinds of alternative fuels as they currently provide for biodiesel.

I felt like an academic when I read this week’s book, “The Powers That Be Global Energy For The Twenty-First Century And Beyond,” although author Scott L. Montgomery wanted the book to be “fun.” I sported my black geek glasses and curled up in a chair at a local coffee shop and attempted to give off the personae that I’m smart. Although I’m not sure anyone was fooled, I’m definitely smarter about our country’s energy options now than I was before I read the book.

This is an extremely in-depth look at what our energy landscape looks like today. It also reviews where we stand, as a world, with regard to resources and options as well as politics and policies that are driving the future. In addition, it looks at where we are headed.  As I look at our country, I’ve felt for a long-time that we are “energy illiterate” and need to become better students of energy education. While Montgomery agrees to some degree, he feels the problem lies more in lack of curriculum and the inability for people to learn about energy in a nonpartisan setting.

Montgomery writes, “Energy matters are critical to understand because they are fundamental to our way of life and because they are the subject of endless misconception, misrepresentation, and, as already noted, myth.”

Throughout the book, Montgomery takes an approach that many other authors have not and that’s the view that he doesn’t categorize energy as “dirty or clean” or necessarily “evil versus good.”  He explains that fossil fuels help build and transport renewable sources and also reminds us that every type of energy has an impact on the environment. Yes everyone, there is no “renewable” energy source that is developed, produced or transported without a fossil fuel.
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A second geothermal plant designed and manufactured by Ormat Technologies has been inaugurated in Las Pailas, Costa Rica. Ormat was contracted by Banco Centroamericano de Integracion Economica “BCIE”, to supply all the power equipment, supervise the installation and conduct the testing and start-up of the 42 MW power plant. The plant will actually be operated by the Costa Rican National Electricity and Telecommunications Company.

Several country leaders attended the event including the president of Costa Ricka, H.E. Laura Chinchilla Miranda. Also on hand was the former Minister of Energy, Teofilo de la Torre who was recently nominated as the Executive President of ICE, the country’s national power utility. Dr. Nick Rischbieth, president of BCIE, along with other members of the government and distinguished dignitaries rounded out the attendees.

“We are very pleased to continue our collaboration with ICE which started with the 18 MW Miravalles Unit 5 in 2004. The Las Pailas plant demonstrates the trust that ICE and BCIE have in Ormat and its Binary Technology,” said Ormat’s Chairman, Lucien Y. Bronicki.

Gevo has inked a deal with Arabian American Development Co. to build a hydrocarbon processing demonstration plant at its South Hampton Resources, Inc. subsidiary located in Silsbee, Texas. Arabian will also provide toll-processing services that will result in the processing of up to 10,000 gallons of isobutanol per month into a variety of renewable hydrocarbon biomaterials including jet fuel, isooctane for gasoline, isooctene and paraxylene for polyethylene terephthalate (PET). Toll processing, or toll manufacturing is when a company (Arabian) with specialized equipment manufacturers a product on behalf of another company (Gevo).

According to Gevo, this strategy will allow them to supply early adopters with product in order for them to test the materials, make sample products and begin sales. The contract is for two years and the demonstration plant should be complete by the end of this year.

“This contract is the successful culmination of one of several toll-processing opportunities on which we have been working. Gevo is developing exciting new technology and we’re pleased to be part of this value chain,” said Nick Carter, President and CEO of South Hampton Resources. “We believe this is a sustainable partnership as Gevo expects to demonstrate the viability of renewable hydrocarbons in a variety of market applications. That would pave the way for a larger market development plant, which, in turn, expands opportunities and should drive additional demand for our toll-processing services.”

Carter added, “In addition, the new processing facility will continue to expand our capabilities into the renewable energy market. Our largest contributor to date in this field is our C5 product that is being utilized as the working fluid in closed loop geothermal generators with a top US geothermal company.”

The Department of Energy is funding several geothermal projects in the United States including a project by GeoTek Energy to design its Gravity Head Energy System (GHES). The company received $450,000 with the potential for an additional $2.4 million to validate the design and for further development of the technology.

Geothermal energy uses heat from the earth to produce steam or hot water. This “energy” is then used to drive a turbine to generate electricity. Unlike some renewable energy sources, geothermal power is produced all the time making it easier for a utility to predict output and manage load requirements.

The GHES uses the force of gravity to eliminate pumps and motors typically needed in binary geothermal energy production. Once validated, the technology allows geothermal providers to sell as much as 35 percent more electricity over the current technology on the market. This will not only increase energy output, but profits as well.

“GeoTek was one of only eight projects nationwide recently approved for a total of $11 million funding by the Geothermal Technologies Program to advance geothermal power technology,” said Kenneth Fryrear, GeoTek’s chief operating officer. The company plans to supplement the government funds with private capital.

In my latest book review, Energy, Convenient Solutions, author Howard Johnson predicts that geothermal energy will play the biggest role in our energy future. Maybe because I’m now paying more attention to geothermal energy, it seems that some pretty significant geothermal projects have been announced recently. For example, Kenya has unveiled its plans to build the largest geothermal power plant in Africa. The plant, once operational, would have the capacity to generate 2,000 megawatts (MW) per year.

The $3.4 billion Borgia-Silali geothermal project is under development by the Geothermal Development Company (GDC) who plans on building out the project in four phases. GDC believes this project is critical in helping to resolve Kenya’s “critical recurring energy crisis.” The first phase of the project will involve the construction of a plant that will generate 800 MW by 2017. Phase II, with a capacity of 400 MW, is expected to be completed by 2019, while Phase III and Phase IV, each with a capacity of 400 MW, are expected to be completed by 2021 and 2023 respectively.

GDC is a state-owned company and is currently finalizing investors for this portion of the project and are already taking bids for Phase 1, that entails the construction of eight 100 MW power plants in the Bogoria-Silali area.

This is not the only area Kenya is targeting for geothermal power. GDC is also building a 400 MW geothermal plant in the Menengai caldera field and the geothermal power plant in Olkaria is generating 280 MW per year. The country’s current energy demand peaks today around 1,200 MW and is projected to grow by 10 percent to at least 17,000 MW over the next 20 years. The country hopes to generate at least 5,000 MW of energy by 2030 through geothermal power although GDC has identified 14 high potential sites along the Rift Valley that could generate between 7,000 – 10,000 MW.

Renewable energy production has surpassed nuclear energy production in the U.S. according to the latest issue of Monthly Energy Review published by the Energy Information Administration. Production of alternative energy is also beginning to close in on domestic oil production.

During the first three months of 2011, energy produced from renewable energy sources (biomass/biofuels, geothermal, solar, hydro, wind) generated 2.245 quadrillion Btus of energy equating to 11.73 percent of U.S. energy production. During this same time period, renewable energy production surpassed nuclear energy power by 5.65 percent. In total, energy produced from renewables is 77.15 percent of that from domestic crude oil production.

When looking at all energy sectors, production of renewable energy has increased by a little over 15 percent when compared to first quarter of 2010, and by more than 25 percent when compared to the first quarter of 2009. Of this total, biomass/biofuels accounted for approximately 48 percent of this total followed by hydropower at 35.41 percent, wind at 12.87 percent, geothermal at 2.45 percent and lastly solar at 1.16 percent.

Despite a seemingly low number for solar power, when compared to first quarter last year, solar power has increased by 104.8 percent while wind power increased by 40.3 percent. Hydropower and geothermal energy also increased by 28.7 percent and 5.8 percent respectively. While nuclear energy has seen a slight increase in power generation, for the most part it has remained steady.

“Notwithstanding the recent nuclear accident in Japan, among many others, and the rapid growth in energy and electricity from renewable sources, congressional Republicans continue to press for more nuclear energy funding while seeking deep cuts in renewable energy investments,” said Ken Bossong, Executive Director of the SUN DAY Campaign. “One has to wonder ‘what are these people thinking?’”

The Intergovernmental Panel on Climate Change (IPCC) has released a paper on the potential of renewable energy and its impacts on reducing greenhouse gas emissions that are believed to contribute to global climate change. The report found that close to 80 percent of the world’s energy supply could be met by renewables by mid-century if supported by the right policies.

More than 120 researchers worked with IPPC on the report, “Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN),” and the findings also indicate that the rising penetration of renewable energies could lead to cumulative GHG savings of 220 to 560 gigatonnnes of carbon dioxide between 2010 and 2050.

“With consistent climate and energy policy support, renewable energy sources can contribute substantially to human well-being by sustainably supplying energy and stabilizing the climate,” said Professor Ottmar Edenhofer, Co-Chair of Working Group III at the report launch. “However, the substantial increase of renewables is technically and politically very challenging.”

According to a news release, the upper end of the scenarios assessed, representing a cut of around a third in GHGs from business-as-usual projections, could assist in keeping concentrations of greenhouse gases at 450 parts per million. If this were the case, it could help to hold the increase in global average temperatures to 2 degrees Celsius, a goal laid out in the Cancun Agreements (COP-16).

Youba Sokona, Co-Chair of the Working Group III, said: “The potential role of renewable energy technologies in meeting the needs of the poor and in powering the sustainable growth of developing and developed economies can trigger sharply polarized views. This IPCC report has brought some much needed clarity to this debate in order to inform governments on the options and decisions that will needed if the world is to collectively realize a low carbon, far more resource efficient and equitable development path.”

The six renewable energy technologies reviewed were bioenergy, solar energy, geothermal energy, hydropower, ocean energy and wind energy. The report, which is a summary of a longer, 900 plus page research document, will feed into the broader work of the IPPC as they prepare its Fifth Assessment Report that is scheduled to be released in September 2014.

I spent Earth Day 30,000 feet up and I must admit that there was a tiny part of me that felt guilty. So to make myself feel better, I read “World On The Edge,” by Lester Brown.  The book focuses on how to prevent environmental and economic collapse and operates on the assumption that it’s not “if” global warming will change business as usual, but when. It should be noted that Brown is the founder and president of Earth Policy Institute and has been advocating for change relating to environmental concerns such as climate change for more than 30 years.

In the first part of the book, Brown lays out the problems at hand including falling water tables and shrinking harvests, eroding soils and expanding deserts and finishes with a discussion about the effect of rising temperatures including the melting of ice and glaciers and food security. He notes that several researchers conducted a study whereby they aggregated the use of earth’s natural resources including CO2 and discovered that we first surpassed the earth’s regenerative capacity around 1980. In 1999, global demands on the earth’s natural systems exceeded sustainable yields by 20 percent and today it would take 1.5 Earths to sustain our current consumption.

Next Brown begins a discussion of the consequences as a result of our foundation in peril. He discusses rising food prices and food scarcity, environmental refugees (think Hurricane Katrina where more than 300,000 people were displaced and many never went back) and failed states such as Somalia and Iraq. During the first part of the book, the big link, or the big disaster, is failed agriculture. He notes that many archeologists have determined that many civilizations that disappeared did so because of food shortages and he believes this is the weak link for today’s civilization.

He uses the 2008-2009 “food bubble” as an example. This was when energy prices hit record highs and food prices also hit record highs. He explained that with countries producing fuel from food crops, such as the U.S. producing ethanol from corn, energy prices/fuel prices are now directly tied to food prices.

“The question is not whether the food bubble will burst but when,” says Brown.
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A multitude of leading energy trade associations today wrote to Congressional leaders with a request for Congress to maintain support and funding for the U.S. Department of Energy (DOE) including the Loan Guarantee Program. The program, in part, is used to help bring emerging alternative energy technologies to market. Groups that signed the letter include the Advanced Ethanol Council (AEC), the American Wind Energy Association (AWEA), the Biomass Power Association, the Clean Economy Network (CEN), the Geothermal Energy Association, the Solar Energy Industries Association (SEIA), and the Renewable Fuels Association (RFA). A hearing on federal loan guarantee programs is scheduled for Thursday, March 31, in the House Appropriations Subcommittee on Energy and Water.

The organizations wrote in their letter, “[W]e write today in support of Federal programs implemented to foster the development and expanded use of domestically-produced clean and renewable energy in the United States. Together, our industries account for over half a million jobs in the United States and counting. Existing federal programs continue to foster growth and allow U.S. businesses to lead a worldwide effort to deploy power plants, manufacturing facilities and fuel production facilities across the country.”

The groups stressed how economically unsustainable America’s dependence on imported energy, especially oil, has become. With oil prices hovering around the $100 per barrel mark, the country sends hundreds of billions of dollars to OPEC members. The groups stressed that support and investment in renewable energy technologies can lessen this dependence while creating jobs. While the organizations recognize budget issues are of utmost concern in Congressional leaders, they still urged members of Congress to take a holistic look at the benefits of America’s renewable energy industry.

“As Congress moves forward with efforts to cut federal spending, it is important to recognize and retain programs that create American jobs, leverage private sector investment and increase tax revenue,” the letter continued. “The DOE Loan Guarantee Program is one of these programs. Eliminating funding for this program will disrupt and delay dozens of projects that are seeking a DOE loan guarantee, and will have very real impacts on job creation and energy security efforts currently underway. We strongly support efforts to prevent funding cuts and preserve the DOE Loan Guarantee Program in its current state.”

The full letter can be read here.

Sen. Chuck Grassley (R-IA) is hoping to avoid a vote in the Senate on the amendment introduced last week by Sen. Tom Coburn (R-OK) that would repeal the Volumetric Ethanol Excise Tax Credit (VEETC).

Grassley said today during his weekly agricultural media conference call that there are two ways the vote can be avoided. “Either talking him out of it, or denying unanimous consent to bring it up, and I think we can do the latter,” he said. Grassley say he is trying to “reason with” Coburn and urge him to take up the issue within the context of energy legislation so to “have ethanol be viewed as part of an overall energy program” instead of having it be part of the spending bill debate.

According to Grassley, Coburn says he has 55 votes. “He probably needs 60 votes. I think we can probably keep him from getting 60 votes. But, quite frankly, I don’t want anybody on record, if we can avoid it, on the ethanol issue until we get down to discussing it as part of the energy debate.”

Listen to Grassley’s comments in answer to a question by Dan Looker of Successful Farming. Sen. Grassley

Meanwhile, as the future of the VEETC remains unsure in Congress, ethanol interests are reportedly in negotiations on a proposal for moving beyond the VEETC. According to DTN/The Progressive Farmer, representatives from the American Coalition for Ethanol, Growth Energy, National Corn Growers Association and Renewable Fuels Association have been working on a compromise proposal this week, getting input from lawmakers in Washington.

The Environmental Protection Agency (EPA) has named Washington D.C. as the leading EPA Green Power Community. Combined, government, businesses, institutions, and residents in the nation’s capital are collectively purchasing nearly 756 million kilowatt-hours (kWh) of green power each year. This is enough to meet 8 percent of the city’s total electricity use. All voluntary, this feat catapulted the city into the number one spot in the country on EPA’s rankings.

District leaders kicked off a District Green Power Challenge today during the District’s EPA Green Power Recognition Ceremony that was held at Phelps Career High School in northeast DC to encourage more residents and businesses to switch to green power. The first goal of the challenge is to increase citywide green power purchases by 33 percent by August 31 of this year in hopes of keeping their #1 ranking. This increase would also mean that the city’s electricity users are purchasing 10 percent from green power or 1 Billion kWh each year.

“This is a huge honor for Washington, D.C. and we are proud to be recognized by the U.S. Environmental Protection Agency,” said Mayor Vincent Gray. “The purchase of green power by our citizens and businesses is cleaning our air and supporting growth of the clean energy economy. When we clean the air, we improve the health of our residents, and particularly our children. We are sending a message to other communities across the country that supporting clean power is a sound business decision and the right thing to do. I’m proud that the District of Columbia government is leading the way, purchasing 50 percent of our electricity through the Washington Gas Energy Services, Inc. wind power program.”

There are currently 36 Green Power Communities across the country. To be given the designation, a city, town or village must have government, business and residents that commit to purchasing green power in amounts that meet or exceed EPA’s Green Power Community purchase requirements. Qualifying energy sources include wind, solar, geothermal, biogas, biomass, and low-impact hydro-electric power.

“The District of Columbia is setting an excellent example for the nation by harnessing clean energy,” said Elizabeth Craig, Acting Director of EPA’s Office of Atmospheric Programs. “We hope the city will continue to increase its use of green power and that other communities will follow suit.”

Canada is now the home to a giant renewable energy company. Vancouver-based Magma Energy, a geothermal company, has purchased wind, solar and hydro energy company Plutonic Power, also based in Vancouver, to form Alterra Power Corp. The deal is worth around $190 million but when the two companies are combined, their net worth is estimated to be worth $575 million.

In a financial analyst call this week, Ross Beaty, Magma’s Chairman and CEO said that “size matters” and “the power business is all about the cost of capital.”

In a press statement Beaty commented, “This merger will strengthen both companies and will create a larger, more diversified renewable energy company with assets across a broader spectrum of the clean energy industry. It has the potential to lower the cost of capital to develop each company’s existing growth assets, to enable those assets to be developed more quickly, and to better attract new opportunities for future development. Geothermal will remain a core focus of the new company, but hydro, wind and solar assets will be solid business platforms for future growth. In the renewable energy business, bigger is better and this combination will achieve that while enhancing returns to each company’s shareholders.”

The new company, Alterra Power Corp, intends to develop new energy sources either within Canada or globally, whatever projects will provide the best return on investment for shareholders. Magma already operates projects in the U.S., Iceland, and Latin America while Plutonic has wind projects in Canada and is looking to acquire some solar projects in the U.S.

Donald McInnes, Plutonic’s Vice-Chairman and CEO said, “2010 was a breakout year for Plutonic having completed the transition into an operating company. To continue to build on the success of our history as a project developer, a merger with Magma will provide our shareholders with the best path to further value creation achieved through a larger market size, greater liquidity, better access to capital, and diversity of geography and technology with a healthy development pipeline that provides significant growth opportunities.”

In conjunction with General Electric (CE), Plutonic Power operates Canada’s largest wind farm, the Dokie Wind project. Under a 25 year Electricity Purchase Agreement with BC Hydro, the now fully operational wind farm will is expected to generate 320,000-340,000 MWh per year – enough energy to power about 34,000 homes. It is comprised of 43 wind turbines and located in the foothills of the Canadian Rocky Mountains. As part of the project, Plutonic Power also built seven kilometres of transmission lines and an electric substation.

According to a new report from Pike Research, “Geothermal Power,” geothermal capacity could double in 10 years. The report concludes that increasing investment in geothermal power could result in a 134 percent increase in total geothermal power between 2010-2020. In other words, an increase from 10.7 gigawatts (GW) to 25.1 GW worldwide when based on a high-growth scenario. Using a more moderate growth scenario closer to the current rate of growth, the report estimates capacity would increase 34 percent to 14.3 GW by 2020. Geothermal energy offers many benefits including the ability to provide almost 24 hour per day electricity production with little to no emissions.

“Worldwide potential for geothermal energy is immense but geothermal remains an underutilized resource and represents only a small fraction of the global renewable energy portfolio,” said senior analyst Peter Asmus. “Improved access to resource data, more efficient drilling processes, increased understanding about the industry’s potential, and improving access to financing are driving expanding interest in the sector.”

According to Asmus, the current geothermal capacity is spread across 26 countries with a combined output of nearly 67 terawatt hours (TWh) of electricity. The U.S. is the global leader with 3.1 GW of installed capacity while seven countries represent 88 percent of the global geothermal capacity. Although traditional geothermal resources make up the majority of installed capacity, enhanced geothermal systems (EGS) and co-produced wells both offer opportunities for expansion.

The high-growth scenario used in the study assumes continued and persistent volatility in the price of oil, tightening carbon regulations, improved access to capital, standardization of geothermal exploration data, contribution from EGS-enabled and co-produced resources, technological breakthroughs in exploration and drilling equipment, improved access to drills and skilled labor, and sustained policies supporting renewable energy mandates, grants, and tax subsidies.

Asmus added, “Even if progress falls short in these areas the potential for geothermal market expansion remains strong, and even our conservative business-as-usual forecast is consistent with growth rates observed in the industry since 1990.”

Two, four, six, eight, who do we love to hate? The oil companies!

Despite my story lead, I was not a cheerleader in another life but I couldn’t get that cheer out of my head while I read this week’s book, “Why We Hate The Oil Companies Straight Talk From An Energy Insider,” by John Hofmeister. I recently gave Mr. Hofmeister some ink when he predicted that the country would see $5 per gallon of gas within the next 10 years so I thought, hey, I should read his book. See what’s he’s all about. He is, after all, the former president of Shell Oil Company.

What is Hofmeister all about? Bringing affordable, clean and sustainable energy to all Americans. He writes, “The truth is that affordable energy is essential for American economic growth. It is essential for our national security and position in world leadership. And it is necessary to maintain our quality of life.” He continues by saying affordable energy and environmental sustainability are challenges that require immediate attention.

Who is in charge of leading the way to affordable energy?  The oil and utility companies? Government? American Citizens? The answer is not so black and white as Hofmeister explains. No one believes the oil companies – they are ranked 24 out of 24 in the industry “Who do you trust” poll and the government is ranked at 22. Not swell by any standards. Then we have American citizens who have been fed “information, misinformation and no information” and they are still electing politicians who have spent 40 years not making good energy policy decisions. We Americans have bad voting histories.

So what do we have? Hofmeister says “there is an energy shortage, but there is no shortage of energy.”
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