Daily Archives: July 2, 2009

Latitude-specific solar cells

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Lynne Kiesling

How cool is this? Solar cells that can tune to the light angle and quality at different latitudes:

Quantasol has now created GaAs [gallium arsenide] solar cells that can be tuned to the prevailing light conditions of a particular place, to get the most out of the cells wherever they are.

To do that, the firm added indium gallium arsenide (InGaAs) to pores just a few nanometres across on the surface of their cells, called quantum wells. Like the GaAs that makes up the rest of the cell, they can absorb light to produce electric current. But they do so at very specific frequencies.

The pores can be tuned to absorb light at the frequencies that are most common in a particular place but aren’t absorbed well by GaAs. Over time this strategy should extract more energy than an off-the-shelf solar cell.

In fact, this cell has achieved the first real efficiency gains in 21 years. Gallium arsenide cells are more expensive than the traditional silicon-based solar cells, but if the efficiency differences are high enough, they could actually be cost effective:

HT: Slashdot

Plug-in hybrid vehicles and the New York electric power system

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Michael Giberson

The New York Independent System Operator – the folks the manage the electric power transmission system in the state – has released a report on the potential effects of plug-in hybrid vehicles (PHEV) on New York power systems  operations.  Given the very early stage of technology development – if there are any PHEV’s in the state now they are likely experimental research vehicles or hobbyist homebrews – a lot of the report comes down to saying “it depends on how things eventually work out.”

From the point of view of the power system, the most important issues concern how and where and when the vehicles recharge. As the report points out, consumer recharging choices will be significantly affected by retail rate designs. A flat rate means that consumers will not be dissuaded from adding to overall electric load at peak times, when the transmission system is congested and high-cost generation units must run to keep the system operating. Time-of-use rates or market-driven prices will encourage consumers to shift charging to off-peak periods.

The flat rate scenario will require additional investment in electric generation, transmission and distribution systems, while the more reasonable pricing systems may allow the power system to accomodate significant numbers of PHEV with little or no additional investment in supply-side capacity.

It should go without saying that smart grid systems (devices and commercial practices) could play a critical role in getting the most consumer value out of a PHEV.

The NYISO report draws from three much more detailed technology analyses, one by Oak Ridge National Laboratory, another by the Electric Power Research Institute  and the Natural Resources Defense Council, and the third by Pacific Northwest National Laboratory, and several other studies. Despite the tentative nature of the NYISO report, it provides a concise, readable introduction to the issues addressed at more length in the technical studies.  In addition, the NYISO report includes an extensive bibliography.

Not a bad place to start if you are interested in understanding these issues.

RELATED: EPRI and PJM conducted a “PHEV Summit” in January of this year, exploring these same issues.

Walmart supports employer health care to raise rivals’ costs

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Lynne Kiesling

I have to admit, I thought that this point was obvious. Clearly Walmart (accurately, I think) sees itself as well-positioned to leverage its size nationally to negotiate better health care arrangements than its competitors, so its newly-announced support of employer-based health care is a classic example of raising rivals’ costs.

Apparently, it’s not so obvious to everyone, as Megan McArdle pointed out:

I find it hard to believe that none of the liberal commentators breathlessly celebrating Wal-Mart’s “capitulation” on national health care have even entertained the most parsimonious explanation:  that Wal-Mart is in favor of this because it raises the barriers to entry in the retail market, and hammers Wal-Mart’s competition.  Yet somehow, this appears nowhere in any of the analysis. …

Regulation has a very high fixed cost for compliance; the larger the firm, the more dollars/employees over which to amortize the fixed cost.  Meanwhile, market leaders have disproportionate bargaining power, and tend to get better rates from suppliers than smaller competitors.  Finally, a high fixed cost means either that it’s harder to initially enter the market, or (if there are exemptions for the smallest firms) harder to grow.

Megan also recommends what I think should be universal required reading:

All of which is to say, Bootleggers and Baptists should be required reading in all schools.  When you find strange bedfellows in politics, don’t look for a surprising outbreak of spontaneous virtue:  looking for the hidden conspiracy.

Note: I don’t particularly care about what “breathless commentators” of various partisan stripes do or don’t claim politically; I do care about the economic content and substance of their analyses. Raising rivals’ costs and the political economy of leveraging regulation to do so is an important economic lesson.

UPDATE: I just got around to reading this morning’s Wall Street Journal, which has a lead editorial making the same point:

The employer-mandate endorsement falls into the same self-interest department. A boost in the minimum wage helps Wal-Mart because most of its workers already earn well over the wage floor, and it hurts smaller, less-profitable competitors that can’t afford to pay more. On health care, an employer mandate will also reduce the margins of their rivals. This is especially true for businesses of a slightly smaller size that cannot insure on the same scale or currently don’t reach the 55% of the 1.4 million Wal-Mart employees who are insured through the company. (Another 40% or so are covered by spouses or the likes of Medicaid.)

Technology and changing the business model in the electricity industry

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Lynne Kiesling

Germany’s utility Yellow Strom is a technology leader. They are leading in the introduction of digital technology in the interface between their wires network and the customer’s home; for example they are one of the first partners with Google to roll out Google’s Power Meter, and they are working on an application that will use data from the customer’s meter and enable customers to set up a Twitter stream for their home’s energy use (like the now-private Andy’s house that I discussed in October 2008).

In an earth2tech article today, Katie Fehrenbacher points out what’s been my drum beat here for a long time: digital (and ultimately transactive) technology transforms the set of possible end-use value propositions, thereby changing the possible range of differentiated retail products and services in the retail electricity industry. It also changes the business models of firms in the industry … if the firms don’t resist it and use political mechanisms to stifle it, and if regulatory inertia doesn’t stifle it.

Compare that type of innovation to what your average utility is doing — just keeping the lights on — and it’s like night and day. “There’s close to a revolution happening,” when it comes to bringing the Internet and energy consumption together, says Martin Vesper, Yello Strom’s executive director. Think about it: The emergence of broadband connections in our homes has changed the way people consume media, communicate with each other, buy goods and work. And the hope, which Yello Strom is betting on and which could do wonders for fighting climate change, is that broadband will also fundamentally change both our energy consumption habits and what it means to be a utility.

However, she then goes on to say that she’s not arguing for retail competition in the US:

While we’re not arguing for U.S. energy deregulation — various U.S. states have already failed miserably at that — it does create a more friendly market for leveraging consumer trends, like the emergence of home broadband connections. It also leads to companies taking bigger risks and being more innovative.

In this instance she is incorrect, and I believe those two positions are internally inconsistent, as the second quote I pulled from her article demonstrates. While many states claim to have retail competition, only Texas has truly rivalrous, meaningful competition for the business of residential consumers. Retail restructuring in other states has been hamstrung by phased-out retail rate caps, by default service contracts that constitute a substantial entry barrier in a market segment where customer acquisition costs are already high, and by other administrative and regulatory half-moves that leave the retail market uncertain and entry costly for the competing retail provider. Thus it is incorrect to say that various US states have failed at deregulation, because they actually have not had the political gumption to do it.

This article, and Germany’s Yellow Strom, illustrate the chicken-egg problem associated with innovation and regulation in the electricity industry. Retail competition is easier with smart meters at the interface between the regulated wires company and the customer premises. But it’s also true that innovation and entrepreneurship flourish, with benefits for both consumers and entrepreneurs, in rivalrous retail markets with low entry barriers. Which should come first?

Open-road electronic tolling also reduces emissions

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Lynne Kiesling

Today a post from Ben Casselman at the WSJ’s Environmental Capital highlights one of my favorite unintended benefits of open-road electronic tolling: by eliminating deceleration and acceleration to pay a cash toll, electronic tolling reduces emisssions, with one big caveat:

So does eliminating toll booths really cut down on emissions? The answer appears to be a qualified “yes.” A 1998 study in Orlando, Fla., found that installing an electronic toll collection system at the Holland East Toll Plaza there cut carbon monoxide emissions by 7.29% and hydrocarbon emissions by 7.19%. The reduction came even though the number of vehicles passing through the tolls during peak hours increased by 30%.

The downside: Nitrogen oxide emissions increased by 33.77%, apparently because cars were able to drive faster with the electronic tolls. (The Orlando road kept some cash lanes, so the impacts—positive and negative—would presumably be even greater in a totally cash-less system such as Dallas’.)

Casselman then draws what I think is the natural conclusion:

In theory, cashless tolls could pave the way for a more radical move: congestion pricing.

Yeah, bring it on!