Monday, January 19, 2015

Fracking may be Fracked

Of all the people I interface with regularly, very few of them are upset about the recent collapse in gasoline prices.  Most consumers are enjoying the, in some places, nearly 50% drop in fuel prices, and many business have now found a windfall of profits resulting from the sudden decrease in cost of energy (airlines for example).  At its simplest, this drop is because certain oiligarchies refused to cut oil production even when faced with weak demand, at which point supply and demand takes over and prices drop.  Consumers around the world rejoice!

But there is at least one group of people who are getting totally crushed by the fall in oil prices.  Spoiler alert.. its not the solar people.  In fact, its the opposite, its the fracking people.  Fracking shops large and small are packing it in as the economics of their existence literally changed overnight.  Chesapeake Energy, a $12b energy conglomerate, saw their stock fall 22% in 2014, mostly because of the oil price adjustments of the final quarter.  And its starting now to affect the downstream economic benefactors of fracking.  The deli down the street from the new fracking operation?  Its losing money.  The new apartment complex in the small fracking town?  People are leaving.  Things are not looking good for this once claimed "savior of domestic energy production" as it is getting a hard lesson in short term vs long term economics.  More on the downstream effects at this link here

The reason fracking is getting fracked is simple.  Fracking is a more expensive enhanced recovery technology than primary or secondary recovery still used by many oil rich areas in the world.  This more expensive approach makes plenty of sense (and money) when the global price of oil is high, but it makes no sense (and can lose vast sums of money depending on contractual and land lease arrangements) when the global price for oil is low.  The sliding scale economics of oil production are well discussed in the 2006 book Bottomless Well by Peter Huber who makes the prediction that humans will never "run out" of fossil fuels due to new recovery technologies becoming cost effective as the primary and secondary recovery production slows and oil prices rise.

But the problem with investing in new technology in the oil business is that access to the raw material, oil still in the ground, is not spread out equally for everyone.  It is in no way democratic, and it many ways is the opposite of democratic.  It is therefore inherently unstable, as the actions of a few can affect the business plans of the many.

Solar energy, on the other hand, has a raw material, sun hitting the ground, which is far more (but not perfectly) democratic.  When you own a house or land, it comes complete with free sunshine which you can use if you choose to do so.  This is not the case for potential oil under your property.  It therefore enjoys a far more stable long term outlook, which may be a very important but currently under appreciated competitive advantage.  Today, A business plan built on solar energy is very very stable and very predictable compared to other forms of energy.  This is one of the reasons why even with low cost oil, investment in clean technology and solar is still doing quite well, as discussed in this link here.

So solar supports around the world, do not fret!  The fact that fracking is eating its own tail and contributing to turmoil in oil markets is in the long term going to make solar energy look even brighter!

Friday, January 2, 2015

A 2015 goal: Get solar on the roof in the OC!

 Everyone involved with OCR hopes you had a fun end to your 2014 and are now ready to embrace the full potential of the new year.  2015 is likely to be very busy in the world of clean solar energy, with the market for solar generation hardware continuing to grow at ~20% a year and, for us here in Orange County, CA, a return of the DOE Solar Decathlon in October!

The start of the new year is also time to set goals for the upcoming years.  So with that in mind, I've decided to set my main (personal) solar goal for 2015: to design, procure and install my own home solar system and document all the steps, problems, learning and resources needed to do so.  I've searched online for similar step-by-step accounts of this process for a home in Orange County, and I have not found anything that I think does a great job of listing all the needed information, complexities, costs and resources needed to get the job done.  I decided the only way to really learn how to do this is to turn myself into the guinea pig and give it a shot. I will document my progress here on the OCR blog as I move through the steps, and then post a full "How To" document once the project is complete.

With the goal stated, I am happy to report I've already completed a version of "Step #1", which is to understand my usage, size the system and start the conversation with the city.

Step 1 - Understanding the need 

In 2014, a utility rep told me a great tag line, "Reduce before you produce", meaning the best use of money is to reduce your power usage before you take the steps to produce your own power with solar.  Last year I replaced every fixture in my home with LED lighting.  I used Cree (T60 I believe) dimmable sunk fixtures, at a cost of about $24/each.  The color temperature is great at about 2700k, so I recommend anyone to check them out.

After replacing the lighting, my electric bill was coming in at about $30/month ($360/yr).  This is low enough that going solar with a leasing company (like SolarCity) really doesn't make any sense.  But to do the project myself, and with creative sourcing on components, my hope was to reduce my bill to $0/month (with self generating credits) without a huge amount of money up front.  

So here are some draft usage numbers.  I use about 150 kWh / month (1800 kWh/yr), so with my south facing roof I am estimating roughly about 5 hrs / day of rated sunshine.  So, doing some back of the envelope math, 1800 / 365 = 4.93 kWh/ day / 5 hrs sunshine / day = 1,000 W of panel needed.  I know this is very rough, but for now its OK, I just want to understand about the magnitude of power I will need.  

Right now you can buy solar panels for about $1/W direct from vendors such as  But, I am going to try and source used panels for much less than this to see if I can do the entire project for $1000-$2000, or about $1-$2/W.  This way the payback would be 3 - 6 years, which I feel is a great deal.  

Step 2 - What does your city require

Every city in the OC will be different, but I started this by visiting the building permits office at the Huntington Beach City Hall.  There I got a copy of the step by step instructions for installing solar on a residential structure, and it starts by talking with the city's solar permit inspector.  Huntington Beach has a dedicated solar inspector.  The next step is to talk to the inspector about what is required to get the project approved before I start building.  I have a feeling I will need to know which panels, inverters, racking, ect I will be using before I submit the plans.  

Stay tuned for an update on my 2015 solar power saga as I make progress against this goal!