This week marks the twentieth anniversary of NASA Scientist James Hansen’s groundbreaking Congressional testimony on global warming, an event that put climate change squarely on the political agenda. In honor of the anniversary, UN Dispatch, On Day One, and Grist are partnering to discuss ideas the next president can adopt to take on climate change. We are joined by a panel of experts who will weigh in on ideas submitted to On Day One by everyday users concerned about the climate crisis.
Our first idea comes from On Day One user wise old owl, who suggests we decentralize energy production.
Decentralized energy production through use of renewables (roof-top solar as well as solar farms, together with geothermal, tidal, and wind) can be transferred across our national grid to areas where it is needed from areas with higher productivity and/or lower need, which would change on a dynamic basis. This would eliminate centralized generating facilities as “targets” for terrorists, and eliminate the “control mentality” of large, centralized for-profit utilities.
This strikes me as important, because this is one of the ideas that people could start working on without the federal government. The ability to connect to the grid and sell energy back to your local supplier is based on state and local laws, primarily. I know in New Jersey there are farmers along the Delaware Bay, which has great wind capacity (and doesn’t have the prized “views” that folks along the Atlantic Coast are worried about impairing), who would love to build wind turbines and start selling back to the grid, but they’re prevented by state laws. It’s not only a tremendous opportunity to become energy independent and to curb emissions, but it’s also an economic opportunity for individuals and small businesses. This is something that folks should be lobbying for at the local and state levels now, which would help create more pressure to do the things nationally that would need to be done to make this happen.
But then, of course, there’s the bigger problem of revamping the grid to make this possible. Oilman-turned-clean-energy-evangelist T. Boone Pickens was on the Hill just last week testifying about how the country’s transmission problems are preventing wind from becoming a major source of power. Pickens is attempting to build the world’s largest wind farm in Texas. Right now though, it would be impossible to get solar energy from Arizona to Seattle, or wind energy from Texas to the surrounding states. It would require a a lot of new transmission lines, and that would probably take a significant amount of public investment at this point. Some states, like Texas, have already started adding and expanding transmission lines, but there really needs to be a national effort in order to connect all these localities.
On the federal level, though, another major hindrance right now is the lack of stability in the renewable industries, because Congress has failed to pass tax credit extensions multiple times. There’s a $54 billion tax package hanging in the balance in Congress right now that would extend tax breaks for renewable energy that are set to expire at the end of this year. This includes a six-year extension of the investment tax credit for solar energy; a three-year extension of the production tax credit for biomass, geothermal, hydropower, landfill gas, and solid waste; and a one-year extension of the production tax credit for wind energy. There are also incentives for the production of renewable fuels such as biodiesel and cellulosic biofuels, incentives for companies that produce energy-efficient products, and incentives to improve efficiency in commercial and residential buildings. The House has passed the package repeatedly, but it’s failed in the Senate six times now.
Folks in the renewables industry are starting to get nervous as we near the expiration of those credits at the end of this year, and I’ve talked to people who work with trade organizations that represent renewable-energy firms on the Hill who say they’re already seeing a slowing of growth in the sector because companies are hesitant to start new projects without the assurance that these credits will be available. Passing those credits now would be a significant step toward decentralizing energy
Nigel Purvis, President of Climate Advisers
Opening and expanding the grid to promote green competition makes a lot of sense. Of course, we also need to find ways to ensure that the companies that paid for today’s grid recoup their investment in a green energy future. One way to do this would be to create financial incentives for today’s utilities to improve the energy efficiency of their customer’s homes, schools, factories and office buildings, as Duke Power CEO Jim Rogers has proposed. The cleanest power plant is the one that doesn’t have to be built. And greater investment in energy efficiency would increase incomes and economic growth, making it one of the clearest ‘no regrets’ climate change solutions.
I think large, central-generation power plants are on the wane, for reasons as much economic as environmental. The cost of power plants has been spiking and there’s been a concomitant surge in interest in smaller, faster, lower-risk investment options. There’s big private money flooding into this area and orders of magnitude more ready to go pending the lowering of a few barriers.
Keep in mind that there are two kinds of decentralized energy. One is solar panels, small wind turbines, combined heat and power systems, geothermal heat pumps, and other sources of energy that can be owned and operated by communities, business, or individuals. The other is utility-scale renewable power farms, mostly wind and concentrated solar (CSP). These are large and centralized insofar as they clustered together, but they are decentralized in that they are made up of multiple independent units. They are, in the jargon, modular.
Both have their merits — 207 merits, according to Amory Lovins. A system based on some mix of the two would get you graceful failure (individual units can go out without imperiling overall supply), safety (it’s difficult for terrorists or natural disasters to take out power plants that are spread out), dispatchability (it’s almost always windy or sunny somewhere in a large geographical area), and speed (units are smaller and cheaper and thus can be built more quickly).
As in so many cases, what’s needed is a combination of regulatory reform and investment. Right now electricity sector regulations are heavily biased in favor of central plants, for reasons varied and painfully wonky. In terms of investment, we need to put far, far more public money into clean energy R&D , and we need to get serious about infrastructure, particularly building a smart grid that can intelligently coordinate distributed resources. We also need innovative funding mechanisms (like Berkley, Calif.’s rooftop solar program or Shai Agassi’s Project Better Place in Israel) to overcome the primary barrier to deployment, which is high upfront capital costs.
Just to end with a metaphor: The move from central to decentralized power will mirror the move from mainframes to desktop PCs. The democratization of computing power not only made IT cheaper, it is helping invigorate democracy itself as citizens learn to talk, learn, and work together directly, without intermediaries. Thus has come a flood of innovations and serendipities we never could have predicted in advance. Another flood will come with the decentralization of power.
The biggest obstacle to decentralizing our system of electricity generation and transmission has been, and will continue to be, the institutional structures working to keep it centralized. For us to transition to a system that favors decentralized or “distributed” generation, we would need substantive changes in policies at the local, state, and federal levels — not to mention cultural shifts at the utilities themselves.
Thus far, the favored policy mechanisms for developing renewable energy in this country have been tax credits, and more recently at the state level, renewables portfolio standards (RPS). But the problem is that federal investment tax credits for renewable energy (ITCs), and production tax credits (PTCs) have not provided the steady, long term investment security that is needed to make renewable energy a substantial portion of our electricity mix.
Instead, the one and two-year extensions of the tax credits interspersed with periods of no federal support whatsoever, have given us “feast or famine” cycles of clean energy development, whereby, renewable energy development ebbs and flows with the shifting political tides.
The tax credit/RPS model does little to encourage proliferation of the kind of small-scale renewable energy generation Mr. Owl refers to in his question. For example, the PTC is only applicable to those entities with a large enough tax liability to make a tax credit worthwhile (usually multinational energy companies). Excluded from taking advantage of the PTC are most individuals, churches, schools, water districts, neighborhood associations, or any other not-for-profit organization.
I submit that the best way to develop this country’s renewable energy sources is not necessarily to extend those languishing tax credits for another couple of years, but rather to democratize the grid by guaranteeing a fixed tariff for anyone who puts electricity back on it. The “feed-in tariff” model is the primary reason that half of the world’s installed solar PV is in Germany. German feed-in laws require utilities to pay a specific tariff based on the technology used to generate the electricity. The idea behind the different payouts is that they will eventually drive down prices of the more expensive technologies so they become more competitive with other sources. Thanks to the feed-in, Germany now gets about 15 percent of its electricity from renewable sources, at an added monthly cost of about $1.69 per household.
In the U.S., on the other hand, those who put solar, small wind, biomass, etc. back on the grid are lucky if they can benefit from a local “net-metering” policy, which allows meters to spin backwards, but doesn’t allow the folks who own them to actually turn a profit.
Feed-in tariffs have been introduced in several U.S. states, and most recently, a national feed-in tariff proposed by Rep. Jay Inslee (D-Wash.) may be introduced in the House as early as this week. But as I mentioned at the outset, the policies and institutional structures that have been built around the model of centralized generation and distribution will not be easy to change, and those with vested interests (i.e. the major utilities) are going to do their best to prevent that change from happening.