ANU Energy Update 2014 Canberra, Australia

8 December, 2014

The Energy and Climate Challenges

“Our ability to find and extract fossil fuels continues

to improve, and economically recoverable reservoirs

around the world are likely to keep pace with the

rising demand for decades.”

Steven Chu and Arun Majumdar, Nature (2012)

Will we run out of oil and natural gas?

U.S. Oil Production (1945 – 2012)

2013: 7.5 M bbls/day

U.S. oil production from tight oil is ~ 4.5 M bbls/day

The increase in oil production, ~ 4.5 M bbls/day, is more than the oil production of all countries except Saudi Arabia, U.S. and Russia

2014: 8.5 M bbls/day

~ 70% of the total world oil reserves is heavy, extra-heavy, oil sands and bitumen

≤ 22.3°API

≤ 10°API

Brent, WTI 38° - 40°API

Steam-assisted gravity drainage (SAGD) Estimated recovery 50% - 60%

Can a mixture of steam and CO2 allow lower temperatures to decrease energy use and increase oil production?

The estimated reserves of all deposits in western Canada and eastern Venezuela is ~ 5.3 trillion barrels.

7  

ICE Price of Brent Crude Oil

Where  oil  prices  be  in  the  next  4  –  20  years?  

Saudi  Arabia  was  no  longer  willing  to  cut  produc=on  to  keep  the  price  of  oil  at  $100/bbl.  

100  

60  

80  

120  

8  

Natural Gas

 Actual   Forecast  

85  Bcfd  in  2013  

 ARPA-E

 ARPA-E Hydraulic fracturing and horizontal drilling

Typical depth: few thousand

meters

Storage of flow-back (waste) water

Fresh water tables protected by

cemented casings

Fractures caused by hydraulic pressure

propants– (e.g. sand) keep micro-cracks open

 ARPA-E EIA estimates of technically recoverable shale gas (tcf)*

* Russia, Central Asia, Middle East, south East Asia and central Africa not included

The rest of the world may have 10x more tight oil and shale gas than the U.S.

 ARPA-E

•  Changes in oil and gas production due to hydraulic fracturing and horizontal drilling

•  Environmental and safety issues

 ARPA-E

Barnett Shale formation fracture treatments (2001 – 2010)

water table depth

Dep

ths

(ft.)

Spikes are the extent of fracture growth

 ARPA-E

•  Cheniere’s LNG Project ≤ 6 LNG trains @ 4.5 million tonnes/train/yr

= 27 M tonnes/yr = 1.3 x 1012 ft3/yr = 3.6 Bcfd = ~ 4% of current U.S. production

•  3 LNG storage tanks ~ 10.1 x 109 ft3 equivalent

•  2 berths for vessels with capacity ~267,000 cubic meters.

•  EPC contract estimate for 3 trains ~$11 B (excluding financing costs) •  Project waiting for final EPA – CEQ statement and FERC ruling

Potential shale gas and tight oil reservoirs can change the energy landscape of the Americas, Asia and Europe.

The  rest  of  the  world  may  have  10  =mes  more  =ght  oil  and  shale  gas  than  the  U.S.  

© 2013 Munich Re

NatCatSERVICE Weather-related loss events worldwide 1980 – 2013 Number of events

Meteorological  events  (Tropical  storm,  extra-­‐tropical  storm,  convec6ve  storm,    local  storm)  

Hydrological  events  (Flood,    mass  movement)  

Climatological  events  (Extreme  temperature,    drought,  forest  fire)  

200

400

600

800

1 000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Number  

©  2014  Münchener  Rückversicherungs-­‐GesellschaJ,  Geo  Risks  Research,  NatCatSERVICE  –  As  at  February  2014  

88% of World-wide losses were weather related

19  

Canning    

20  

“The  Stone  Age  came  to  an  end  not  for  a  lack  of  stones  and  the  oil  age  will  end,  but  not  for  a  lack  of  oil.”    

 -­‐    Sheik  Ahmed  Zaki  Yamani,  former  Saudi  Oil  Minister    

 

We transitioned to better solutions.

If we do not find better solutions, the oil, gas and coal will be used.

The full cost of coal, oil natural gas is not included in the price

Harbin, China

24  

Relative Safety of Energy Sources For each death associated with nuclear energy, there are

4000 coal-related deaths (161 deaths/TWh) and 900 oil-related deaths. Future deaths due to climate change are not included

4000X  more  coal-­‐related  deaths  than  nuclear  power  per  unit  of  energy  produced    

25  

“2014 on course to be one of hottest, possibly hottest, on record …14 of the 15 warmest years have all occurred in the 21st century”

26  

3.2 mm/year rise in sea level (satellite data, Jan 1993 – Aug 2014)

27  

Rate  of  sea  level  rise  Jan  1993  –  Aug  2014  

3.2  mm/year  

Recent rate of sea level rise compared to historical record

 25  year  delay  aRer  the  onset  of  smoking  

Smoking increases the risk of •  Lung cancer: 25x •  Coronary heart disease: 2x - 4x •  Stroke: 2x – 4x

 25  year  delay  aRer  the  onset  of  smoking  

The damage already done to our environment may not be known for a century.

How long will CO2 remain in the atmosphere?  

“The  Stone  Age  came  to  an  end  not  for  a  lack  of  stones  and  the  oil  age  will  end,  but  not  for  a  lack  of  oil.”    

 -­‐    Sheik  Ahmed  Zaki  Yamani,  former  Saudi  Oil  Minister    

 

We transitioned to better solutions.

U.S. to cut CO2 by 26 -28% by 2025 from 2005 levels

States with Renewable Portfolio Standards (mandatory) or Goals (voluntary) in 2012

78%  of  the  total  U.S.  economy  has  mandatory  standards.    86%  has  either  standards  or  goals.    

33  

1.  The U.S. Supreme Court has ruled that CO2 and other Greenhouse gases are pollutants.

2.  The Clean Air Act will be used by EPA to control these pollutants.  

•  Utility companies realize they will have to control carbon emissions. They need a stable policy so they can make future investment choices.

•  Most major multinational oil companies carry an internal price on carbon to guide future investment decisions.

34  

Energy efficiency

Clean energy sources

How science and technology is giving us better solutions.

35  

Renewable energy be more expensive than fossil fuels for at least a few

decades.

Energy Quiz (True or False)

36

Signed PPAs (Power Purchase Agreements) for wind in 2012$

Addi=onal  20%  -­‐30%  decrease  is  expected  

$30/MWh  

In the U.S. we have a wind production tax credit

West  

Interior  

Cost of PV modules are dropping below the power law experience curve SunShot goal $1/watt = L.C.O.E. 6.5¢/kWh

37

Solar  module  produc=on  costs  are  currently  ~  $0.50/waX  for  20  –  21%  efficient  mono-­‐silicon    

Over 40 years, the price of solar modules has declined 40x.

Cumula6ve  Produc6on  Volume  (MWs)  

38  

Cryst. Si : 19 % è 22 % efficiency è lower cost? Poly-Si : 14 % è 16.5 % è ? CdTe: 12 % è14.5 % è ? GaAs: 26% efficient èlow cost ?

Multiple Junction PV, CIGS, Gretzel cell, Perovskites with Si ... ?

The Department of Energy is agnostic to any particular solar technologies:

Progress  in  Perovskite  PV    (Si-­‐  Perovskite  tandem  cells  could  be  over  30%  eff.  

United States Solar Electricity Generation 1985 – 2013

My time as U.S. Secretary

of Energy

45

“Unlike  physics,  where  we  can  fundamentally  figure  out  the  upper  limit  for  the  efficiency  of  solar  cells,  there  is  no  such  limit  to  bureaucracy."  

Minh  Le  Program  Manager  SunShot  

Soft costs

46  

Residen6al  PV  in  Germany  costs  ~$2/W  Residen6al  PV  in  the  US  costs  ~$4  -­‐  $4.50/W  

DOE solar energy goal for utility L.C.O.E. is $65/MWh. This corresponds to ~ $1 /watt of generating capacity.

Our goal for residential installations is $1.50/watt.

48  

$50/MWh  

$70/MWh  

U.S. Levelized Cost of NEW Electricity in 2015 (2010$) with/without incentives and CO2 costs

Natural  gas    

Onshore  wind  

Large  solar  PV  

Nuclear  

Pulverized  Coal  

Solar  thermal  

Efficiency  

Geothermal  

Coal  IGCC  

Biomass  

Coal  IGCC-­‐CCS  

At  $4/MM  Btu  

49  

U.S.  Energy  Informa6on  Administra6on  (EIA)  of  the  Levelized  Cost  of  Electricity  (LCOE)  for  2016.    

(2012  actual  costs  in  green)  2022  (?)  projected  costs  in  magneta  (no  storage)    

50  

Energy Quiz (True or False)

A reliable electrical grid cannot tolerate more than 5 - 10% intermittent renewable energy.

In 2013, Hawaiian Electric Co. (HECO) claimed the grid could not sustain more that 3% - 4% solar power. The intermittent power

would threaten reliability and safety.

FALSE

51  

In 2013, fraction of total electricity generated by renewable energy Germany 30% (20% wind and solar), Denmark 33%

Spain 25%, Ireland 20%, … 14 countries has >25% of electricity generated by renewables

Spain's  largest  wind  turbine,  Arinaga,  a  five  megawap,  505-­‐foot  tall  at  the  Spanish  

archipelago  of  the  Canary  Islands  Countries  with  very  liXle  hydropower  100  %  

80    

40    

20    

0    

Careful  planning  is  needed  to  op6mize  the  lowest-­‐cost  solu6on  

52  

Lowest cost solutions when renewable energy becomes > 30% of total energy will require  

 

(1)  Long distance Transmission,

(2)  Load-management, (3) Automatic control of two-way energy flows, (4)  Energy storage

(5)  Stand-by generating capacity.

It  is  far  easier  to  meet  energy  demands  using  coal,  natural  gas  and  hydropower  than  to  manage  renewable  energy.    U6lity  operators  will  take  the  easy  (and  safe)  op6on,  rather  than  find  a  lower  cost  op6on  that  requires  more  thinking.    

Regulators have to know about existence proofs of (deployed) state-of-the-art technology.

53  

Why aren’t utility companies focused on transitioning to the low-cost option?

Use of “energy-on-demand” energy sources does not require technical innovation. Most utility companies move at glacial speed in the adoption of new technologies.  

This comparison maybe unfair to glaciers. With climate change, some glaciers are moving faster than utility companies.  

54  

Energy Quiz (True or False)

Electric vehicles will never be cost competitive because of the high cost of batteries.

FALSE

The Rolls-Royce Silver Ghost cost = £1500 ( up to ten years wages for a professional)

6-cylinder, 7 liter, 3-speed transmission, 48hp 50 mph, 20+ mpg In a reliability trial the car broke all records completing a 24,000 km test run.

The Model T Ford transformed transportation by making it affordable to many Americans

Henry  Ford  

DOE’s “EV Everywhere set goals for battery cost, energy density, durability.

$0  

$200  

$400  

$600  

$800  

$1,000  

$1,200  

2008   2010   2011   2012   2015   2018   2022  

BaXery  Cost  vs  Year  $/kWh  

Target  

Target  

57  

 ~  $500/kWh  $1,000  kWh  $160/kWh  for  

autos,  $100/kWh  for  u=lity-­‐scale  storage  ?  

58  

Bloomberg New Energy Finance: Total cost of lithium ion battery packs for EVs and PHEVs

Tesla  Giga  Factory  baXery  pack  cost?  

59  

Learning Curve for Electric Vehicle Lithium Ion Batteries

Projec=on  of  cumula=ve  produc=on  by  2020  

$1,000/kW  and  $160/kWh  

10,000  cycles  (30  years)  

61

Tesla battery uses 200 Wh/kg batteries. 85 kWh = 425 kg, excluding packaging and cooling.

Prof.  Yi  Cui  and  I  are  working  on  a  lithium  metal  -­‐  sulfur  bapery  that  may  increase  the  energy  density  4x  and  the  charging  rate  8x.  

The cost of solar modules declined 6-fold in the past ~6 years. Full installation costs in are ~$5.50/watt;

Germany ~$2.50/watt.

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This technology could be as disruptive to electricity generation and distribution as the internet was to

publishing and entertainment

The cost of home solar energy will likely achieve the DOE goal of $2/watt and utility scale cost of $1/watt.

(L.C.O.E. ~ 6.5¢/kWh)

Battery storage of a ~ 6 kWh system may be ~$1,200 in a decade, and the total installed 6 kW/6kWh

system cost could be < $15,000.

64

A proposed solution to align utilities company incentives with deployment of solar energy:

Offer customers roof-top electricity & in-home energy storage owned, installed and maintained by the utility company.

•  Home owners get low electricity rates and ~ 10 kWh of local storage (> 1 week of blackout resistance).

•  Distribution companies get indoor energy storage at the ends of their distribution network.

65  

Summer - Winter energy storage •  Transmission of solar energy from North Africa

and the Middle East may be possible, but energy security is an issue.

•  Chemical energy storage: e.g. use excess night time electricity to split water into H2 and O2 and combine with CO2 to form liquid hydrocarbons that can be shipped anywhere in the world

Earthrise  from  Apollo  8  (December  24,  1968)  

"We  came  all  this  way  to  explore  the  moon  and  the  most  important  thing  is  that  we  discovered  the  Earth.”  

Bill  Anders,    Apollo  8  Astronaut  66