Industrial Revolution Redux
Renewable Energy and What it Means for Construction

 

Competitive Renewable Energy Graph

 

Let’s drill down into the Power and Industry sectors to see if we can understand the dynamics better.

15 years ago, it was uncertain whether we could tap vast supplies of renewable energy economically. In other words, there was a huge technical challenge in becoming Green at No Cost.

We can see the dip in consumption in 2007.

A price bubble in commodities knocked energy consumption down significantly.

Good for the environment, so Green, but at Prohibitive Cost.

Renewables, except for hydro, were virtually non-existent at that time.

Amazingly, the prognosticators for this graph got it right!

 

North America Energy Cost by Source

 

The average cost of energy in North America - Graph showing the change in cost of different types of energy sources over decades.

 

The turning point has come in the last decade. Solar supply cost has dropped by a factor of 7.

Wind has dropped by a factor of 3. Meanwhile, fossil fuels and nuclear are taking themselves out of the game by becoming more expensive.

Market forces and technical advances will continue this trend indefinitely.

These are the sources of electric power…

 

Energy Source and Consumption by Sector

 

Energy consumption pie chart

 

The uses of power divide the pie roughly into 3 equal pieces.

The easy conversions away from fossil fuels are already happening as Buildings and Industry go Electric.

The sticking point has been Transportation.

 

 

Biofuels

Imagine plants eating sunshine and pooping oil.

This would allow us to keep carbon-based conventional fuels in the ground until we need them.

 

Biofuels - use graph over 15 years

 

 

Going back 15 years, transportation fuel consumption for the US was about 150 billion gallons per year.

Steep growth in biofuel production, along with a significant improvement in efficiency, was projected to supply about 30% of demand sometime around 2030.

Since our vehicle fleet and fuel distribution infrastructure were all set up for liquid fuels, biofuels seemed to be the leading contender for sustainable transportation.

 

 

Projected growth of biofuel production. Graph. Projected growth of biofuel production and transportation savings

 

 

However, projected growth in biofuel production halted its exponential rise right when it was expected to take off.

Current production is stuck around 5% of total consumption, mostly ethanol, taking biofuels out of our sustainable future for decades to come.

 

Car + Fuel Cost 2008

 

Car + Fuel Cost 2008 Hybrid vehicles strike a balance between lower first cost and lower fuel cost over the life of the vehicle.

 

Also, 15 years ago, battery electric vehicles were coming into the picture as hybrids. Hybrids reduced fuel on the road but did not replace fuel as the source.

To be competitive 15 years ago, it would have taken a gas price of 7 times the price per gallon at that time to equal life cycle cost of the battery of a Battery Electric Vehicle (BEV).

To quote the National Renewable Energy Laboratory at that time,

“The limiting factor to the cost-effectiveness of EVs is the price of batteries. Today batteries are around $700 per kW, but they need to come down to $300 per kW to be able to compete with conventional vehicles.” ~ (National Renewable Energy Laboratory A. Brooker, M. Thornton, and J. Rugh NREL 2010).

 

Battery Cost per kiloWatt hour 2018 to 2030

 

Graph showingBattery Cost per kiloWatt hour 2018 to 2030

 

 

That is what has happened as we entered this decade.

Tesla has gone beyond the $300 per kWh threshold, leading the pack at $100 for 2022 and shooting for $50 per kWh by 2030.

What does this mean? Are vintage muscle cars destined for the museum?

 

Conventional Ownership Cost

 

Graph showing ownership cost of conventional vehicles will increase - the crossover to electric vehicles

 

 

Well, yes!

Conventional gas vehicles were projected to increase slightly in total cost of ownership this decade, but supply chain disruptions in the last two years have caused that cost to shoot up.

Meanwhile, government programs are piling on subsidies that reduce the price of Battery Electric Vehicles.

What does this mean for the built environment? Is the new industrial revolution happening right now?

 

 

One for the Road

 

Projected number of electric vehicles by 2030
Projected number of electric vehicles by 2030

 

 

Green vehicles and ride-share give people choice-based clean alternatives that run on existing infrastructure.

With reduced-cost Green Infrastructure, transportation costs will continue to track down.

Construction sectors to watch are electrical infrastructure, electricity generation, roads, single-family residential, manufacturing, science, and technology.

 

U.S. Energy Consumption by Source and Sector

 

Graphic showing U.S. energy consumption by source and sector 2022

 

 

In 2022 less than 1% of transportation was electric-powered, 13% of industrial, and 45% of commercial/residential.

As these sectors electrify, renewable sources will replace fossil fuel sources.

Since these sectors are so huge, it seems that generation and distribution must increase.

But is this offset by a phaseout of conventional sources and efficiency?

 

Emerging Energy Technology and Cost

 

Emerging Technology Enebled Cost Effective Energy Savings

 

 

Emerging building technologies have reduced total energy requirements from 38 quads in 2010 to 21 quads in 2023.

Business As Usual would have grown to 43 quads.

Emerging Technologies will result in a 50% saving from Business As Usual by 2030.

Only a slight growth in use is projected from 2023 to 2030, 21 to 22 Quads.

 

Global Energy Supplies vs. North American Energy Supplies

 

Chart showing - While Global Energy Supplies are increasing, North American Energy Supplies could decrease

 

While Global Energy Supplies are increasing, North American Energy Supplies could decrease.

At right, I have penciled in a scenario for North America, projecting to 2030 and 2050.

Efficiency improvements will continue to reduce consumption from over 100 Quadrillion BTUs – Quads – to 80 Quads in 2050.

Solar sources continue to grow and become the largest source. Coal phases out completely.

Gas stays in the picture while phasing out as heating fuel. Nuclear continues to decline due to cost and risk. Oil remains for certain transportation and industrial requirements.

Below the line, fossil fuel emissions are offset by carbon capture.

The new industrial revolution will be a turnover from an old costly unsustainable, one to a bright, literally, efficient one with a perpetual future.

To watch the forum recording of this segment, visit: Design and Construction Market Outlook Forum May 24 2023.

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Richard Vermeulen - Construction Economist for Green Building

Richard Vermeulen is the construction economist creating profitable sustainability in the built environment. He’s the founder of GreenLight™, author of Green at No Cost, and developer of the Total Benefit Analysis and The Value Process as well as co-CEO, lead economist, and chief estimator for Vermeulens. Richard has developed industry-leading standards for estimating and data-basing complex construction projects throughout North America. In addition to consulting for thousands of major projects over 30 years, Richard has designed and built residential and commercial projects, from hammering nails to hound-dogging bureaucracies. He has traveled extensively, always with an awareness of how cities do and don’t work.

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