Thursday, October 27, 2016

Why There Is No Silver Bullet in Energy Policy

Matt L. Wald
At 4:00 p.m. US EDT, Matt Wald, senior director of policy analysis and strategic planning at NEI, will deliver a speech in Kennewick, Washington at Energy Northwest’s 2016 Public Power Forum. 

The speech will be streamed live on the company's Facebook page. We're sharing an excerpt below. As always, please follow Matt on Twitter at @MattLWald.

The energy business is sometimes prone to the silver bullet syndrome, the belief that there’s a single solution in hand if only we’d embrace it. Back when Spencer Abraham was secretary of energy, in the beginning of the Bush administration, he called it the “flavor of the month” club. He said that at various times, methanol, low temperature fuel cells, high temperature fuel cells, superconductors, thin film pv, ethanol from non-food sources, etc, etc, were going to save us.

Today we’ve got new silver bullets, new flavors of the month. Well, I’d like to be unfashionable here. (Actually my wife assures me that I don’t have to try very hard, that I am unfashionable.) But I’d like to say some things about electricity that go against the popular view lately.

First of all, there is no silver bullet. There is no tooth fairy. Or if there is, she doesn’t work in the energy business. There are technical problems that don’t go away when you wave a magic wand. A good energy system is diverse. Ethanol is still with us, and it has a role to play. So are fuel cells and a lot of other things.

But we need some balance and some systematic thinking. Good planners hedge their bets. Natural gas is cheap and plentiful and easy to use, and may be that way for a few years to come. Historically, we aren’t very good at predicting the cost of gas. If I could do it, I wouldn’t be here talking you; I’d be out trading futures contracts.

But the only thing we can say for sure is that it has a role to play, not that it should take over the world. Nobody here knows what the next round of carbon rules will be. Nobody knows when we have the next Aliso Canyon leak, the next pipeline failure, or other supply interruption.

It's a figment of your imagination.*
Wind is wonderful stuff, and new turbines are impressive machines that show the fruits of patient, smart innovation and evolution. They have a place too. If they are deployed properly, they not only supply carbon-free energy, but they may even provide a bit of capacity value. But it’s possible to overdose. If you live in a place where they flood the market and push the price down to zero or below, you may begin to wonder why it’s sensible to add more to the surplus. A market-based business entity wouldn’t do that but a company with strong government subsidies would, and it ends up pushing other valuable energy sources out of the market.

Earlier this month the Washington Post carried a front-page story from Scotland, saying that the country had briefly met all its electricity needs with wind and that this was a milestone, on the way to meeting a goal of 100 percent renewable power.

But the has both positive and negative dimensions.  Wind power gets harder to add when you already have a lot. If such places add just one more wind farm, and record the same electricity demand on a similar windy day next year, then the electricity will have nowhere to go. The problem is that in most of the world, wind production varies by season, and demand varies by season, and the two are not in sync. Thus each new wind turbine produces less and less useful energy.

Solar is nice stuff too. Properly applied, it can shave some peaks and ease some distribution problems.

But that’s not always how we apply it.  In some places, in the shoulder months the mid-day price of electricity is zero. In that case, adding more solar doesn’t lower costs for consumers,  because the price has already been driven down to zero. It doesn’t help taxpayers, either, if their tax dollars are subsidizing the addition of more solar.

The best approach to a low-carbon system is a diversified mix of emissions-free generators.

The electricity system needs to be a combination of bottom-up and top-down. Bottom up in that we take advantage of new technologies to optimize at the grass roots level. And top down to assure that we have some central intelligence brought to bear on the problem, to view the system as a whole.

Otherwise, some of us see problems ahead. Do you?

*Photo by Graeme Clark used courtesy of a Creative Commons license.

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