Taking South Carolina’s Manufacturers to the Next Level
Being part of the energy market, it is also our responsibility to keep up to speed on the market dynamics, politics, etc. This past week we’ve spent not less than three days at the South Carolina State House listening in on the public hearings concerning Bill 5118 regarding the energy market in the state. The public hearing was so well attended that not one but two overflow rooms to receive everyone interested in the future of South Carolina’s energy supply. 76 people signed up to make their voice heard and, approximately 300 were listening to what everyone had to say!
Three utility CEOs addressed the public hearing. Dominion’s SC CEO Keller Kissam explained that SC needs 9 GW of electricity capacity, both baseload and dispatchable to handle the state’s growth, a statement supported by Duke’s Michael P. Callahan and Santee Cooper’s CEO Jimmy Staton. The three began the public hearing by stating that a natural gas Giga project is the only option that makes sense.
Is it?
There were a lot of concerns from many stakeholders. One can say that there were three main categories of stakeholders besides the utility companies:
- Legal
- Environmental
- Solar
1. Legal
This group is concerned about the fact that the bill gives almost “almighty power to the utility companies”. The biggest concern is the lack of transparency from the utility companies, they wouldn’t have to declare the cost for the Giga plant(s), how much land they need, where the pipelines are intended to go if there are any environmental damages, for which they wouldn’t be liable and all legal battles would go straight to the supreme court. Just about all lawyers are seriously concerned about the transfer of power, from the different authorities that currently protect the citizens, to the utilities.
The only arguments given were that South Carolina has such an energy deficiency that the investment in giga-scale gas-fired electricity has to be rushed and that, historically, large infrastructure projects have been beset by legal problems and court battles.
To minimize obstruction and delays (which normally is a protection for misappropriation,), the bill proposes to dismantle the South Carolina Office of Regulatory Staff (ORS), which represents the public interests of the state in utility regulation, oversees such concerns, including financial, rights of way, etc. The numerous questions about the proposal were left unanswered and we will most likely see battles regarding this moving forward.
- Environmental – Why do we need a huge Giga plant?
There were predominantly two arguments brought to the table, one was “Why do the utility companies have to build a giga-plant where it used to be a coal plant?” The County is still cleaning up after it and the second was the fact that natural gas is a fossil fuel-derived gas and as such, it’s not clean, its combustion emitting Greenhouse Gases. The previous coal plant has over decades negatively affected the community and they asked, “Why should we pay with our health one more time? Haven’t we paid enough? Can’t somebody at least share the load?”
Building a pipeline (without environmental or financial considerations for the landowners) will have a negative environmental impact.
- Using the sun
Several non-profit organizations were promoting solar energy. There were predominantly three arguments from the Representatives supporting the Bill, one was that solar isn’t baseload, the second was that it’s not clean, and, the third was the amount of land needed.
The land needed is mostly because of tax construction. Science in both the US and Europe has shown that by farming under the panels (agrivoltaics), the farmer can improve the yields, so they can make more money farming and, at the same time make money from the electricity. This way the solar wouldn’t take up any space at all.
We are not saying that solar is the only way forward but, it has a place in the mix. There’s still some development needed when it comes to recycling batteries and panels. It’s not in such a rush that some want us to believe, Europe has panels that are 30 years old and still working. Sure they are not as effective as new ones but they are still effective.
What does the industry think about the future of energy supply?
If you listen to experts, they are pretty much all in line that nuclear power is needed for an unforeseeable future, the uranium mining is dirty but the generation plants represent one of the cleanest energy sources we have. We will need to invest in the storage of waste and efficiency, although the new generations of nuclear facilities use up to 99% of the fuel rods, the old ones only 10%…
Dow’s Seadrift, Texas location selected for X-energy advanced SMR nuclear project to deliver safe, reliable, zero carbon emissions power and steam production. This won’t happen tomorrow but, 15-20 years down the line, modular nuclear will most likely be a reality.
Jim Vinosky, with a background in manufacturing, has helped companies such as Ralston-Purina and General Mills make products ranging from food to plastics and paints to bourbon and Dr. Lars Schernikau had a discussion about the energy transition the world is struggling with. Listening to Dr. Schernikau some things stand out, one is the energy density – coal, oil, and gas have a higher density – and today we have problems fully replacing them. Natural gas has become a political tool for governments that aren’t the US, or Europe’s allies. Germany decided to close the nuclear plants and go all in on renewable, solar, and wind, and to begin with Russian natural gas as an energy transition fuel. It turned out to be a very expensive strategy, today Germany has the highest energy prices in Europe. As Andrew Carnegie, the Scottish-American industrialist who made his fortune in the steel industry expressed, don’t “put all eggs in one basket!”
Feedstock future
Feedstock has almost a life of its own since it’s very politically driven, we just don’t know when Russia (or any other country) is going to launch a full-scale war that affects world markets, or when OPEC thinks that somebody has offended them and decides to reduce their production to increase the price.
The tables below are quite descriptive.
Natural gas plays an important role in the global energy system as an input to power generation, heating, and industry. The graph below shows the uncertainties for natural gas markets in the coming decades. The model-based research as well as an up-to-date survey of natural gas resource availability. The different colors are prices on different markets, with one common thing, they follow each other.
Centralized versus Distributed power generation
In the world of electricity, we have two main ways of generating power: centralized and distributed. Each approach has its advantages and disadvantages, making them suitable for different situations.
Centralized generation:
Large-scale power plants: These facilities, typically coal, gas, nuclear, or large hydro dams, are located away from population centers and generate enormous amounts of electricity.
Transmission lines: The generated electricity travels over long distances through high-voltage transmission lines to reach consumers.
Claimed advantages:
Economies of scale: Building and operating a single large plant can be cheaper per unit of electricity produced compared to many smaller ones.
Reliability: Large plants can be more reliable due to redundancy and backup systems, depending on the setup.
Disadvantages:
Transmission losses: Sending electricity over long distances leads to energy loss in the lines. The U.S. loses around 5% of its electricity annually during transmission and distribution (T&D) according to the U.S. Energy Information Administration.
Environmental impact: Fossil fuel plants contribute to air and water pollution, hydro facilities contribute to relocation and loss of habitat, and nuclear plants raise concerns about waste disposal.
Vulnerability: A single point of failure, like a breakdown at the plant or damage to transmission lines, can affect a large number of consumers.
Distributed energy generation
Advantages
Not so vulnerable since there are plenty of plants
Less sensitive
Lower local environmental impact, depending on the technology used
Lower transmission losses
Can be located at the point of load demand, reducing additional investments in T&D, also reducing the need for additional rights of way.
Disadvantages
More expensive if we don’t turn to
Manufacturing modularized power plants
In Bill 5118, a 15% reduction in price was mentioned as the benefit of going big, and centralized. 15% price reduction from the first to the equipment that comes from the assembly line would be a shame. Already Henry Ford was able to reduce the price of the T-Ford (not considering inflation):
- 1908 (Initial price): $825 ($27,656.96 today)
- 1925 (Final price): $260 ($4,582.20 today)
In today’s value, Mr. Ford was able to reduce the price by approximately 700% through mass production.
The N+1 Philosophy to Reduce Cost and Increase Price Stability
Our co-founder Magnus had the pleasure of discussing paper mills this past Friday evening, and it was quite interesting. The mills make money by making paper, nothing surprising there but, to make paper they need to heat paper fiber, and the waste energy is used to make electricity in a combined heat and power plant (CHP). Then there are perhaps other manufacturers nearby who need the leftover steam, some plants also have black liquor as waste, which they sell, and in some cases, since the water used needs treatment which can support the local municipality.
All of this drives the cost of electricity downwards, making more feedstocks competitive with fossil fuels.
Using multiple feedstocks and energy sources
By using multiple feedstocks, it’s possible to minimize the effect of volatility when it comes to prices and
The grid
FERC took a step in the modernization of the nation’s transmission grid by streamlining the interconnection process for transmission providers, providing greater timing and cost certainty to interconnection customers, and preventing undue discrimination against new sources of power generation.
What do the manufacturers need?
To be able to manufacture, we need stable, accountable, and cheap energy. If this is available, then the industry will thrive, generate jobs, and drive our economy.
What does the society need?
A robust energy system is critical to the Nation’s economic, energy, and national security. Once again, the utility industry needs to look at various industries, and learn from them, and what they do good and bad. Relying on others when it comes to our energy needs is a risk to our National Security.
Conclusion
The conclusion is, that the industry needs a sound energy mix, and the utility industry needs to look at the IT industry and modularize, and distribute the power generation for increased resilience, stability, and security.
The industry has to meet the utility industry, so modularity, flexibility, and N+1 thinking can change our energy generation.
Today one of the major problems is that the industries don’t collaborate, everything is political from transition to using feedstock supply as a political tool.
Solving the Global challenges can’t be done without collaboration. Nobody has all the answers.
