A Free-Market Energy Blog

Federal Energy Efficiency Mandates: DOE’s End Run vs. the Public Interest (Part II)

By Mark Krebs and Tom Tanton -- January 31, 2017

“Perhaps most important is the self-fulfilling prophesy: if renewables are made to look more attractive, they’ll increase in actual use. As they increase in use, according to the EERE Guidance document but not reality, they look more favorable. Rinse and repeat.”

“The net effect of the “guidance” is to artificially discriminate against one of America’s most abundant and cleanest energy forms, natural gas.”

“… we believe DOE should rescind this report and any applications of it within Federal policies and regulations.”

Part 2 identifies some of the more egregious technical flaws in EERE’s “Accounting Conventions for Non-Combustible Renewable Energy Use.” Part I yesterday discussed process deficiencies.

Despite the innocuous appearance of an RFI, what EERE ultimately did was to issue a “Technical Report” which, in fact, is more far-reaching than just “guidance” and would impact a multitude of state and federal programs. The intent is for all to begin using this new (and highly debatable) “captured energy” metric as a basis when comparing the direct use of fossil fuels with “averaged” Btu of electricity.

This “captured energy” metric further appears to assume that averaged Btu’s in each kWh will continue to decline in some forecasted fashion, primarily due to a widespread shift towards renewable form of electric generation; perhaps attributable to a full implementation of the soon deceased “Clean Power Plan” and greater reliance on renewables for electricity (if that term can be accurately used with unreliable sources.)

Perhaps most important is the self-fulfilling prophesy: if renewables are made to look more attractive, they’ll increase in actual use. As they increase in use, according to the EERE Guidance document but not reality, they look more favorable. Rinse and repeat.

Additional flaws in the technical report include ignoring the fact that differing end uses can use differing forms of energy and that there is a fundamental difference between dispatchable and non-dispatchable electricity generation. By ignoring these truths, the report ignores the capital and energy used in backup and balancing the grid owing to the increased use of non-dispatchable technologies. The report also ignores crucial life cycle analysis parameters such as the energy and materials environmental impact of “rare earth” demands in renewable energy technologies.

Energy Values Ignored

Not all BTUs are created equal. BTUs of electricity (measured in kWh) are said to be of higher energy quality than BTUs from say burning natural gas or (even lower) contained in a pot of hot water or some hot air. Similarly, each application needs different quality of energy. This makes BTUs from some energy sources useful and useable for some applications but not others. Simply speaking, using electricity to, say, defrost your car’s windshield is a waste of that form’s higher energy quality.

But you would not be able to charge your cell phone using the BTUs in a stream of hot air. EERE ignored energy quality and assumed all BTUs are created equal. This results in a non-effective and inefficient use—a waste—of higher valued energy forms resulting from the energy requirements used in production. It can take several BTUs of lower quality forms (like fuel) to produce a BTU of high quality forms (like electricity) and creates waste when higher-than-needed quality is used. EERE should focus on end-use requirements for energy quality and less on intermediate forms that are ethereal.

Backup and Balancing For Renewables

To ensure electricity generation (supply) equals demand on a second-by-second basis, balancing authorities, also known as “independent system operators” (ISOs), increase and reduce generation as needed, often using automated generation control (AGC).

When demand increases (or other supplies become unavailable), the ISO directs a generating facility operator to “ramp up” their generation. When demand drops, the ISO directs a “ramp down” in generation. Prior to the advent of wind generation, these ramp ups and ramp downs reflected daily life and followed a predictable schedule that prevented the need for saw-tooth ramping to balance the second-by-second variation in wind generation connected to the grid.

When wind speed increases (but remains below the maximum speed allowed by the turbines), generation companies curtail generation from their intermediate load units sufficient to accommodate the wind power. Intermediate load units are usually natural gas powered generators, but, as discussed below, must on occasion be slow-to-respond coal-fired units. When the wind subsequently slows, generation from the intermediate load units is increased or otherwise brought back online as needed.

The process by which generation is ramped up and down at a plant due to wind or any other factor is called cycling. Integrating erratic and unpredictable wind resources with established generation resources requires the electricity generators to cycle their intermediate load coal and natural gas-fired units. This wind-energy-caused cycling results in significantly less efficient performance of fossil fuel facilities. The net result is increased emissions and fuel use.

This is referred to as balancing and is distinct from the concept of backup for when the wind isn’t blowing. Both have been described by Kent Hawkins here at Master Resource. Neither have been included in EERE’s new ‘captured energy’ metric. Backup and balancing increase fuel consumption and emissions (and capital requirements) faster than the growth in renewables—in other words they look worse, not better, with increasing use.

International Strategic Considerations Have Changed

As a result of the 1970s energy crisis, in August 1977 President Carter signed the U.S. Department of Energy (DOE) Organization Act (Public Law 95-91), centralizing the responsibilities of the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power Commission and other energy-related government programs into a single presidential cabinet-level department.

The new Department was responsible for long-term, high-risk research and development of energy technology, federal power marketing, energy conservation, energy regulatory programs, a central energy data collection and analysis program, and nuclear weapons research, development and production. Today we’re are an energy exporting country, thanks largely to the technology of fracking. In the place of strategic concerns about energy are associated concerns about rare earths.

We’ve ‘traded’ the reliance on a cartel for reliance on a monopoly. Rare earths are used extensively in producing solar cells and wind turbines, and those two technologies are fundamentally dependent upon those materials. Thus, they are dependent upon the sources of those materials. Various estimates of the market dominance of Chinese producers of rare earths place the HHI, a measurement assessing supply risk, at more than 9,400.

Scores between 1,000 and 1,800 have been defined as benchmarks for moderate supply risk, scores above 1,800 are problematic, and scores below 1,000 are relaxed. In 2015, we imported over 75 percent of our rare earth consumption. They also require heavy, and often dirty, mining and energy to drive excavators and trucks and milling and refining.

The energy embedded in our rare earths and consequently in renewable energy equipment, compulsory precursors to renewables’ development, are missing from EERE’s guidance document. Pushing significant energy requirements to outside of the boundaries of analysis does not eliminate those energy requirements.

The net effect of the “guidance” is to artificially discriminate against one of America’s most abundant and cleanest energy forms, natural gas.

Considering the vast economic ramifications of EERE “guidance” can easily exceed over $100 million, this topic should not have taken the form of an Request for Information. Rather, it should have been issued as a Notice of Proposed Rulemaking (NOPR) if at all. Had it been issued as a NOPR, the affected stakeholders could at least appeal the “technical report” as a Final Rule under the Administrative Procedures Act.

Clearly, the elimination of natural gas direct use would have over $100 million in economic impacts. Accordingly, we believe DOE should rescind this report and any applications of it within Federal policies and regulations. If, after that, DOE wants to proceed legally and transparently, this subject can be revisited as a NOPR consistent with the President’s call for Regulatory freeze and review, and the President’s energy priorities. This should not be undertaken by a single Office within DOE.

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Mark Krebs, an engineer by training, has been involved with energy efficiency design and program evaluation for more than thirty years. He has served as an expert witness in dozens of energy-efficiency filings, which he summarized in a Public Utilities Fortnightly article, “It’s a War Out There: A Gas Man Questions Electric Efficiency”(December 1996).

Tom Tanton, Director with Energy and Environmental Legal Institute, has worked 40 years in energy and environmental policy, focused on enabling technology choice and economic development. Mr. Tanton has testified to numerous state Legislatures and Congress as an expert on energy policy. He formerly served as Principal Policy Advisor at the California Energy Commission.

11 Comments


  1. Jon Boone  

    Another important article from Tom Tanton, one that should be distributed widely. NREL and EERE from the get go have represented little but promotional ersatz on behalf of energy schemes that are themselves shell operations on behalf of income production via tax sheltering for large corporations with a lot of taxable income to shelter. By exposing yet another bit of unscience–a nimble Orwellian gambit cloaked in meaningless terms like “guidance” and “energy capture,” the authors here demonstrate that the Department of Energy continues its work of separating rate and tax payers from the content of their wallets while delivering energy dysfunction.

    The Department of Energy deserves little but contempt. It should have been eliminated years ago.

    Reply

  2. Jim Moore  

    Great overview of the RFI issue. Next step is to unwind it, challenge it, file a complaint…do something. Otherwise, the bureaucracy will grind forward and declare it settled science. Another factor they have ignored is the large investment in transmission required to get renewable resources to where the load is. Most large renewable resources are nowhere near the load and require millions if not billions to safely integrate into the grid. Direct use of natural gas is at the load.

    Reply

  3. Federal Energy Efficiency Mandates: DOE's End Run vs. the Public Interest (Part I) - Master Resource  

    […] guidance that is discriminatory and lacks basis. Today we cover procedural deficiencies; Part 2 tomorrow will cover technical […]

    Reply

  4. gordon berry  

    I quote Jon Boone: “Department of Energy continues its work of separating rate and tax payers from the content of their wallets while delivering energy dysfunction.
    The Department of Energy deserves little but contempt. It should have been eliminated years ago.”

    These are two generalized statements that have absolutely no basis in fact. The hard working scientists (of all political stripes) who work for and with the Department of Energy deserve incredible praise for all the scientific and technological advances during the past 50 years (at least). It is Boone and the writers of this article who deserve only contempt. Their ignorance of the progress we have made in understanding the efficient human use of energy resources is stupifying.

    Reply

    • rbradley  

      In defense of Jon Boone, he is focused on 1) the civilian side of DOE and 2) the argument that government R&D and science misallocates scarce resources.

      The same talent would be doing other things without the ‘false crisis’ of energy (it is running out, etc.). The labs are so politicized toward politically correct, economically incorrect energies that they should be axed out completely for private funding or none at all.

      Free government resources for the private sector to put science and engineering to better use.

      Reply

  5. Mark Krebs  

    Mr Berry:

    I take it you are a scientist (probably a physicist). If so, I ask you: Do you think there is legitimate science behind the “captured energy” metric?

    From my perspective, in order for “captured energy” to work, you would need an electron filter so only the green ones could pass through. I am unaware of any such device. Perhaps you are?

    Reply

  6. Jon Boone  

    It’s always a pleasure engaging the prejudices of folks like Gordon Berry. No one involved with this article, including me and my brief commentary about it, are “ignorant” of the “progress the [scientific community] has made in understanding the efficient human use of energy resources.” However, from its origins out from the Manhattan Project and continuing in bits and pieces during the 1940s through the 1970s, where its progenitors touched on a range of issues from nuclear bomb testing to gasoline shortages and flirtations with “energy independence” (what a howler this continues to be); to its guise as the Energy Research and Development Administration and the Nuclear Regulatory Commission in 1974; to, in 1977, its modern incarnation as the Department of Energy under President Jimmy Carter, with James Schlesinger as the agency’s first Secretary–DOE has been steeped in politics much more than it has been energized by legitimate scientific inquiry. In my considered view, the real value of the Department has been its work with nuclear energy, which has over the last 35 years withered away to near virtual reality. That no new nuclear power stations have been constructed in the US since DOE’s inception should be instructive. Readers should also be reminded that it was Carter who stopped work on nuclear fuel reprocessing research.

    Jimmy Carter’s politicalization of the agency was evident from the beginning, with the Solar Energy Research Institute begun in March, 1977 and, in Carter’s political swan song in 1980, the creation of a number of remarkably silly initiatives: U.S. Synthetic Fuels Corporation Act, Biomass Energy and Alcohol Fuels Act, Renewable Energy Resources Act, Solar Energy and Energy Conservation Act and Solar Energy and Energy Conservation Bank Act, Geothermal Energy Act, and Ocean Thermal Energy Conversion Act.

    Given the physics behind converting energy from these sources into modern power, and limitations of scale imposed by both the physics and economics, the DOE engaged (and continues to engage) in unscience at breathtaking levels.

    Spun out of the Solar Energy Research Institute, the National Renewable Energy Lab was given corporeal existence in 1991. Currently, NREL is managed for the DOE by the Alliance for Sustainable Energy, LLC. In the last few years, NREL has become inexorably links to Climate Change folderol. NREL’s areas of research and development expertise are renewable electricity, renewable fuels, integrated energy systems, and strategic energy analysis. Virtually all of this “work” is in service to epistemic nonsense, though it has a kind of high church appeal to those who know nothing about energy density, power density, and the true costs of deploying this cant onto a modern world.

    Concurrently, DEA’s questionable accounting methods, most recently documented in this article, ratcheted up. Particularly as they relate to the output of renewables, they cherry pick what data to incorporate and what information to elide. I haven’t read one NREL paper on wind, for example, that could pass scrutiny in the real world.

    The United States and the scientific community would be improved without the DOE today as it exists today. Although there are some functional units with the agency, these could rather easily be tucked into other agencies with no loss of value. Moreover, scientific inquiry as it relates to building machines that convert high energy to modern power should not require the assistance and imprimatur of a federal agency to make its way in the world.

    Reply

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