Scuttlebutt: Renewable Energy

Scuttlebutt: Renewable Energy

    If I could feel sorry for energy companies I would.  Turns out, though, that would be tough sledding for me.  Coal companies, power companies, and oil companies are facing strong headwinds as they struggle to retain the business practices that have made them the economic giants that they are.

     The problem for them is that most are committed to a business model that is no longer supported by the public or reality.  Short term profits are still to be had as the world transitions away from fossil fuel, yet a recent poll by a group called RE100 reveled that 74% of respondents believe we should use “as much renewables as possible” and 70% say “in the near future we should use 100% renewables such as wind and solar”.  Surprising to me is that a majority of those surveyed (51 percent) believe that 100 percent renewables is a good idea even if it raises their energy bills by 30 percent.  This was worded merely to gauge public interest, not because rate increases like that are likely—it is quite the opposite.

     This stands in stark contrast to efforts by oil companies to seek new oil leases, power companies to build fossil fuel plants and coal companies to even exist.  The last-gasp business approach is driven by the short term need to keep stock prices up.  When an oil company, for example,  acquires a new lease, it is an asset that increases the value of the company, even if they don't ever drill.

     There is a real dilemma for energy companies.  State and local governments as well as many large corporations have committed to a goal of zero emissions, but following that course of action would mean that many fossil fuel assets would become “stranded”, an economist's fancy term for useless.  That, of course, reduces the value of a company.

     Wind and solar bid into wholesale power markets at very low cost, and are usually dispatched first.  The reason for that is that once a solar or wind facility is constructed, the cost of operation is very low because of the lack of necessary inputs.  In other words, you don't have to keep buying fuel to feed your boilers.  This prevents not only the most expensive gas plants – such as less efficient simple-cycle plants – from being brought on line, but also most of the coal plants.

     The Sierra Club notes that so far in the US, more than 80 cities, five counties, and two states have committed to 100 percent renewables. Six cities have already hit the target.  The group RE100 tracks 152 private companies across the globe that have committed to 100 percent renewables, including Google, Ikea, Apple, Facebook, Microsoft, Coca-Cola, Nike, GM, and, uh, Lego. Even if policymakers never force power utilities to produce renewable energy through mandates, if the biggest customers demand it, utilities will have to produce it.

     Renewable energy is hot. It has incredible momentum, not only in terms of deployment and costs but in terms of public opinion and cultural cachet. To put it simply: everyone loves renewable energy. It’s cleaner, it’s high-tech, it’s new jobs, it’s the future.  Growth has been driven largely by state policies and federal tax incentives that encouraged adoption of renewables. In 2005, non-carbon sources accounted for 28% of the U.S. electricity mix. By 2017, that share had grown to 38%. Almost all of this growth was in renewables.

    Take a look at Texas.  Since 2010 nearly a fifth of the electrical generation in Texas comes from wind and solar.  The Electric Reliability Council of Texas (ERCOT) reports that Texans have saved $5.7 billion since 2010 because of renewables.  Their modeling found that wind and solar have reduced wholesale power prices by an average of between $1 and $2.50 per megawatt-hour each year from 2010 through 2017.  ERCOT has estimated that the state could put online 12 GW more of solar by 2030. This will ultimately mean more hours where coal and gas plants are not operating, and more retirements of conventional generation.

     Texas is not alone.  New England saw its first “duck curve” day this year; that is, where mid-day net demand fell to a lower level than overnight demand due to high levels of solar.

     U.S. electric power sector carbon dioxide emissions (CO2) have declined 28% since 2005 because of slower electricity demand growth from increased efficiency and changes in the mix of fuels used to generate electricity. EIA has calculated that CO2 emissions from the electric power sector totaled 1,744 million metric tons in 2017, the lowest level since 1987. 

      In 2017, renewables – such as hydropower, wind, solar and geothermal energy – made up 16% of the electricity powering the nation’s homes and businesses. This is almost double their contribution at the start of the decade.  

     Iowa’s largest electric utility, MidAmerican, expects to be generating 85% of its electricity from wind by 2019. In Kansas, the utilities are on track to supply 50% of the state’s power with wind by the beginning of 2019.

    Texas, Iowa, Oklahoma, California, and Kansas, in that order, lead the nation in wind power generation while all acquiring more than 1/3 of their power from wind.  New Mexico, Missouri, Wisconsin, Vermont, and Michigan have had the greatest growth in wind generation as they rush to catch up with the national leaders.

     The solar industry took a little hit this year because of the Trump-imposed tariffs on Chinese solar panels, but still achieved the Energy Department's goal of reducing solar costs to $1/W and did so three years early.  Though California far leads the nation in solar output, the five states with the greatest growth are all “red” states, because it is not about politics—it's about money.

Devreaux Baker Devreaux Baker at Coast Community Library in Point Arena

Devreaux Baker Devreaux Baker at Coast Community Library in Point Arena

Getting To The Bottom Of Things: The Dungeness Crab

Getting To The Bottom Of Things: The Dungeness Crab