Category Archives: Renewable Energy Sources

Electric Cars, Geothermal, Lowering Electric Rates, Peak Oil, Renewable Energy Sources

Levelizing Electricity Bills Throughout the State

Last week I was approached by some people whose vision is to levelize the cost of electricity so that residents statewide pay a rate similar to, or less than, what O‘ahu residents pay.

On O‘ahu, they pay around 26 cents per kilowatt hour (kwh) for electricity. Here on the Big Island, we pay about 36 cents/kwh.

These people see geothermal as the resource we have available that could take us largely off oil. And, unlike with oil, geothermal power costs are stable.

They explained that although the geothermal resource is on the Big Island, the largest number of customers are on O‘ahu. And that they would need to reach those O‘ahu customers in order to have enough people to pay for the cable and to lower the rates of Big Islanders.

With lower electric rates, they would hopefully attract a lot of folks to buy electric cars. This too would increase electricity sales, and help stabilize rates at a lower level.

They spoke about running a cable to Kaua‘i, as well, and powering Kaua‘i if the science permits. They know that’s probably a money loser. But they feel that it’s the right thing to do. How can we leave our brothers and sisters defenseless when oil price start to rise?

They asked me if I would join their group. For several years I’ve been working toward lower electricity rates for the rubbah slippah folks. And now, with Peak Oil right around the corner, it’s critical that we move quickly. I told them my intention is to join them after I spend some time evaluating things.

I like their general approach and there will be lots of details to fill in along the way. But it is certainly better for the rubbah slippah folks than the path we are heading down now.

This Pacific Business News blog post, by Sophie Cocke, says that the electric utilities recently reported lower sales due to cool weather.

HECO, ‘bad’ weather and decoupling

Pacific Business News – by Sophie Cocke

Date: Monday, November 1, 2010, 8:57pm HST

Hawaiian Electric Industries, the parent company of Hawaiian Electric Co. and American Savings Bank, released its third-quarter earnings this weekend showing a 12 percent decline in electricity sales compared to the same quarter last year.

The company’s year-to-date revenues, through September, show an even sharper decline of 17 percent, compared to last year.

…

Two months ago, the Hawaii Public Utilities Commission approved decoupling for the utility companies, severing the link between sales and profits — a matter that has been on the forefront of shareholders’ minds during the company’s last two investor calls.

Read more: HECO, ‘bad’ weather and decoupling | Pacific Business News

Yes, but I wonder if the lower sales could also be due to folks leaving the grid to protect themselves from rising oil prices. When that happens, everybody else ends up paying more, and then we will begin dividing ourselves into the haves and the have nots. For ourselves and for future generations, we do not want this to happen.

Decoupling might protect the shareholders, but it does not give HECO any reason to be concerned about customers’ costs. It just allows them to do things like encourage expensive biofuels instead of bringing more geothermal on line.

Geothermal, Government, Renewable Energy Sources

Abercrombie, Shatz and Leadership

As I write this, the first Election Day printouts are in and it looks like Neil Abercrombie and Brian Shatz have an insurmountable lead for the Governorship and Lieutenant Governorship of Hawai‘i.

We are truly at a crossroads in human history, and it is going to take real leadership to lead all of us to greener pastures. I have all the confidence in the world in Neil Abercrombie’s leadership abilities. He will take us there!

In terms of renewable energy, we must utilize our natural resources to their maximum potential. What we have here on the Big Island is truly extraordinary. While the rest of the world is fearful of a decline in available energy, we here in Hawai‘i have the most powerful energy source available to us. It is geothermal.

What if we could connect all the islands to this energy? What if we all shared, so everybody on every island pays the same low amount? What if this cost would hardly rise?

And what if this source of energy would last 500,000 to a million years? Wouldn’t we fix whatever it is that’s holding us back?

I feel good about Abercrombie and Shatz being elected, and confident that we will take the right path to the future.

For the sake of future generations: Not, no can. CAN!

Biofuel, Geothermal, Renewable Energy Sources

Why We Need Geothermal

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I just returned from Detroit, where I attended the NH3 conference.

NH3 is ammonia, and it’s “the only realistic energy solution that makes sense,” according to Matt Simmons of the National Petroleum Council, the Council on Foreign Relations and founder of the Ocean Energy Institute.

Guy Toyama, chair of the Hawaii County Energy Commission; Mitch Ewan, of the Hawaii Natural Energy Institute at UH Manoa; Roald Marth, venture capitalist, and I were the others from Hawai‘i who attended. Guy gave a talk and pretty much convinced them to hold next year’s conference on the Big Island.

What I learned:

• NH3 is more practical than H2, because there are three Hs in its molecule, rather than two. Therefore, it’s a third more energy dense when transporting. And it can be moved around through the propane infrastructure at relatively low temperature and pressure.

I am a farmer and I like things that are practical. NH3 is the practical person’s hydrogen. H2 is very impractical.

• With a little help, NH3 can be used to run internal combustion engines without much modification. The largest company in the world that converts engines for propane use is now working on commercially modifying engines so that they can use NH3. They focus on fleet vehicles, like BlueBird school buses, etc.

I like this company’s approach. They take care of everything so it is simple for the operator.

• Rather than using hydrocarbons to make NH3, as is done now, we can use electricity for hydrolysis to separate out the hydrogen and oxygen from plain water; then take “N” (nitrogen) from the air to make NH3. Cheap electricity from “off peak” geothermal power would make this cost-competitive as oil prices rise. Considering the recent Lloyd’s of London white paper telling its business clients to be prepared for $200/barrel oil by 2013, it is prudent to be self-reliant.

So the ingredients for NH3 are:

  • Geothermal for cheap electricity
  • Water for the hydrogen, and
  • Air for the nitrogen.

We have all that in abundant supply on the Big Island.

NH3 does not burn well by itself, so it can be used to stretch hydrocarbons to hedge our bets. This conference was interesting because folks reported on using oxygen to strengthen the flame. It just so happens that oxygen is produced, along with hydrogen, during the hydrolysis process.

If we do more geothermal, we can get cheap electricity for all us. And as the NH3 technology develops, we put ourselves and future generations in a position to win.

NH3 is simply ammonia and its safety issues are easily overcome. Catalytic converters can take care of greenhouse gases. Folks are working on making the combustion more efficient.

Guy Toyama said he believes we should be burning H2 in the engine and using NH3 as the H2 carrier. That’s why it it’s important to have an ammonia cracker, like Shaun Grannell was demonstrating outside. That engine was running on pure H2. The pipe on the outside stripped the NH3 to H2 + NO, NO2. Hydrogen flame speed is quicker, so you can more easily convert an Internal Combustion Engine to run on H2.

Cracker

This is a small engine with the H2 cracker wrapped in tin foil. It ran on straight ammonia.

It was amazing to see. I felt like I was witnessing a historical event.

As we all know, the folks on the lowest rungs of the economic ladder are the ones who will get their lights turned off first, and too often they will be Hawaiians. Geothermal can help to prevent this from happening.

In the uncertain future ahead, we need to take care of each other. Not, No Can. CAN!

Can you folks help us advocate for geothermal?

Geothermal, Renewable Energy Sources

What I Learned From the Asia Pacific Clean Energy Summit & Expo

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Some general impressions I got from the recent Asia Pacific
Clean Energy Summit and Expo:

  • Sofar, I get the impression that the new HECO transition team is made up of very competent people, and the utility is in good hands. I work with Dave Waller on the biofuel foundation and he is good at what he does and is a very considerate and professional person. I have only heard Scott Seu speak, but I was very impressed at his breadth of knowledge and how he
    handles himself. I sat next to Colton Ching at lunch and liked him immediately. He is a person with lots of work experience. Most impressive to me was his belief that this is about people, not only things. I asked him a lot of questions and I was not surprised when he told me Robbie Alm was his mentor. Of course. He and Scott are two-thirds of the clean energy team. Robert Young is another very impressive professional on HECO’s team. I would love to meet the rest of the team, and I’m sure they’re all very good at what they do. HECO is in good hands.
  • [Recently I wrote about having lost confidence in HECO and
    the path it has taken. The new HECO people are good at what they do and they will do a good job for the people of O‘ahu. It is the Board of Directors that has a fiduciary duty to stock holders, which sometimes conflicts with the interests of rate payers. So it is the Board of Directors we are at issue with — not the other folks. It isn’t personal. I think we could work it out if we sat down and talked story.]
  • Ted Peck and his gang put on an excellent conference. I was very impressed.
  • The Department of Energy, Department of Agriculture, the Navy and the Department of Defense have many, many projects going on. I was surprised at how many. The military approaches things in a very systematic and professional manner. They know what they are doing.
  • Senator Fred Hemmings spoke about mini-nuclear stations for the future, and it sounded very reasonable. He said there have been 18 nuclear reactors on O‘ahu, on ships and submarines, for many years. It was safe and all that was needed was to disburse the units where you wanted. Maybe bury it in the ground for safety. It sounded reasonable, especially for O‘ahu, where an alternative base power to oil is not yet available.
  • An algae spokesperson spoke about the progress his company is making. He said that the third stage target for algae biodiesel would be priced at $3 per gallon. And the second stage algae biodiesel would be priced at $2 per gallon. I was impressed. Later, at the Expo, chatted with Kelly King of Pacific Biodiesel, who told me that she would pay $500 for the first gallon of algae biofuel that was actually produced. Hmmm.
  • Now that I have actually seen a hydrogen car, I would like to see a fleet of hydrogen fueling stations around the Big Island. It could be fueled by hydrogen made using electricity from cheap “off peak” geothermal energy. It would be much cheaper than the hydrogen made from petroleum on O‘ahu.
  • It reminded me that HELCO, led by Jay Ignacio, is also a top-flight company made up of first class, competent people. I was very impressed when we toured the command center and Lisa Danglemaier related how they want to get solar data; but instead of buying a very expensive system, they put one together from off-the-shelf materials. I am very impressed by this kind of ingenuity.
  • The Solar Guy grabbed me for a quick interview for the ‘Olelo Channel. It must have been interesting, because he would like for us to do a radio interview next.
  • But there are no magic bullets. I am more convinced than ever that we need to deliberately and systematically incorporate geothermal for the Big Island grid.
Big Island, Biofuel, Geothermal, Peak Oil, Renewable Energy Sources

‘Aloha, Aloha, Call When You Find Land!’

I stayed at the Ala Moana Hotel last week while attending the Asia Pacific Clean Energy Summit, which had 1400 participants and was huge and exciting.

One evening, as I sat on the lanai of my hotel room looking toward Waikiki and all the lit-up hotel rooms and bright lights and the headlights and tail lights of cars, it came to me: Everything visible was dependent on oil.

The only thing I could see that was good was that the Macy’s sign is cheaper to power than the Liberty House sign it replaced. Shorter sign.

Sitting out there on the lanai, it became clear to me that if we follow HECO’s plan for using biofuels to generate electricity for the Big Island, we will soon have limited food resources and will be making plans to send people out to discover new lands.

Back in 2007, I spoke at the Hawaii Island Food Summit:

I told them I had a nightmare that there would be a big meeting down by the pier one day, where they announce that food supplies were short because the oil supply was short and so we
would have to send thousands of people out to discover new land.

I was afraid that they would send all the people with white hair out on the boats to find new land—all the Grandmas and Grandpas and me, though maybe not June.

Grandmas and Grandpas hobbled onto the boats with their canes and their wheelchairs, clutching all their medicines, and everybody gave all of us flower leis, and everyone was saying,
“Aloha, Aloha, call us when you find land! Aloha!”

If, instead, we on the Big Island follow our own plan of maximizing
our geothermal resource, and start to add others such as wind, solar and ocean resources as they scale up; and if we emphasize lots of small- to medium-sized diversified farms, we will not need to send out the canoes to look for new land.

The Big Island could help solve O‘ahu’s food and fuel issues, too, so it wouldn’t be necessary for them to send their white-haired folks off, either.

The Asia Pacific Clean Energy Summit was exciting and I’ve spent all week trying to put all the goings-on into perspective. O‘ahu has a real serious electricity problem. It has no proven-technology base power alternative to fossil fuels. And it has limited opportunity to integrate solar and wind.

I can absolutely see why HECO was anxious to institute Smart Grid. It was an attempt to wring every bit of efficiency out of intermittent sources of power.

I can also see why HECO made the decision that biofuels would have to be a solution for O‘ahu. The biorefinery is located on O‘ahu. I can even understand why they changed their minds and decided to bring on more PV solar. THEY do need everything!

What I just cannot understand is why HECO tried to force the Big Island to go that route.

We on the Big Island need a different strategy – one that focuses on the Big Island’s resources and environment.

Biofuel, Geothermal, Renewable Energy Sources

I Have Lost Confidence In HECO

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I am becoming more and more critical of the Hawaiian Electric Company’s (HECO’s) top-level decision makers, and of their policies. I am sad to say that I have lost confidence in their ability to lead us safely into the future.

A Wall Street Journal article last September noted that Spain – the world leader in solar technology – stopped its generous subsidy to support the solar industry. Basically, ratepayers could not bear the cost of the subsidy.

So I was not surprised recently to hear HECO say it could not accept any more solar. What I was surprised about was that they reversed their direction immediately. Did things change? No. It was a missed opportunity to educate the public about what is truly going on. They chose not to.

Recently, HECO was turned down regarding its attempt to initiate Smart Grid on O‘ahu, Maui and the Big Island. Smart Grid is a developing system, and there was no need to be the first in the world to implement this. At Hawai‘i’s size, it is much smarter to be best in the world at copying the most successful systems. You get a tested system that does not cost the ratepayers as much.

Several years ago, HECO chose the biofuel path, but it did not have a serious conversation about it with farmers. Farmers know that they will not grow anything for 7 cents per pound. They might switch from growing food to growing fuel for 35 cents per pound, but oil prices would have to be $400 per barrel before it would send that price signal.

And small farmers would not be able to grow biofuels on the kind of scale that HECO needs, anyway. More likely, it would be on the scale of redemption of cans and bottles.

When HECO brought the biofuel meeting to Maui, there was
discussion about ultimately importing palm oil from Indonesia. Many of the folks in the audience were distressed at what would happen to animal habitat, especially the orangutan. HECO replied that it would source “green” biofuel. 

We know that biofuels will be more expensive than fossil fuels. Will the rubbah slippah folks be able to afford it?  Can small businesses afford to pay the resultant higher electricity rates?

Is this the solution that will give a continuous, competitive advantage to the islands, relative to the rest of the world?

We should look at the resources available on each individual island before we decide what is best for that particular island. It is the cost of the fuel, not whether it is brown or “green,” that is important.

On the Big Island, we know it must be done right. Geothermal
for base power is: proven technology, a low-cost alternative, has the smallest footprint and gives off no greenhouse gases.

The Oil Age is only 150 years old, and already we are worrying about depletion. According to Jim Kauahikaua, Scientist-in-Charge at the Volcano National Park Observatory, though, the “hot spot” under the Big Island will last for half a million to a million more years.

What about HECO’s general renewable energy strategy? They
say they are for everything – wind, solar, geothermal, ocean thermal, biofuels, biomass, etc. But being “for everything” seems to be a way of not talking about any one thing. HECO does not put any effort into enabling geothermal, so we can only assume that they do not really want it.

On the other hand, they do really want biofuels. “Shameless”
comes to mind. I am not for geothermal exclusively. But I do think there should be a prioritization of the various resources based on many factors, such as: proven technology, relative competitiveness, scalability, net energy, social consequence, geographic appropriateness, etc. 

In other words, what will give us the best chance of surviving since we are living out here in the middle of the Pacific? “We are for everything” falls way short.

I think that the rubbah slippah folks intuitively have it figured out when they say: “One day, the boat not going come.” That is their shorthand way of saying: “One day, things will be too expensive, and the boat might as well not come.” In that scenario, we will be going back to the basics. The most important question one asks all day might be, “I wonder what color malo I going wear tomorrow?”

Two weeks ago, former Chancellor of UH Hilo Rose Tseng invited Bill Steiner, the Dean of the UH Hilo College of Tropical Agriculture and Forestry and myself to attend an REIS retreat put on by the UH Manoa College of Engineering.

I immediately noticed that the Big Island was not a focus and that geothermal was not on the radar. But we were able to express the Big Island’s concerns, and we were welcomed to participate fully. This is very encouraging.

HECO sent many of its people to the retreat because many of
those people work as engineers, and many graduated from the UH College of Engineering. I found HECO’s new Director of Renewable Energy Planning, Dora Nakafuji, impressive because she is willing to discuss alternatives in an inclusive way.

The most recent issue of Hawaii Business magazine describes the restructuring of HECO. I hope the new folks will change HECO’s
corporate culture, and take the time to understand the needs of the rubbah slippah folks. We can take the right path to survival and accommodate everyone’s needs at the same time.

In an ideal reorganization, HECO gains the trust of the community, and because its plan is mutually beneficial we go down to support it at the PUC. Not, no can. CAN!

Geothermal, Peak Oil, Renewable Energy Sources, Sustainability, Video

Video: Climbing Up The Bamboo Pole

Richard Ha writes:

Awhile back I spoke to the UH Hilo Student Association Senate leaders about geothermal energy. I warned them that exponential growth fueled by a finite resource – oil – was a serious problem for us here on the Big Island.

Along the very same lines, Lloyds of London just warned its business clients to prepare or it could be catastrophic. I wrote about Lloyds of London's warning here.

I told the student leaders that we need to know what we are going to do before a catastrophe happens. "White water coming, we need to climb up the bamboo pole and lift up our legs." 

This video sums up everything I talk about on this blog.

Richard Ha Video 

Renewable Energy Sources

West Meets East, and BioTork

We are trying out some Korean Natural Farming methods at the farm. We are also using commercially available micro-organisms when we start from seed, and that has eliminated our dieback problems. It’s only an observation so far, not science. But it’s working.

I found this video interesting:

Bruggeman.jpg

It’s a video interview with Terrance J. Bruggeman, executive director of BioTork. He discusses BioTork’s natural solution to the BP oil spill clean-up, using variants of naturally occurring organisms. Watch the video here.

BioTork is an bio-engineering company focused on three things: waste-to-biodiesel, using microbes to control agricultural pests and oil remediation. What they are doing sounds like what Korean Natural Farming does – using micro-organisms, instead of chemicals, to produce food. If so, it’s a game changer.

Geothermal, Renewable Energy Sources

When The Lights Went Out

Things happen.

When the lights went out nearly island-wide a couple weeks ago, people who were in a position to know said that it was due to a recurring problem at Keahole. That’s the site of the big, new, HELCO-owned oil-fired generator.

These windmill pictures below show that all was not perfect in the early days of the windmill, either.

Like everything else, geothermal has also had some production glitches.

Jim Kauahikaua, Hawaii Volcano’s National Park-Scientist in charge, gave a presentation the other day at the Hawai‘i Volcanoes National Park’s “After Dark in the Park” program. It was about Hualalai, the third most active volcano on the Big Island.

Someone asked how long the Big Island would be over the hotspot and Jim said maybe 500,000 to a million years.

For the last 150 years, the world has been powering modern society using cheap oil. Within 20 years, the oil-exporting nations will no longer export. They will instead use the oil for their own people.

Last week, King Abdullah of Saudi Arabia, said they would cease operations in terms of exploring for oil. He wants to save it for future generations, and that sounds like a rational decision. It should not surprise us when other exporting nations do the same.

What should we do?

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Aquaponics, Peak Oil, Renewable Energy Sources

Lloyds of London says ‘Expect $200/Barrel Oil by 2013’

Lloyds of London just issued a  White Paper on Sustainable Energy Security. It is a paper addressed to businesses and it says everything I’ve been saying for the last couple of years.When I attended those two Peak Oil conferences, it was because I wanted to learn how to position my business for the future. And I did.

Here is a formal road map that other businesses can follow. Modify the information to allow for Hawaiian conditions.  

Strategic risks and opportunities for business
Executive summary
 
1. BUSINESSES WHICH PREPARE FOR AND TAKE ADVANTAGE OF THE NEW ENERGY REALITY WILL PROSPER – FAILURE TO DO SO COULD BE CATASTROPHIC
Energy security and climate change concerns are unleashing a wave of policy initiatives and investments around the world that will fundamentally alter the way that we manage and use energy. Companies which are able to plan for and take advantage of this new energy reality will increase both their resilience and competitiveness. Failure to do so could lead to expensive and potentially catastrophic consequences.

What if the EPA declares CO2 a dangerous gas? What is plan B? C?

 2. MARKET DYNAMICS AND ENVIRONMENTAL FACTORS MEAN BUSINESS CAN NO LONGER RELY ON LOW COST TRADITIONAL ENERGY SOURCES
Modern society has been built on the back of access to relatively cheap, combustible, carbon-based energy sources. Three factors render that model outdated: surging energy consumption in emerging economies, multiple constraints on conventional fuel production and international recognition that continuing to release carbon dioxide into the atmosphere will cause climate chaos.

This means that people will need to bite the bullet and accept the high cost of renewable fuels. But what if we have the opportunity for cheap renewable electricity? And what if this means that we can elevate the living standards of the host Hawaiian culture? Should we turn it down, or should we fight for it?

Geothermal is cheap and renewable and, compared to fossil fuels, bio fuels and bio mass alternatives, it is environmentally friendly. Of course we should fight for it!

3. CHINA AND GROWING ASIAN ECONOMIES WILL PLAY AN INCREASINGLY IMPORTANT ROLE IN GLOBAL ENERGY SECURITYChina and emerging Asian economies have already demonstrated their weight in the energy markets. Their importance in global energy security will grow. First, their economic development is the engine of demand growth for energy. Second, their production of coal and strategic supplies of oil and gas will be increasingly powerful factors affecting the international market. Third, their energy security policies are driving investment in clean energy technologies on an unprecedented scale.
 
China in particular is also a source country for some of the critical components in these technologies. Fourth, as ‘factories of the world’, the energy situation in Asian countries will impact on supply chains around the world.
 
4. WE ARE HEADING TOWARDS A GLOBAL OIL SUPPLY CRUNCH AND PRICE SPIKE
Energy markets will continue to be volatile as traditional mechanisms for balancing supply and price lose their power. International oil prices are likely to rise in the short to mid-term due to the costs of producing additional barrels from difficult environments, such as deep offshore fields and tar sands. An oil supply crunch in the medium term is likely to be due to a combination of insufficient investment in upstream oil and efficiency over the last two decades and rebounding demand following the global recession. This would create a price spike prompting drastic national measures to cut oil dependency.

With every year that goes by, the world’s oil fields are aging at the rate of 4 million barrels per day. Saudi Arabia produces only 10 million barrels per day. This means that every 2½ years we need to have found the equivalent of a Saudi Arabia. Are we doing this? NO! We have not found giant oil fields like Saudi Arabia since the 1970s. We have not found enough to make up the natural aging of oil fields.
 
It is estimated that we will only be able to produce half of the 4 million barrel decline. This means that in less than two years, once our extra capacity runs out, we will be short two million barrels per day.

Supply constraints will drive up the price of oil.

“A supply crunch appears likely around 2013…given recent price experience, a spike in excess of $200 per barrel is not infeasible.” Professor Paul Stevens, Chatham House.

5. ENERGY INFRASTRUCTURE WILL BECOME INCREASINGLY VULNERABLE AS A RESULT OF CLIMATE CHANGE AND OPERATIONS IN HARSHER ENVIRONMENTS

Much of the world’s energy infrastructure lies in areas that will be increasingly subject to severe weather events caused by climate change. On top of this, extraction is increasingly taking place in more severe environments such as the Arctic and ultra-deep water. For energy investors this means long-term planning based on a changing – rather than a stable climate. For energy users, it means greater likelihood of loss of power for industry and fuel supply disruptions.
 
6. LACK OF GLOBAL REGULATION ON CLIMATE CHANGE IS CREATING AN ENVIRONMENT OF UNCERTAINTY FOR BUSINESS, WHICH IS DAMAGING INVESTMENT PLANS
Without an international agreement on the way forward on climate change mitigation, energy transitions will take place at different rates in different regions. Those who succeed in implementing the most efficient, low-carbon, cost-effective energy systems are likely to influence others and export their skills and technology. However, the lack of binding policy commitments inhibits investor confidence. Governments will play a crucial role in setting policy and incentives that will create the right investment conditions, and businesses can encourage and work with governments to do this.
 
7. TO MANAGE INCREASING ENERGY COSTS AND CARBON EXPOSURE BUSINESSES MUST REDUCE FOSSIL FUEL CONSUMPTION
The introduction of carbon pricing and cap and trade schemes will make the unit costs of energy more expensive. The most cost-effective mitigation strategy is to reduce fossil fuel energy consumption. The carbon portfolio and exposure of companies and governments will also come under increasing scrutiny. Higher emissions standards are anticipated across many sectors with the potential for widespread carbon labelling. In many cases, an early capacity to calculate and reduce embedded carbon and life-cycle emissions in operations and products will increase competitiveness.
 
8. BUSINESS MUST ADDRESS ENERGY-RELATED RISKS TO SUPPLY CHAINS AND THE INCREASING VULNERABILITY OF ‘JUST-IN-TIME’ MODELS
Businesses must address the impact of energy and carbon constraints holistically, and throughout their supply chains. Tight profit margins on food products, for example, will make some current sources unprofitable as the price of fuel rises and local suppliers become more competitive. Retail industries will need to either re-evaluate the ‘just-in-time’ business model which assumes a ready supply of energy throughout the supply chain or increase the resilience of their logistics against supply disruptions and higher prices. Failure to do so will increase a business’s vulnerability to reputational damage and potential profit losses resulting from the inability to deliver products and services in the event of an energy crisis. 

We have changed our business model to give our customers the opportunity to shorten their supply chain. And we have included many small farmers in order to make ourselves more resilient, which benefits our customers (the retailers).
 
With our hydroelectric plant, we will immunize ourselves from the increasingly risky and unstable fossil fuel infrastructure.
 
HECO should go to geothermal faster, rather than slower, in order to accomplish the same thing.

9. INVESTMENT IN RENEWABLE ENERGY AND ‘INTELLIGENT’
INFRASTRUCTURE IS BOOMING. THIS REVOLUTION PRESENTS HUGE OPPORTUNITIES FOR NEW business PARTNERSHIPS
The last few years have witnessed unprecedented investment in renewable energy and many countries are planning or piloting ‘smart grids’. This revolution presents huge opportunities for new partnerships between energy suppliers, manufacturers and users. New risks will also have to be managed. These include the scarcity of several essential components of clean energy technologies, incompatible infrastructures and the vulnerability of a system that is increasingly dependent on IT.

Many opportunities will come up. Will we recognize them? If we expect this to happen, we can.

“Peak oil presents the world with a risk management problem of tremendous complexity.” US Department of Energy 2007.  A vast array of studies have attempted to predict the time at which global oil production will reach a maximum level, from which point it will go into irrevocable decline. Some suggest that this ‘peak’ has already occurred, while others maintain it is either impossible to predict or shows no sign of appearing. Looking further than a decade into the future presents many uncertainties, including: the availability and cost of extraction technologies; substitute technologies; pricing systems in major economies; and carbon legislation. A comprehensive two-year study by the UK Energy Research Centre completed in August 2009 found that a peak in conventional oil production before 2030 appears likely, and there is a significant risk of a peak before 2020. With average rates of decline from current fields, the report says that just to maintain current production levels would require the equivalent of a new Saudi Arabia coming on-stream every three years. What’s more, giant fields pass peak production levels and there is a shift to smaller, more difficult to produce fields that have faster depletion rates meaning the rate of decline will accelerate.

Better to be safe than sorry. Plan on oil spikes in two years.

Rare earth metals (REMs) are a group of 17 elements whose unique properties make them indispensable in a wide variety of advanced technologies. They are an important example of material scarcity in the ‘third energy revolution’, because they are indispensable for so many of the advanced technologies that will allow us to achieve critical national objectives. As such, disruption to their global supply is a new energy security concern. Their production, alongside the metals and magnets that derive from them, is dominated by one country, China. At present, China produces 97% of the world’s rare earth metals supply, almost 100% of the associated metal production, and 80% of the rare earth magnets. REMs such as neodymium are the world’s strongest magnets and are key components for more efficient wind turbines, each of which requires about two tonnes. They are also important in enabling the miniaturising of electronic equipment; consequently demand grew between 15% to 25% per year from 2003 to 2008. 

We need to know where they occur so we can avoid bottlenecks. In many cases in the future, simplicity will be a virtue.