Public Utilities Should Embrace Renewable Energy Revolution, Not Get Run Over By It
The U.S. electricity sector will be unrecognizable in 20 years. How—and how—fast it changes will be a big factor in how large a price the world pays for having disrupted climate equilibrium—but it is not the climate threat that will drive the changes. Electricity is a very capital intensive business. The rapid shift from one set of technologies and business models to another means that much of the existing capital will be stranded—worthless—sooner than its owners will like. This is what Schumpeter called capitalism’s “creative destruction.” But incumbent owners and firms are using every tool at their disposal to slow change to protect the value of their investments.
Photo credit: Shutterstock
Three major threats undermine the value of the classic U.S. utility model: big power plants linked to big transmission grids operated by monopoly companies with guaranteed profits.
- SLUMPING DEMAND: Historically electricity was mostly wasted (90 percent of the electrons in a light bulb turning to heat not light). Optimizing its value required information, which cost more than electrons. Now electrons are more expensive than information. The historic link between total economic production and electricity demand has shattered. Not only is electricity consumption rising slower than the economy grows, in the U.S. it is actually shrinking. So utilities whose profit model required adding new generation capacity and new wires to meet higher demand are suddenly running out of load growth to feed their stock value.
- DISECONOMIES OF SCALE AND AGE: For decades utilities built bigger and bigger generating plants further and further from customers requiring more and more transmission because bigger was cheaper—and then kept them running as long as possible. Now the arrival of distributed generation—mostly in the form of rooftop solar—is enabling customers to become generators, and to replace precisely those electrons which create utility profits—peak afternoon and early evening load. And when utilities look around for “bigger is cheaper” options, they come up short, because most of their central station technologies—coal, nuclear, big hydro, new transmission corridors—are bad, unpopular neighbors. The bigger they are, the harder they are to site. Resulting delays and the need to compensate neighbors make ever bigger utility technology no longer cheaper. Recent nuclear and coal projects have, without exception, been plagued by enormous delays and cost overruns. Meanwhile, since 1977 utilities have chosen to delay modernization of their power plants, preferring instead to lobby for exemptions from pollution standards. This left power companies with an outmoded fleet of filthy coal plants that poured mercury, soot, sulfur and other toxins into neighboring communities. That delayed maintenance bill has now come due, but the economics of old coal power plants doesn’t work when both renewables and natural gas have dropped dramatically in price—cleaning up most old coal plants costs more than they are worth. (That’s before climate clean protection is added to the bill.)
- EMPOWERED CUSTOMERS. Rooftop solar, cheaper than remotely delivered grid power when you include the cost of transmission, is the killer-ap. It enables utility customers to go partly independent. In California, the combination of utility scale and roof-top solar has already stripped away the traditional afternoon peak load. This time of day fattened the profit ledger because large base-load generators could charge the same rate as more expensive intermittent natural gas peaking plants. Utilities inability thus far to respond to this threat caused Barclay’s bank to downgrade the bonds for the entire sector. But rooftop solar is only one new innovation disrupting the traditional capital and electron wasteful model. Demand response technologies, recruiting consumers whose power needs can be shifted by a few hours to shave peak demand are now a significant part of the total management strategy of many utilities. Industrial customers are jumping into the business of deploying combined heat and power making them, too, generation competitors. The U.S. grid is deplorably unreliable—20 percent of the total U.S. power supply has to be backed up with diesel generators, because the hospitals, airports, data centers, university laboratories, highways and bridge signaling systems which use that power cannot tolerate grid failures. But new fuel cell and battery storage technologies are becoming the preferred reliability option. Once customers have their own reliable storage capacity, it becomes much easier for them to self-generate and pull away from the grid altogether.
While the research that led to these disruptive changes was in many cases inspired by concern over climate, they have now achieved a competitive advantage over traditional centralized generation that is self-sustaining, no longer dependent upon climate policy. The sector will change dramatically—utilities cannot survive on their present models.
But the utilities are not out of the game yet. They have enormous opportunities if they are willing to be revolutionaries, as they were in the 1920’s when electrifying the nation the first time, or in the 1950’s when they provided the finance that enabled Post World War II Americans to shift to an appliance heavy, kilowatt hour dependent suburban “all electric” life.
They have three huge business opportunities the environmental community would love to support. Most of the industry is desperately trying to throw them away.
1. Rooftop solar. What are the “first principles” as Elon Musk likes to say?
- Rooftop solar is very capital intensive
- It is customer centric.
- It requires lots of detailed knowledge about every roof and substation.
Who in the marketplace possesses cheap capital, intimate customer relations with every electricity user, and detailed knowledge about roofs and substations?
SolarCity? Sunrun? Well, they can buy rooftop maps from Google. They pay a fortune to obtain the rest, particularly customer knowledge.
But, with that same little help from Google, your average public utility has those assets in spades. They ought to dominate the rooftop solar business and the electrons it generates, to fill in their grid and make it more reliable and robust. They can choose the best roofs for their purposes without regard to the income of the homeowner, because they can lease the space not the panels.
2. EV saturation. If utilities embrace the rooftop revolution, they still need load growth. They also need balancing capacity—customers who can be cycled on and off with load shifts since the cheapest power they can get soar and wind, is intermittent. EV's are the perfect solution to provide demand growth, while simultaneously enabling balancing load—because the average car is parked 95 percent of the time, available to charge or discharge.
Indeed, as the industry did with the "All Electric Home" in the 1950's, utilities should become the financiers of EV sales, making it cheap to buy EV’s in exchange for paying a slight a premium on the electrons they use.
3. The Storage Breakthrough. It will come—perhaps the visionaries who say our cars will become grid storage are right, and EV saturation will BE the storage breakthrough. Or perhaps some other form of storage breaks through instead. Having a grid with lots of distributed rooftop solar and demand manageable EV load means that the volume of storage needed is much smaller than would be required to meet the needs of remote solar and wind.
And if there is no technological breakthrough beyond batteries, EV's are still the key to storage. As batteries improve and EV's penetrate, this will generate a huge supply of used batteries which can no longer cycle as nimbly as an EV requires, but which have a decade or more of utility grade service left in them.
Utilities would need permission from their regulators to convert from a capital rate-based monopoly to one reliant on a diversified portfolio of fees, with modest recovery from generation of electrons. Utilities would look more like a bank or a cable company. Which in today's world does not look like a bad profit strategy.
But it’s a very different world, and holding on to old stuff for a few more years will only ensure that instead of leading the revolution, today’s public utilities are run over by it.
Part III of this series will focus on getting through the transition.
YOU MIGHT ALSO LIKE
- Climate Crisis Could Change Permafrost Soil Microbes, With ... ›
- Zombie Fires Could Be Awakening in the Arctic - EcoWatch ›
- The Arctic Is on Fire and Warming Twice as Fast as the Rest of the ... ›
EcoWatch Daily Newsletter
By Tony Carnie
South Africa is home to around 1,300 of the world's roughly 7,100 remaining cheetahs. It's also the only country in the world with significant cheetah population growth, thanks largely to a nongovernmental conservation project that depends on careful and intensive human management of small, fenced-in cheetah populations. Because most of the reserves are privately funded and properly fenced, the animals benefit from higher levels of security than in the increasingly thinly funded state reserves.
Vincent van der Merwe at a cheetah translocation. Endangered Wildlife Trust
Under Pressure<p>Cheetah populations elsewhere in Southern Africa have not prospered over the past 50 years. In Zimbabwe, cheetah numbers have crashed from 1,500 in 1975, to just 170 today. Botswana's cheetah population has held steady at around 1,500 over the same period, but illegal capture for captive breeding and conflicts with farmers and the growing human population are increasing. In Namibia, there were an estimated 3,000 cheetah in in 1975; roughly 1,400 remain today.</p><p>In contrast, South Africa's cheetah numbers have grown from about 500 in 1975 to nearly 1,300 today. Van der Merwe, who is also a Ph.D. student at the University of Cape Town's Institute for Communities and Wildlife in Africa (iCWild), says he's confident that South Africa will soon overtake Namibia and Botswana, largely because the majority of South African cheetahs are protected and managed behind fences, whereas most of the animals in the neighboring countries remain more vulnerable on mainly unfenced lands.</p><p>Wildlife researchers Florian Weise and colleagues have reported that private stock owners in Namibia still trap cheetahs mainly for translocation, but there are few public or private reserves large enough to contain them. Weise says that conservation efforts need to focus on improving tolerance toward cheetahs in commercial livestock and game farming areas to reduce indiscriminate trapping.</p><p>Van der Merwe says fences can be both a blessing and a curse. While these barriers prevent cheetahs and other wild animals from migrating naturally to breed and feed, they also protect cheetahs from the growing tide of threats from humanity and agriculture.</p><p>To simulate natural dispersion patterns that guard against inbreeding, the trust helps landowners swap their animals with other cheetah reserves elsewhere in the country. The South African metapopulation project has been so successful in boosting numbers that the trust is having to look beyond national boundaries to secure new translocation areas in Malawi, Zambia and Mozambique.</p><p>Cheetah translocations have been going on in South Africa since the mid-1960s, when the first unsuccessful attempts were made to move scores of these animals from Namibia. These relocations were mostly unsuccessful.</p>
Charli de Vos uses a VHF antenna to locate cheetahs in Phinda Game Reserve. Tony Carnie for Mongabay
Swinging for the Fences<p>But other wildlife conservation leaders have a different perspective on cheetah conservation strategy.</p><p>Gus Mills, a senior carnivore researcher retired in 2006 from SANParks, the agency that manages South Africa's national parks, after a career of more than 30 years in Kalahari and Kruger national parks. He says the focus should be on quality of living spaces rather than the quantity of cheetahs.</p><p>Mills, who was the founder of the Endangered Wildlife Trust's Carnivore Conservation Group in 1995, and who also spent six years after retirement studying cheetahs in the Kalahari, says it's more important to properly protect and, where possible, expand the size of existing protected areas.</p><p>He also advocates a triage approach to cheetah conservation, in which scarce funds and resources are focused on protecting cheetahs in formally protected areas, rather than diluting scarce resources in an attempt to try and save every single remaining cheetah population.</p><p>"People have an obsession with numbers. But I believe that it is more important to protect large landscape and habitats properly," Mills said.</p><p>He suggests that cheetahs enclosed within small reserves live in artificial conditions: "It's almost like glorified farming."</p><p>"In the long run we have to focus on consolidating formally protected areas," he added. "Africa's human population will double by 2050, so cheetah populations in unfenced areas will become unsustainable if they are eating people's livestock."</p>
Scientists are on the brink of scaling up an enzyme that devours plastic. In the latest breakthrough, the enzyme degraded plastic bottles six times faster than previous research achieved, as The Guardian reported.
- Mutant Enzyme Recycles Plastic in Hours, Could Revolutionize ... ›
- Scientists Find Bacteria That Eats Plastic - EcoWatch ›
- Plastics: The History of an Ecological Crisis - EcoWatch ›
- Scientists Accidentally Develop 'Mutant' Enzyme That Eats Plastic ... ›
By Jessica Corbett
In a rare calm moment during a historically active Atlantic hurricane season, an international team of climate scientists on Monday published a new study in the journal Nature Climate Change showing that human-caused global heating is making the world's oceans more "stable"—which, as co-author Michael Mann explained, is "very bad news."
<div id="e639b" class="rm-shortcode" data-rm-shortcode-id="d8d112e123588b9bf3c3eadcc89627e8"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1310602217825726465" data-partner="rebelmouse"><div style="margin:1em 0">Thank you to @MichaelEMann for patiently and clearly explaining to non scientists why increased ocean stabilizati… https://t.co/yW2BmQhKGp</div> — Dr Naomi Wolf (@Dr Naomi Wolf)<a href="https://twitter.com/naomirwolf/statuses/1310602217825726465">1601306893.0</a></blockquote></div>
<div id="85eca" class="rm-shortcode" data-rm-shortcode-id="43780424fc8b04e23a525e1bad1086eb"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1310608647651811336" data-partner="rebelmouse"><div style="margin:1em 0">Canada has oceans on 3 sides-we can't ignore the climate news that The Oceans Appear to Be Stabilizing. Here's Why… https://t.co/SfWJWWRHr7</div> — Friends Of Halifax Common (@Friends Of Halifax Common)<a href="https://twitter.com/FriendsHalifax/statuses/1310608647651811336">1601308426.0</a></blockquote></div>
<div id="3e52e" class="rm-shortcode" data-rm-shortcode-id="f210e186b6e1481a64770e0c8722a438"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1310638669477236738" data-partner="rebelmouse"><div style="margin:1em 0">"Das bedeutet, dass das CO2-Budget, das zur Vermeidung kritischer Erhitzung (z.B. 1,5°C) übrig bleibt, möglicherwei… https://t.co/675YBTSybJ</div> — Parents For Future #SystemChangeNotClimateChange (@Parents For Future #SystemChangeNotClimateChange)<a href="https://twitter.com/parents4future/statuses/1310638669477236738">1601315583.0</a></blockquote></div><p>Ending his piece on a similar note, Mann wrote that "in short, it's unwise to be complacent given the accumulating scientific evidence that climate change and its impacts may well be in the upper end of the range that climate scientists currently project. There is ever-greater urgency when it comes to acting on climate. But there is agency as well. Our actions <a href="https://www.newsweek.com/dangerous-new-form-climate-denialism-making-rounds-opinion-1455736" target="_blank">make a difference</a>—something to keep in mind as we head into a presidential election <a href="https://www.newsweek.com/greta-thunberg-donald-trump-true-leadership-climate-change-free-world-1461147" target="_blank">whose climate implications</a> are monumental."</p><p>Mann is on the mounting list of climate experts and advocates <a href="https://www.axios.com/2020-presidential-election-joe-biden-endorsed-climate-scientists-24013990-0300-4c2c-ad95-57571b397196.html?fbclid=IwAR3vTCBmK5BwvoafwGefadTsnIMnKo9FS6ssc9PCdFLEeXr6p4KHlnrFWKU" target="_blank">supporting </a>Democratic presidential nominee Joe Biden in his effort to oust President Donald Trump—who has, at various points, ignored and exacerbated the climate emergency. Earlier this month, the <a href="https://www.commondreams.org/news/2020/09/15/matter-life-and-death-after-175-years-scientific-american-backs-biden-magazines" target="_blank" rel="noopener noreferrer">editors</a> of<em> Scientific American</em> as well as the political action arms of both 350 and Friends of the Earth also <a href="https://www.commondreams.org/news/2020/09/24/clarion-call-all-progressive-environmentalists-defeat-trumps-planetary-destruction" target="_blank" rel="noopener noreferrer">endorsed</a> the former vice president.</p><p>"The stakes are clear and present," Tamara Toles O'Laughlin from 350 Action said of the general election, for which early voting is already underway in some states. "The planet cannot withstand four more years of Trump."</p>
- 5 Things to Know About Earth's Warming Oceans - EcoWatch ›
- Report Details Climate Crisis Impacts on Coral Reefs, Warns of ... ›
- 'A Little Shocking': Ocean Currents Are Speeding up Significantly ... ›
By Hannah Murphy
When he talks about the Trump administration, David Doniger likes to say: "Imagine where we'd be if they knew what they were doing." The climate lawyer and senior advisor to the NRDC Action Fund spends his days defending the environment from the U.S. government, and for the past three and a half years, that's meant a front-row seat to the Trump administration's relentless attacks on any regulation that's meant to slow the climate crisis.
- Trump's Climate Change Record Threatens the Planet - EcoWatch ›
- Climate Change Purged From White House Website - EcoWatch ›
- America Burns From Climate Change While Trump Officials Attend ... ›