Improvements in solar technology, along with rate hikes that make energy more expensive and tax incentives that encourage consumers to make their homes more energy efficient, will soon upset the delicate monopoly that utility companies have maintained for a century.

By Richard Read, Guest blogger / June 2, 2013

Some of the twenty 3 by 5 foot solar panels recently installed by Rich Herr at his home in Valparaiso, Ind. Solar power could disrupt the business model of traditional utility companies.

Andy Lavalley/The Post-Trubune/AP/FIle

Now, a new threat looms in the dark pit we call progress: solar power. According to Grist, utilities are worried that wiring up photovoltaic cells to human ingenuity will soon upset the delicate monopoly that those companies have maintained for the past 100 years. 

The article details a report from the Edison Electric Institute (PDF), which paints a bleak picture of the utility sector's future. In addition to rate hikes that make energy more expensive and tax incentives that encourage consumers to make their homes more energy efficient, the industry is also witnessing a rapid drop in the cost of solar energy hardware. Between 2008 and 2012, the price of photovoltaic panels fell from $3.80/watt to $0.86/watt -- and hold onto your hats, because it could go lower. 

Adding to these dark burdens are improvements in energy storage technology. Every week, it seems like someone or other develops a new battery that can hold more power and do so longer than those on the market today. Pair those batteries with a solar setup, and you give customers something terrifying: access to 24-hour power.

Analysts at EEI worry that all these factors may encourage more customers to switch to solar. As they do, they'll begin using the grid as mere backup, in much the same way that cellphone owners hold onto their rarely used landlines -- putatively as a backup, but really, just for nostalgia's sake. 

That, in turn, will lead to a drop in profit at utility companies, which will force upper management to scale back on their consumption of gold-plated golf tees and also reduce the dollars they spend maintaining the grid. That will cause the grid to become even less reliable than it is today, forcing even more customers into the bright, shiny embrace of solar energy. 

In common parlance, that's called a vicious circle, but the technical term is "Oh, we've reached the tipping point."

At the moment, solar makes up less than 1% of the U.S. energy mix, but the article cites Bloomberg Energy Finance, which predicts 22% annual growth in photovoltaic sales for the coming years. By 2020, such expansion could begin drying out some utility companies' swimming pools full of cash and Franklin Mint collectibles.

So what are the utilities to do? Judging by the wrap-up on page 19 of the EEI report, it appears as if they're going to do what they've always done: charge customers more while begging states and municipalities for breaks so they can remain profitable. Oh, and maybe identify a few as-yet-unknown business models to keep themselves afloat.

This is terrible. These people aren't used to innovation -- certainly not on the scale of folks in other industries like telecommunications and automobiles. They're in deep trouble, and all because of that stupid ball of hydrogen sitting at the center of our solar system, giving away its energy for free. 

Really, something must be done. 

It took nearly seven years, but the blades are finally turning on a pair of wind turbines at the Archbold and Pettisville schools in northwestern Ohio, demonstrating how school districts can take control of their energy future and create educational opportunities for their kids at the same time.

“We have controlled the price of the electricity we will use going forward,” says Stephen Switzer, superintendent of the Pettisville schools. The turbine has a projected lifespan of 20 years.

Administrators at both of the small-town school districts had been looking into how to become more self-sufficient and reduce their energy bills since the mid-2000s. Switzer says he had watched as other districts grappled with financial problems brought on by energy costs, and he didn't want his schools to end up in the same situation when they built a new buidling, as they were planning to do in 2011. But it wasn’t until federal stimulus funds became available through the American Reinvestment and Recovery Act in 2009 that the construction of the twin turbines became a reality.

Building wind turbines isn’t cheap. But it will mean about $100,000 in energy savings each year.

Since the turbine's activation in late February, says Switzer, the 85-foot blades of the 300-foot-tall 750-kilowatt structure in Pettisville have been whirring away productively, generating about 325,000 kilowatt hours to date. On some calm days, the school has to buy electricity from the utility, but on others, when the wind is strong, it sells juice back to the grid.

In Archbold, school officials hope that the turbine will eventually meet 74 percent of the electricity needs of the district’s high school and elementary school.

Building wind turbines isn’t cheap. Pettisville’s cost more than $2.1 million, and Archbold’s came in at $1.8 million, with each school getting more than half the cost of the American-made turbines covered by stimulus funds. The rest was paid by funding from the state and interest-free loans. According to the Archbold Buckeye, proximity of the turbine sites to rail lines reduced costs. Contractors also offered better prices because the two jobs were so close together.

Switzer says that for Pettisville, the turbine will mean about $100,000 in energy savings each year.

The turbines have become part of the math and science curricula in the schools, an effort that’s being encouraged by consultants from the Renaissance Group, an Ohio firm that worked on the project and runs a program called Kilowatts for Education.

The only downside so far came on the first couple of days after the turbines were turned on. The light conditions were just right to create a flickering shadow that fell directly on the school, something that will occur at certain predictable times of year according to the position of the sun in the sky.

“We learned pretty quickly that the flicker is not something you ignore,” says Switzer. “It’s like a strobe light.” The solution is to turn off the unit when the flicker starts.

The superintendent says that support from the community has been strong throughout the process, and that he’s very happy with the way the project has come out. He likes seeing the turbine when he drives to work each day. “It’s a good feeling to have it there,” he says.

Switzer says he and the Archbold superintendent had hoped that their turbines would be a model for other schools around the country, and a few similar projects do exist. But without the stimulus money, he acknowledges, the Pettisville and Archbold turbines would never have been built. And it’s not clear when, or if, that kind of funding will come around again.

Karl BurkartA graph from a study concluding that New York State can shift from fossil fuels to wind, solar and water power by 2050.

A group of scientists and energy analysts has laid out a path under which New York State could, in theory, eliminate its use of fossil fuels and nuclear power — including for transportation — by 2050. The graph above charts the contributions played by improved efficiency and adoption of renewable electricity sources as well as hydrogen fuel cells (with the hydrogen generated with renewable energy).

The plan, “Examining the Feasibility of Converting New York State’s All-Purpose Energy Infrastructure to One Using Wind, Water and Sunlight,” is slated for publication in the journal Energy Policy.

The analysis, predicated on the need to swiftly address global warming, essentially does for New York what two of the authors, Mark Z. Jacobson of Stanford University and Mark A. Delucchi of the University of California, Davis, did for the world in an energy roadmap published in Scientific American in 2009.

The paper argues against any role for natural gas, using arguments developed by two of its authors, Anthony Ingraffea and Robert Howarth of Cornell University. Here’s one taste of what they’re calling for (from a news release):

According to the researchers’ calculations, New York’s 2030 power demand for all sectors (electricity, transportation, heating/cooling, industry) could be met by:

4,020 onshore 5-megawatt wind turbines
12,770 offshore 5-megawatt wind turbines
387 100-megawatt concentrated solar plants
828 50-megawatt photovoltaic power plants
5 million 5-kilowatt residential rooftop photovoltaic systems
500,000 100-kilowatt commercial/government rooftop photovoltaic systems
36 100-megawatt geothermal plants
1,910 0.75-megawatt wave devices
2,600 1-megawatt tidal turbines
7 1,300-megawatt hydroelectric power plants, of which most exist

To me, the analysis works best as a thought experiment, given the monumental hurdles — economic, political, regulatory and technical — that would hinder such a shift.

In gauging the costs and benefits of various energy options, the authors include the costs from illness and death linked to pollution from fossil fuels. I’d love it if such indirect costs were integrated better into how decisions on energy policy were made. Therein lies some of the value of this kind of analysis.

But, like any good thought experiment, the paper raises a host of questions, including about its basic assumptions.

- Does New York State need — for its own sake or the environment’s — to be an energy island? A lot of economists, and environmental analysts, would say no.

- Does this team’s justification for such an abrupt shift in a state’s energy system and norms match the level of risk posed by human-driven climate change?

That’s a question that will always — with or without industry lobbying — get varied answers depending on competing priorities and differing perceptions of risk across society.

If you presume the answer is yes, that leads to specific questions about how to achieve such a transformation on the time scale they propose. (This is very reminiscent of discussions here of California’s ambitious 2050 targets for greenhouse gases.)

I’m engaged in a fruitful e-mail exchange with the authors. Read on for one of my questions, with the answer from Mark Delucchi of Davis (There’s more, but I have to teach and didn’t want to delay in getting the discussion started here). 

My question:

On the energy end, how does your plan propose to get around the realities of built infrastructure today? Who puts up the money to retrofit buildings when, as New York City wrote in its energy plan, “Energy use in buildings accounts for 75 percent of New York City’s greenhouse gas emissions, and 80 percent of the buildings that will exist in 2050 are already here today.”

Delucchi’s reply:

I think there is nothing to “get around”. There are several general strategies for dealing with existing infrastructure, broadly defined.

1) Instead of upgrading, maintaining, and replacing deteriorating existing infrastructure, invest in new infrastructure. If we don’t appreciably accelerate retirement, there is no “extra” (early-retirement) cost to consider.

2) Retrofit and rebuild for maximum efficiency and minimum environmental impact. The correct basis for evaluating this economically is a full social lifetime cost-benefit analysis with a near-zero discount rate. On this basis, I believe that most improvements will be economical.

3) Electrify all sectors as rapidly as possible. In particular, create policies and physical plans that accommodate the electrification of transport. These policies and plans generally will not involve large-scale, rapid replacement of major infrastructure, but rather extensive but decentralized modifications and additions: charging stations; incentives for EV ownership, driving, and parking; mode shifting from heavy trucks to rail; port electrification; transportation and urban planning in support of electric transport, including transit and rail; etc.

4) Rapid expansion of micro WWS [wind, water, sunlight] generation and associated decentralized infrastructure: rooftop solar, micro-wind, V2G, smart grids. These are mainly upgrades and additions to infrastructure, rather than replacement. And again, the correct evaluation basis is full social cost-benefit analysis over the entire physical lifetime, at near-zero discount rate.

As you probably have seen, the Urban Green Council just came out with a report showing how NYC can reduce its carbon footprint 90 percent by 2050. I haven’t read the report carefully, but from what I’ve seen it is reasonable. I have excerpted from the abstract:

“This study focuses primarily on the building sector, the source of 75 percent of New York City’s greenhouse gas emissions. Building simulation modeling using eight basic building types shows that heating and cooling loads can be dramatically reduced through air sealing, heat recovery ventilation, and additional insulation, to a point where all heating, cooling, and hot water can be provided by heat pumps. Analysis of the city’s building stock shows that the total electric load in 2050, which must be supplied by carbon-free sources, will be slightly more than today’s electric load. Contributions from rooftop photovoltaic panels will be significant. An initial analysis shows that over the period examined, and on the basis of today’s prices for both fuel and improvements, the savings from energy use reductions will be comparable to the costs of the building improvements. The total amount is affordable and will pay for itself over time if the cost of improvements falls as expected and fuel prices increase.

“In the transportation sector, electrification and expansion of both passenger and freight rail and conversion of on-road vehicles to electric drive, hybrids, and turbo diesels, coupled with the recently enacted CAFÉ standards, will allow total residual carbon emissions to drop well below 10 percent of today’s levels. Adding electricity generation from biogas derived from waste and sewage treatment provides an additional input of carbon-free power while consuming a potent greenhouse gas.

“Several unused alternatives, such as maintaining the district steam system on waste combustion, are discussed but were not incorporated in the analysis.

“Although not a blueprint or detailed plan for the next 37 years, ’90 by 50’ demonstrates that the extreme emission reductions required to minimize climate change are in fact possible using technologies that are known and in almost all cases currently available, and that the cost is within reasonable bounds.”