The LA Times is reporting on the impacts of utility-scale solar power plants in SoCal’s desert counties. What do you get when you start building multi-billion dollar solar installations? Solar land-men, in three piece suits, leaning on your local politicians for favorable tax treatment? Solar astro-turf campaigns, with corporate sponsored buses bringing solar supporters to public meetings? Yeah. Of course you do. How else could it be, within our system? If we do the responsible thing for the climate, and create a wholesale shift away from fossil fuel to renewables like wind and solar, we will have replaced one trillion dollar industry with another, and trillion dollar industries all behave badly. At some level, what we’re fighting for is to create a trillion dollar climate advocate. An incumbent corporate interest, invested in not breaking the sky. And when we’re done, we’ll still have all the greater governance issues lying around, waiting to be dealt with.
A presentation from Lawrence Berkeley National Labs, exploring Why Rooftop PV is so much cheaper in Germany than the US. Their feed-in tariff started out quite generous, and has declined predictably over the last several years, which has resulted in the rooftop PV market growing enormously, while installers have been forced to dramatically reduce costs. To the point where today, it’s about half the cost per-watt-installed to get PV in Germany that it is in the US. The physical hardware is the same price, but the process is much easier, and the businesses involved in it much leaner. Good old fashioned German engineering at work, but in the policy realm.
I just finished reading Renewable Energy Policy by Paul Komor (2004). It’s a little book, giving a simplified overview of the electricity industry in the US and Europe, and the ways in which various jurisdictions have attempted to incentivize the development of renewable electricity generation. The book’s not that old, but the renewable energy industry has changed dramatically in the last decade, so it seems due for an update. There’s an order of magnitude more capacity built out now than ten years ago. Costs have dropped significantly for PV, but not for wind (according to this LBNL report and the associated slides). We’ve got a much longer baseline on which to evaluate the feed-in tariffs and renewable portfolio standards being used in EU member countries and US states. I wonder if any of his conclusions or preferences have been altered as a result? In particular, Komor is clearly not a fan of feed-in tariffs, suggesting that while they are effective, they are not efficient — i.e. you end up paying a higher than necessary price for the renewable capacity that gets built. This German report suggests otherwise, based on the costs of wind capacity built across Europe. Are the Germans just biased toward feed-in tariffs because they’ve committed so many resources to them? NREL also seems to be relatively supportive of feed-in tariff based policies, but maybe this is because the design of such policies has advanced in the last decade, better accounting for declines in the cost of renewables over time, and differentiating between resources of different quality and utility.
The IEEE Spectrum magazine has a preview of a book looking at the EROI (energy return on investment) for solar PV, based on 3.5GW of actually installed capacity in Spain. The authors suggest that based on their case study, the EROI for utility-scale PV, when all the associated energy expenditures are accounted for, is substantially lower than the value of ~7 which is commonly cited. It’s worth noting, however, that EROI is not something being optimized for right now. We’re very much focused on the plain old ROI, and in a world without a meaningful carbon tax (and, indeed, many subsidies for fossil fuels) even if you’re building renewable energy installations, you’re going to tend to use the cheapest energy available in that pursuit. The article also points to another study, suggesting that an EROI of 12 or so is necessary to support “modern society”… but that has to depend pretty intimately on how efficiently you utilize your energy, and what you think constitutes “modern society”. Either way, the EROI for fossil fuels is steadily declining as we pursue more and more “unconventional” reserves, so we’ll have to come up with a new solution, whether we want to or not.
Vaclav Smil on the the scale and difficulty of executing an energy transition for the civilization. “Calculate with me!” he says, before diving into a bunch of order-of-magnitude demonstrations that this is all much harder than we might like to think. He’s very pessimistic about the large-scale integration of intermittent resources, and also about humanity’s ability to initiate a change voluntarily. Would like to understand those positions better… and still continue to disagree with them. The talk is long and rambling, but he’s so clearly engaged and emphatic that it doesn’t matter.
It’s often been said that “time is money,” and it turns out to be more than an aphorism.
I’m going to try and tell you a story about discounting, which is one of the ways that we convert between time and money. The story has broad implications for the energy investments we choose. It’s not entirely straightforward, and if it’s going to make sense there are some background pieces you’re going to need. The background is important because the ending depends not only on understanding what is being done, but why. This story happens to be about Xcel Energy and Colorado, but the same thing happens in other places, with other companies, and in other contexts too.
To greens my argument may seem circumspect. I’m not going to challenge the doctrine of Everlasting Economic Growth. I’m not going to look at the large externalized costs of burning fossil fuels. I’m not going to argue against the monopoly electrical utility model. Those are important discussions to have — they’re just not the one I’m having here. What I’m trying to do is show that a minor change in the way we calculate the cost of future energy can drastically alter what kind of power we decide to invest in for the next century, even if we only look at the decision in selfish financial terms.
To the finance geeks among you, much of the background will be familiar, but the situation may seem strange unless you’re familiar with how regulated monopolies work. I haven’t been able to find anyone familiar with energy finance who thinks what we’re currently doing makes sense, but if you’ve got a thoughtful rebuttal, I’m genuinely interested to hear it.
Conservative thinktanks step up attacks against Obama’s clean energy strategy, as revealed by ALEC bills and other PR documents. This morning at the World Renewable Energy Forum, in response to a (long winded) question about how we might re-frame the energy discussion in light of the unfortunate hay which was made from Solyndra’s failure, US Energy Secretary Stephen Chu re-iterated that clean energy should not be a political issue — that it’s just common sense. That may be true, but it doesn’t mean it will remain apolitical. As Pericles once said… “Just because you do not take an interest in politics, does not mean that politics will not take an interest in you.” Clean energy is political, as is climate change. Yes, it’s stupid, but that’s the way it is. We have to deal with it. Though, I have to admit, if prices keep dropping like they have been, it will be fun to watch the right-wing culture warriors backpedal, as massive renewable deployments become profitable without subsidies of any kind in the next decade.