Dana Blankenhorn

Cutting the String

Think of this as Volume 15, Number 1 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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This holiday season is why we need a War Against Oil, and why winning that war will still prove difficult.

With the stock market just starting to point toward better times ahead, the price of oil went past $90 per barrel, and the average price of a gallon of gas rose above $3 per gallon.

This is not supposed to happen at Christmas.

Prices rose not because of weather, and not because of costs, but simply because they could. The price of energy is set in two markets, New York and London, and no matter where the oil comes from it moves at that price. Some think we're looking at $5/gallon by 2012.

That price has nothing to do with costs.

A low cost supplier like Saudi Arabia makes an enormous profit at $90/barrel. Even $50/barrel production from deep under the Gulf of Mexico becomes profitable at today's prices. Despite all the talk there remain vast reserves of oil underground, which can be produced when the price is right.

The result is we've put our national security into the hands of Saudi Arabia. The whole point of the Iraq war was that their pools near Basra are similar to those the Sauds control, and once they're drilled they can be pulled up at a similar cost. Somehow the Bush people thought that controlling this pool would enhance our national security.

They were wrong.

How we cut the string is best understood by looking at the economics of oil and solar power.

Cerium breakthrough opens new path of progress

When I talk of solar energy having "Moore's Law" effects, you might think I'm describing greater efficiencies for polysilicon panels (they're made with the same process used to make semiconductor chips) or the math that multiplies production as new systems are installed alongside old ones.

But I'm really thinking of something else, the rapid breakthroughs possible from using the computer processing power Moore's Law has made some abundant, and the trained minds being produced in ever-greater quantities around the world.

That's what gives me hope for 2011 and beyond. Here's one example.

Cerium oxide is a fairly common substance in industry. It is used as a catalyst in self-cleaning ovens, it's used in ceramics, it can sensitive photosensitive glass, and it has even been considered as a component for sunscreens, since it absorbs ultraviolet light but is transparent to visible light.

A CalTech team with Swiss help built what they call a small solar reactor with it. Instead of producing hydrogen in a two-step process (make electricity, use that to split water), the reactor does it in one go. Light is focused through a quartz window into a chamber holding lined with porous cerium oxide, water and carbon dioxide are pumped in, and what comes out is water and carbon monoxide.

The prototype is ridiculously inefficient. What's exciting is how this mimics how plants work. It cuts out the electric middle-man, so it can be made very efficient. We're talking, potentially, orders of magnitude more efficient.

Making the Solar Crossover Argument Mainstream

For the last decade arguments for renewable energy have mainly been made by environmental groups like NC-WARN.

While their experts, like former Duke chancellor John Blackburn, have done important work  showing that the costs of renewable power and its alternatives are crossing, and will continue to cross, these reports are still subject to fisking by skeptics who claim their views on climate change color their research.

Economic arguments have to scale in the real economy to become effective.

Because past solar facilities didn't scale to their needs utilities like Georgia Power are still going ahead with new, giant nuclear plants, and pushing through rate hikes based on them, arguing that regardless of costs such plants scale to meet demand, while renewables just don't.

The good news is these high-priced plants bring the point of cost crossover closer by raising utility rates where they have traditionally been low.

Dow plans high profile roll-out for CIGS solar shingles

Dow Chemical plans to bang the marketing drum hard for its solar shingles when they are introduced this coming year under the POWERHOUSE brand. 

What you see may be louder than what you get, meaning there will be opportunity here for you.

Consider that Dow's Midland, Michigan manufacturing facility for the new shingles is still being called a pilot by management. Then consider that, beneath the hype, there's not a lot really new here.

What Dow has done is wrap conventional CIGS panels from Global Solar Energy into a shingle line, an idea Global Solar itself introduced last summer, claiming the resulting shingles are “lightweight and can be applied directly to a roofing surface, requiring no mounting hardware, no roof penetrations, and creating no additional wind load.”

Some analysts are complaining about Dow's planned 10-year pay-out time and $6,000 cost, saying the “sweet spot” is a seven-year pay-out. That's quibbling.

Solar Miracles Happening Every Day

What critics of solar energy fail to realize is that its growth is being matched by technology that reduces its necessity.

A generation ago, when Steve Roberts launched his ride across America, even a “portable” PC like my Kaypro had to be plugged into the wall. Today you can get infinitely more computing power in an iPhone, and while thin film solar systems may offer just at trickle of charge, it can be enough.

All sorts of Moore's Law miracles are also accompanied by lower power requirements. Modern cellular systems ride on Digital Signal Processors (DSPs) that deliver more-and-more bandwidth with less-and-less power every year. In American cities we see this reflected best in WiFi, which is 10 times faster than it was a decade ago.

2011 Will Be Better

Think of this as Volume 14, Number 52 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Every year I use my last Clue to peer into the future and see what the next year may hold in store.

From here it holds almost nothing but good news. (Explore The World of Escher, from which this crystal ball was borrowed. Still under-estimated among the great 20th century artists.)

The economy has bottomed up, and it has been growing (albeit slowly) for six quarters. Employers have been squeezing employees for productivity, getting P/E ratios down toward a rational level, and looking around the corner for the next boom. When they see it they will start hiring again.

Recessions have causes. Since field computing ended the problem of "inventory recessions" in the early 1980s, recessions have been financial events. The leveraged buy-outs of the 1980s, the Internet stocks of the 1990s, and the housing bubble of the 2000s all created irrational exuberance that had to be unwound for growth to resume.

This last has been a harder fall than the others, and unless regulators around the world are watchful the next fall will be harder still, because financial interests control many governments including (it turned out) our own.

But that fall is now behind us. The markets have been recapitalized. What people are looking for is the Next Big Thing.

Are We Going To Become Dependent on the Arabs Again?

The biggest problem in scaling solar or wind energy is storage.

Lots of solutions have been proposed. Underground storage in the form of compressed gas. Flywheels. Batteries of all kinds have been talked about, but most don't scale.

There is an exception.

NaS batteries use liquid sulfer as their positive electrode and liquid sodium as their negative electrode, separated by a solid ceramic called beta-alumina. Electrons move through the beta alumina from sulfer to sodium or (if it's charging up) from sodium to sulfer.

The system is said to be 89% efficient,  meaning only 11% of the energy is lost in the form of heat. Because both parts of the battery are already liquid, it can store an enormous amount of energy in a relatively small space.

2010: Patterns Don't Age

Think of this as Volume 14, Number 51 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Each year at this time I look back, like most people, in order to go forward. I celebrate successes and rue failures. Then I go on.

In retrospect this should go down as my best year ever. The financial clouds around my family lifted. While millions of Americans slogged through rejection and unemployment, our family rode high. We were making a ton of money, and had come into an inheritance of happiness, highlighted by a long (and long delayed) trip to continental Europe.

But my life has always had a boom-bust cycle. When I learn something too well, whenever I thought I had solved life's puzzle, idiocy would come and bite me on the butt. Sometimes it was market idiocy, as in the Internet crash of 2000. Sometimes it was corporate idiocy, as when Newsbytes canned me in 1994 or NetGuide let me go while it crashed and burned in 1997.

Utilities will get it when Suppliers Collaborate

Utility companies are a lot like the Bells.

They know what they do, or think they do. Their customers give them “intravenous” permission to sell them electricity, in the parlance of Seth Godin's “Permission Marketing.” Their monopolies are all regulated, and they chafe under it.

While secretly harboring the desire to be competitive forces, they're secretly comfortable, like the chartered accountant who thought he wanted to be a lion tamer until he found out what lions looked like.

Because they are big, because they act as gatekeepers, it's easy to think that utilities will drive the renewable energy business. Some very smart people, like Jesse Berst, have re-arranged their careers around this assumption.

But history tells me they will be laggards, not leaders. They need to be handed big, scaled opportunities, with pre-marked standards, and a sense of urgency based on consumer demand and competition before they will move decisively.

Where Jesse Berst is wrong

It's foolish to expect Congress to get a Clue when it's so devoted to the Crazy.

Most people in the renewable energy market are figuring that out.

But there is something that they haven't yet figured out. Depending on utilities as change agents is a sucker's game.

I know that's true from my career covering the Bells. I've learned it's not that they want to be stupid. They just have so many layers of management, who are so necessarily risk-averse, that they can't move quickly. They may appear to do so, when huge opportunities are presented, and when their self-interest is at stake, but such speed is relative. You're still looking at a turtle.

I have told the story of Dennis Hayes many times now, and it's sad to see history repeat itself in the person of Jesse Berst (above). Back in the 1990s I (like many of my colleagues in the computer press) had a severe case of Berst envy. He ran ZDNet Anchordesk, with a 3 million name mailing list.

Then he seemed to disappear off the face of the Earth. Turned out he had gotten turned on by the smart grid and renewable energy, as I would be later. He now runs a news site and discussion forums on the topic, he consults and sits on boards, and these days when entrepreneurs have a choice between sitting in on him or Al Gore at an industry conference, they're going Berst.