WUEG February 2015 Newsletter

WUEG
February 2014 Newsletter
India: Growing Demand, Growing Dependence
Henry Gager – Head of internal education, Academic Committee
Currently, India is the fourth largest consumer
of energy in the world, following historical
energy giants China, the United States, and
Russia. However, one crucial difference is
beginning to become alarmingly clear in Indian
energy consumption: a growing dependence
on fossil fuel imports. India boasts the world’s
third largest economy and the second largest
population, and has considerable fossil fuel
resources at its fingertips, yet is struggling to
increase its domestic production rates. In
2013, India imported approximately 42% of its
primary energy consumption, a number that is
expected to rise over 50% by the year
2030. Political officials attribute India’s inability
to expand its fossil fuel production to high
debt levels, infrastructure deficiencies, and
energy structure reforms, all of which have
created an unappealing environment for
energy investment. That being said, with an
increasingly modernizing and urbanizing
economy, India is struggling to meet domestic
energy demands and secure reliable and
affordable energy supplies.
Coal is India’s primary source of energy,
making up approximately 45% of total energy
usage. Put concisely, domestic production has
been blown away by increasing
demand. Domestic producers have
consistently failed to meet government
production targets, and shortages across the
country have been reported for nearly a
decade now, with insufficient investment and
mining industry problems plague the
marketplace. Additionally, because the
majority of Indian power plants rely on coal,
major Indian cities have experienced regular
rolling blackouts. As the population continues
to rise and urbanize, demand will increase
exponentially, and securing cheap energy
imports will soon become extremely difficult.
Generating approximately 25% of Indian
power, natural gas has become a key source of
energy. Up until 2004, India did not import any
natural gas, but since the development of the
LNG markets, it has become increasingly
dependent upon foreign imports. In 2013,
India accounted for nearly 6% of the global
LNG market, a staggering share. Reliance of
foreign natural gas again stems from the
inability to produce large quantities
domestically, with production being hindered
significantly by inadequate pipeline
infrastructure. This lack of ground organization
has also drastically affected the oil industry,
which sees production in small, concentrated
areas and minimal transportation across the
country. To this point, many Indian energy

companies have looked to diversify their
supply sources, investing heavily in foreign oil
and gas production fields, particularly in South
America. Yet, as must be importantly noted,
the vast majority of Indian oil and gas imports
come directly from the Middle East, where
access to direct investment is extremely
limited.
Clearly, major changes need to be
implemented in order to secure the currently
uncertain future of Indian energy. Attracting
investment, improving infrastructure, and
working towards reducing debt standing must
be top priorities for Indian officials.
This link details possible energy scenarios for
India in the near future, and can help shed
more light on their growing energy demand.
Sources:
Energy Information Administration
India Energy Security Scenarios
Opinion
The Nuclear Solution to the 9-Billion-
Person Problem
Charlie Gallagher – VP, Academic Committee
On my 47 th birthday, there will be nine billion
people living on this planet. Worldwide, the
middle class is on the rise, as is demand for
food, water, air conditioning, cars, highdefinition
TVs, and, most of all, energy. One of
the biggest questions this world faces is how
can we supply the energy needs of nine billion
people?
died of immediate acute radiation syndrome
and fifteen died in the following years of
thyroid cancer. The United Nations estimated
the radiation-related fatalities to be 4,000 by
the year 2066. It was a tragedy and an
appalling act of negligence by the Ukrainian
power plant’s operators.
The solution is nuclear energy. Nuclear
reactors use a naturally radioactive element
called uranium to split apart atoms in a chain
reaction, which generates heat that turns water
into steam that turns a turbine that generates
electricity.
The history of nuclear power is rough to say the
least. But a brief run-through is useful in order
to bust some myths and provide some
perspective. The first plant was constructed in
1954. Since then, there have been some
notorious nuclear accidents. Chernobyl (1986)
is most notable, where an explosion released
radioactive particles into the atmosphere,
causing global panic. Twenty-eight workers
Point Beach Nuclear Station, Two Rivers, WI. Capacity: 1,026 MW
Three Mile Island (1979), the worst accident in
the history of U.S. nuclear power, resulted in
zero fatalities but cost an estimated $1 billion

to clean up. However, the American Nuclear
Society stated that the average local resident’s
radiation exposure was equivalent to a chest X-
ray. Similarly, a Columbia epidemiological
study “found no link between [nuclear] fallout
and cancer risk.”
More recently, the 2011 Fukushima nuclear
meltdown caused billions of dollars in damage
and a worldwide radiation scare that,
laughably, prompted some Californians to
swallow iodine tablets in fear of radiationrelated
thyroid cancer. There were three
fatalities: two workers who fell and one worker
who bled to death from being struck by a
piece of machinery. A UN Committee on
atomic radiation (UNSCEAR) reported in early
2014 that there is “no evidence [the incident]
will lead to an increase in cancer rates or birth
defects.”
Both the Three Mile Island and the Fukushima
accidents were partially the result of fear: TMI
engineers warned their superiors several times
that valves were loose (later found to be one of
the primary causes of the TMI incident) but the
managers ignored these warnings, fearing
costly regulatory intervention; the Japanese
utility TEPCO publicly admitted that they
“failed to take stronger measures to prevent
disasters for fear of inviting lawsuits or protests
against its nuclear plants.”
To compare casualties from nuclear energy to
those from other energy sources is like
comparing annual base-jumping fatalities to D-
Day. In 2005 alone there were 6,000 deaths
from coal mining, according to the World
Wildlife Fund. An accident at a hydropower
plant in China—the Shimantam Dam—killed
171,000 people in 1975.
Yet only 57% of Americans favor nuclear
energy. The political repercussion of this
sentiment has made nuclear power perhaps
the most painfully over-regulated industry in
America. At a power plant I visited this
summer in Florida, there were 700 individuals
on-site; 350 of them were security
personnel. The costs of compliance are rising
faster than ever, in large part due to ignorance,
panic, and political cowardness.
The economic perspective, however, is most
central to this argument. The shale gas boom
coupled with this egregious nuclear
governance has made gas plants increasingly
cost-competitive with nuclear. But nuclear
power has the potential to be the most
economically viable solution to the nine-billionperson
problem. Here’s why.
First, nuclear power runs all the time. Wind
blows at night when there is little demand; as a
result, many turbines turn in their blades
because no one is there to buy the power.
Solar only generates when—and where—the
sun shines, and unless you cover north Africa
with solar panels, this technology simply won’t
cut it for rising energy demand. Second, fuel
costs (uranium) have a fraction of the volatility
and exposure to market forces as gas, oil, and
coal. Third, the planet has only so much
available space. The San Gorgonio Pass Wind
Farm has a capacity of 615 MW over 5500 acres
(and the geology that creates the wind tunnel
is one-of-a-kind). The Seabrook nuclear plant in
New Hampshire has twice the capacity on onesixth
the acreage. Unless families want to live
amongst the noisy wind turbines, the best
energy solution to meet future demand is
nuclear.
Finally, and most importantly, once the world
includes the full cost of carbon in the price of
power (and other commodities), the value of
carbon emissions-free nuclear energy will
soar. Coal—and even gas—will inevitably lose
the price war to nuclear.

My intent is not to bash solar and wind, nor to
say that nuclear energy is risk-free. I only wish
to convey a sobering reality: nuclear power is
the best choice for the world. And if we can
convince politicians and citizens alike to even
consider that possibility, we are one step closer
to having nine billion fully-powered people.
Sources:
American Nuclear Society
Chernobyl Forum Assessment Report
Journal of Contemporary Asia
UNSCEAR
New York Times
World Wildlife Fund
Clean and Safe Energy Coalition
Sustainable Startups
OxiCool: A Cleaner Approach to Air
Conditioning
Connor Lippincott – Senior Member, Academic Committee
This is the first in a series of articles about startups and small companies working on sustainable energy solutions. This
month’s focus is OxiCool, Inc., a company that is amidst their first product roll-out after 6 years of work.
I first learned about OxiCool at the Penn Start-
Up Career Fair, where I met their CEO,
Ravikant Barot, and their Director of
Administration and Sustainability, Emma Kaye.
Barot, a Wharton MBA Graduate, started the
company in 2009 through the Frederick
Innovative Technology Center, Inc. incubator.
Since then they have worked with both the
military and large trucking companies to make
and distribute an air conditioning system that
avoids the environmentally harmful gases
present in most air conditioners today. Kaye
told me that they have broken ties with the
military for now since “there was too much red
tape” but that this summer was going to see
their first product release with an unnamed
trucking company.
Their product, which they bill as “the world’s
only truly green air conditioner,” simply uses
water in the place of other, less ‘green’
refrigerants. It’s a simplified system, requiring
only the unit and a heat source. This works well
for motor vehicles, especially large trucks,
which generate plenty of heat on their own. A
test run at a 2012 Marine Corps event showed
that the unit was able to reduce the
temperature of 115°F water nearly
instantaneously to 60°F. They also claim that
their unit can save 90% of trucking air
conditioning fuel costs. Their claims are
impressive, and it seems as though they have a
final product that will be able to live up to
these expectations.
In the broader scope of things, the lack of
fluorocarbons in this system is promising. Most
systems in developed countries have phased
out chlorofluorocarbons (CFCs), which directly
deplete the ozone layer as a result of the 1987
Montreal Protocol. However, most refrigeration
units still use hydrofluorocarbons (HFCs) which
do not deplete the ozone layer but still
contribute to global warming. One of the most
widely used refrigerant blends, HFC-134a, has
a global warming potential (GWP) of ~1300—a
significant amount. Limiting the use of these
agents is definitely good for the environment.
However, this system does still require a large
heat source, which can often bring
unsustainable methods into the equation.
OxiCool even claims that its “technology

capitalizes on the low cost and efficiency of
natural gas”. Claiming this as a perfect system
would be overly optimistic, but overall, it
seems as though they have a good product
that can help reduce damage to the
environment.
Their product roll-out this summer will be
interesting to follow, and I hope it is profitable
enough to continue to expand.
Sources:
OxiCool
Daikin Global
EPA
Beyond Keystone XL: How Albertan Oil Sands
will reach the Global Market
Max Isenberg – senior member, Academic Committee
President Obama’s February 24th veto of
legislation that would have moved forward
negotiations on the Keystone XL pipeline
connecting Canadian oil resources to refineries
and shipping terminals in the United States has
raised questions about the impact to Albertan
oil sand production. Understanding the
existing and proposed alternatives to Keystone
XL can help put the planned pipeline into the
greater context of oil sands production and
transportation.
Mining at the Alberta oil sands (Source: Pembina Institute)
Other Pipelines
Currently, a few pipelines exist to transport oil
sands within Alberta and to key shipping sites.
The Transmountain Pipeline, operated by
KinderMorgan, currently has the capacity to
transport 300,000 barrels per day to Vancouver
for export to Asia and the US West Coast. The
company has plans to almost triple the
throughput of the pipeline by 2017.
Additionally, the original Keystone pipeline,
which starts in Hardisty, the main terminal from
which oil sands are transported out of Alberta,
takes a roundabout path to Cushing,
Oklahoma, and carries up to 600,000 bpd.
Keystone XL would more than double the
transport capacity and take a shorter path to
Cushing. Interestingly, no single pipeline
connects Eastern and Western Canada; as a
result, despite being a net exporter of oil,
Eastern Canada must import 640,000 barrels
per day. While plans exist to build such a
pipeline, they remain at least a few years away.
Road and Rail: Dangerous
Alternatives?
Beyond pipelines, crude can be shipped from
the region via rail or truck. Rail has gained
increasing popularity in recent years as
pipeline investment cannot keep up with the
demand for capacity. Currently, rail takes away
over 200,000 BPD, an impressive ramp up
given that rail shipments only began in 2013.
Predictions of rail shipments suggest between
700,000 and 900,000 BPD could be transported
by 2016. While numbers for the magnitude of
road transports are hard to come by, it appears
that it still remains a minor method of
transportation in Alberta. However, as demand

for transport remains unfulfilled, tanker trucks
will gain in use and importance.
Both trucking and rail pose environmental,
safety, and economic concerns. The likelihood
for leaks are significantly higher for rail cars and
trucks, which are less reliable methods of
conveying crude than pipelines. Additionally,
rail and roads often run through populated
areas and accidents (such as in Quebec in
2013) violently demonstrate the volatile nature
of crude. Finally, hiring drivers and contracting
trains, though requiring less capital investment,
cost significantly more per unit of oil moved.
While effective as a stopgap measure to
transport crude, pipelines represent the most
realistic long-term vehicle for getting oil sands
crude to market.
Oil Sands Hit by Oil Prices
Despite all the hub-bub, current oil prices may
make the entire debate moot. Oil sands
projects, with their very high set-up costs and
relatively low grade product, face significant
cuts to investment as oil prices have plunged
and stayed low for several months. Shell’s
shelving of an oil sands mine on February 23rd
underscored the threat that the current pricing
environment could have on new production
and alternative pipelines. Still, those
operations that are being completed or have
already been finished will be finished, as the
expectation remains that prices will eventually
rebound. The long term impacts of the price
environment are unclear, but the fact remains
that oil from oil sands is going to reach the
global market, one way or another.
Sources:
Business News Network
Canadian Association of Petroleum Producers
Financial Post
Forbes
Solar Energy in China
Sheetal Akole – Senior member, Academic Committee
With a population of over 1.4 billion people
and an economy growing at 7.7% per year,
China currently holds the title to the largest
energy consumer in the world. Major cities
such as Beijing, Xi’an, and Nanjing are now
known for their pollution, contributed by their
dependence and use of coal-powered plants.
As of 2011, coal constituted 69% of total
energy consumption, and oil constituted 18% --
renewables only accounted for approximately
7%. However, a more recent look at China’s
energy consumption shows shifting trends,
with renewables, especially solar energy,
beginning to play a larger role.
In 2012, China had 3 gigawatts (GW) of solar
capacity – their goal was to reach 35 GW by
2015. As of August 2014, China’s total power
supply was up to 23 GW, coming in second (in
terms of solar capacity) behind Germany, which
had 36GW of capacity. Although Germany
remains the global leader in solar power
generation, China is challenging their position.
In 2013, China increased its photovoltaic (PV)
generation capacity by a whopping 232%.
Compare this to Germany’s 56.5% decline in
new PV generation capacity additions.
Many of the large strides taken by China in
terms of solar energy generation comes as a
result of two main characteristics: China’s
massive solar panel manufacturing industry and
the way China incentivizes solar power. China
has ramped up its PV cell production and is

selling them on the world market below cost,
undercutting domestic panel-makers and
uncompetitive manufacturers out of business.
Over the past seven years, the costs of PV
systems have fallen 80%.
While most developed countries have been
scaling back government incentives for solar
panels, China has been increasing tariffs and
subsidies offered to private industry. Both
ground mounted and rooftop panels are
eligible for a feed-in tariff. Feed-in tariffs allow
energy producers to charge a higher price for
their electricity than the retail rate, amounting
to, in this situation, a subsidy of between 14
and 16 cents per kilowatt hour. New public
buildings and public infrastructure are also
eligible for subsidies, encouraging orders for
solar equipment.
Looking forward, China has set its sights on
reducing carbon emissions and continuously
increasing their supply of solar energy. By
2020, the government aims to have 15% of
China’s power mix coming from renewable
energy sources, and with solar panel costs so
low, a large portion of this mix will be solardriven.
In addition, China is seeking solar
markets overseas because its current
manufacturing capacity exceeds domestic
demand. However, certain countries (such as
the United States) are pushing back, imposing
anti-dumping and anti-subsidiary tariffs on
China. The two questions we are left with are
how China will handle the overcapacity of solar
panels that they are manufacturing, and
whether the solar industry will be able to
sustain itself in the long run when government
subsidies are removed.
Sources:
World Resources Institute
United Nations Environmental Programme
OilPrice
New York Times
Apple Runs on Renewables
Arthur Chen – senior member, Academic Committee
There has been some big news surrounding
Apple, Inc. in the past month. First, it became
the first company in America to hit a $700B
market capitalization. Second, there are rumors
swirling around when Tim Cook will deliver the
iWatch. Third, and most recently, the
Cupertino-based company appears to be
making a move in the electric car space.
Possibly lost amongst this deluge of news was
another major news story. Apple announced
that it had entered into a $850 million dollar
agreement to buy solar energy from First Solar,
the biggest developer of solar farms in the US.
The 130 megawatts of power provided by this
procurement deal will be enough to power all
of Apple’s headquarters, offices, stores, and
data centers in California.
The contract is set start almost immediately in
mid-2015, and the plants (formally located in
the California Flats Solar Project in Monterey
County) will have an ultimate footprint of 2,900
acres when it is completed by the end of 2016,
1,300 of which will be allotted to Apple. This
agreement builds on top of Apple’s existing
investments in two 20 MW plants in North
Carolina and one 20 MW plant in Nevada. At
this point, all of Apple’s data centers are
powered by renewables, positioning the
world’s biggest company as a leader in the
corporate community over the future of
energy.

While Apple’s deal is the first of its kind for
solar, many other large companies have
already struck similar deals. Just last year,
Google signed a 400 MW deal power-purchase
deal in wind, bringing the company’s total to 1
GW. Amazon signed a 150 MW deal for wind
just last month, and Microsoft has done deals
for a total of 285 MW itself. Outside of Silicon
Valley, large retailers like Wal-Mart have been
installing solar arrays on its roofs, and Ikea
joined a group of large companies in a
commitment to be fully renewable by 2020.
Apple’s new deal inspires questions as to
whether this represents the beginning of a new
age of environmental responsibility among
American companies. For his part, Tim Cook
has taken the lead on the issue. While speaking
at the Goldman Sachs Technology and Internet
Conference, he said: “We know at Apple that
climate change is real. The time for talk has
passed and the time for action is now.” He
went on to say: “We’re doing this because it’s
right to do. But you may also be interested to
know that it’s good financially to do it.”
If the world’s biggest company can do it,
perhaps all the other companies aspiring to be
the next Apple will take their cue and follow
suit.
Sources:
Bloomberg
The Verge
Oil Prices Update - February 2015
Thomas Lee – senior member, Academic Committee
the start of the year down to about 1,000 units,
according to Baker Hughes data. Also,
Bloomberg reports that amidst OPEC's refusal
to cut output, international oil majors like Shell
and Chevron have announced capital
expenditure cuts of more than $40 billion since
last November.
After the last few months’ drop to a historic 6-
year low, crude oil prices have begun to rally.
On February 25, WTI front month futures
traded at $50 per barrel, up from around $44 at
its lowest in January; Brent traded at $61
dollars, showing an increase in the Brent-WTI
spread that seemed to disappear at the end of
January. This crude price rise reflects supply
adjustments to overall low prices--WTI is still
down 50% from highs last June. For example,
U.S. weekly oil-rig count decreased 31% from
Downstream, gasoline prices also rose. On
February 24, RBOB (reformulated blendstock
for oxygenate blending) futures traded at
$1.62, up from lows of $1.28 in January. The
RBOB-Brent crack spread increased to 18 cents
per gallon, doubling since the start of the year.
This additional price hike above crude is driven
significantly by the largest U.S. refinery strike
since 1980, yet unresolved as of February 25.
The massive United Steelworkers walkout by
more than 6,000 union members closed 12
refineries, or one-fifth of U.S. refining capacity.
Similarly, the February 18 explosion and fire at
an ExxonMobil refinery in Torrance, California
negatively impacted capacity (although this

incident's effect on crude indices is less since
the California market is relatively isolated from
other U.S. and international markets). Without
these incidents, consumers would have seen
even lower prices at the gas station.
The diminished refining capacity contributes to
the fact that, despite the slowdown in crude
supply, large crude oil inventory buildups are
occurring. The weekly U.S. change in crude oil
inventories is around positive 8.4 million
barrels. These factors suggest that prices are
not increasing indefinitely but rather are
stabilizing. A senior Gulf OPEC delegate
commented to Reuters that a price level of $60
is acceptable; they will likely not cut output.
Americans should be expecting gasoline prices
to remain low well into 2015.
Sources:
Bloomberg
CNBC
Energy Information Administration
Forbes
LA Times
Reuters