U.S. Economy Shrinks in 4th Qtr

[Ben Kenobi]

What you know about solar and wind power can be written on the inside of a matchbook with a sharpie. Solar works well from a technical perspective if you have fixed arrays.

Well sure. I believe I implied, "it isn't ready for prime-time", means that it works, it's just expensive.

Wind is technically feasible with approriate reserves.

No, wind is horrible. One, it doesn't provide reliable power. Even under ideal conditions - you still need to back it up with other, reliable methods. Like Coal. Which raises the question, why bother with it? Solar's the way to go if you want renewable energy. Hydropower is much more cost effective. There's exactly zero circumstances where wind is superior to the other alternatives.

That said, I don't do wind or solar. That's not the limit of renewables.

You do geothermal or nuclear? There's plenty of potential for nuclear, just not in California.

And no government subsidies. In fact, the depreciation rates suck and are the same as for coal plants, etc., unless we do a CHP conversion, which I'm going to be paid to evaluate after acquisition.

Well, saying you don't do solar or wind got my attention.

[DinoDoc]

Your collective naivety and kneejerk reflexive responses are amusing.

Would the industry exist without the largesse of the government?

[Ben Kenobi]

Apparently you don't, since you posted your kneejerk one liner nearly half an hour after I stated no governement involvement and no subsidies.

Sorry, my sammitch was ready.

[Ben Kenobi]

Austrian advocates cherry pick like everyone else.

I chose 1913 as the start point because I had good data for it. Nothing arbitrary here.

I was talking your selection 1942 as a start point for the DJIA vs inflation argument.

Great argument, except that I used 1913.

It would be for rational objectivists, but it isn't possible. Complex systems have to be reduced to be modeled and predicted. The question is what do you select and leave out, and the more subtle version is how do you weight the inclusions and rationalizations. The current mess works very nicely for the majority who simply want to justify their pre-formed world view.

Well, as a rational objectivist, this is important to me. I believe it is possible and certainly complex systems in other fields have been successfully modelled. Especially given as I'm not part of the 'established crowd', given few Austrians.

There can't be demand for what is still in the patent process - and very well hidden as to its ownership. I also work for a client which is primarily engaged by some very big clients to do emerging technology review and development of patentable emerging technologies. These are things that will be in huge demand, years from now - but mostly at a B2B level, not on the street.

Ok, that makes sense. No sense in assigning future demand to something that hasn't even been released. Release it, see how it does and then we can draw some conclusions.

It's doing quite nicely. It's just a bit under the radar.

Personally I liked the financial crisis. My bills went down.

Tax laws are relevant. Not the material wallowing of the peasantry.

Everything is shaped by demand. Not necessarily directly, though.

IRR is a measure of annual performance from start point to point of measurement. I didn't say anything about 7 percent - I said 7 year exit max, for a flip strategy, e.g. you resell the asset by no later than 7 years after acquisition. Inflation is not relevant, only risk profile vis a vis competitive opportunity. In a 15+% per year world as a threshold level (i.e. minimum to even consider) , who really gives a **** if inflation is 2% or 3% For that matter, if it's 10% but you outperform the best equal-risk competitive opportunity, then you're still golden. It's only if similar risk competitive opportunity value shifts that your threshold rate of return shifts.

Well, no ****. If you can bring in a 10 percent return yearly then it's just chaff. But at 18 over 7, it is relevant and it's going to have a large impact. And that's not taking into account the risks that you're taking if you can't flip and have to sell.

What the **** are you even talking about? There is no assurance whatsover of any future double digit annual gan in equity or debt markets over a five or seven year window. It's not 18% after 7 years, it's an effective annual rate of return every year in that time frame. And short sale of what? The exit price is already fully predictable.

Actually 2.5 percent market return yearly is reasonable, and precisely equivalent to 18 percent gain over 7. That's why your bosses are cutting you off there and not other places. Your risks are higher than the market though.

It's the risk associated with competive opportunity at X rate of return. If similar risk investments are available at 20% (they're not), then the threshold rate of return changes, regardless of what inflation does. Conversely, if the similar risk competitive opportunities are well under 15%, then the threshold drops, but the assets I'm representing are well over the threshold rates.

Your numbers make sense. I haven't done cost/benefit, so I don't know where your cutoffs are. If jumping up to 21/7 from 18/7 would drop your revenue too much, then that would matter more than the losses to inflation.

[MichaeltheGreat]

Well sure. I believe I implied, "it isn't ready for prime-time", means that it works, it's just expensive.

Price is coming down. I'm talking large scale wholesale generation - not the rooftop or parking lot crap. And the price can fit, espcially in CAA non-attainment areas for various products of combustion, since it's essentially a peak asset.

No, wind is horrible. One, it doesn't provide reliable power. Even under ideal conditions - you still need to back it up with other, reliable methods. Like Coal.

As I said, you need adequate spinning and ready reserves. Coal is base load only, it is not acceptable as any form of spinning or ready reserve, because the start/stop times are insane and the generator rampup/rampdown times are far too slow. Typical reserve assets are aeroderivative gas turbines. Typically part of the peak asset portfolio, with some running as peakers and some running or ready for startup in various categories of reserve mode. LM-6000 family with SPRINT

Which raises the question, why bother with it? Solar's the way to go if you want renewable energy. Hydropower is much more cost effective. There's exactly zero circumstances where wind is superior to the other alternatives.

Wrong. It's a niche resource, but conventional dam hydro is built out, there are limited sites for ROR or pumped storage, solar requires larger footprint. Wind has zero water requirements, and zero requirements for gas pipelines or rail access for coal. Wind reliability is also primarily a function of tax credit distortions.

You do geothermal or nuclear? There's plenty of potential for nuclear, just not in California.

I've done geothermal - it's pretty much a dead armadillo - fun, but all sorts of issues and not cost-effective or long-term reliable in the vast majority of fields. Pressure drops, excess solids, corrosivity, difficulty in estimating resource size adequately, etc.

The opportunity for nuclear is vastly overstated. The dominant problem is financing, not technical.

Well, saying you don't do solar or wind got my attention.

Biomass currently, though at one point or another I've done something with everything except nukes.

[MichaeltheGreat]

Sorry, my sammitch was ready.

You still read it wrong.

[Ben Kenobi]

Price is coming down. I'm talking large scale wholesale generation - not the rooftop or parking lot crap. And the price can fit, espcially in CAA non-attainment areas for various products of combustion, since it's essentially a peak asset.

Yeah, don't get me started on that - my school parish where I teach put that one up over their parking lots. Something like a 50 year return. Why bother? More pressing needs.

There's definitely possibilities. Hopefully the Cali wingnuts stay the hell away from it once the panels hit primetime. Still, it's nothing like the nuclear possibilities with thorium reactors. Would have loved to push for one to get built back home - it's ideal for cold places with little sun and difficult transportation in the winter. Texas, not so much, though there's lots of open spaces here that would work just fine.

As I said, you need adequate spinning and ready reserves. Coal is base load only, it is not acceptable as any form of spinning or ready reserve, because the start/stop times are insane and the generator rampup/rampdown times are far too slow.

Absolutely agree - but nuclear is far superior to coal for base load. US should be switching over, but politics is in the way.

with some running as peakers and some running or ready for startup in various categories of reserve mode.

Solar's just better for peak load.

Wrong. It's a niche resource, but conventional dam hydro is built out, there are limited sites for ROR or pumped storage, solar requires larger footprint. Wind has zero water requirements, and zero requirements for gas pipelines or rail access for coal. Wind reliability is also primarily a function of tax credit distortions.

It's a prime beneficiary for them! That's the only reason they get built right now. If footprint is your concern - go nuclear. Nothing better for generation over square footage.

I've done geothermal - it's pretty much a dead armadillo - fun, but all sorts of issues and not cost-effective or long-term reliable in the vast majority of fields. Pressure drops, excess solids, corrosivity, difficulty in estimating resource size adequately, etc.

Pity, I haven't heard much about it, and that would explain why.

The opportunity for nuclear is vastly overstated. The dominant problem is financing, not technical.

In theory, it's the best thing we could possibly use for power generation. In terms of footprint, availability, etc.

Biomass currently, though at one point or another I've done something with everything except nukes.

Ah, well forgive me. Biomass is very respectable. I've toyed with wood generators before. If you know anything about PG and Mennonites, you'll know why. Fun stuff.

[Ben Kenobi]

You still read it wrong.

I was distracted.

[MichaeltheGreat]

I chose 1913 as the start point because I had good data for it. Nothing arbitrary here.



Great argument, except that I used 1913.

Now I remember, you were babbling about 1942 for somethine else. The point stands, DJIA has vastly outpaced inflation since the great depression and the initial regulation of the stock market to slightly rein in the traditional fraud bubbles inherent in the market until the great crash.

Well, as a rational objectivist, this is important to me. I believe it is possible and certainly complex systems in other fields have been successfully modelled. Especially given as I'm not part of the 'established crowd', given few Austrians.

You can't be a rational objectivist and be an Austrian. Or a Keynesian. Those are preset ideological filters.

Ok, that makes sense. No sense in assigning future demand to something that hasn't even been released. Release it, see how it does and then we can draw some conclusions.

The last one I reviewed will be ubiquitous, but it will be embedded functionality contained in other devices. Most people won't even recognize what it is or what it does for them. But the manufacturer in question certainly will. They're drooling, as it's pretty close to a holy grail for what it does, and is infintely adaptable within its given domain - i.e. you can change the central algorithms as newer, faster ones are developed, without needing to change any other aspect of the technology.

Everything is shaped by demand. Not necessarily directly, though.

Taxes are shaped by politics. Lobbyists FTW

Well, no ****. If you can bring in a 10 percent return yearly then it's just chaff. But at 18 over 7, it is relevant and it's going to have a large impact. And that's not taking into account the risks that you're taking if you can't flip and have to sell.

Were you thinking I was talking about 18% total in 7 years? I'm talking (in simplified terms, it's a curve) 18-18-18-18-18-18-18

Worst case, assuming you couldn't flip, is you get 18+ a year until you do. Actual case, since the driver is the lifetime of the offtake agreement, at 7 years, you still have 10 years existing contract life on a renewable contract for on a 30 year remaining physical lifespan asset. The marketability of the asset is based on the power offtake price and duration and the fact that the offtaker is an investment grade rated entity. If I stick around that long, I'll have no problem moving it again.

Actually 2.5 percent market return yearly is reasonable, and precisely equivalent to 18 percent gain over 7. That's why your bosses are cutting you off there and not other places. Your risks are higher than the market though.

You misread. I'm taking 18% a year, each year over a maximum 7 year hold period before flipping the asset and taking the capital gain.

And my risks are much, much lower than the market. I have guaranteed revenue levels for 17 more years with (if the assets are operated properly) HUGE effin' margins. Not dependent on tax subsidy or any regulatory or legislative policy. Revenues are from an investment grade rated utility, so default risk is non-existent, and there's almost a 20 year revenue history.

Your numbers make sense. I haven't done cost/benefit, so I don't know where your cutoffs are. If jumping up to 21/7 from 18/7 would drop your revenue too much, then that would matter more than the losses to inflation.

[/quote]

Revenue is fixed, but it's insanely high. That raises another slew of possibilities which I'll investigate when I get paid to do so. The margins are all controlled on the OPEX side, but I have so much fat built into that to prove out the above threshold case that it's not funny. The nice part is the current asset manager discussion has some very fat bonuses in for exceeding projected margins. I didn't initiate that discussion, they did, but given the excess costs I built in to do the justification, I'll have no trouble exceeding the target margins.

[Ben Kenobi]

The point stands, DJIA has vastly outpaced inflation since the great depression and the initial regulation of the stock market to slightly rein in the traditional fraud bubbles inherent in the market until the great crash.

I don't think anyone here claimed otherwise. My point was that taking inflation into account provides for accurate analysis of real economic gains.

You can't be a rational objectivist and be an Austrian. Or a Keynesian. Those are preset ideological filters.

Sure, if you believe that Austrian economics is the best theory available.

The last one I reviewed will be ubiquitous, but it will be embedded functionality contained in other devices. Most people won't even recognize what it is or what it does for them. But the manufacturer in question certainly will. They're drooling, as it's pretty close to a holy grail for what it does, and is infintely adaptable within its given domain - i.e. you can change the central algorithms as newer, faster ones are developed, without needing to change any other aspect of the technology.

Interesting. Look forward to seeing it.

Taxes are shaped by politics. Lobbyists FTW

Indeed, Lobbyists FTW.

Were you thinking I was talking about 18% total in 7 years? I'm talking (in simplified terms, it's a curve) 18-18-18-18-18-18-18

Yes, I was thinking of 18 over 7. 18 per year, much different story.

And my risks are much, much lower than the market. I have guaranteed revenue levels for 17 more years with (if the assets are operated properly) HUGE effin' margins. Not dependent on tax subsidy or any regulatory or legislative policy. Revenues are from an investment grade rated utility, so default risk is non-existent, and there's almost a 20 year revenue history.

Well, if you're generating 18/year, yeah, no doubt.

Revenue is fixed, but it's insanely high. That raises another slew of possibilities which I'll investigate when I get paid to do so. The margins are all controlled on the OPEX side, but I have so much fat built into that to prove out the above threshold case that it's not funny. The nice part is the current asset manager discussion has some very fat bonuses in for exceeding projected margins. I didn't initiate that discussion, they did, but given the excess costs I built in to do the justification, I'll have no trouble exceeding the target margins.

And you're in biomass and not the other, much well more publicised (and worse) technologies. Good for you. Wood's just not sexy, sadly.

[MichaeltheGreat]

Yeah, don't get me started on that - my school parish where I teach put that one up over their parking lots. Something like a 50 year return. Why bother? More pressing needs.

They got hosed.

There's definitely possibilities. Hopefully the Cali wingnuts stay the hell away from it once the panels hit primetime. Still, it's nothing like the nuclear possibilities with thorium reactors. Would have loved to push for one to get built back home - it's ideal for cold places with little sun and difficult transportation in the winter. Texas, not so much, though there's lots of open spaces here that would work just fine.

You have two ways of getting a thorium reactor built. A government owned and funded boondoggle, or a utility board of directors ready to retire sitting on adequate cash to drop in a 100% equity hole. The financial markets won't touch it.

Absolutely agree - but nuclear is far superior to coal for base load. US should be switching over, but politics is in the way.

Nukes have one big huge ****ing problem. There is no adequate solution for long term waste storage.

That aside, the constraints aren't policital, they're logistical and financial. Replacing coal generation with nukes would require tens of billions of investment in transmission realignment and reconfiguration with those costs incurred before you ever started your nuke.

It's a prime beneficiary for them! That's the only reason they get built right now. If footprint is your concern - go nuclear. Nothing better for generation over square footage.

Nuclear requires lots of water (Palo Verde is an utterly unreliable piece of ****) and requires huge transmission. Wind can be slotted into irregular locations next to existing transmission and sized within the capacity constraints of existing lines. The 30% credits are all wrong - wind is mechanically complex. The credit provides an incentive for getting a wind turbine running, not keeping it running. Hence manufacturers build new turbines, not parts to maintain exsiting ones.

Pity, I haven't heard much about it, and that would explain why.

People keep trying, but usually don't get beyond the test well phase.

In theory, it's the best thing we could possibly use for power generation. In terms of footprint, availability, etc.

In theory, but not at all in practice - that gets us back to the "big grid" with relatively few oversided generating assets and very inefficient transmission systems. Finer granularity is needed for grid stability.

Ah, well forgive me. Biomass is very respectable. I've toyed with wood generators before. If you know anything about PG and Mennonites, you'll know why. Fun stuff.

These are basically like small coal plants, just with biomass instead of coal. Plant layout is basically the same except fuel is trucked in, not railed in.

[Ben Kenobi]

They got hosed.

You're telling me. They also pay me, so I could have worse bosses...

You have two ways of getting a thorium reactor built. A government owned and funded boondoggle, or a utility board of directors ready to retire sitting on adequate cash to drop in a 100% equity hole. The financial markets won't touch it.

Well, if I had the money sitting around, I'd do just that.

There is no adequate solution for long term waste storage.

What if I told you I had one?

That aside, the constraints aren't policital, they're logistical and financial. Replacing coal generation with nukes would require tens of billions of investment in transmission realignment and reconfiguration with those costs incurred before you ever started your nuke.

Agreed, but I believe the cost for switching over is worthwhile.

The credit provides an incentive for getting a wind turbine running, not keeping it running. Hence manufacturers build new turbines, not parts to maintain exsiting ones.

The problem is that it's just bad technology. There are better options. Rather than screwing around with peak/base, just generate more than you need. If you're screwing around with wind, then you need higher base capacity to compensate.

In theory, but not at all in practice - that gets us back to the "big grid" with relatively few oversided generating assets and very inefficient transmission systems. Finer granularity is needed for grid stability.

Well, true, the model of massive nuclear generators and spending the money on transmission would require transmission upgrades. The benefit would be greater power grid stability, etc. The theoretical benefits of this model are enormous. I don't believe that the disposal problem is a significant one.

These are basically like small coal plants, just with biomass instead of coal. Plant layout is basically the same except fuel is trucked in, not railed in.

100 percent proven technology. No innovation required. Where do you get your fuel from?

[MichaeltheGreat]

What if I told you I had one?

Lots of people have ideas. You can't insure the offsite transport, for one thing. And no, you and Sloww can't truck it to Mexico.

Agreed, but I believe the cost for switching over is worthwhile.

Not at all. Large grid/few generating nodes is not responsive to long-term load shifts due to macroeconomic factors, and it's actually worse from a reliability/stability point of view, not to mention load balancing. To rate base the transmission changes, you're talking about doubling people's cost of electricity in all sectors for 15-20 years before you even see a theoretical benefit.

[q]
The problem is that it's just bad technology. There are better options. Rather than screwing around with peak/base, just generate more than you need.
[/quote]

You know what happens if you generate excess capacity you can't move off-system via balancing trades?

If you're screwing around with wind, then you need higher base capacity to compensate.

Nope, you can use wind as a nice reinforcement tool if you site it properly with the right capacity. Stuff like those ugly ass monster towers off Cape Cod is useless, but wind is a nice little specialty tool, if you use it in the right place.

I don't believe that the disposal problem is a significant one.

You're wrong.

100 percent proven technology. No innovation required. Where do you get your fuel from?

Well, it typically comes from three sources - forest products industry residues, ag residues, or diverted green waste. I'm working on various aspects of projects involcing all three types sources. Innovation isn't requred in the technology, but definitely on the implementation.

[Ben Kenobi]

Lots of people have ideas. You can't insure the offsite transport, for one thing. And no, you and Sloww can't truck it to Mexico.

I actually like Mexico. No, dump it somewhere else. Like Canada.

Not at all. Large grid/few generating nodes is not responsive to long-term load shifts due to macroeconomic factors, and it's actually worse from a reliability/stability point of view, not to mention load balancing. To rate base the transmission changes, you're talking about doubling people's cost of electricity in all sectors for 15-20 years before you even see a theoretical benefit.

The grid has to be upgraded at some point. What about the economies of scale benefit associated with one huge plant? Would it be sufficient to counterbalance the other issues. As for load shifting - isn't it more economical to move around the electricity in the grid than, say, to move around the generators? Say if you had a large plant in South Dakota and wire it up to everything else? Or would it be better to divide the distribution and place it closer to the population centres?

You could do something like having one large one in WV, one in TX, one in the Midwest and one in Nevada. That would take care of the population distribution.

You know what happens if you generate excess capacity you can't move off-system via balancing trades?

Can't you simply overbuild and balance through lowering the amount you generate?

Nope, you can use wind as a nice reinforcement tool if you site it properly with the right capacity. Stuff like those ugly ass monster towers off Cape Cod is useless, but wind is a nice little specialty tool, if you use it in the right place.

Does that actually generate enough to really be useful? I can see it providing bursts here and there. But beyond that.

Well, it typically comes from three sources - forest products industry residues, ag residues, or diverted green waste. I'm working on various aspects of projects involcing all three types sources. Innovation isn't requred in the technology, but definitely on the implementation.

Check yer PMs.

[MichaeltheGreat]

I actually like Mexico. No, dump it somewhere else. Like Canada.

You've got a lot to learn before they can call you "Tex"

The grid has to be upgraded at some point.

Yeah, it does, and the utilities have their heads in the sand, or someplace. NERC screams about it on a regular basis, and all FERC can do is review and approve, it can't direct.

What about the economies of scale benefit associated with one huge plant? Would it be sufficient to counterbalance the other issues.

Offset by line and transformation losses and reduced power factor over distance.

As for load shifting - isn't it more economical to move around the electricity in the grid than, say, to move around the generators? Say if you had a large plant in South Dakota and wire it up to everything else?

You generate with finer granularity (which you'd do for peak loads anyway, but you need to do it for base load) At the extremity of distances you're talking about, line losses and thermal breakdown of conductors would become insane. You'd also need to build whole new classes of transformers that would stretch the limits of the technology and have high failure rates. Plus new types of vacuum breakers.

Or would it be better to divide the distribution and place it closer to the population centres? You could do something like having one large one in WV, one in TX, one in the Midwest and one in Nevada. That would take care of the population distribution.

Yes, but at much finer granularity than you're talking about. That's also the cheap way to fix the grid - if you can reduce the major grid to primarily a balancing system and synchronizing reference, then the need for major upgrade and replacement goes away. At the granularity you describe, you're talking a couple of decades (or more) to build a completely new transmission grid independent of the existing one, with no revenue to support it. Then you get your massive banks of multi-unit nukes, and if one goes offline in an emergency situation, the resulting cascading failure will dump the entire national grid and force emergency shutdowns on all your nukes. Then you're well and truly ****ed trying to blackstart into a dead oversized grid like that.

Can't you simply overbuild and balance through lowering the amount you generate?

That's whats done now. But you have to approximately balance in near real time. If you go more than a few percent out of balance, you'll trigger overvoltage/undercurrent relays and have a cascading failure on the whole regional grid. That's happened before. It's not pretty.

Does that actually generate enough to really be useful? I can see it providing bursts here and there. But beyond that.

It can, since generators offset load-imposed reactive power. It wouldn't take much, but as long as you have some generation on a given line, (given that wind sites in California are typically just outside major load centers and can provide stabilization benefits on the lines between those load centers), you would see voltage, phase balance and reactive power stabilization benefits.

Threads like these make me wish Adam Smith was still around - we used to have great off-site exchanges about this stuff. RIP Scott.