Author: Rob Redfearn, TerraStar Energy

MBA in Marketing and Finance from University of Toronto (Rotman School of Business) 30 years experience in business development and general contracting.

Open Source Energy

In the 21st century, energy is a fundamental and universal need. It literally provides life and life-saving functions in healthcare and hygiene. It is a fundamental stepping stone to accessing information and advancing our civilization. Access to energy, like access to information should be a right, not a privilege awarded to a relative few. We can, today, provide this Open Source energy in a variety of ways and according to the principles of supply and demand, as more energy from new sources is harnessed, and supply is increased, the price of energy will decline and become more affordable to even the poorest people on Earth.

Looking ahead a decade or two, most energy produced will be “home-made”, whether it is the energy that moves your car, powers your lights and appliances or heats your house. It will be generated in panels on rooftops, collected from the heat of the sun and from the turning of wind turbines.

Another renewable source still yet to be tapped is energy created from the processing and destruction of regular household waste; kitchen scraps, yard waste, paper, plastic and even septic waste. Energy from these never ending “fuel” streams will be made literally at your home or at your neighborhood power station (see Benefits of Distributed vs. Centralized Power Generation).

Why generate energy from waste? Because it makes sense! It is environmentally friendly, cost-effective and already economically feasible with today’s technology. It makes no sense to bury these valuable resources in expensive landfills that are reaching their maximum capacities. When something does not make sense, it is going to eventually change.

Waste that can be converted into energy falls into 2 basic categories; “Soft and Wet Stuff” (“SWS” includes food scraps, grass clippings, fats and oils, septic waste, etc.) and “Hard and Dry Stuff” (“HDS” includes wood, paper, cardboard, plastic, etc.). Using naturally occurring bacteria in anaerobic digesters that eat the SWS to create biogas and using gasification to convert the HDS to syngas, provides a source of heat and fuel to generate electricity.

Anaerobic digestion (AD) has been used for centuries to make gas for heating and cooking. Gasification has been around for over a century. Obviously, the processes have been improved, but the science is basically the same. Technological advancements have increased the efficiencies and lowered the cost. Scaling these systems down to home size units is doable (in fact, our company is doing it).

Imagine throwing your trash into a modular unit that sits in your basement or backyard. In some cases, you might have to carry it down the street to the neighborhood system. The trash is sorted, ground up, and moved into the appropriate equipment. Not only does the trash go away, but the gas can be routed directly back into the home or to a generator to run your lights, or both. Excess heat from the generator is also captured and used.

The financial and environmental expense of collecting, transporting, sorting and burying the trash practically goes away. Your gas and power bills will plummet. Your home eventually might even disconnect from the grid entirely. You will no longer be at the mercy of the utility company’s billing cycle and potential power outages during storms. Decentralizing power production simultaneously reduces the threat to is production from criminals and terrorists. Open source energy is not a pipe dream. It is coming and it will change the world.

 

The Price of Energy is Due to Decline

Prices of solar panels are in a steep dive thanks to massive production rates in Asia. In the US, local installers of arrays that used to take 3 days to install can now complete the task in 4 hours. Tesla just announced its new home battery pack starting at $3500.

And sunshine is still free. Where does all this lead?

Inevitably it will lead to a massive supply of electrons created from sunlight that can be stored for later use. For all intents and purposes there will be an infinite supply of electrical power at costs that will continue to decline. Simple supply and demand curves will tell you that given a huge supply of virtually free electricity will cause the price of each kWh to approach zero, even as demand increases.

Today’s cost of sunshine power.

Consider today’s 5kW array with a battery big enough to store a few days power for a typical home. Currently that is about US$40k. Given a 20 year life span and a 5% interest rate the system cost is about $5000 per year ($2000 in depreciation and $3000 in debt service). That is $400 per month.

In my home, I average 3kW/hour and this system would be fine for me. So I would be paying the equivalent about US$.19/kWh (in fact I could probably use a smaller system, but let’s go with this!). This is not too much higher than the US$.12/kWh I currently pay my local utility.

What about in a few years?

Expect the installed cost on that same system to drop to $15,000 (think big screen TVs that used to cost $4000 that now cost $400) then the monthly cost of depreciation and debt service drops to $162.50/month (.07/kWh).  When the cost drops to $10,000 its just $110/month (.05/kWh)

This in itself will put a downward pressure on the market price of power (not just electricity, either, liquid fuels, NG, etc will all decline in value as electricity becomes a more viable substitute). Can you say “Paradigm Shift?”

Predictable changes in marketing strategy … just compare it to the information industry.

Let’s take it a step further and compare the energy market to the information market. Google has made a global fortune giving away information for free and monetizing the mechanism by which it is done. Imagine the same for energy. Companies will be happy to install a whole system on your home in return for learning more about your spending habits and daily routines. Smart appliances and other household equipment that relay information to your energy provider, which in turn will parlay that into a revenue stream by selling your information to all the other companies that want to sell you everything from food, to entertainment…. Because now you will have that $400 per month you used to spend on energy back in your pocket to spend elsewhere. Basically, energy will be Open Source

The part that makes this REALLY big and completely unavoidable?  Not everyone in the world needs Google … but every single person needs energy! It is just a matter of time before all 6 billion of us will have more reliable power, supplied essentially for free, in return for spending those dollars on goods and services, other than fossil fuels.

100 years from now people will look back on the fossil fuel industry the same way we look at fossils today; An industry dinosaur.

Waste-to-Energy Power Plants: Empowering New Global Entrepreneurs

 

“Utilities see a big opportunity in distributed energy resources, but are unsure of the best business models (by which to benefit)”quote from Industry Survey of Electric Utility Executives (FEB.2015)

The solution appears, to us, to be pretty obvious. Even the big utility companies agree that distributed energy production is going to usurp the centralized production model that has prevailed for the last century. It just makes sense to produce power closer to the customer and closer to the fuel sources. It also makes sense to have lots of smaller power plants than several large ones because it’s a safer, more reliable and more secure system overall.

Our proposed strategy to make this a win/win scenario is to have hundreds and eventually thousands of power plants; each individually owned and operated, either grid tied or stand-alone. To do this, means to have a standardized model of a power plant that can be built modularly and quickly at a cost driven down by economies of scale. These modules can be built in factories wherever the labor/capital/quality ratio is optimal. The modules can be built in perfect conditions in a plant and shipped to wherever they are needed and deployed with confidence to feed power to those who need it. It is a mass market approach to energy generation that we are convinced is the best solution to a multitude of problems.

TerraStar Energy has modules (gasifiers, anaerobic digesters, pyrolysis, biomass boilers) that readily convert waste to energy. That is; each module can work independently or in a “gang” or array that can be scaled up easily to meet the capacity requirements of a site or community. Converting waste to energy at a local level will extend the useful lives of landfills, reduce the amount of waste deposited onto fields, from where it can infiltrate rivers and lakes, and minimize (and even reverse) the amount of carbon entering the atmosphere.

Local power plants can be run like so many small businesses. Each employs local builders to construct the site and local staff to operate and maintain it once it is operational. Each uses local waste that is generated nearby and is hauled by local companies to the power plant. Jobs therefore are created when and where they are needed and are directly proportional to the volumes of waste that are being produced.

TerraStar Energy envisions a world full of well-paid owners and operators of power plants, each feeding the existing grid at wholesale rates that are individually market based. Operators will sell the power they produce at a wholesale rate that the utility companies can distribute and sell at a respectable retail rate.

Modular and scalable electricity generation combined with superior interconnection technology is going to enable a whole new class of business people into the energy market that never could have entered it before.

It is certainly the way of the future …. A way in which all stakeholders will win.

A new paradigm: The End of Centralized Energy Generation

In general, things that don’t make sense don’t continue to do so. They either have to change or die away. It is an extension of Darwinism. In today’s world, centralized generation of energy is making less and less sense than it did a hundred years ago. It is predictably and poetically going to go the way of the dinosaurs from which it gets its fossil fuels.

At the turn of the last century, large coal powered electric plants with their economies of scale made sense. No one then conceived that the power grid would ever be as expansive as it is now. Electron production has been inherently costly, especially if you factor in the environmental costs, which were not even accounted for until the last few decades. Converting coal (or natural gas or radioactivity) to electricity is a poor business model; believe it or not, it takes 700 pounds of coal to generate the power to run a single 100watt light bulb for a year!

The average US home consumes a pile of coal 7 times the size of the actual house every single year, just for the electricity it consumes.

Pushing electricity through power lines more than a few miles results in drastic transmission losses. The costs to mine the fuels from the ground, and erect the transmission lines (at over $1million per mile) compound the problematic costs. Overall, it’s a business model that makes no sense. We are just used to it and simply pay the monthly bill to our providers.

To make matters worse, as we have witnessed, a small terrorist action can easily cripple substations across the country, causing massive and nearly irreparable damage. Our legendary power grid may represent just a few percent of the national GDP, but losing it could cause us a 100% loss in GDP in a matter of days or weeks. A large solar flare or Electro-Magnetic Pulse (EMP) from the atmospheric detonation of a nuclear weapon would likewise cause the system to shut down instantaneously. We are precariously close to something along the lines of the zombie apocalypse.

The alternative is to generate power closer to the fuel source and/or closer to the customer and, ideally, to do both at the same time.

Distributed energy generation means to have many more, but much smaller, power plants located closer together. These may feed into the national grid, but make more sense to be isolated micro-grids or even single customer providers. As such, the users will be virtually immune to catastrophic shut-downs.

Solar, wind and biomass can all be harnessed on a micro level, and they are all essentially free after the capital costs are incurred. The capital costs of a typical thermo-electric plant is about $3000 per kW of capacity. Our alternative methods of doing the same thing are now within spitting distance of matching and even beating these costs. In fact, converting waste into energy, although not nearly as sexy as the others, has the added benefit of eliminating waste that would otherwise be buried, with its own high monetary and environmental cost. Methane and CO2 escaping into the air from waste dumps will last for hundreds of years, the environmental effects compounding exponentially.

The costs of generating power locally, even at your own backdoor have plummeted over the last 10 years. More and better ways of producing electrons, syngas, biogas and liquid fuels will continue to drive down the costs, someday making electricity itself almost free.

The Leap Frog Advantage: Emerging economies in nations with little or no investment in infrastructure; power plants, transmission lines, distribution lines, substations, transformers, repair crews, etc. will leapfrog into this new energy model the same way they jumped into cell phones. It took just 5 years for almost everyone in South Africa to have a cell phone from the day the first towers were erected. They skipped the high costs of installing phone lines across the country and into each home. Be prepared for a change the balance of power in our current economic model. These emerging nations already blessed with abundant cheap labor will now have cheap energy to go with it.

The turn of the 21st century is not unlike the turn of the last century in the USA. Many fortunes will be made and many more will be lost. Just ask the ghosts of the guys who made horse drawn carriages, buggy whips and oil lanterns. Evolve and adapt or perish.