The busy person’s guide to a 20 percent Renewable Power Standard

For a long time there has been discussion of 20 percent renewable power standards in a wide assortment of countries. There’s squabbling about the exact percentages, and the merits of solar, wind, biomass, geo and hydro — but it’s a conversation that hasn’t gone away, and won’t.

Why? To meet the 2050 global carbon goals and provide power for a world population growing in numbers and affluence, a 20 percent RPS is a minimal standard, no more or less than a material first step.

With carbon legislation under consideration this month in the United States Senate, its worth looking at the impact of such a transition on the economics of power generation. These have been studied in depth many times, and industry conferences and the halls of academia and government could be effectively wallpapered with all the pages of impact analysis that have been generated.

But studies do not always equate to readership, and the reason is often that the very sophistication and depth that is the hallmark of a study, is the kiss of death in terms of achieving a broad readership. There are many members of the green-conscious society who would rather spend the evening with an insurance salesman than wade through an academic journal.

Getting a member of Congress to master the fine points of economic analysis is even harder. Congress is a world of five-minute meetings, and the most effective impact analyses are those which can be communicated in the 140-character world of a Twitter post.

So, without limiting ourselves to 140 characters, let’s go through some of the numbers and impact, with simplicity. We’ll look at the US, but the math will be a fair proxy for other countries.

Renewables by the numbers

The United States generates about 4000 terawatts of power per year – never mind exactly what a terawatt is. We produce about 10 percent of our needs today from renewables. In a 20 percent scenario, we’ll need 10 more – or 400 terawatts.

Hydro and geothermal have development limits, solar is a beautiful infant, nuclear takes forever, and there’s only so much wind that can be built at one time without toppling the credit markets and overloading the grid. In a five-year, near term scenario, we’d be darn lucky to add 11 terawatts from all those sources.

Even so, we’d be doubling the capacity of that entire sector – the 50 year history of that buildout reduplicated in just five years.

What’s left? Biomass. Whether you think of it as the “friendly fuel” or the “scourge of mankind”, its infrastructure and capital light. Co-firing or conversion, its the near-term technology that’s available.

Usually, we burn wood when we burn biomass, but wood takes quite a while to grow, and the near-term play is in energy grasses.

Since you get about 1000 kilowatt hours per ton of switchgrass, you need 250 million tons to produce the extra 250 terawatts of power from new generation.

That uses up about 30 million acres, at 8 tons an acre (if you can get those yields, planting in such a darn hurry). Sure, wood will take up some of that, and energy canes where they grow well, but this is the Twitter version of an impact analysis, so we’ll keep it simple.

Someone is going to have to pay for all that biomass. Switchgrass will cost 10 cents per KWh on a good day with that kind of need for added production – that’s around $100 per ton, and the price for biomass is already at those levels in some markets without the full-court press of a national price on carbon.

Coal costs around 5 cents per Kwh.

Doesn’t sound like much, but it adds up quickly. The differential is around $15 billion. That can be absorbed in the form of tax, or rate increases. Throw in a few pennies for the impact of other new renewables generation, and we look at $20 billion per year in added cost, excluding the capital cost of new generation from wind, solar and geo.

The bottom line

That’s about $200 per household per year, $4 per week, or about 60 cents per day. That’s the kind of metric that can really cheese off an annoyed electorate, fed up with government spending.

But look at it another way. Hurricane Katrina caused $125 billion in total damages. And anyone who thinks that global warming will cause less economic impact than Katrina hasn’t been looking at the numbers.

Global warming believer? Renewables are a must, with a superior ROI to “do-nothingism”.

Global warming skeptic. Still sounds like an affordable hedge, with a pay-off in lower rates down the line, should all the carbon chat turn to nothing and tons more fossil fuel resources be uncovered.

Capacity builds can be tough asks for investors and financiers, but they always, always pay off for the end-user.

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