Grids and smart grids allow various power companies to share capacity and load, buying and selling electricity back and forth on the fly and by the second when necessary, but at the end of the day you and I write a check to one company.
That company is your local entry point into—or handcuff to—the power-industrial complex.
They like big. Big nuclear plants. Big coal plants. Big dams. Big oil- or gas-fired plants.
By keeping things centralized and big, they’re able to ensure they can always, forever and ever, skim a few dollars out of your wallet every day for your electricity.
Which is why it’s such a good idea to decentralize our power systems.
Decentralization
Big Power is jumping on Big Solar and Big Wind projects like there’s no tomorrow—they already have a business model that works for it. And to some extent this isn’t a bad thing: We have to make a transition from Big Coal and nuclear plants to something, and with the existing grid and distribution systems in place, these companies are ideally situated to be agents of that change.
But what happens when a critical mass of people figure out they can live, like my friend Hal Cohen, without ever having to send a penny to a power company?
Hal and Shelley live just outside Montpelier, Vermont—about as northern and mountainous a place as you’ll find in America. They have a beautiful, spacious house, with all the modern appliances and amenities. And there is no electric power wire coming to their house, and never has been.
Hal’s house is a more modern version of thousands built nationwide back in the late 1970s, when President Jimmy Carter had pushed through Congress a series of bills that made it profitable to build off-the-grid houses. He explicitly said, in an address to the nation in 1979, that his goal was to have 20 percent of the nation’s power produced by solar energy by the year 2000. And with the programs he put into place, we would have easily reached it.
Every time Louise and I move (which has been about every five years for the past forty-plus that we’ve been married), be it in Georgia, New Hampshire, Oregon, or Vermont, the realtors have always either had or known of off-the-grid houses for sale. And these houses were almost always either very recent or built between 1978 and 1982, when Ronald Reagan killed off the programs in a nod to his big-energy financial supporters.
The Tipping Point
If you type “solar power rooftop shingles” into a search engine, over three million hits come back. At the top is a 2010 video review that Consumer Reports did of Dow’s new “Powerhouse Solar Shingles,” which the company was just then rolling out. They require no wires or wiring—and so can be installed by a normal roofer using normal roofing nails. They look pretty much like asphalt shingles, and protect the roof of the house the same or better. And they can generate “from forty to sixty percent” of all the electricity a home needs (and that’s assuming the home hasn’t been superinsulated and appliances haven’t been upgraded to low-power-consumption types).
At the moment, according to Consumer Reports, it costs about $25,000 to cover your roof with Dow’s new photovoltaic shingles, but federal tax advantages can cut that price by a third, and state tax incentives can drop it even further.
Meanwhile, a new technology was announced in late 2011 that allows solar-electric-generating panels to be created using an ink-jet printing technique to apply the light-catching/electricity-producing material, rather than the now-current “gas diffusion” method, which requires large machines, lots of heat, and wastes much of the material. The cost of solar panels is dropping like a stone, pretty much following Moore’s Law—every year or two the price drops by half, while the capability doubles. As of this writing, solar panels are competitive with any other form of electricity generation, and far cheaper than coal or nuclear when you monetize the externalities such as fly ash, smoke/mercury, and nuclear waste. Wind is even cheaper. Both solar and wind will become so inexpensive soon—perhaps even by the time you read these words—that the tipping point will have been reached and most all of the investment, development, and research money and effort will be there.
As will people’s homes.
Just as America now faces an unsustainable thirst for energy, so, too, was Germany faced with a power crisis in the late 1990s. Growing demands for electricity collided with the reality that the country has no oil reserves and a strong bias among its people against building new nuclear power plants in the wake of the nearby Chernobyl meltdown.
Yet the government knew that the country needed the electricity equivalent of at least one or two nuclear power plants over the next decade. So, how to generate that much electricity without nuclear power?
In 1999, progressives in Germany passed the 100,000 Roofs Program,189 which mandated that banks had to provide low-interest ten-year loans to homeowners sufficient for them to put solar panels on their houses. They then passed the Renewable Energy Law and integrated the 100,000 Roofs Program into it in 2004.190 The REL mandated that for the next ten years, the power company had to buy power back from those homeowners at a level substantially above the going rate so that the homeowners’ income from the solar panels would equal their loan payment on the panels and would also represent the actual cost to the power company to generate that amount of power by building a new nuclear power plant.
At the end of the ten years, the power company gets to buy solar power at its regular rate, and it now has a new source of power without having to pay to maintain (and eventually dismantle) a nuclear reactor. In fact, while the reactor would have a twenty-to-thirty-year life span, the solar panels typically last fifty years.
For the homeowners, it was a no-brainer: They were getting low-interest loans from banks for the solar panels, and the power companies were paying for the power generated from those panels at a rate high enough to pay off the loans. It was like getting solar-power panels for free.
If anything, the government underestimated how rapidly Germans would embrace the program, and thus how much power would be produced by the program, and how quickly. By 2007, Germany accounted for about half of the entire world’s solar market. Just that one year, 2007, saw 1,300 megawatts (millions of watts) of solar-generating capacity brought on line across the country.191
For comparison, consider that the average generating capacity of each of the last five nuclear power plants brought on line in the United States is 1,160 megawatts.192
In 2008, Germany added 2,000 megawatts of solar power to their grid, and in 2009 homeowners and businesses put onto their roofs enough solar panels to glean an additional 2,500 megawatts. Although the goal for the first decade of this century was to generate around 3,000 megawatts, eliminating the need to build two new nuclear power plants, this simple, no-risk program had instead added over 8,500 megawatts of power.
And, because the generation sources were scattered across the country, there was no need to run new high-tension power lines from central generating stations, making it more efficient and less expensive. Meanwhile, as dozens of German companies got into the business of manufacturing and installing solar-power systems, the cost dropped by more than half between 1997 and 2007, and continues to plummet.193
The Germans expect that by 2050 more than a quarter of all their electricity will come from solar (it’s now just over 1 percent), adding to the roughly 12.5 percent of all German energy currently being produced by renewable energy sources (mostly hydro, but also including wind, biomass, and geothermal).194
The solar-panel program has been so successful that the German government is now thinking that it’s time to back off and leave this to the marketplace. As the New York Times noted in May 2008:
Thanks to its aggressive push into renewable energies, cloud-wreathed Germany has become an unlikely leader in the race to harness the sun’s energy. It has by far the largest market for photovoltaic systems, which convert sunlight into electricity, with roughly half of the world’s total installations…
Now, though, with so many solar panels on s
o many rooftops, critics say Germany has too much of a good thing—even in a time of record oil prices. Conservative lawmakers, in particular, want to pare back generous government incentives that support solar development. They say solar generation is growing so fast that it threatens to overburden consumers with high electricity bills.195
Translation: The solar-panel manufacturers want the subsidies to stop so they can catch up with demand and then bump up the price, and profits. Because of the subsidies, prices have been dropping faster than manufacturing costs.
Germany is now considering incentives to its world-famous domestic auto industry to manufacture flex-fuel plug-in hybrid automobiles that can get over 500 miles per gallon of (strategic) gasoline (boosted by domestically produced rooftop solar) with existing technology.
Meanwhile, Denmark has invested billions into having more than half of its entire auto fleet using only electricity by 2030.
And China is no slouch when it comes to renewable energy. Although the Chinese continue to bring another dirty coal-fired power plant on line about once a week, they surpassed every other nation in the world in 2010 in direct investment in the production of solar and wind power. As the Los Angeles Times reported in March 2010:
U.S. clean energy investments hit $18.6 billion last year, a report from the Pew Charitable Trusts said, a little more than half the Chinese total of $34.6 billion. Five years ago, China’s investments in clean energy totaled just $2.5 billion. The United States also slipped behind 10 other countries, including Canada and Mexico, in clean energy investments as a share of the national economy…
[T]he Pew report pointed to another factor constraining U.S. competitiveness: a lack of national mandates for renewable energy production or a surcharge on greenhouse gas emissions that would make fossil fuels more expensive.196
The ultimate “power to the people” is for homes to have their own solar roofs, no longer needing power lines from distant power plants owned by big transnational corporations.
A few countries are pushing this solar tipping point, like China and Germany. Jimmy Carter started us in this direction a generation ago, but Reagan and the Bushes paused it, and we’ve never recovered. Ironically, if our government doesn’t participate in bringing along the tipping point to solar and other renewable-energy systems, it’ll happen anyway because of the strong demand in other nations that is driving the technology to be cheaper and more easily accessed. The only downside for us will be that, like with our clothes and computers and TVs and pretty much everything else except weaponry, we’ll be buying our solar panels from overseas.
The final point, which I also noted in my book Rebooting the American Dream, is that if we don’t strip oil of its strategic value, we will continue to be at the mercy of OPEC—which comprises more than a few nations that don’t much like us.
Stripping Oil of Its Strategic Value
Two hundred years ago, and for a thousand years before that, one of the most strategic substances on earth was salt. It was “strategic” because no army could travel without it—salt was necessary to preserve food in a prerefrigeration era. Wars were fought over it, and countries that had lots of salt made out well, while landlocked countries with no salt reserves were forced to sell their natural resources in exchange for it.
Oil is the new salt. It is now the planet’s number one strategic resource. And as has been noted by numerous commentators since the first Gulf War, in 1990–91, if the primary export of Iraq was broccoli, we wouldn’t have given a damn that Saddam Hussein was a tin-pot tyrant.
The unfortunate reality is that we have within and around our national boundaries about 3 percent of the world’s oil, but we consume about 24 percent of the world’s produced oil. So we buy what we don’t produce. This dependence represents a massive transfer of wealth from us to oil-producing countries. It’s a strategic blunder that would have horrified Julius Caesar, who expanded the Roman Empire all the way to central Europe when he ran out of fuel—wood—by deforesting virtually all of Italy,* and then paid the price as his empire began to collapse from overexpansion.
Countries like Saudi Arabia rake in billions from oil-dependent countries like the United States, and oil revenues fuel their economies. In 2008, for instance, Saudi oil revenues spiked to $281 billion, a quadrupling of revenues from 2002. In 2009, those fell sharply to $115 billion, still nothing to sneeze at.197 Oil revenues fund much of the fundamentalist Wahhabi movement within Saudi Arabia, and it’s out of this movement that come the most virulent anti-American and anti-Semitic rhetoric, textbooks, and television and radio programming.
Thirty years ago, the OPEC nations were producing around 30 million barrels a day, nearly half of the world oil consumption. Regardless of how much we buy from them or instead buy from Mexico, because oil is a fungible commodity, their production will continue and just go to others who are no longer buying from whomever we choose to buy from. The proof of this is that today OPEC production is still around 30 million barrels—even though world oil consumption has gone up and is now around 85 million barrels a day. The OPEC nations don’t adjust production to meet demand; they maintain it to control prices so they have relatively stable income.
Thus, the only way we can change this situation is to reduce the amount of oil we use. Oil is a strategic commodity, and we need to strip it of its strategic value.
So what do we use all that oil for that makes it a strategic resource? We certainly don’t use it to produce electricity—only 2 percent of our electricity is generated by oil, because we have huge domestic supplies of coal, which produce over half of our electricity. Pretty much nobody is producing electricity with oil except the oil-rich countries of the Middle East—even rapidly-growing countries like China and India, for example, are not producing oil-fired power plants.
Thus, moving to solar, wind, biomass, or even nuclear power to generate electricity in the United States will help tremendously with our CO2 output and all the pollution “externalities” associated with coal—but it will not make us less oil dependent or strip oil of its strategic significance.
The simple fact is that oil accounts for roughly 95 percent of the energy used for transportation in the United States (our military is the world’s single largest consumer of oil), and that’s what makes it “strategic.” If we want to strip oil of its strategic value so it can’t be used as a weapon against us and so we can use our remaining oil supplies for rational things, such as producing plastics and medicines, we need to shift our transportation sector away from oil, and do so quickly.
This has been the essence of T. Boone Pickens’s rant, although the eccentric oil billionaire is now a natural-gas billionaire, and he’s suggesting that we convert our truck fleet in this country from oil to natural gas, which is nearly as bad a source of greenhouse gases as is oil. He’s right that such a change would make us stronger and safer, both militarily and strategically, but he misses the global-warming part of the equation (which is also increasingly becoming a strategic issue, as global climate deterioration leads to crises both at home and abroad).
Europe, Japan, and China are moving fast to shift their transportation sectors from oil to electricity, mostly through the use of trains. Brazil did it over the past twenty years by mandating that all cars and trucks sold would have to be “flex fuel”—capable of burning gasoline or ethanol, diesel or biodiesel. The result is that Brazil now provides nearly half of their transportation needs with domestically grown ethanol made from sugarcane (over 80 percent of their cars and trucks are now flex-fuel). And the added cost to Brazilian drivers to buy a flex-fuel car instead of gasoline or diesel-only car? About $100.
China is similarly moving in the direction of flex-fuel cars, and doubling every year their methanol production (mostly derived from domestically produced coal).
Flex-fuel cars can also burn part-ethanol, part-gasoline. If, for example, we were to shift to only 20 percent of the fuel being used by a car being gasoline (the remainder being ethanol or methan
ol), then a single gallon of gas would go five times as far. A 40-mpg car would become a 200-mpg vehicle in terms of the strategic resource of oil-derived gasoline.
Most significantly, in the United States, fully half of all automobiles are driven fewer than twenty miles in any given day. This is an easy range for an electric-only or a plug-in hybrid car, and by moving to the latter immediately—mandating them—we could shift the entire US auto fleet to consuming 50 percent or more electricity instead of gas/diesel in less than a decade, stripping oil of half its strategic importance.
And our trade policies are really stupid on this. We have no import tariff whatsoever on oil, so there is nothing to discourage American drivers from using foreign-produced oil products to fuel their cars and trucks. But we charge an import tariff of over a half a dollar a gallon on ethanol, discouraging Americans from using the fuel and discouraging the more than one hundred countries in the world where there’s enough intense sunlight and where sugarcane grows well from becoming net fuel exporters. And while we offer billions in tax breaks and incentives to oil, gas, and coal companies in the United States, we don’t subsidize or support with tax subsidies (as the Danes are doing) electric or part-electric cars, either in their production or on the consumer end.
If we add to all of this some good scientific innovation in developing a mix of low-carbon energy resources (biomass, geothermal, wind, tidal power, and so on), and can figure out a way to strip the carbon dioxide out of our power-plant smokestacks (and our atmosphere) and turn it into a solid (calcium carbonate—which you can buy at the store under the brand name Tums—is a good candidate for a desirable product produced by binding carbon, in this case to calcium), it’s not inconceivable that by 2050 we could cut our CO2 emissions by over 80 percent. And perhaps even decades sooner, if we begin now.198 Plus we could strip oil of its strategic value and make our nation independent of Middle Eastern dictatorships.
The Crash of 2016 Page 25
