New Energy & Industrial Region ….

Today’s post: Weds, 2-27-2008

Today, solar generated electricity is still more costly than generating electricity by burning natural gas, oil, or coal.

However, that is rapidly changing on both ends of the equation.

Thin film solar promises to soon cost less than fossil fuels at today’s prices. Other new technologies are being developed all over the world to bring down the cost of solar electricity. And we are already seeing the increase in volume of solar deployment that will allow for economies of scale & drive developments in cost-effective manufacturing.

Increased worldwide economic & population growth have increased demand enough that oil has gone from $30 a barrel to $100 in the last six years or so. Unlike the spike in the late 1970’s & early 1980’s, the upward trend in prices caused by increased demand for energy is likely to continue -- though perhaps at a lower annual growth rate -- over the next 50 years.

And, increasingly, because of the problem of already having too much CO2 in the world’s air, use of fossil fuels will increasingly be taxed. Soon all uses in most developed countries of fossil fuels will be taxed directly by carbon taxes on natural gas, oil, & coal. And, increasingly, to use such sources, you will need to get licensed & will also need to pay enough to offset 100 % of the carbon dioxide generated.

Given these things, I believe solar generated electricity will soon cost less than generating electricity by burning fossil fuels. I think we’ll be best served if it happens in five years for new capacity. But it may take more like 10 or more.

However, it’s quite clear to me that sooner is better and that there will be huge amounts of money to be made as this happens whether it takes 5 years or 20. And, it’s equally clear that is certain to happen barring world wide disasters or somehow developing safe & cost effective controlled fusion power.

You may be aware that the thermal solar company Ausra and PG & E are already beginning to build large scale thermal solar electricity generation facilities in the desert of Southeast California.

(If not, see http://www.ausra.com .

Here’s a quote from their website:

“Amid growing public demand for clean energy, Ausra offers solar thermal electric power stations that provide large-scale low-cost, reliable, renewable energy. Unlike competing approaches, Ausra's technology is proven, easily manufactured and installed, and scalable to high volume.“)

And, here is the key quote from their website.:

“Using Ausra's current solar technologies, all U.S. electric power, day and night, can be generated using a land area smaller than 92 by 92 miles.

Ausra's business will benefit local economies by bringing “green collar” manufacturing and operating jobs to rural communities.”

Ausra’s is not the only thermal solar approach. From what I’ve seen it may well be one of the most cost effective. However, there are other companies already moving into this space. Some may eventually be more cost effective than Ausra.

And, it may be that in some locations, it may be most cost effective to combine thin film solar with thermal solar. Thermal solar has the advantage of being able to store the collected heat for use in nighttime electricity generation. However, for optimum cost effectiveness, it may make sense to have the increased daytime demand be covered by thin film solar “farms.” (So, far it looks to me as if thin film generated solar electricity will cost less per megawatt to install & operate.)

So why does this mean there is a “New Energy & Industrial Region “?

In North America, the locations that work best for large scale electricity generation need to be unusually sunny year round and have land that is not very arable & is currently not very populated.

Where is that found in North America?

1. In the United States,

It’s in California in Southeastern California, far Southern California, &, given less water access in the future, in the South end of the Central Valley at least in part.

It’s also in much of Nevada & a good bit of Arizona & New Mexico. To a lesser degree it’s also in parts of Utah, Colorado, & West Texas.

2. In Mexico,

It’s most of Baja California.

And, it’s in a huge area of Northern Mexico that lies South of California, Arizona, New Mexico, & West Texas.

Since this area taken as whole totals thousands of square miles & has abundant sunshine year round, once it is fully developed as a solar electricity generation zone, much of the electricity needed to power the economies of the United States & Mexico may well come from this area.
Some electricity will come from locally generated renewable sources such as local rooftop solar & wind. And, some will likely come from sequestered coal burning & nuclear -- at least during the transition phase.

I believe that as this area becomes a major energy generation zone, it will make increasing sense to locate server farms, manufacturing, & industrial plants that need large amounts of electricity, such as aluminum smelting, in this area.

In addition, the current populations of this area will need desalted sea water let alone increased populations. This will clearly be powered by solar thermal & solar electricity.
To me, this makes the area of California along the Pacific coast from San Diego to the Mexican Border, the coast of all of Baja California, & the part of Northern Mexico on the other side of the Gulf of California the site of real estate that will be quite valuable in the future for such businesses.

One of the interesting implications is that there may well be enough jobs in this overall area of Northern Mexico to mostly solve the problem of excess & illegal immigration into the United States from Mexico.

If this forecast is correct, there will soon be enough jobs in this part of Mexico, people in Mexico will no longer need to move to the United States to get good jobs. They will be abundantly available in Northern Mexico.

A policy implication of this is that the governments of Mexico, California, & the United States would do well to foster the development of such solar farms & new jobs in Northern Mexico as fast as it can be made to happen.


And, it will pay companies in the United States to plan on expanding into this area as well. In the Silicon Valley where I live, there are three companies that I think for various reason might look at this.: Google, Intel, & Hewlett Packard. These & similar companies thrived by adding facilities in Ireland. And the economy of Ireland has thrived because of it.

I predict this will now happen in Northern Mexico because of solar power available there already -- & the solar electricity that will be available there soon.

The good news is that the current governments of California & Mexico seem likely to like the idea. The President of Mexico just said recently that while he wants people from Mexico who do come to the United States to be treated humanely, he would much rather they could find the good jobs they want in Mexico.

The development of this Solar Energy Area in Northern Mexico has the promise of doing exactly that.