How to make blackouts a thing of the past

The key to providing for our energy needs is technological development, not sterile rows about energy sources.

Various Authors

Topics Science & Tech

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When 650million people in north and east India endured two power failures in two days earlier this summer, it was all too predictable. As in many developing countries, power cuts are frequent in India. Meanwhile, about 300million Indians have never enjoyed the benefits of electricity. Clearly, what India needs is a lot more energy: while its economic growth may be slackening, its demand for energy will carry on increasing. Moreover, energy in India, like all forms of energy the world over, needs to cost less and to be delivered reliably if industrialisation is to resume the momentum it deserves.

This essay looks at how energy supply must aim for high productivity before all else. A capital-intensive, not labour-intensive level of technique, together with a higher-level safety regime and the minimising of pollution, should allow the issue of energy to recede from public consciousness, so we can all get on to more important matters.

High productivity in energy supply counts not just for India, but for Britain, too. Britain faces a mid-decade energy gap, as old coal-fired and nuclear plants are retired and not replaced quickly enough – a predicament compounded by the decision of energy firms E.ON and RWE npower to cancel their joint venture to build six gigawatts of nuclear capacity for the 2020s. Elsewhere, government decisions to end nuclear power (Germany), or at least drastically curtail it (Japan), may pose similar problems. Worldwide, what the International Energy Agency (IEA) calls electricity ‘shortfalls’ have been growing and even when untoward events, rather than weak capacity or ropey electrical grids, have caused such problems, the inability to prepare for such eventualities tells a sad story.

Table 1 Selected electricity blackouts, 2005‐12

Country/state Year Cause
Alaska 2008 Avalanche cut transmission line
Bangladesh 2005 Demand growth, insufficient investment
Chile 2007/08 Drought, gas shortfall, plant breakdowns
China 2007 Drought
Ethiopia 2009/10 Demand growth, insufficient investment
Japan 2011 Earthquake/tsunami causes plant failure
New Zealand 2008 Drought
Pakistan 2007 Demand growth, insufficient investment
South Africa 2008 Demand growth, insufficient investment
US 2012 Severe storms and heatwave
India 2012 Demand growth, insufficient investment

In the face of such blackouts, the IEA proposes that countries ration energy and get people to change their behaviour so as to conserve it. These are not just familiar – and authoritarian – solutions, which seek to control people’s lives. By privileging demand-side energy conservation at the expense of better and greater energy supply, such demands add yet more misplaced priorities and low ambitions to those that are displayed whenever politicians make rhetoric about ‘green jobs’.

On the surface, the promise of green jobs is attractive. After all, the level and intractability of unemployment in Britain is so great today, it’s natural that people celebrate when companies such as Hitachi or Aldi bring jobs to mainstream manufacturing and retailing, as each has recently done. But hold on. The decline of employment in British manufacturing is well known: generally, manufacturing raises productivity and levels of output at the same time as it sheds labour. Similarly, when shopping is subjected to automation in the form of online retailing, the results are acclaimed – even if, as has already happened, trade in high streets and out-of-town emporia declines as a consequence, and so threatens jobs there.

By contrast, increases in the productivity of energy supply are almost never discussed. Instead, UK prime minister David Cameron boasts that Britain is, compared with the rest of the world, a centre for what he calls ‘clean’ energy: it’s ‘one of the best places for green energy, for green electricity, for green investment and crucially for green jobs’. Here the purpose of energy is to save the planet and to provide employment. That is an agenda unique to energy. While the British car industry, retailing and even financial services are upheld as ‘internationally competitive’, one never hears that phrase in relation to energy – despite the fact that fuels of every sort, along with electricity, cross the sea into Britain everyday.

That energy is talked about without reference to productivity shows how much environmentalism has come to dominate mainstream economics nowadays. What matters, apparently, is that energy is ‘clean’ and that it creates jobs. Moreover the calibre of those jobs – whether they turn out to be long-hours, low-pay, low-skill occupations in home insulation, for example – is not discussed in polite society. Official discussions on energy, therefore, are oblivious to what bourgeois economists call ‘value added’. According to this mindset, it is enough that energy isn’t dirty and that it absorbs the labour of many hands.

Obscuring the productivity of different techniques of energy supply

There are many different ways of assessing the merits of any technique in energy supply. In terms of economic viability alone, one can consider capital amortisation, state subsidies, fuel and labour costs, rent on land, insurance, decommissioning costs, costs of complying with regulation, thermal efficiency, fuel density and price per unit of energy generated. However, in Britain, as both household bills for energy and the statistical incidence of ‘fuel poverty’ have risen, so debate has focused mainly on different sources of energy – gas, wind, etc. To that extent, there is discussion about how much particular sources will add to family expenditures. Broadly speaking, liberal and green commentators talk up the extra bills which recourse to gas-fired electricity generation is supposed to bring; conservatives worry about the impact of wind power on household outlays. Yet this preoccupation with choosing between different sources of energy is myopic. The productivity of any particular source of energy is not something intrinsic to it, and is far from immutable. It depends on the particular level of science, engineering and scale that attaches to that technique at any moment in time.

After the Second World War, in economics the general issue of choice of technique (CoT) assumed some prominence around developing countries. In 1960, the Indian economist Amartya Sen wrote a very influential text about CoT in relation to new state-owned sectors and the reputed planning options that the state had for such sectors around different levels of capital intensity and employment creation (1). Sen’s thinking was profoundly wrong; but the fact that energy is today so often discussed simply in terms of choice of source reveals, if anything, a regression he wrote that book.

In fact, the obsessive eternalising of the merits and demerits of different sources goes further. First, in place of old left/right passions, fondness or hostility toward particular sources has become a kind of badge of identity. So dissent from wind, for example, is not just about cost, but also about unsightly aesthetics, or ‘wind turbine syndrome’. Similarly for shale gas captured through ‘fracking’: among US enthusiasts for it, shale is a vindication of the endless ingenuity of capitalism. Thus, just as environmental alarmists can see only merit in the ‘renewable’ energy provided by Mother Nature, so climate-change sceptics imply that the superiority of particular naturally occurring fossil fuels is determined by Fate.

Second, passions are especially inflamed around the issue of state subsidies for different sources. Garbed in green, the International Energy Agency (IEA) insists that global subsidies for fossil fuels were in 2011 nearly seven times those afforded to renewables. But if India uses subsidies to keep energy prices low and so avoid unrest, what about the taxes applied to motoring fuel in the UK? And what about the tax credits that the US grants to producers of wind power and ethanol? Are these sums in the IEA’s calculations? One man’s outrageous subsidy is another man’s piece of progressive taxation.

Altogether, the productivity of different ways of generating energy appears very obscure. In manufacturing, for example, simple measures such as output per man-hour and total factor productivity have long been established. In energy, by contrast, there is little or no discussion of output per man-hour (2).

Take the labour out of energy supply

Part of the promise of technological innovation is that it makes processes less laborious. In this respect, energy supply is at its best when it requires the minimum amount of human intervention. We are, after all, dealing with the machine-production of energy. Some techniques will be more labour-intensive than others, but broadly the mechanisation of energy supply in the future will require a higher productivity of labour than exists today.

In energy as elsewhere, capital intensity is what counts. It follows that a serious programme of investment in energy supply will create relatively few new direct jobs. The purpose of innovation in energy is not to create more jobs, but to produce more energy, more cheaply and with less waste. The idea with energy innovation is to continue the automation of energy supply, including its transmission and distribution, so that human beings can devote themselves to higher things. Society needs more labour in healthcare and education, because older people and children need plenty of high-quality attention. Society also needs more time for leisure, even if capitalism rarely delivers that. But society does not need more jobs in energy. It needs the maximum amount of energy for the minimum amount of effort.

Of course, the construction of any major energy facility remains, like civil-engineering projects generally, a labour-intensive challenge. That fact is unlikely to alter despite the widespread use of advanced project-management tools, such as 3D modelling. In nuclear, for example, it takes thousands of workers to plan, build, equip and connect up services to a typical plant with a capacity of 1.5 gigawatts. It will take even more people to build the additional 180 gigawatts of capacity, which, after Fukushima, is the minimum that the IEA predicts will be constructed by 2035 – mostly in non-OECD countries (3). Yet these ‘nuclear jobs’ should not be the point of the exercise.

Partisans of particular energy sources love to play up the numbers of jobs their preferred source is meant to create. Thus we find the Washington-based Nuclear Energy Institute (NEI) is delighted at the high numbers of workers needed to operate a nuclear plant. It is also happy to display a table suggesting that, for each megawatt of electricity (MWe) generated, nuclear is not just nearly five times more labour-intensive than a large hydroelectric plant, but 10 times more labour-intensive than gas combined-cycle plants and wind turbines.

Critics often castigate the nuclear ‘lobby’. But it is a strange kind of lobby that flaunts how many jobs have to be occupied just to make its technology actually generate electricity.

Just as hilariously, we also find the American Wind Energy Association (AWEA) presenting a very different set of figures to argue that wind energy is a big creator of jobs. Developing 293 gigawatts of new land-based and offshore wind technologies for the US from 2007 to 2030 would, the AWEA says, lead to an annual average of more than 250,000 construction-related jobs in wind and wind-related industries. Here the AWEA factors in, with a generosity bordering on the absurd, not just the jobs directly involved in installing and manufacturing wind turbines, but also ‘indirect’ and ‘induced’ jobs. Indirect jobs relate to contractors’ bankers and accountants, and to makers of steel and components; induced jobs are those created by the consumer spending unleashed by people both directly and indirectly employed by wind projects.

If we add the construction annual average jobs to the operational jobs in 2030, the total is 475,333 jobs, or 1.584 jobs per megawatt of capacity. If we then rate the actual output of wind power rather sympathetically at 33 per cent of its capacity, that makes 0.528 jobs per megawatt electrical (MWe) of wind power. This figure is 10 times higher than the NEI estimate of jobs per MWe of nuclear power. More recently, the AWEA has rounded totals up to 500,000 jobs by 2030, giving a figure of 0.555 jobs per MWe.

Claims made by the nuclear and wind industries are, of course, rivalled by those made by oil and gas. Thus Vote4Energy, a project of the American Petroleum Institute that represents more than 490 oil and natural gas companies, uses the consultants Wood Mackenzie to estimate the employment impact of US government policies that are more favourable toward oil and gas than at present. Such policies, Wood Mackenzie estimates, could create 1,403,877 jobs by 2030, generating 10,371,000 more barrels of oil equivalent per day than is currently the case. Since one barrel of oil equivalent per day amounts to 1.7 megawatt-hour (MWh) per day, this amounts to a figure of 12.56 jobs per MWh per day (4).

Increases in productivity used to be hailed as progress. Now what is greeted as progress in energy are sources that make for more work, not less.

It is anyway impossible to calculate an unimpeachable figure for jobs per nuclear reactor, wind turbine, oil refinery, or gas plant – or even a proper figure for the jobs involved in each of the whole nuclear sector, wind sector, etc. These figures depend on the cost of the energy involved in building and operating installations, as well as the cost of steel, concrete, fuel transport and so on. At issue with any national economy is the overall efficiency of its complete energy system, which in turn depends on the productivity of the calibre of that economy’s industrial, extractive, construction, infrastructural and service sectors.

What we need to uphold, instead of the creation and measurement of jobs around different sources of energy, is how technological leaps forward in the productivity of energy supply as a whole can lower input costs to the rest of the economy, as well as lower the energy bills that workers pay out of their wages.

Lowering the cost of energy to the rest of the economy should result in lower prices for products in the shops, and cheaper services, too – whether private or public. Energy is an important input to manufacturing and agriculture, and an appreciable one in sectors such as retailing, education and healthcare. So higher productivity in energy supply should help check inflation, and so make workers’ salaries stretch further. On top of this, the average household bill of about £1,250 a year for gas and electricity could do with being reduced – £500 maximum would be a reasonable sum to aim for, which would require a major improvement in the productivity of energy supply.

So far, the biggest impact of shale gas in the US, for example, may have been to lower the price of gas as an industrial feedstock, not to lower the price of electricity made by gas-fired power stations. So shale gas has helped allow old US facilities for the production of fertiliser and petrochemicals – facilities that were mothballed because they were outdated – to enter service again. Yet while the cost of gas in the US has fallen rapidly, much lower prices will be necessary if gas is really to bring serious benefits to the whole of America’s industries and services – and to allow American workers’ incomes to be spent on something more interesting than methane.

Changing energy technologies vs largely unchanging energy sources

Debates on energy cannot just be about one source as against another. Technology and innovation profoundly and continually modify the nature of each source. Debates on energy, then, should revolve around five neglected but crucial factors, as follows.

1. How different sources are worked up, and the marginal cost of adding a new unit of capacity

Improvements in the way that energy sources are worked up are more important than choice of source by itself. Coal is coal, for example, but today’s coal mining bears almost no relation to that of the seventeenth century. Wind turbines could be designed to operate efficiently at low wind speeds, rather than intermittently at high ones, as is presently the rule. Another way to get more from less is to recycle the products of energy generation. France, after all, derives about 17 per cent of its electricity from recycled nuclear fuel.

In working up particular sources in particular places, there can be physics- or geography-based limits to continual improvements in productivity. Not every oil or gas field, or hydroelectric opportunity, is worth taking further. After a certain point, costs may rise. The purpose of any particular energy installation, and the geographical circumstances that surround it, have to be taken into account. For instance: in Mexico, the present boom in wind energy properly centres on a town called La Ventosa – ‘the windy place’. But if it’s wise to build wind turbines there, Mexico’s electricity shouldn’t all come from wind. Deciding how much and what sort of wind energy to build in Mexico, and where to build it, depends not just on wind technology, but also on Mexico’s national energy system as a whole, as well as the energy systems of Mexico’s environs.

Also to be remembered is the general rule that the second gigawatt of capacity is cheaper than to build than the first, and the third, cheaper than the second. As is even more evident in the software sector: once the basic learning, design and investment have been done around a particular energy machine, further machines can reap economies of scale. China, for example, has certainly been able to corner the world market for solar photovoltaic (PV) panels, because its domestic requirements are so great, it can keep prices low – low enough, too, to give Germany and America serious competition in solar PV.

Again, though, dwindling marginal costs in energy have their limitations. Once La Ventosa begins to be blanketed in wind turbines, or the Sahara with solar panels, installations in other places may look wise, but will not be so efficient. In this respect, therefore, the thing to do isn’t to ask the abstract question ‘are wind and solar cheap or dear?’, but to invest in the best locations for each technology and carry on until the marginal cost of adding more installations gets too high.

2. The productivity of equipment supply

Other things being equal, the price of shale gas would no doubt be lower than it is now if the equipment used to get hold of it became cheaper than it is today. Similarly, while the blades for a turbine in a gas-fired electricity plant have little in common with the blades for a wind turbine, both have benefited from greater automation in manufacture. In the making of gas turbines, for example, ‘multi-axis, super-abrasive grinding technology has introduced new ways of thinking about combining operations, reducing throughput time, lowering cost and increasing quality, especially for complex components like blades, vane segments and shroud segments.’

It is a similar story in lowering of the stress and penetration of moisture around the blades of wind turbines, as well as lowering the incidence of their repair and replacement. Here the US energy energy firm Enercon uses robots made by Swedish/Swiss engineering giant ABB to paint a coating on to blades with micrometer precision, in the process saving energy and paint. As late as 2007, by contrast, the Indian wind-turbine manufacturer Suzlon followed a much more old-fashioned route in Pipestone, Minnesota. The world’s third largest maker of wind turbines, Suzlon had its first factory outside India finish blades by hand, and with the aid of masking tape. Blade-finishing technology has moved on.

3. More installations prompt a new division of labour in equipment supply

Take the example of gearboxes for wind turbines. As the number of turbine installations has grown, so downtime has become a more critical issue. About 30 per cent of wind-farm operating and maintenance costs are spent on maintaining wind-turbine gearboxes. The more this downtime can be reduced, the more productive wind power becomes.

Instead of employing labour and cranes in a haphazard fashion, it makes sense to carry out work when a whole farm is shut down. To help plan this, industrial giants such as General Electric (GE) have developed sophisticated remote monitoring that calibrates the condition of gearboxes. That helps operators optimise maintenance schedules, as well as spot faults that could cause costly failures and outages.

In the US, the point has been reached where wind turbines have generated a fresh industry devoted to on-site and off-site services. Besides GE providing maintenance, a new company, Gearbox Express, has arisen with just one line of business: refurbishing old gearboxes and swiftly delivering them to turbines where they are needed. Such a development of the social division of labour can only help improve the productivity of wind.

Meanwhile, companies such as Siemens are now selling turbines that, because they are gearless, require little maintenance. Siemens’ six-megawatt offshore units weigh less, per unit of power produced, than conventional designs – because they use direct-drive technology and have fibreglass-reinforced blades. Each unit comes with remote-monitoring software, and a nacelle that not only houses the complete, self-contained power system, ready for connection to the grid, but also ‘an on-site workshop complete with crane and coffee machine’. Other emerging technologies within the industry include using massive turbines driven directly by wind – that is, without blades – and using gears that have no axes, no friction and no lubrication, since they are held in place by magnetic fields.

4. How different sources can usefully work together

Carbon: capture in extraction, capture in power generation, recycling to make chemicals and fuels

As shale gas and heavy oil have developed, so separating CO2 from these fluids has grown in importance. Why? Because as they come out of the ground, these fuels have higher concentrations of CO2 than conventional natural gas and oil: the shale in a giant field such as the Horn River Shale Basin in British Columbia (BC), Canada, is 12 per cent composed of CO2, whereas the usual figure for the proportion of CO2 in natural gas in BC is between two and four per cent. But because CO2 can’t be burned as fuel, separating technologies have to remove it ‘pre-pipe’.

Now, in the North Sea, injecting CO2 into oil reservoirs hasn’t just helped force out more usable oil there; it has also given the world experience of the chemical engineering necessary to deliver the ‘storage’ part of carbon capture and storage (CCS). It’s the same with CO2 separating technologies. They won’t just help in the handling of shale and heavy oil. Scaled up, perhaps by a factor of 10, into CO2 scrubbers on coal- and gas-fired electricity plants, they will deliver the ‘carbon capture’ part of CCS. Finally, there is the chance to use thermochemical, biological and electrochemical means of recycling CO2 so that it can help build chemical and fuel products.

Biofuels to complement shale chemistry and assist oil extraction

Gevo, a company backed by Richard Branson and the Indian-American venture capitalist Vinod Khosla, is starting up commercial production of bio-butanol, a fuel that’s made from biomass. Bio-butanol has a higher energy content than ethanol, produces fewer emissions, and can be blended directly with gasoline in any ratio to supplement it as a fuel diesel machines, automobiles and jets. However as the petrochemical industry sees more of its raw materials coming from shale gas and fewer from oil, some products are in short supply. For example, butene, which is used to make polypropylene, is now less abundant than it once was. Gevo has spotted an opportunity to make these materials from biomass, giving industry the flexibility to go on using more shale gas.

Another advanced biofuels company that specialises in developing alternatives to petroleum-sourced products is Amyris. It engineers microorganisms such as yeast, algae and bacteria to convert plant sugars into diesel and jet fuel, as well as other chemicals. Yet Amyris also has a 50:50 joint venture with the French oil and gas giant, Total – to make not just renewable fuels, but also renewable fluids that will assist Total’s drilling for oil and gas. Again, this illustrates the potential for close collaboration between biofuels and fossil fuels.

Long-term developments around nuclear

At the Massachusetts Institute of Technology, the Center for Advanced Nuclear Energy Systems is researches, among other things, how nuclear power could work with other energy technologies in the long term. The heat from nuclear reactors, for example, may one day be used to recover and convert shale oil into liquid fuels (5). At times of low electricity demand, nuclear heat could also heat a 500x500x500m cube of rock deep underground, and so, with hot or cold pressurised water as the mechanism for transferring hear, work as an artificial source of geothermal power (6). Last, and again in the long term, nuclear could provide heat and hydrogen to convert biomass into diesel fuel at a highly efficient rate (7).

5. How each source, and the technologies around it, work with the rest of a country’s gridded energy system

Taking into account all the energy innovations listed above, it’s obvious that the productivity of different energy technologies cannot be assessed in isolation, but only as part of the energy system as a whole.

It is well known that a large investment in transmission grids is necessary to connect up the new wind power. But why blame such investment simply on wind? All kinds of electricity generation would benefit from it – indeed the IEA’s electricity ‘shortfalls’ are usually to do more with the poor resilience of grids than they are to do with lack of generation capacity. And, while building out a land-based grid to support on-shore wind provides clear benefits to other forms of energy supply, even a grid to take electricity from offshore wind turbines can be integrated with pipelines that support offshore oil and gas facilities, sea-laid telecommunications cables, coastal terminals for general freight, and terminals for the processing and transport of oil, gas, and liquid natural gas.

At the IEA, there is some recognition of the significance of whole energy systems. Bo Diczfalusy, IEA director of sustainable policy and technology, speaks of the need for what he calls a ‘smarter, more unified and integrated’ energy system for 2050. He is right to call for the integration of heat with other forms of energy, and right, too, to ask how, by 2050, society will manage to integrate very large variable sources of energy, such as wind, solar and tidal. Diczfalusy also makes a very telling call for ventures into the unexplored – ‘We need to think of new breakthrough technologies that aren’t known today’, he has said. But despite all this, he cannot stop himself from calling for the enforcement of more stringent codes around energy in buildings (8). Once again, we are turned back from high-tech, low-labour energy supply to attempts to curb energy demand through regulation and the labour-intensive retrofitting of homes, factories and offices.


India will add 26 gigawatts (GW) of power generation capacity this year. That would be a lot for Britain, but it will not prove enough for India. Worse, in a striking example of the inescapable internationalisation of the energy business, India’s electricity generators will have to rely more and more on foreign imports of coal and, still more, of gas. Electricity in India is getting more expensive, even if the government subsidises it a lot.

In the past, and even now, India has had high hopes for nuclear power as a capital-intensive means of building energy capacity. Belatedly India has found indigenous uranium reserves; it has plans a highly productive type of reactor based on thorium and low-enriched uranium; it also participates in the ITER programme to develop fusion power. Nuclear, which is available quickly and is safe, could be developed way beyond the tiddly 5GW currently installed in India – even if protests and bureaucratic obstacles have recently thwarted development.

Yet although India sorely needs new and very efficient kinds of nuclear reactor, at just this moment General Electric, one of the world’s leading suppliers of reactors, has let its chief executive, Jeff Immelt, declare that in economic terms, nuclear power is ‘really hard’ to justify when compared with gas and wind power (9).

Well, nuclear is often rather expensive. But that is a reason to innovate further around it as an energy source, not to give up on it. For GE to abandon this effort is a shocking sign of the capitalist class abdicating all thought of capital intensity, productivity and indeed artifice in energy supply, and placing its trust, instead, on windfalls, here and there, of shale gas and the intermittent virtues of wind power.

Alongside nuclear, let it be said, shale and wind have their place, and – for the reasons given above – we will not speculate on the precise levels of employment that obtain now or will obtain in the future around each source of energy. But if GE will not uphold the need for continued technological development in nuclear and all forms of energy, then that task will have to be discharged by people who know better.

Greens, postmodernists and other riffraff will sneer at our stance as a ‘technological fix’, as ‘productivist’, as ‘gigantist’. But we are unabashed. In fact, what we have to say about productivity and capital intensity applies way beyond the energy sector – to manufacturing, to extractive and process industries of all sorts, to construction, to infrastructure and to agriculture.

Those who cavil must face the music. In practice, they will just bring more darkness to India, and to the world.

James Woudhuysen is professor of forecasting and innovation at De Montfort University, Leicester, and co-author of Energise: a future for energy innovation.

Joe Kaplinsky is a Research Fellow at Harvard Medical School, and co-author of Energise: a future for energy innovation.

Paul Seaman is a communications professional based in Zurich, with specialist interests in energy and crisis management. Visit his website here.

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