Thomas CastenAll across the nation, factories and power plants are wasting energy — lots and lots of it. If that energy could be captured and put to good use, greenhouse gas emissions could be substantially reduced, at a profit.

Thomas Casten has been proclaiming this good news for almost 30 years now. Not only that, he’s been trying to make it happen, starting and managing a series of profitable companies, founding and consulting for nonprofits, writings reports, articles, and a book, and testifying before Congress. Despite becoming a nationally known energy expert and a successful businessman, he has often played the role of Sisyphus, pushing uphill against the gravity of antiquated regulations, perverse financial incentives, and above all the poisonous conventional thinking that reducing pollution increases costs.

I spoke with Casten way back in Dec. 2006 (yes, to my great shame, it’s taken eight months to get this up). Since then, energy bills have passed both the House and Senate, including provisions that would begin to remove the barriers to distributed electricity generation and waste energy capture. Greek mythology notwithstanding, Sisyphus may be making progress.

(Full disclosure: Casten’s son Sean is a contributing blogger here at Gristmill, and the President and CEO of Recycled Energy, of which Casten is chair.)

This is the first and longest part of the interview; subsequent parts will be published in coming days. Yes, it’s wonky, but haven’t you heard? Wonky is in.

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David Roberts: What’s wrong with the electricity-generation system in the U.S.?

Thomas Casten: Thirty-eight percent of U.S. CO2 comes from the generation of electricity — a bigger percentage than transportation or anything else — and that number is growing. Electric power is not that big a chunk of total energy use, but because so much of it comes from coal, the carbon number is higher.

The U.S. electric system on average converts 33 out of every 100 units of potential energy into delivered electricity. The energy that’s arriving at the light fixture over your desk represents 33 percent of the energy that went into the power plant.

But that doesn’t mean you’re getting 33 percent of it in light. After it gets to the light fixture, if you’ve got CFLs, about 14 percent of that 33 ends up lighting the room. If you’ve got an incandescent bulb, it’s 6 percent of the 33.

So we start with 100 units of fuel, and we produce two units of light. Not very efficient.

DR: What is cogeneration? Is it different from "recycled power"? And are they different from "combined heat and power"?

TC: Whenever you produce electricity with any kind of fossil or nuclear fuel — I don’t care whether it’s a piston engine or a gas turbine or a boiler in a steam turbine — you will have a significant amount of potential energy left over as low-grade but usable heat.

The three terms are the same. The Carter administration coined the first one, cogeneration. They defined it as the "sequential generation of electricity and thermal energy." The Europeans didn’t like that term, because people didn’t quite know it. They used the term "combined heat and power." But what is combined heat and power? It is the sequential generation of electricity and heat.

The term I have introduced is "recycled power" — I think it’s the first term the man on the street can understand. You have produced electricity, and there’s something left over. You can throw it away, or you can recycle it into something useful. Industrial processes also use energy once — they turn some kind of raw material into more finished goods. These processes often have a stream of energy coming out of them, which still has some value but is typically thrown away.

DR: How do you capture the waste power?

TC: While electricity travels relatively economically through the wires — you lose 9 percent of it on average — heat takes about seven times as much energy to travel. So if you’ve got a power plant located 50 miles from Seattle, there is no economic way to move the waste heat from that power plant to downtown Seattle.

So what happened is my friend Jim Young, who ran the Seattle District Energy System for a time, developed a project: they built a gas turbine right downtown. He gets 40 percent plus of the energy as electricity. He’s got this 1,000-degree turbine exhaust left over, and uses it to boil water to make high-pressure steam. He drives the steam through a steam turbine, and gets more power out of it to make more electricity. The rest of it is used to provide steam for Seattle’s downtown.

By moving the power local, he’s maybe 85 percent efficient. The electricity has become more than twice as efficient as the national average. Instead of using three units of fuel to make one unit of electricity, he’s using 1 1/4 to 1 1/2 units of fuel to make a unit of electricity.

If all you do is look at the fuel and the electricity that comes out of the generator, the big plant is more efficient. Jim wins in downtown Seattle in two ways. The big way is that instead of throwing away all the remaining heat, he’s doing something useful with it, and that doubles his efficiency. The second way, which is smaller but still significant, is that because his power generation is located close to users, the losses on power he generates, by the time it gets to your office, is 2 percent rather than 9.

There is a set of coke ovens in Vansant, Va., that has been throwing heat out into the atmosphere for the last 40 years. Primary Energy spent $165 million, put 16 waste-heat recovery boilers on top of them. In total last year, that plant produced 1.6 billion kilowatt hours of clean energy, burning not one single BTU of additional fossil fuel, not putting out a single incremental pound of carbon dioxide. In 2004, the solar collectors connected to the grid worldwide are estimated to have produced 1.6 billion kilowatt hours of clean energy.

DR: From the one set of coke plants?

TC: Yes. It gets better. The solar collectors represent a collective investment of about $5 billion. This plant cost $165 million.

We have calculated that recycling industrial energy in large plants produces 72 times as much carbon reduction per dollar as a solar collector. Dollars will always be scarce. At the end of the day, what we need to do is get the maximum bang for the buck. So a dollar spent on recycling energy produces about 70 times as much CO2 reduction as a dollar on solar, and about 15 times as much reduction as a dollar spent on a wind turbine.

Our president has said that America cannot afford Kyoto, implying that the cost of making these changes to reduce carbon will destroy the economy. He’s almost right. He’s left out one word — America can’t afford not to reduce the carbon. It’s costing us so much money to buy this carbon and burn it! Every bit of carbon we put out that’s wasteful, we paid for. Our trick is to find ways to deliver the energy to you. All you want is the light over your desk and the power to run your computer.

People have always argued, "well Mr. Casten, you can be more efficient, but there’s economies of scale. These big plants are so much cheaper to build that it offsets the efficiency of small plants." That’s the wrong argument, and the wrong question.

It is true that it is cheaper per kilowatt capacity to build a generating plant 100 miles out of Seattle than in downtown Seattle. Expensive real estate, tight spaces, difficult to be small scale. But that’s absolutely the wrong question. You don’t care. What you care about is how much capital it will cost to deliver a new kilowatt to you.

Let’s say you’re building a new apartment building, and it’s going to be new electric load on the system; it’s going to need 10 megawatts. The question is: how much capital are we going to spend to generate and deliver 10 megawatts to that apartment house? Well, it turns out that the wires, the distribution, the transmission, the substations, and the auxiliary equipment you need cost more than the central plant.

Last year the International Energy Administration said that the average cost of building new central generation in the world was $890 per kilowatt. A big study for the Department of Energy about four years ago — and several other studies corroborate — said that the total cost of transmission and distribution of that kilowatt averages $1,400. You’ve got $900 for the plant, and another $1400, that’s $2100 bucks a kilowatt.

Jim spent less capital for the new kilowatts, around $1500. He didn’t need to build any transmission, because he’s sitting right where the power goes.

So local power costs less capital. It also uses half the fuel. It also puts out half or less of the pollution. It’s also far less vulnerable to extreme weather and terrorists than central stations. Also, because of the way probabilities work, if you have a system made up of a lot of smaller units, you can get reliability with less redundancy. If you have a system made up of 10 or 15 very large units, you have to cover for one or two of them simultaneously failing. National average, we need 18 percent redundancy with our central system. A PhD thesis recently done at Carnegie Mellon says we could get by with 5 percent redundancy if we had multiple smaller generators.