California Zero Net Energy Program: Part 2

By tchenwa | Published: September 23, 2016 – 4:38 pm

The California Zero Net Energy program discussed in the previous post will have a significant impact on new construction. The average residential electric power usage in the State of California is 6,741 kWh per year (U.S. Energy Information Administration) or 18.5 kWh per day on average. Presumably a residential home will generate electric power using a PV (solar) system. The average PV system is rated at 5 kWh (approximately 400 SFT of solar panels). This would appear to be sufficient to offset any usage but depending upon PV module efficiency, which will vary with time of day and weather, the electric power produced will be significantly less than rated. The difference will have to be made up through energy efficiency and the shifting of usage from the time of day with peak loads (e.g. evening) to time of day with peak generation (e.g. mid-day). I would think that from an electric utility perspective, electricity available at 7pm to 10pm during peak usage will be worth a lot more than electricity available at 12:00 noon. Time of day rates may become the norm. TC

California Zero Net Energy Program

By tchenwa | Published: September 16, 2016 – 1:56 pm

I recently read an article about the California Zero Net Energy program whose stated goal is that all new residential construction in California will be zero net energy by 2020. All new commercial construction will be zero net energy by 2030. Zero Net Energy (ZNE) is defined to be that the building will produce as much energy as the building uses over a one year period. This goal will be achieved through a high level of energy efficiency and through the addition of clean, on-site renewable power generation, presumably solar PV. Wow … The implications are dramatic for both the home owner and the electric utilities that service the building. As we discussed in previous posts, the electric utility distribution networks have been designed over the last 100 years or so to be a one-way street. The regulated electric utilities built huge electric power generating plants that transmitted the electric power through a network of power transmission lines at ever decreasing voltage levels until the power arrives at the home at typically 120VAC or 240VAC. Balancing the power requirements for the service territory is the support base provided by the large electric power generation capability augmented with “standby” generators for peak loads. A fairly predictable power distribution model. What happens when a significant share of the end electric power user base becomes at times a power generator? Is the sun shinning in Los Angeles but Santa Barbara is overcast? (FYI Santa Barbara is northwest of LA along the Pacific coast). The source of the electric power generation becomes highly volatile and variable. More information can be found on the ZNE web site www.CaliforniaZNEhomes.com . TC

Free Electric Power

By tchenwa | Published: November 13, 2015 – 1:39 pm

The New York Times published an article recently on how TXU Energy (Dallas/ Fort Worth, Texas) is offering their customers free electricity during certain times of the day. A little background may be helpful. There are three electrical grids that cover the mainland United States, essentially East coast, West coast and Texas. Several years ago, the Texas electrical power market was split into generation, transmission and distribution. The intent was to encourage competition at the generation level and distribution level where the electric power is used. According to the article, the abundance of wind electric power generation has resulted in a surplus of power in the evening. The TXU strategy is to train their customers to shift their variable loads to the evening hours, hopefully reducing the peak energy loads during the day. The article interviews several residential customers who shift their washing machine and dish washer use to the evenings. All of this is made possible by the implementation of the industry term Smart Grid. Intelligent electric meters that can transmit and receive user level data make this time-of-day rate application possible. Is this the killer app that will help to justify the internet of everything? I wonder if this program is available to large industrial users? A night shift from 9:00pm to 5:00am might be very cost efficient. New York Times article: “A Texas Utility Offers a Nighttime Special: Free Electricity”, Clifford Krauss, Diana Cardwell. TC

Electric Power Generation Business Model – Part 1

By tchenwa | Published: June 3, 2015 – 8:21 am

In the 1990’s the trend was to break-up the electric utility monopolies into separate Generation, Transmission and Distribution businesses. The intent was to open up the electric power generation side of the business to more market oriented competition with the hope of lowering prices for electricity at the wholesale and retail level Two trends have evolved in the intervening years to disrupt this neat solution. • The increase domestic (USA) production of oil and natural gas plus other global factors has resulted in the significant reduction over the last year in the price of oil and natural gas. • The significant increase in solar panel electric power generation by consumers has shifted more power generation to the Distribution level. So why is the decrease in global oil and natural gas prices not a completely good thing for everyone? Certainly, those customers that are highly dependent upon electricity generated by oil and natural gas fired generators should benefit. Customers in my family home of Hawaii where oil electric power generators predominate, should see significant savings. The issue is different in parts of the USA that are dependent upon nuclear power plants for the majority of their electric power generation base. The current merchant wholesale rates for electric power generated by nuclear power plants is at a level that makes some of these generators uneconomical. Representing a huge capital investment, requiring years to build, these plants cannot be easily or quickly be added to the power generation mix. Their importance as an electric power generator at stable and predictable rates cannot be over stated. In addition, this type of electric power generation is significantly cleaner if “greenhouse gas emissions” and global warming are a consideration. I recently read an article which discussed the application of a nuclear power plant operator to the utility regulatory agency for financial relief. Their argument is that electric power generation mix needs a source of stable generation at predictable rates to form the base. Coal fired plants have been historically provided the foundation of electric power generation, however, their undesirable environmental impact should see the reduction in usage over time. In general, oil and natural gas generators are very appropriate for time of day and peak load requirements. What is the appropriate mix? Each power generation option has favorable and unfavorable features. Just a few months ago when the price of oil was around US$100 per barrel, nuclear power plants look very good economically (ignoring radioactive fuel disposal). We read every day about coal as a fuel and the undesirable impact on the environment. Oil and natural gas have better environmental impact, but what if we include what it takes to get it out of the ground!? Thrown into the generation mix is the power generation at the Distribution level through solar cell installations. Disruptive environment for both the power generation businesses and their governmental regulators. TC

Globalization and Free Trade Agreements

By tchenwa | Published: March 19, 2015 – 9:32 am

I recently read an article in the Wall Street Journal that analyzed capital investments by multi-national car manufacturers in North America. These multi-billion dollar investments in car manufacturing facilities both completed and planned covered the period from 2005 through 2020. The time line of investments completed and planned during this period shows four (4) in the American Southeast and seven (7) in Mexico. The author’s thesis is that a significant reason that these companies have decided to make these huge investments in Mexico rather than the American Southeast is because of the greater number of Free Trade Agreements that Mexico has negotiated with other countries representing large current and future markets. Certainly, the USA and Canada currently represent a significant market for manufacturing facilities in Mexico. The NAFTA trade agreement has been a significant factor in this trade relationship. Even so, I would assume that the differences in labor costs / component material costs are not sufficient to justify the significant investments in local infrastructure, local suppliers and local work force training over many years. I think that we are seeing a shift in strategic planning by these companies (Audi, Nissan, Mercedes-Benz, and BMW). The Mexican Free Trade Agreements with the European countries, South American countries and those in the Far East will offer in the future a competitive pricing edge that cannot be matched by products manufactured in America’s Southeastern facilities. The current reluctance by some in the US Congress to accept Free Trade Agreements seems like an exercise in futility. As the saying goes – “That horse has already left the gate!”. From a moral perspective, we should congratulate Mexico for its far sighted thinking since Free Trade Agreements work both ways. They have opened themselves to trade coming in the other direction. I have read that the NAFTA Agreement has caused significant harm to Mexican small farmers since the American farmers are enormously productive. So what do I take away from this discussion? Globalization is no longer defined by how we address a market confined to a specific country, but how to efficiently serve many markets (which happen to be divided by political country boundaries). The WSJ article is “Trade Pacts Give Mexico An Edge” by Dudley Althaus and William Boston (March 18, 2015). TC

Solar Arrays as Distributed Power Generators

By tchenwa | Published: February 19, 2015 – 2:56 pm

I have noticed several trends in the electric power market which I find very intriguing. The first is the development of distributed power generation. I am not referring to the growth of the large merchant power generators, but the growth of the individual residential power generators. My sister and brother-in-law live in Hawaii. They installed a solar cell array on their home. The solar cell array generates surplus electric power during the day, resulting in negative metering during the day. During the evening and at night the house draws power from the Hawaii Electric power distribution grid. The arrangement with Hawaii Electric is that the electric power that is distributed into the Hawaii Electric grid is applied as a credit up to the amount drawn from the grid during the periods that the solar cell array is not generating electric power. Assuming that the solar cell array has been sized to generate excess electric power over and above the peak daytime power requirements, Hawaii Electric is receiving essentially “free” electric power during the solar power generating period. I would guess that the kilowatt hour rate for electric power from Hawaii Electric is among the highest in the nation. The return on investment for the residential installation is probably very attractive. This arrangement leads to some interesting questions regarding the future of electric power distribution by electric utilities. Since Hawaii has minimal heavy industry (the exception being the various military bases), the peak requirements for electric power would be typically in the early morning and evening/ night when residential usage peaks. Does this match the distributed power generators anticipated contribution to the grid? Should electric power storage be added to residential distributed generation sites minimizing the electric power draw from the grid, does it make sense to charge the electric power billing method to a basic “connection to the grid” fee plus usage per kilo watt hour rate? How does Hawaii Electric manage the large numbers of distributed electric power generator sites adding power to their distribution grid (low voltage) versus the transmission grid (high voltage) designed for this purpose? TC

Electric Energy Monitoring:

By tchenwa | Published: November 20, 2012 – 2:40 pm

Our business has experienced a dramatic increase in requirements for the precision electric power measurement sensors used to measure electric power at the household and small commercial level. These sensors are incorporated into energy monitoring systems designed specifically for these markets. The energy monitoring systems typically consist of a local data gathering module, a communication link via the internet to transmit the electric power measurement data and an online display of the electric power data through a personal web page. I imagine that the advantage to the typical homeowner is the identification of phantom power loads, vampire power drains and seriously defective equipment. These would appear to be one-time investigations unless the home is in a location with extreme energy rates (e.g. Hawaii, Alaska …), the owner is a “data freak”, the owner is a serious “green” advocate and/ or the local electric power distribution utility offers “time of day” pricing. Time of day pricing is congestion pricing. A higher KWH rate is charged when demand is high. Lower rates are in effect when the demand is low (typically the middle of the night). After the initial investigations and remedial actions, a monthly savings on the order of a low double digit percentage would seem reasonable due to the owners increased consciousness of electric power use. If the home owner has access to “time of day” priced electric power service, then significantly higher savings can be realized through judicious programming of the electric power usage to take advantage of the lower rate periods. On the other hand, small commercial establishments with monthly electric bills in the thousands of dollars, a low double digit monthly savings can quickly become serious money. If the system offers “control functions” (the ability to send a command back to the local data gathering module and initiate turn on/ turn off function), then equipment adjustments could be made remotely through an internet enabled computer, tablet, smart phone. ABC News Report: Time of Day Pricing and Energy Monitoring Green Tech Today 16: Powerhouse Dynamics TC

Rapid Prototyping using 3-D Printers

By tchenwa | Published: November 9, 2012 – 11:14 am

I have read several articles recently on three dimensional printing. The concept is to “print” plastic or metal, layer by layer forming three dimensional objects. Each layer is approximately 20 to 30 microns (0.02 to 0.03mm) thick. Coordinated by a three dimensional computer automated design (CAD) software, the designed object is sliced into thin layers, each layer sequentially printed by the three dimension printer. Think of an inkjet printer, designed to continuously print on top of the previous layer, building up the object based upon a design concept captured in a software database. This new approach to the manufacture of fabricated products could change the concept of globalization. We believe that there is value to the ability to prototype quickly, try the product through market trials and make modifications on the fly based upon market feedback. Once the local market trial is completed, the volume production can be performed in the most cost effective manufacturing source/ location. The concept permits multiple versions of the same basic product, tuned to meet the requirements of each “local” market. In other words, the antithesis of “one size fits all” or “Any color as long as it is black – Henry Ford.” WETA Workshop … How to make Hobbit stuff TC

Mathematics of Globalization

By tchenwa | Published: September 5, 2010 – 10:40 pm

I recently read an article in The New York Times – “Exchange Rate Hurts Toyota, giving Rivals a Chance to Leapfrog It” (September3, 2010). The gist of the article is that because of the strengthening Yen against the US Dollar and the fact that Toyota imports 35% of the autos it sells in the US, their products are less competitive and they are losing market share. The article goes on to quote a Toyota spokesperson in Tokyo … “Our goal is to produce cars where they’re sold … the idea is to try to make as many cars locally to increase local content. That just makes business sense.”

The change in thinking is extraordinary.

Tim Chen

A More Complete Globalization Analysis

By tchenwa | Published: June 10, 2010 – 9:50 pm

Any discussion of globalization tends to be sharply focused on the lost of traditional manufacturing jobs. The conversation begins with the fact that this manufacturing facility closed and the production was moved to “you name the low wage country“. I read an article which quoted an analysis performed by the Personal Computing Industry Center at the University of California, Irvine. The center estimated that for the Apple iPod, thought manufactured in China, that the Chinese labor content represents 2% of the wages involved in the design and manufacture of the product. Whereas the American labor content represents 70% of the wages (engineering, software and distribution). The implication is that if the total picture is analyzed, the labor that is being performed in “you name the low wage country” are the lower skilled value add labor and what is be retained in America is the higher skilled value add labor.

Of course the ratio depends upon the type of product. Highly technical electronic products would have a more favorable American labor content. Products with less technology, such as furniture, would probably have a distribution that not as skewed, thought the furniture designer and all of the support labor to market, sell and distribute would be significant.

The true issue with globalization is that the value add labor in America requires a skilled work force. Americans have benefited significantly from the higher standard of living that has resulted from globalization. We should focus on the real issue, how do we train the next generation of workers so that they have the opportunity to participate in a global economy.

Tim C
tim@tichenassociates.com