Can Micropower Become as Deep a Game-Changer as Microprocessing

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* Article: Can micropower be as deep a game-changer as microprocessing? by Roberto Verzola


"This is the keynote speech prepared by Roberto Verzola, Executive Director of the Center for Renewable Electricity Strategies (CREST), for the annual meeting of the Geosciences and Reservoir Engineering Group of the Energy Development Corporation. EDC is the world's second largest geothermal firm and is also active in the renewables industry."


Roberto Verzola:

"Developments in the renewable energy field indicate that we are entering a period very much like the early period of microprocessing. The technologies are almost there but not quite. Lots of innovation is going on. Prices keep dropping yet production keeps rising, contrary to what conventional economics predicts. This was exactly what happened when integrated circuits were first introduced, which later led to the earliest microprocessors and solid-state memories. It was a matter of time, before the first microcomputer was designed and built with these new components. The rest, as they say, is history. In this speech, I explore the possibility that micropower, or small-scale generation, also called distributed generation, can be as deep a game-changer as microprocessors. By deep, I mean changing the rules of the game not only within the industry, but in society as well.

My conclusion: To become a deep game-changer, the energy industry must find a way to scale down, not up, the power units in energy systems, enough to activate the economics of increasing returns to scale and trigger virtuous cycles of greater demand and lower prices." (


Abundance as the basis of civilization

"Although we might prize scarce items highly, civilizations are built on abundance. It is the abundance of biomass that fuelled our early use of fire. It is the abundance of fossil fuels that propelled the Industrial Revolution. It is the abundance of silicon, transistors and electronic chips that launched the information revolution and propels it today. Although they are the game-changers, these foundational materials of civilizations do not usually get noticed, because their abundance makes it easy to take them for granted. It also makes them less interesting to economists, whose attention is instead focused on scarce economic goods which, precisely due to their scarcity, are poor universal material and energy sources for building civilizations.

The coming abundance emerging from the continuing decline in the investment costs of solar, wind, storage and other renewable energy technologies – together with their near-zero marginal costs of producing electricity -- will surely usher another technological revolution whose features we are yet to fully discern. " (

Scale economics

"Economies of scale lead to higher supplies and lower prices. Under certain conditions, the lower prices lead to higher demand that in turn create better economies of scale. Feedback turns positive instead of negative. Exponential growth in production and exponential decline in prices are the marks of these explosions of abundance. We already see them today in solar, wind and storage technologies."

Scale economics in solar

"In the energy sector, the dramatic impact of economies of scale is best seen in the exponentially rising global production of solar panels. Its result, averaged over almost four decades, is the steady decline in prices of around 9% per year, and of 20-22% for every doubling of cumulative production. It is clear that scale economics is working well in solar production. As a result, solar rooftops are already the cheapest source of electricity in many parts of the Philippines today. This phenomenon will occur in each distribution utility service area over the next few years as solar PV costs continue their decline. Within a few years, rooftop solar will become the cheapest source of electricity nationwide. Look at the downscaling that mainframe took—from mainframes, mini, micro, desktop, transportable, portable, laptop, notebook, netbook, tablet, embedded, etc. It is not hard to imagine, in the not-so-distant future, a similar transformation for solar. When solar panels become the roof or wall itself, for instance, the new round of savings will trigger more virtuous cycles. Then, can solar tablets, solar wearables (hat, shirt, wrist band, etc.), and of course, embedded solar, be far behind?

Among the renewables, rooftop solar holds the biggest promise as a clean and abundant energy source for rebuilding climate-ravaged societies because of the following competitive edge: Largest price declines. Solar PV has shown the largest decline in prices, averaging a 20-22% decline in PV prices for every doubling of cumulative production, which translates roughly to a 9% decline per year over the past four decades.

Cheapest per-kWh price. Electricity from solar rooftops avoids all transmission and distribution costs, as well as other add-ons to the grid electricity price, like metering charges, VAT and other taxes, system loss charges, universal charges, etc. Thus, solar rooftop electricity enjoys a built-in competitive edge over all other grid-delivered electricity. In many service areas in the Philippines, rooftop solar is already the cheapest source of electricity.

Shortest implementation times. Complete solar PV systems can be bought off-the-shelf and installed in a few hours. Larger systems may take a few days. No other technology, renewable or not, approaches the short install times enjoyed by rooftop solar.

Smallest incremental investments. Solar PV investments can be done in small affordable steps, from a few watts to a few kilowatts for households and small business establishments, to a few megawatts for utility-scale solar.

Most accessible to low-income households. No other technology today can do better than rooftop solar in enabling ordinary households to generate electricity themselves. The sun is also more universally accessible than steady winds, steep river flows, underground heat, or biomass. Lowest system losses. Longer wires have more resistance and larger losses. Even hydro, wind, geothermal and biomass electricity have to pass through transmission and distribution lines to reach consumers.

Most reliable long-term source. The sun is the most reliable source of energy. Humanity cannot deplete it or use it up. It rises predictably every morning. Even if regularly covered by clouds, its output over a week, a month or a year can still be predicted with good accuracy. And with better weather prediction tools, our ability to predict solar output with greater certainty will improve over time.

Least environmental impact. Solar rooftops are the only energy source under which you can sleep soundly, without worrying about hazards to your health, safety and the environment. The health and environmental impact of solar PV manufacturing is by no means zero, but they are more easily mitigated and solved, compared to the super-massive impacts of nuclear and fossil fuels. Remember too that rooftop solar is a demand-side – not a supply-side – approach. It reduces the demand for electricity over the grid and therefore enjoys all the advantages of demand-side management (DSM) approaches, such as incremental investments, minimal system losses, no transmission and distribution costs, and so on.

Remember finally that rooftop solar is only part of an overall demand reduction strategy, because it reduces grid demand only when the sun is up. The other strategy is the rapid deployment of LED lighting, to replace inefficient light sources like fluorescent and incandescent lamps. This takes care of the reduction in nighttime peak demand. The third strategy is energy storage, which should become increasingly competitive within the next several years. These three technologies are already showing the marks of a virtuous cycle, and can be considered the leading edge of the renewable energy revolution. Battery storage, in particular, will enjoy dramatic economies of scale because three major industries – the electric vehicle industry, the mobile telecommunications and computing industry, and the energy industry – are simultaneously at work to bring down their costs ."

Scale economics in wind

"Wind turbines in the past were kilowatt-scale machines. The wind industry reached a milestone with its first one-megawatt turbines. Today, 2-3 MW wind turbines are common, and 5-7.5 MW giants have started to come online.

To wind turbine designers, the larger scales are justified because the power that can be extracted from the wind increases as the cube of the wind speed. Wind speeds in turn steadily increase with height. Taller towers also allow longer blade spans, and the power that can be extracted from the wind increases as the square of the blade length. Indeed, this seems like a strong case for taller towers and larger turbines.

But are wind technologies scaling in the right direction? Or is this a similar case of building larger and larger mainframes?

Let us look at the other scaling aspects of wind turbine technology. As towers get taller, they become heavier. Strength generally increases with cross-sectional area. However, area increases in proportion to the square of the linear dimension, while weight increases in proportion to the cube of the linear dimension. Therefore the materials used must also be stronger. Clearly, there are technological limits to the heights that towers can be built.

There is also the problem of minimum and maximum speeds. The larger the wind turbine, the greater the minimum wind speed required to simply start it turning, wasting all wind speeds below this start-up minimum, even though low-speed winds are more common than high-speed winds. On the opposite end of the wind scale, the blade's tips will approach the speed of sound sooner as blade spans get longer, likewise setting a maximum allowable wind speed to prevent the turbine from tearing itself apart. Thus, the larger the turbine, the narrower its range of allowable operating conditions.

In the language of Internet designers, tower height and wind turbine size do not scale up very well. The direction they are taking will eventually mire the wind industry in the economics of decreasing returns."

Scale Economics in Hydro

"Megadams, like mega-turbines and mainframes, do not scale up very well and reach size limitations very quickly.

Note also how decreasing returns characterize the scaling up of conventional power plants.

The largest conventional plant in operation today in the Philippines is the Sual coal power plant, which consists of two units of 647 MW capacity each. While larger machinery may, in some aspects, enjoy better efficiencies than smaller ones, these are negated by inefficiencies in other aspects. The requirements of grid reliability, for instance, mandate that in addition to a regulating reserve of 4% of the total supply, grid operators must ensure the availability of the equivalent of two more 647-MW units, or almost 1,300 MW, as reserve, charge to the consumer of course. Splitting the 647 MW among several smaller machines might be less efficient from one particular perspective, but it would have also spared us the recurring cost of maintaining and operating 1,300 MW of reserve capacity, year after year, purely for backup.

So, what about scaling in the opposite direction? Can microhydro, microwind and similar micropower plants also enjoy economies of scale when they are made smaller?

A recent project I organized involved partnering with local governments to explore renewables at the community level. Part of the project involved engaging the services of microhydro experts to do the resource evaluation and site selection.

From what I saw, microhydro technologies have a long way to go before they can approach even a fraction of the impact that microcomputers made on the industry. Microhydro resource assessment, site selection and design today are not so different from mega-hydro design. Different sets of engineers are employed for the hydrological, mechanical and electrical aspects, many of the components are made to order and require all kinds of engineering skills, and each installation is highly site-specific. This is similar to how offices in the early days of desktop computing bought microcomputers that required hardware specialists to install and maintain them and software specialists to program and operate them. This was before the desktop computer became a nearly universal off-the-shelf consumer item that anyone could learn to use without much difficulty. The fact that the per-watt investment cost of microhydro (P100-200 per watt) is not dramatically lower —and might on occasions even be higher—than mega-hydro installations is clear indication that downsizing hydroelectric technology has not triggered any game-changing economies of scale and virtuous cycles, so far, as the change from mainframes to microprocessors did in the computer industry."

Policy Recommendations

For Microhidro

Roberto Verzola:

"To get the microhydro effort on the right track, I propose a number of approaches that might be able to significantly raise the demand for small-sized hydro-electric units towards production volumes where economies of scale can start to operate:

1. Downsize towards operating pressures that are low enough to allow a shift from stainless steel and other expensive metal penstocks to plastic-based or other lower cost as well as lighter penstock materials. This change will result in a significantly lower penstock and installation costs.

2. Master pump-as-turbine (PAT) technologies, to turn the micro-electric generator assembly into an off-the-shelf item that, although somewhat lower in efficiency, is dramatically lower in cost. This will also shorten the project timeline, reducing financing and other time-related costs.

3. Initially, we can standardize on a limited number of off-the-shelf PAT sizes; it is much harder to standardize on site features. So, why not try an alternative approach that fits the site to standard PAT assemblies, instead of designing a turbine-and-generator assembly to uniquely fit each specific site? Once a mass market for microhydro emerges and establishes itself, the industry can then design more efficient turbine-generator combinations for this growing market to replace the less efficient centrifugal pumps used as turbines. But these micropower turbo-generators will then show features typical of mass-marketed commodities: standard sizes, a low-cost bare-bones set-up, optional accessories, and so on. One can imagine a secondary market eventually growing around the basic micropower installation.

4. Tame the “wild AC” output from microhydro installations with electronic technologies which are already standard in the wind industry, and bypass the need for hydraulic or mechanical control mechanisms. Digital electronic controls enjoy the same advantage of declining prices as all other electronic equipment, especially if these are made for a growing mass market.

5. Develop “killer-apps” for micropower. For the early microcomputer, the first killer-application was the spreadsheet software called Visicalc. This killer-app transformed the microcomputer from a hacker's toy to a business machine that every office must have. And it was only the first in a series of “must-haves”, each one helping propel the continuous growth of the market.

6. Consumers and markets often show certain price “sweet spots”, below which products exhibit a dramatic increase in sales. For newly-introduced desktop computers in the U.S., for instance, the sweet spot was around a thousand dollars. For microhydro installations, the sweet spots may be higher for municipalities, and lower for farm owners with access to fast-flowing water. Just as solar panels had to drop in price by an order of magnitude or more, before they found those sweet spots that appealed to mass markets, microhydro vendors may need to strive for further price reductions, until the market responds enough to activate the economics of increasing returns to scale. The micropower industry should find these sweet spots and strive to reach them. To start off the discussion on sweet spots, let me offer an initial suggestion: microhydro installations for municipal projects should cost about as much as small low-cost housing. For farms, no more expensive than a cheap car. And for the do-it-yourself crowd, no more than the price of a computer. With such prices, one can almost imagine an impulse to buy, if only to try, the new technology.

7. The government should conduct a thorough resource assessment of smaller rivers and produce low-cost publicly available maps that indicate liters per second or even potential watts per meter at five-meter interval contour lines as the rivers flow towards the plains. This can support a nationwide effort to tap what a Department of Energy official has called the “vast untapped resources” available for micro-level hydropower generation."

Recommendation for a micropower transition in the Philippines

Roberto Verzola:

"The renewable micropower industry should also recognize the favorable winds blowing in its favor.

These major drivers for the market expansion of renewables include:

1. With Philippine electricity rates ranking as one of the most expensive in Asia, consumers will welcome the fundamental shift that will occur when renewables like solar, wind and appropriate forms of energy storage reach parity. Rooftop solar is in fact already the cheapest in many service areas. Other renewables will soon follow suit. Precisely because our rates are expensive, we have crossed over grid parity earlier than other countries, making us a pioneer of sorts in the energy transition to renewables.

2. People who are fed up with endemic brownouts will be willing to spend much more on reliable electricity. Their areas will make ideal markets for introducting new micropower products. Off-grid and brownout-prone areas will comprise a significant market for solar panels.

3. As the impacts of climate change worsen, and with a growing international consensus for each country to commit towards greenhouse gas reductions, the renewables market can be expected to enjoy a boom, based on this single factor alone. In fact, as carbon pricing and carbon taxation become the international norm, fossil-fuelled power plants will soon be forced to internalize costs that they have so far ignored, such as health, social, and environmental costs. This will make them even less competitive compared to renewables whose prices are continually declining.

4. The continuing political instability in the Middle East suggests that the currently low oil prices will not stay that way for long. The very volatility in price of this fuel creates energy insecurity that makes it very hard for oil-dependent countries to make long-term economic and energy plans, giving us very good reasons to look for alternatives.

Speaking of the political environments, we can ask government to do a few more things to hasten the energy transition to renewables.

1. The government should liberalize the regulations that govern the use of solar, wind and river water for micropower generation, so that communities, families and individuals are less hampered by byzantine bureaucratic impositions. Requiring, for instance, a 500-watt solar panel owner to apply for a “Certificate of Commerciality” from the Energy Regulatory Commission is just one example of the bureaucratic barriers to the mass adoption of micropower. As is the utility imposition requiring the same owner to conduct a “grid impact study” and a change of meter before it allows net metering to happen.

2. The government should ensure that the provisions on net metering of the Renewable Energy Act are strictly observed, and not violated, by distribution utilities. Unfortunately, the utilities have ignored the law and implemented their own version, which leads to double-charging and has become a solid barrier against rooftop solar. Net metering is the simplest and least expensive way to account for the complex three-way transfer of values that occurs when a micropower installation alternately exports and imports electricity to or from the grid, and the utility sells the result of this exchange to other customers nearby. This matter is so important to the growth of the micropower industry that I have covered it in a separate paper. (Google “net metering by Verzola in cleantechnica”)

3. Finally, the government should review and update the Philippine Energy Plan 2012-2030, especially the sections on energy efficiency and on renewable energy. The PEP 2012-30 contains a remarkable possibility lurking within its pages: if the government had taken the PEP 2012-30 seriously and made sure that its targets were attained in both its energy efficiency project (PEEP) and renewable energy program (NREP), PEEP would have been able to reduce the growth in the demand enough that the NREP alone would have sufficed to meet the demand plus the required reserves. Under this scenario, already planned for and with firm targets in PEP 2012-30, there would have been no need at all to build new fossil-fuelled plants. This would have jibed perfectly with the Philippine commitment in Paris to reduce by 70% the country's greenhouse gas emissions by 2030."