Energy Modernization as Climate Policy
When West Virginia Sen. Joe Manchin stabbed President Joe Biden’s “Build Back Better Act,” he also “expressed” his support for the bill’s energy modernization and environmental aspects. Of course, earlier, he “hinted” that he didn’t support the $4 trillion bill, but might be interested in smaller bills. After the $2 trillion cut, it’s hard to know what his signal means. While he struggled to survive in the crimson politics of West Virginia, he was a very smart guy and knew that fossil fuels were about to go out. Federal money to modernize the energy system and make it more efficient and “green” won’t penalize his hometown fossil fuel businesses too much, and may provide resources to invest in a less costly and more reliable energy system. The United States will need such an energy system to remain competitive in the global economy. The U.S. grid is increasingly unreliable.according to U.S. Energy Information Administration: “On average, U.S. power customers experienced more than eight hours of power outages in 2020, the most since we began collecting power reliability data in 2013.” Most outages were caused by major weather events. Climate change is responsible for more frequent and intense weather events. Without redesign and rebuilding, we should expect more energy outages.
This is a selling point that we seem to overlook when discussing the energy system and climate change. Current systems are highly centralized and vulnerable to climate and cybersecurity impacts. It also relies on fossil fuels. Even if fossil fuels don’t destroy the planet, they are still an established alternative technology. In the long run, the cost of fossil fuels will be much higher than that of renewable energy. Fossil fuels are finite, and while there is still plenty of supply, it’s getting harder and harder to get them. In comparison, the sun will live longer than us humans. Solar cells, batteries, and wind power technology are constantly improving, making them more efficient and less expensive—kind of like computers and smartphones. The computing power of a multi-million dollar computer in the 1970s was far less than a $300 smartphone. The source fuel for renewable energy is free. In stark contrast to fossil fuels. Oil, coal and gas must be extracted from the earth at the expense of wallets and ecosystems, transported to where it is burned (at a higher cost), and finally burned. fee on top of the fee. This is a technology that has been disrupted and replaced by renewable energy.
We still need an energy grid for the foreseeable future, and with large-capacity transmission lines, we may be able to deliver renewable energy from sunny and windy places to cities. But absurd efforts like California’s tax on households with solar panels to pay for the grid won’t work, and grid financing will become more difficult when distributed generation reaches an unknown tipping point. We can expect to see power companies and their regulators oppose efforts to promote renewable energy. California’s efforts to tax solar panels have been ridiculed by former Gov. Arnold Schwarzenegger. New York Times last week’s column. According to Arnold, the state proposes:
“…new monthly ‘grid participation costs’, with an average estimate of $57 per month For solar customers. People who power their homes with fossil fuels won’t pay the bill. So let’s call it: a solar tax. This solar tax also applies to customers who invest in batteries to store solar energy. Battery storage is critical to the transition to clean energy and grid resilience. But such a tax will only hinder that progress. In addition, the commission will cut credits for new solar customers (and some existing customers) by up to 80% for not using and delivering to the grid under a net metering plan. These credits, in turn, can lower their utility bills. This is just one more example of how big companies — investor-owned utilities — are fighting for themselves and hurting people who have invested or want to invest in solar panels. ”
The political reaction against the California Public Utilities Commission’s efforts was swift. As a result, Governor Newsom and the committee appear to be holding back.According to Rob Nikolewski, in San Diego Union-Tribune:
“Unsurprisingly, the California Public Utilities Commission has delayed a vote on a controversial proposal that would dramatically change the way the state’s 1.3 million rooftop solar customers are compensated when their systems generate more electricity than they consume. Voting is scheduled for January 27, but Agenda for next Thursday’s meeting No item lists proposed decisions on net energy metering tariffs colloquially known as NEM 3.0 or more formally. ”
Institutional and financial interests in investing in fossil fuels and grids are major obstacles to modernizing our energy system. While currently owners of solar panels and batteries often sell excess back to the grid, reducing energy costs on the grid, a tax on home solar could lead to a decision to disconnect from the grid entirely. Technology may develop that will make cutting energy lines less risky, more common, and more costly for those who rely on the grid. We’ve seen this with landlines and cable TV. Why should electricity be immune to similar forces?
The problem in California is that the fees paid to homeowners and businesses that sell energy to the grid may be set too high in order to encourage renewable energy investment. The cost of maintaining and updating the grid needs to be paid by someone. The required capital investment is subsidized in part by federal infrastructure and the Build Back for a Better Climate provision. But the long-term shape and financing of the grid needs to be rethought and refinanced as part of efforts to modernize and decarbonize the energy system.
Since I live in an apartment in NYC, I don’t have a place for rooftop solar. But many companies are working to put solar cells in window glass. The technology shows great promise and should lead to the ability for people in multifamily homes or skyscraper offices to generate their own electricity. While all of these technological developments will help reduce greenhouse gas emissions, combined with advanced battery technology, they are also expected to reduce costs and provide more reliable electricity.
Once upon a time, houses were heated by fireplaces, and light came from oil or gas lamps and candles. These technologies were replaced by oil, gas, electric heat and light bulbs. There is no reason to believe that the methods we currently use to power our homes will continue indefinitely. In the future, power companies will play a different role in powering our economy than they do today. We are all interested in preventing utility companies from going bankrupt and encouraging them to actively participate in the energy transition to renewables. We should not tax renewables to fund the transition, at least until renewables are more widely used. California has over a million installations, but it’s a state with a population of over 39 million. They still have a long way to go, and the rest of the country has a long way to go when it comes to renewable energy.
National-level resources will be required to provide the funds needed to modernize the grid. By easing some of the capital costs for utilities and their taxpayers, utilities can lower costs by reducing grid waste and reducing reliance on fossil fuels. Large-scale national projects like grid modernization will require subsidies, but once built, some of the ongoing costs of grid maintenance and generation can be reduced and adapted to the different loads the current system seeks to meet.
The transition will be complex, and financing needs will vary by region. Interest group politics will be characterized by intense lobbying from utilities, fossil fuel companies, renewable energy companies and environmentalists. But the goal should be a cheaper, more reliable, less polluting energy system. By bringing these three elements together, under the umbrella of modernizing our energy system, we can build a broader coalition than efforts led by greenhouse gas reduction goals. Energy modernization is the goal, and greenhouse gas reduction is a much-needed by-product.
