Re: Cost of electric power for H2 production?

Posted by lanecove on September 03, 2003 at 00:16:49:

In Reply to: Cost of electric power for H2 production? posted by DocN on September 02, 2003 at 14:29:11:

Doc,

The key - as in much of human activity - is economics, specifically the supply-demand-price aspects.

(What follows is a summary; much important detail has been glossed over).

Alternatives to burning fossil fuels which have relatively low start-up/capital costs (and can come on stream quickly) - such as wind and solar power - will displace coal, oil, and gas as their marginal cost of production becomes competitive. (Nuclear sources have been largely ruled out because their fixed costs, esp when all are truly counted, are so high; the marginal cost is then pretty irrelevant).

So here's the conundrum: despite the headlines, fossil fuels remain very cheap, and there's an awfully large natural supply, esp of coal. The marginal cost of extraction and use remains low; indeed, it's lower today than it (ever?) has been. The fixed costs (exploration, new field development, infrastructure, etc) are high, but in constant dollars not very high. Gradually the full costs are becoming factored into the prices - air pollution (or its control), global warming (e.g. through carbon taxes, tho' not in the US!), etc. Note that war is cheap (except maybe for Iraq), and its costs are not usually born directly by the end users.

Where's the conundrum? If fossil fuel prices do rise significantly, it becomes economic to start exploiting fields/deposits which are already known (and start looking for new ones) where the cost of extraction is high. The Alberta tar sands are one example; dirty coal is another. And so on.

If your time horizon is millenia, the result is clear - renewable/sustainable sources are the answer (fusion power may be an exception). Over n (<10) generations, it'll be a race between the declining marginal cost of electricity from sources such as wind and solar against the fossil fuel industry.

Of course, where markets are inefficient - e.g. the electricity distribution market in the US - various distortions can arise, with most unpleasant effects (unless you're Kenneth Lay).

Regards
lanecove


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Follow Ups: (Reload page to see most recent)

• Enough time? -- DocN 9/04/03 (2)
  • Re: Enough time? -- lanecove 9/04/03 (1)
    • U.S. Energy Bill -- DocN 9/05/03 (0)

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