November 8, 2010

The Winds of Support for Renewables

A cover story in the NY Times today declares, "Cost of Green Power Makes Projects Tougher Sell." Apparently wind turbines are not flying off the shelves as fast as a couple of years ago (when oil hit $145/barrel in mid-2008, it was a pretty good boost to the renewables industry).

While China and other countries ceaselessly invest in renewables, we continually see these kinds of ebbs and flows in our commitment depending on the politics of the moment. In the inexorable march toward a clean energy grid and economy, these slow-downs do take the wind out of your sails (pun intended).

But this is why the now-dead climate bill was so vital. A price on carbon would accelerate the transition and smooth out these ups and downs, providing some predictability to investors in these new markets.

I'm 100% convinced we will see a 100% renewable-based grid at some point. The problem is that it won't happen fast enough to stave off some very bad effects of climate change. It might take 40 to 50 years on current economics, but we need to do it in more like 20.

So the political reality of a carbon tax being impossible with Republicans ascending is bad enough. But what's really sad about this story was that this supposed cost barrier is negligible. From the Times...

“The ratepayers of Virginia must be protected from costs for renewable energy that are unreasonably high,” the regulators said. Wind power would have increased the monthly bill of a typical residential customer by 0.2 percent.

In Kentucky, the article says, the number is 0.7 percent. To put those figures in perspective, if you paid $300/month on electricity, your bill would be higher by 60 cents each month in Virginia and $2.10 in Kentucky. And that's if fossil fuel prices don't go up much (don't bet on it). I firmly believe that traditional energy prices are fundamentally rising over time as demand around the world continues to grow. So why wouldn't we want energy sources with zero variable cost?

As the wind company CEO featured in the article put it, "They have to look for the ratepayers’ long-term interest,” he said, “not just the bills this year.”

Especially if those bills go up just 60 cents.

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