Before the natural gas tsunami came ashore of the U.S. energy sector in 2014/2015, it was little more than a rogue wave at sea. This is a story of its impacts on one energy technology while it was still barely discernible from the surrounding waves in which it lurked as it gained momentum and mass.
In 2008 through 2010 I worked with a small diversified “solar” company in Colorado as a Project Manager – “Jack of All Trades.” At the time, we focused on distributed solar thermal at the municipal and residential scales, while engineering a more versatile racking system than that on the market out of Europe.
We were using ingenuity as well as trial an error to combat limitations imposed by “one size fits all” applications, where the reality was, there were few “one sizes” in the residential or commercial markets to attach rooftop solar.
In the nascent U.S. solar thermal realm, we were cutting edge in a technology that was left to die in the late 1970s and early 1980s for reasons similar to President Carter’s PV panels being removed from The White House. Although we were able to shut off electric water heaters and natural gas boilers 90 per cent of the time, through the advanced collector designs and minor consumer habit modifications, a perfect storm of outside influences was about to arrive, effectively crushing this promising carbon dioxide reducing technology.
Years before residential solar mounted their attack on the “wires and poles” utilities, hollowly claiming PV could free consumers from the greed of corporate maleficence at legacy thermal generation companies, i.e., nuclear or coal, and to which they have now renewed their claims with the hype of Tesla batteries; solar thermal was already a proven distributed energy technology in Europe. The problem of thermal energy storage was already well understood and solved.
In efforts replicated in countries around the world experiencing energy scarcity and/or expensive fuels, reducing overall consumption is well understood to be the most cost effective means of increasing energy security. However, in the U.S., blessed with abundant resources and historically cheap fuel, I would argue we as a nation skipped over this recognition as the current energy revolution (‘evolution’ one might say) began to gain steam, and distributed solar thermal was ‘left out in the cold’, where it really excels.
Ultimately, distributed solar thermal did not come to be in the U.S., even though, in country after country I have traveled to since that time, there it is on rooftops around the world. To understand why, we have to back up to the perfect storm that occurred then, as it is telling, of a much larger tsunami underway currently.
First, in the wake of the global financial collapse, significant financial incentives were earmarked for solar electricity under the America Recovery & Reinvestment Act of 2009 – through PV installations, and the needed jobs they provided; supply chain and manufacturing investments, many of which failed; and research and development, which in hindsight was superseded when China’s vast economies of scale buried the global market in cheap PV modules.
Although solar thermal collectors can harness upwards of four times the available energy in sunlight in contrast to photovoltaic’s 20% efficiencies; qualifying for the same tax credits and incentives as PV required expensive testing on small run, continually improving designs. 1970s technology, long outdated, qualified, however, ours didn’t. Solar PV quickly saturated the available “rooftop real estate” of that market and time.
Second, the U.S. ‘conditioned space’ (everything inside a building) markets are dominated by forced air heating and cooling schemes, denoted by a familiar acronym HVAC. We could produce the heat, making it better for northern and colder climates, but merging hydronic (fluid systems) with air at the heat exchanger was inefficient and costly. Radiant in floor systems are luxuries in the U.S., not the norm. Retrofit and Balance of System (BoS) costs were prohibitive for the majority of U.S. homes and businesses, unlike what exists in European homes with radiators or district heating schemes.
Leading me to the third element of this perfect storm; natural gas and its plummeting costs as a result of the U.S. Shale Gas Boom.
By 2010, the effects of hydraulic fracturing and horizontal drilling were yet to be felt in a painful way across the competing energy technologies. And few in the energy sector recognized what we are learning today; natural gas’s impacts on the global energy markets are all-encompassing, like a tsunami coming ashore, not just a rogue wave to be experienced regionally at sea.
The Return on Investment (ROI) was substantially better than solar, even without credits or incentives that were made less readily available to our technology. Also, we were significantly reducing NG consumption for our large municipal customers across Colorado, shutting down their boilers even.
However, the fall in NG prices was a “one, two punch” to solar thermal. The first, a body blow to the gut, hit the primary method solar thermal used to attack fossil fuel heating, reduction of fuel consumption itself. The second, a knockout blow, eroded the margins, which once existed when both natural gas and electricity were expensive [per U.S. standards].
Solar thermal’s integration to NG boiler systems carried lower capital cost, however in electric heating systems or domestic hot water (DHW) applications, the change-over of BoS equipment necessary to support solar thermal exceeded that for natural gas boilers. The semi-saturated NG local distribution company (LDC) network, in conjunction with low NG prices, facilitated the decision to go with NG over solar thermal if the customer was looking to get away from electricity.
The market conditions vanished for displacing natural gas consumption, and solar thermal was one of the first to see the effects of declining prices.
Although this may have been a perfect storm for solar thermal itself, it was only a sign of things to come, as natural gas has weathered every assault, planned or unplanned, against its continuous low costs in the U.S. Its impacts on coal-fired and nuclear power economics, are all the more ironic, in that arguably, natural gas “peakers” were built by the same generation companies to mitigate the poor economics of ramping up or down base load generators to meet peak demand.
And as I have written about elsewhere, countless times, shy temporary cold weather induced peaks, due to pipeline infrastructure and reconfiguring constraints in the U.S., the global natural gas market will continue to experience downward pressures on cost, making it a very viable option for developing and emerging economies.
What was also difficult in the U.S. market during those years, and continues to this day, was cracking the commercial markets and their expansive rooftop real estate.
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In my next article, I discuss some exciting news I came across today regarding “solar cracking the commercial markets.” It actually inspired this article based on the design aspects that jumped out of the accompanying picture at me. Must be the pocket protector wearing, geeky engineer I keep locked up inside me screaming to get out. He was a happy, well exercised nerd back in those days when this story took place.
* Countless articles and reports are the basis of my global energy perspectives, some of which can be found here. All perspectives are the property of the author. Posted originally on LinkedIn Pulse 30 Jul 2015.