Re: attn: William Mook - How is your company doing?

From: charliew2 (charliew_at_ev1.net)
Date: 01/06/05 

Date: Thu, 6 Jan 2005 12:09:44 -0600

"William Mook" <william.mook@mokindustries.com> wrote in message
news:1105020532.954117.238980@z14g2000cwz.googlegroups.com...
> As the cost of electricity from sunlight changes the best way to market
> it changes. This thinking can be compared to the best way to sell
> computing power as the cost of computing changes. These 'platform'
> changes occur with falling costs.
>
> I see three major channels developing as electricity prices fall.
> These are;
>
> 1. - The cost of equipment exceeds the value of the energy produced
> over the lifetime of the equipment's operation. At these prices, it
> makes more sense to sell the equipment rather than the energy the
> equipment produces. This limits us to niche markets. This is where
> solar energy is today.
>
> 2. - The cost of equipment is less than the value of the energy
> produced over the lifetime of the equipment's operation. At these
> prices, it makes sense to sell energy, not equipment. This is when
> solar energy will become mainstream. As the cost falls we move from
> home and site of use installations to centralized installations as the
> transmission costs are easily supported by sufficiently low solar
> generator costs.
>
> 3. - The cost of equipment is less than the value of the energy
> contained in fuel costs alone from conventionally generated energy
> equal to the energy produced over the life of the equipment. This is
> when it makes sense to make synthetic fuels from solar energy. As we
> drop below this cost we can make synthetic fuels from sunlight and sell
> them at a profit.

As you mention below, you are dealing with markets, where supply and demand
sets prices. Due to this, there are a couple of factors which will
influence the decision to use cheap solar electricity to produce synthetic
fuels:

* There is somewhat less than 100% conversion efficiency in turning sunlight
into something like hydrogen. The additional step of turning hydrogen back
into electricy ensures that the overall efficiency of electricity ->
hydrogen -> electricity results in a hydrogen fuel that produces
substantially less electricity that it took to make it. This inefficiency
must be made up by pricing hydrogen high enough to account for this
inefficiency.

* When you have solar electricity, and before you turn it into hydrogen,
there will be competing processes for that electricity. Anyone and everyone
who is attempting to maximize their profit will look at all of the various
uses and prices of electricity that they are dealing with, and they should
choose to use cheap electricity to offset the cost of the highest priced
fuel that they are using (I am including electricity as a fuel in this
case). This means that it is definitely not a foregone conclusion that
cheap solar electricity will be used to produce hydrogen, as that decision
will be determined by the user of the solar electricity. Any plans that
assume that cheap solar electricity will be used for hydrogen production had
better take this into account to avoid a lot of hydrogen infrastructure with
insufficient hydrogen to put into that infrastructure.

* Even under the circumstances where cheap solar electricity *is* used to
generate synthetic fuel, it is easily possible that a process will take
carbon and hydrogen and produce a hydrocarbon with it. If the source of the
carbon is atmospheric CO2, there will be no net increase in greenhouse gases
from burning such a fuel. Such synthetic fuel has *many* advantages over
hydrogen, which is exactly why there is such reluctance to switch from
hydrocarbon fuels to hydrogen in this time frame.

> This allows us to capture energy at times and places
> that allow efficient solar operation, and sell the resulting fuels we
> make with that energy anywhere that fuel is needed. London for
> example, might never be a good place to generate solar energy, but
> people in London can easily buy solar derived fuels made in the deserts
> on the world's energy exchanges.
>
> So, to answer your question directly. It makes more sense to sell
> synthetic fuels produced in large efficient centralized solar
> operations - fuels like hydrogen to utilities who efficiently operate
> fuel cells that convert that hydrogen to electricity, than to sell you
> panels that you then must pay someone to install and someone else to
> maintain, and that you must operate as best you can.
>
> Of course pricing is set by the market. So, you will always pay what
> the market will bear for your energy, regardless of the costs to me or
> anyone.
>
> Where will the profits show up? That's an important question. And who
> will pay in terms of their profits? That's another important question.
>
> Creating a new disruptive technology has the potential to attract
> negative attention of very poweful players. But, it also has the
> potential to attract positive attention - depending on where in the
> supply chain you position yourself and how you enter the market and the
> price points you maintain.
>
> We are working through all of this now, and very shortly you will see
> the results of our efforts.
>
>

(cut)

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