A Second US Industrial Revolution

  By Bob Shapiro

Retail prices for electricity vary widely in the US, from about 8 cents per kilowatt hour in Washington and West Virginia to 19 cents in California. But you wouldn’t know even from the 8 cent price that there is an ongoing revolution in what it costs utilities to generate all that power.

A new generation of combined cycle, gas fired power plants now produce electricity for well under 2 cents per kilowatt hour, while the utilities’ cost to build the power plants has fallen to well under $1000 per kilowatt hour (KwH). While these facilities emit much less CO2 than coal fired power plants, greens concerned about climate change still don’t like the combined cycle gas fired variety because they put out any CO2. You can’t please some people.

Now, a new technology is emerging which will be competitive with the combined cycle versions on cost to build and cost to produce electricity, and the newer plants will emit ZERO CO2! Actually, since part of their process will remove some CO2 from the atmosphere, you could call these negative emission power plants.

Unlike wind and solar power generation schemes, these new gas fired plants will generate electricity 24/7/365, even after the sun goes down and when the wind isn’t blowing. As these facilities start going into service, they likely will sound the death knell for so-called renewable energy systems.

So far, the inventor of the new technology, NET Power in Research Triangle, North Carolina, has only a 50 megawatt demonstration plant in operation, but a gigawatt, full scale plant can’t be too far down the road. With no legacy operations to retard NET Power, they are free to develop their technology in several directions as they begin to build.

What follows is a brief description of the new technology plus my speculation on some of the possibilities available to NET Power. I believe that these possibilities can energise a second industrial revolution for the US.

The new system uses Natural Gas (mostlt Methane) and burns it in pure Oxygen, as opposed to air which has a little over 20% Oxygen. No Nitrogen or other non-essential ingredients are involved, so there are no noxious gases or other pollutants created. The chemical formula for this process is:

CH4 + 2 O2 → CO2 + 2 H2O

When the Gas is burned, it produces Carbon Dioxide and Water.

To get the Oxygen, air is run through an air compressor. As the air is compressed, its temperature goes up, in accordance with the ideal gas laws. This heat is allowed to dissipate, and the compressed air then is much nearer to ambient temperature.

The air then is allowed to decompress, which causes it to cool greatly, and the gases in air begin to condense. First, the small amount of CO2 in air turns from a gas directly to a solid (dry ice). Then Oxygen turns from a gas to a liquid. If the process is allowed to continue, the Nitrogen and Argon in air will liquify as the temperature for each gets low enough.

This process is known as cryogenic separation or concentration of the gases in air. All three liquids have value, and the Oxygen’s value will be released as it is used to burn the Natural Gas.

At the other end of the process, the CO2 and the Water will be captured. NET Power’s process includes their patented use of part of the output CO2 to turn the turbine blades to generate electricity. None of the CO2 produced will be released into the atmosphere, so the process is Zero Emission generation of electricity. Actually, counting the small amount of CO2 removed from the air in the cryogenic generation of Oxygen, the whole process is Negative CO2 Emission.

So far, so good. But why do I think this process can bring on a 2nd Industrial Revolution? The answer lies in all the add-ons which now are available. Of course, they’re my speculations, and NET Power may not implement some or even any of what I suggest is possible.

At the back end, the spent CO2 and Water still will be hot, so that heat can be a source of additional electrical generation, which can be done by adding a combined cycle 2nd loop. The amount of power which theoretically can be recovered depends in part on the temperature to which the circulating media is cooled. Since part of the process is cryogenic production of Oxygen (and also Nitrogen & Argon), there is a ready made source of “coldness” to help make the 2nd loop more efficient.

In the actual production of electricity, NET Power projects their cost at under 2 cents per KwH. California has discouraged production of electricity and currently must “import” over ¼ of its usage from other states. Part of the reason is that it has enacted mandates for zero emission sources. (CA hopes to get to 100% “Clean Energy” by 2045!)

California today has the nation’s (continental US) most expensive electricity, costing homeowners almost 20 cents per KwH. This sets up a tremendous opportunity for NET Power. The process for selling electricity into California involves a two tier auction. First, to meet the Clean Power mandate currently in effect, providers of zero emission electricity bid to sell their electricity to California. Once the mandated amount has been reached, a second auction round takes place for other sources (dirty) electricity.

Since NET Power produces at zero (actually negative) CO2 emissions, they should be able to participate in the first round of the auction. (They might need to install a nominal amount of solar trough collectors to qualify, but this would add an insignificant amount to the total cost.)

I would expect they easily could sell their electricity for 12 to 15 cents per KwH. At that price, they could pay off their production facility in a single year! I would suggest that they locate their production facility just over the border in Arizona for several reasons.

  • Politicians in California can be unpredictable and dangerous. However, their jurisdiction ends at the state line – Arizona is a safer place than being located in California.
  • Arizona has the highest insolation (sun’s rays hitting the ground) in the country, and cost for the land for siting the plant and “needed” solar collectors is very low.
  • There are other benefits which I’ll talk about later.

The very high return on investment of the power plants is a main reason I expect a second industrial revolution. If NET Power builds a 1 Gigawatt facility, at a cost around $1 Billion, then it would earn $1 Billion the first year, allowing it to build a second plant. With a possible doubling each year, after only 5 years, NET Power would generate over $30 Billion each year going forward. That amount of Capital would solve the general US industrial capital shortage created within the US over the last 20 years or more.

Yes, California would lose that much Capital, but California is a dying state which would lose capital anyway. Its anti-business, tax, and regulatory environment also chases away people. Even though California has attracted hundreds of thousands of illegal aliens and highly paid computer industry workers, in 2019 California still lost 200,000 residents. I expect it will lose another 1-3 million people over the next 10 years.

But, an Economy dying takes time. During this time California will will import more and more, including increasing amounts of the electricity it consumes. In many ways, California is traveling down the road toward becoming another Venezuela, with rich and poor but no middle class. So, whether or not NET Power generates massive amounts of Capital at California’s expense, it won’t affect the state’s downward trajectory. However, that Capital combined with continuing human innovation can provide great progress. If and when Californians regain their sanity, that progress will help the state recover some of the lost ground.

So, what additional opportunities can be exploited with the Capital?

The Glass, Steel, and Aluminum industries are very energy intensive, requiring temperatures between 1500 and 2100 degrees Celcius, plus a lot of electricity. Steel requires blasting the molten metal with pure Oxygen to burn off Carbon and other impurities. Aluminum uses a Carbon anode which is consumed and which produces a lot of CO2 in the process.

Part of the electricity generating process involves cryogenically separating air into pure Oxygen and other gases. The Oxygen then is available for the Steel blast furnace, and the separation process can capture the waste CO2 generated. The CO2 captured can add value to the whole process.

When the natural gas is burned in pure Oxygen, the flame can get over 2500 degrees. It ought to be feasible to combine making Glass, Steel, and Aluminum with generating electricity, using the heat produced to sequentially melt the Glass, Steel, and Aluminum. The result would be great cost savings for producing those materials. And, the projected cost of electricity of 1.9 cents per KwH just adds to the profit potential of those materials.

There is a recent innovation in steel-making which is just waiting for major Capital to become available. A “2-Roller” Steel output process allows the steel to be fabricated into needed shapes immediately, rather than being made into ingots, etc which then need to be remelted for fabrication. The major energy cost (and time) savings of avoiding this being a separate step can add greatly to profits.

The immediate fabrication can bring down the cost of making auto parts (or whole cars), automation equipment, structural beams, and more.

What else?

The electricity generating process would produce prodigeous amounts of water. A 1 Gigawatt power plant would provide enough water for roughly 1 million people. For the desert southwest like Arizona, that would be a game changer. (There are many mixed use building complex innovations available.)

Arizona receives twice the daily insolation as my home state of Massachusetts. It would make sense to build greenhouses to grow food – not only during the day but also at night (using LED lighting) and during the winter when Arizona can get very cold. If the power plant also makes Glass, Steel, and Aluminum, the greenhouse costs would be quite low. And, there would be a steady stream of plant fertilizing CO2 and Water.

As an aside, dumb regulators in California are starving the food producing Central Valley of water. No water means no more food production in California. Farmland prices are plummentting and expert farmers are moving out of state.

Then there are financial innovations ready to be implemented, which could save a lot on taxes, helping to increase the return on investment of the varied business segments.

The computer industry is a major user of electricity. As the price of electricity and all prices generally in California continue to soar, that state’s computer industry is vulnerable to upstart competition in Arizona.

Using the historic (not recent) German Model of companies teaching new employees the skills needed, plus upgrading the skills of existing employees, Arizona can become an educational Mecca for the many engineering, math, and other technical fields. And, there are several available innovations for greatly lowering the cost for tuition, further attracting undergraduates.

All of this (and more) would require attracting huge numbers of prospective employees and students, many of whom will be escaping California. To keep Arizona from becoming another California (full of stupid socialists), I’d suggest using vigorous screening of immigrants, as well as providing training in basic Free Market Economics and Principles of Freedom.

And then, there are similar opportunities in Nebraska, but that’s enough for now.

I think this all is possible. We’ll have to wait to see how things progress before we can declare the 2nd US Industrial Revolution to have begun.

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