Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

17 June 2008

Energy Policy: Good Batteries and How to Get Them


Introduction: What Good Batteries Can Do
Batteries for Transportation
Batteries for Clean Power
The National Battery Development Consortium
Conclusion
P.S. T. Boone Pickens Confirms Analysis

Introduction: What Good Batteries Can Do

Good batteries can change the world. They can dramatically lower the cost of driving in the near term. They can wean us from the Saudi oil tit. They can give us clean, renewable energy. They can bring us good manufacturing jobs and the good pay and pride that comes with them. They can make a huge dent in global warming while reducing air and solid-waste pollution.

In short, good batteries can remake the face of America and eventually the world. And they can do all this in twenty years or less.

That’s a heady prediction. But it’s not dreaming. Almost every bit of industrial technology to make this happen is ready now, off the shelf. We would have to produce it in larger quantities, but scaling up has never been a problem for American industry. The only missing ingredient is reliable light batteries, and they may be on the way. This essay describes why and how.

Batteries for Transportation

Like all technological-economic questions, our inquiry begins with numbers. We need only a single number: five miles per kilowatt-hour, or 5 mi/Kwh. That’s the electrical “mileage” that prototypes of GM’s Chevy Volt—a battery driven plug-in hybrid—have already achieved in testing.

If you want to know how much that number would save you in commuting to work, just do a little arithmetic. Multiply your cost of electricity per kilowatt-hour by your car’s mileage in miles per gallon. Then divide the result by the price you pay per gallon of gas, multiplied by the magic number, 5 miles per kilowatt-hour. The result is your savings ratio, i.e., the ratio of what you would pay per mile driving a Chevy Volt on electricity to what you now pay per mile for driving on gas. (To see a table with the Volt’s other specifications, click here.)

For example, my car gets about 20 miles per gallon, and I pay about 7 cents per kilowatt-hour for electricity and about $ 4 per gallon of gas. So my savings ratio is (.07 x 20)/(5 x 4) = .07. Commuting to work and back (or going to the store) with the Volt would cost me about 7% of what I now pay for gas. It would be like buying gas at 28 cents per gallon again.

The only real limitation is that I couldn’t go more than 40 miles per day on electricity alone. According to GM, more than half of us have commutes of less than 40 miles, round trip. The rest of us would have to burn some gas or ethanol in the hybrid Volt to make up the difference between 40 miles and our round-trip commute.

What stands between us and this transportation nirvana? Very little. The electric motors, bearings, and high-power solid-state electronics that the Volt requires are ready off the shelf. GM and its suppliers developed them for GM’s abortive EV-1 electric car years ago and have improved them since. If you need proof of their practical feasibility, take a look at Toyota’s Priuses as they whiz by you at 40 to 50 miles per gallon. The electrical parts of the power train and the control electronics are much the same for the Prius and the Volt. No magic is needed, and no new technology. It all exists now.

All we need is better batteries. The Prius’ batteries are not strong enough to make a commute on electricity alone. So GM is working with suppliers developing stronger batteries. Working prototypes exist but need to be made more reliable.

Even the battery development involves nothing fundamentally new. The Volt’s batteries will be bigger and stronger versions of the lithium-ion batteries that power your cellphone, laptop and iPod today. If you own one of these devices, you already have batteries like those that will power the Volt, only smaller.

We don’t need any new physics or fundamental new chemistry. All we need is reliable scale-up—a problem on which GM’s suppliers are working. It’s a matter of engineering, materials science, production technology, and maybe some clever tricks of metallurgy and chemistry. But it requires no new basic research.

To bet that this can’t be done, as Honda’s chairman appears to have done [subscription required], would be foolish. GM has promised the Volt by 2010, and we are so close.

So close are we that it makes sense to catalogue the numerous blessings that good batteries will bring. I’ve discussed them in a separate post. They include: (1) dramatically lowering the cost of commuting and light transport; (2) reducing our consumption of foreign oil by about half; (3) dramatically increasing the fuel and geographic flexibility of our transportation system, while retaining the convenience of individual vehicles; (4) reducing our carbon footprint—and global warming—as our electricity infrastructure makes the transition from fossil fuels to carbon-neutral sources; and (5) curbing hydrocarbon and particulate pollution in crowded cities as cars convert from gas and ethanol to pollution-free electricity.

But the blessings of good batteries do not end there. They go on and on.

Good batteries will provide a smooth and natural transition from our current expensive, dependent, polluting state to a better world. Market forces will drive the transition, without the need for government regulation. The vast price differential between gasoline (or ethanol!) and electricity will impel rapid consumer adoption of plug-in electric hybrids like the Volt, whose cost and price will decrease with increasing mass production.

The conversion will occur quickly and naturally as our national vehicle fleet turns over. We could be mostly converted in a mere five to ten years after introduction of a successful Volt or similar plug-in hybrid.

Immediate environmental benefits will be profound. Air pollution in cities will drop as city commuters buy nonpolluting plug-in hybrids like the Volt and drive them mostly on pollution-free electricity. Solid waste will benefit also. Today’s lead-acid batteries are hazardous waste because lead is a potent systemic and nerve toxin. But lithium is not. Not only is it the lightest metal in the periodic table. (Only hydrogen and helium are lighter elements, but they are gases at room temperature.) It is also nontoxic. It is ubiquitous in the Earth’s crust, and people regularly ingest it as an anti-depressant and anti-psychotic drug. So the transition to lithium-ion batteries will not only clean up our air, but our landfills, streams and aquifers as well.

Batteries for Clean Power

The biggest blessing of good batteries has nothing directly to do with cars. They are the missing link in massive exploitation of renewable energy. Once we have them, wind and solar power will become feasible and practical on a massive scale.

Have you ever driven through the Southwest, especially the eastern half of New Mexico and the western two-thirds of Texas? There is a vast area, bigger than New York and California combined, whose most prominent features are extremely low population density, lots of sun and lots of wind. An old, crude New Mexican joke tells the story: “Why is New Mexico always windy? Because Arizona blows and Texas sucks!”

Politicians and policymakers don’t pay this area much attention because there are next to no people there. Sagebrush doesn’t vote.

But that’s precisely the point. The area has empty land, sun and wind galore. And there are few people to complain that windmills or solar-power installations would spoil their view, as Senator Kennedy famously did in opposing a wind farm near Hyannisport.

Most politicians don’t even know this potential exists. Most come from and live in highly populated areas where sun and wind are evanescent. So when the coal companies scoff at wind and solar power, politicians’ personal experience seems to confirm the scoffing. They have no idea of the power and constancy of the Southwest’s sun and wind.

To get a small idea of the potential, drive east toward Amarillo from Tucumcari, New Mexico, on Interstate 40, near the New Mexico-Texas border. If you have sharp eyes, you will see a major wind farm called Caprock in the distance, on a high bluff to the south, on your right. There are eighty windmills, each over 200 feet tall and each capable of generating a megawatt of electrical power.

The Caprock windmills are so far away you can barely see their blades turning from the highway. There is not a human habitation near them for miles in any direction. Together, they constitute an 80 megawatt power plant, capable of serving 26,000 homes, which produces no greenhouse gases or pollution whatsoever and requires no fuel. There appears to be space on the same high bluff for five times as many, maybe more.

Lobbyists for the coal industry like to point out that wind and solar power together now provide only one percent of our power needs. But when you drive through the Southwest, it is easy to imagine increasing that fraction by 50 times, 100 times, or even more. There are literally thousands of square miles of sun and wind that haven’t been touched, with no one but cattle, sagebrush and the occasional obsolete oil well to complain of view-blocking infrastructure.

What stops us from using this unexploited natural resource? Three things.

First, there’s the corrupting power of the coal lobby, which makes exploiting it seem much harder than it really is. We’ve already got reliable windmills that work marvelously; our own General Electric is a world leader in producing and maintaining them. We’ve got solar cells that convert sunlight directly into electricity. They’re not as cheap or efficient as someday they might be, but they work, and they work right now. All we need to start the conversion is political will and maybe some tax or other economic incentives.

As the coal industry constantly reminds us, today the price of coal-produced power often can meet or beat the cost of renewable power. But the coal industry’s cost estimates neglect what economists call “external costs.” These are costs that burning coal imposes on all of us, but that don’t appear in the price of coal from the mine. They include things like acid rain, particulate-induced asthma and other respiratory diseases, mercury pollution of lakes, rivers and streams, mercury poisoning of tuna and other fish in our oceans, and greenhouse gases that produce global warming and threaten to destroy life on Earth as we know it. When you add in those costs, wind and solar beat coal hands down.

A second potential problem is that much of the Southwest’s sunny, windy, mostly empty land is privately owned. The solutions to that are simple: privately negotiated leasing or eminent domain. The Caprock Wind Farm near Tucumcari, for example, is on private land. If a landowner insists on unreasonable terms, the government can condemn the land needed for solar and wind plants and the transmission lines to serve them. The cost would be reasonable: we’re talking about empty rangeland, not downtown San Francisco or Manhattan. And landowners have little reason to complain about nontoxic, nonpolluting technology too far from habitation even to affect views.

But there is one remaining technical problem. The sun doesn’t shine at night, and the wind doesn’t blow all the time. So a rational plan for solar and wind power requires some way to store power for later use.

That’s where good batteries come in. If one nontoxic, nonpolluting lithium-ion battery pack can power a car for daily commuting, another can supply the electric-power needs of the average household, which are more modest. For a reasonable capital cost—perhaps advanced by local power companies—every household could have its own battery pack, separate from any in a Volt or other plug-in hybrid. Sun and wind power from the Southwest (or sources closer to the house) could charge the batteries whenever they are low.

This method of powering households would have another advantage: when bad weather or natural disasters strike, battery-powered households could be entirely self-sufficient for the few days it would take crews to restore the power lines. No longer would homes have to suffer without power for days after storms and disasters. No longer would power companies have to pay massive claims for food spoiled in stalled refrigerators.

If this picture sounds utopian, think again. Except for the batteries, every element needed to bring it to reality exists right now, as you read this post. As the following table shows, global wind power production is undergoing an explosion, limited only by production capacity:


Global Wind Power Production by Year (Gigawatts)

1990       2

2005      59

2008     100


If our national wind and solar power together increased at the same rate as global wind power alone did from 1990 to this year, they would produce half of our total current power needs in eighteen years. If conservation efforts kept our total demand from increasing in the interim, then nuclear, hydroelectric and geothermal power could supply most of the rest of our needs, leaving only about five percent of demand to be supplied by burning coal.

That’s eighteen years to nearly complete carbon neutrality, at a rate of growth that the world has actually sustained for wind power alone over the past two decades. That growth rate is not projection or speculation, but historical fact.

If plug-in hybrids like the Volt convert most of our vehicle fleet to electrical “fuel,” demand for electricity will increase, and conservation will not likely make up the difference. But the basic point remains valid. Wind power, let alone solar power, is in its infancy. It hasn’t yet even begun to reach the steep part of the exponential growth curve. We have enormous untapped resources of wind and sun in our Southwest, our plains states, and in parts of our Midwest and South. We haven’t even begun to exploit them seriously, and the only thing keeping us from doing so is the lack of good batteries.

In ramping up, wind and solar both have substantial advantages over coal. No one wants the horrendous pollution of a coal-fired power plant, or the heavy rail transport that coal requires, in his backyard. Therefore siting coal power plants encounters enormous political resistance. The environmental impact statements and permitting processes take years or decades.

Not so for wind and solar. They are non-polluting and nontoxic. They require no massive increase in freight traffic to bring fuel in. In unpopulated rangeland, there is no one and no reason to resist their establishment.

Other practical advantages of wind and solar power are equally important. Wind and solar installations can be built to any size and can be widely distributed. Their economics of scale do not require massive generating plants like those needed for coal. So the ramp-up for wind and solar can proceed in small increments. For example, a single 1 megawatt windmill might supply the power for a small town of 300 or so homes in a windy area, making the town completely self-sufficient. And of course wind and solar have a substantial long-term cost advantage over coal when coal’s huge external costs of pollution and global warming are considered.

Except for batteries, the industrial infrastructure to make all this happen is in place already. Our own General Electric is one of five leading firms serving the wind power market, and all of them are huge, multinational manufacturers. We and the Germans (who lead the world in production) are also making solar cells. Modern high-power solid-state electronics now allow us to convert power back and forth, at low cost and high efficiency, between the direct current that batteries store and the alternating current that we use in our homes. Because they are solid state and have no moving parts, these components last for decades without servicing or failure. We have a good national power transmission grid, which, after the fiascos of a few years ago, now appears to be well controlled, flexible and reliable. All we would need to do is to ramp up production of windmills and solar cells, install them, and build some new power-transmission spurs in the Southwest and plains states, where the sun and wind are. The only essential missing component is good batteries.

The National Battery Development Consortium

With so much promise and so much at stake in their development, you would think policy makers would pay more attention to batteries. But I’ve seen, heard or read nary a peep from either presidential candidate on the subject.

What can government do? Plenty. Right now, battery development depends on a few small, private companies that are GM’s putative suppliers. These companies’ (and their investors’!) foresight and risk-taking so far deserve commensurate rewards. But it is implausible to think that they now employ all the nation’s best minds for the job.

What we need is a national crash project, similar to the Manhattan Project that developed atomic weapons from a standing start, in six years, during World War II. Our current zeitgeist would not permit a top-down, military-controlled institution like the Manhattan Project. It would have to be a cooperative venture between government and the private sector. Here’s how one might work.

The government would set up an independent quasi-public corporation, similar to the Postal Service or Amtrak. Its mission would be developing lightweight, practical, reliable storage batteries for transportation and private power storage as quickly as possible. We might call it the “National Battery Development Consortium,” or “NBDC.”

NBDC would not make or sell anything or own any technology; it would leave those functions to the private firms, universities and nonprofit research centers that were its members. It would develop and test prototypes (its own and others’), promulgate safety and performance standards, and serve as an information and licensing center for the results of research and development.

NBDC’s main function would be to fund and encourage basic and applied research relevant to its mission and to license the results of that research to industry. Initially it would receive generous funding from the U.S. Treasury, with which it would make research grants to universities, nonprofit research firms, and private industry. It would also hold conferences and create a central database of relevant technology and research results.

Like government grants in science and technology today, NBDC’s would be awarded and administered strictly on their technical merits. The National Science Foundation or the Defense Advanced Research Projects Agency (DARPA) might review grant applications and administer grants. Special restrictions would help avoid political and corrupt influence.

Grants would require recipients to license the results of their research and development to NBDC, and NBDC could in turn license them to others. Voluntary negotiation or, in an impasse, an expert panel set up by NBDC would determine the royalty rate. To encourage private investment, NBDC could grant exclusive rights for a limited period (say, five or seven years) to firms that made extraordinary breakthroughs, as determined by the expert panel, or to the first firm to develop and manufacture a commercially successful battery pack. NBDC also might retain the right to approve licenses to firms outside the Consortium, so as to optimize commercial incentives and keep the technology initially within the United States.

Existing firms in the field, like those now working with GM, would be encouraged to license their existing technology to NDBC on the same basis. Nothing would compel them to do so, but they would be fools not to. Unless they were only two inches from the finish line, other members of the Consortium might get there first, and their technology and investment might become worthless. There would thus be strong economic incentives, but no compulsion, for everyone to join the Consortium.

An arrangement like this would have four advantages. First and most important, it would identify the best minds in the country to work on the battery problem and engage them with adequate, few-strings-attached funding for their research effort. Second, it would provide strong incentives—but no compulsion—for universities, nonprofit research firms and private industry to cooperate in research and development, and it would set up a central database and information clearing house to aid their cooperation. Third, its promise of time-limited exclusive licenses for winners in the research race would maintain incentives for private investment and effort. Grant recipients would be encouraged to get patents for their technology, which would help restrict its use to the Consortium and perhaps to U.S. firms for manufacturing in the U.S. only.

Finally, successful development would generate huge royalties for NDBC. The Consortium might eventually recover taxpayers’ investment in it and even return money to the Treasury. At the least, royalties ought to make NDBC fiscally self-sufficient and self-sustaining after the first reliable battery pack is sold commercially.

Conclusion

The promise of good batteries is enormous. They can help us lower energy prices dramatically, curb our dependence on foreign oil, stop or retard global warming, clean up our environment, reduce smog in cities, provide consumers with the convenience of “charge at home” cars, realize the promise of wind and solar power soon, and reduce the consumer impact of power outages due to inclement weather and natural disasters.

With so much promise and so much at stake, it makes no sense to rely entirely on the efforts of the few small, private firms now engaged in the effort to make good batteries. We need a full-scale, national effort, like the Manhattan Project.

But a wartime, secret, government-controlled effort is inappropriate for out times. With an intelligently planned consortium, based on a public-private partnership, we can enlist the effort of our nation’s best minds from both the public and private sectors. We can provide economic incentives for private industry, including the firms now working in the field. And we can get the job done soon.

 P.S. T. Boone Pickens Confirms Analysis [added July 10, 2008]

It’s nice to have your analysis confirmed by a prominent businessman, and so soon after posting. According to the Chicago Tribune, T. Boone Pickens wants to raise $ 1 trillion in government and private investment in windmills over the next twenty years to cut our foreign oil addiction.

Pickens is a one-time petroleum geologist and oil wildcatter who became a public figure as a swashbuckling corporate raider. He’s also a close friend of Dubya’s. He hardly lacks experience in wind power. Mesa Petroleum, once his primary corporate vehicle, invested $ 2 billion in a Texas wind farm that runs 685 windmills and serves 300,000 homes.

The story’s author seems incredulous at the project’s cost ($ 1 trillion) but notes elsewhere that we spend $700 billion on foreign oil every year. What business person wouldn’t invest in a project that could recover its cost in less than two years? That’s a much shorter payback period than most oil projects, in part because you don’t have to prospect for wind.

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