European utilities: How to lose half a trillion euros | The Economist

A fascinating story about the combined effects of government policy and renewable electricity technology in Europe. Good intentions and massive subsidies have produced very high electricity consumer prices and decimated the finances of the electric utilities. The future seems even more uncertain as the consequences of these policies are destroying wealth with no demonstrable environmental benefit.

Are the same consequences in store for America?

European utilities: How to lose half a trillion euros | The Economist: "Those goals are now harder to achieve. Renewable energy has grabbed a growing share of the market, pushed wholesale prices down and succeeded in its goal of driving down the price of new technologies. But the subsidy cost also has been large, the environmental gains non-existent so far and the damage done to today’s utilities much greater than expected. Europe in general and Germany in particular see themselves as pioneers of low-carbon energy. If they are genuinely to be so, they will need to design a much better electricity system that rewards low-carbon energy without reducing reliability and imposing undue and unnecessary costs."

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Building Storehouses for the Sun’s Energy, for Use After Dark - NYTimes.com

This approach seems sensible and likely to succeed because energy storage has always been the problem with renewable sources like the wind and the sun.

However, it's probably only viable for those portions of the grid served by very high sunlight locations, i.e., the Southwest. Unlikely that this technology would ever be viable in the northeast U.S. or the Pacific Northwest where cloudiness rules.

"If solar energy is eventually going to matter— that is, generate a significant portion of the nation’s electricity — the industry must overcome a major stumbling block, experts say: finding a way to store it for use when the sun isn’t shining.
That challenge seems to be creating an opening for a different form of power, solar thermal, which makes electricity by using the sun’s heat to boil water. The water can be used to heat salt that stores the energy until later, when the sun dips and households power up their appliances and air-conditioning at peak demand hours in the summer.

BP abandons solar quest - MarketWatch First Take - MarketWatch

Smart business people make rational economic decisions. Kudos to BP. Meanwhile, politicians pander to the alternative energy proponents and spend our tax dollars to do it. A lump of coal for them this Christmas.

"...Despite all the negative fallout from its 2010 Gulf of Mexico oil spill, BP has had huge success developing deepwater oil fields around the world. This, combined with high oil prices, is the engine driving BP’s profits.
Bob Dudley, the current American-born CEO of London-based BP, is clearly taking the company back to its roots in the oil patch. And when sizing up China, vanishing government funding and a world apparently more alarmed about the economy than the environment, he’s found it hard to justify BP’s dabbling in solar power.
Some day the oil industry will have to revisit alternative energy in a big way. They all know it. But, just like in government, it’s easier to kick that can down the road for future generations to deal with.
But for the time being, old fashioned oil-field profits are just too good to get sidetracked by all that solar stuff. Besides, it will likely be many years before history shows whose vision was the right one -- Browne’s, Dudley’s or China’s..."

A Gold Rush of Subsidies in Clean Energy Search - NYTimes.com

Corporate welfare based more on ideology than realistic economics is not good for America's fiscal health. Any policy that builds in a no-fail parameter is simply bad public policy, except for projects that are for the military, or health, or the environment, or... pick your favorite.

"...The government support — which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates — largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG — even Google..."

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Senator Sanders Solar Dream

If my arithmetic is correct, Sen. Sanders plan would cost federal and state governments $271,250,000,000 out-of-pocket for these solar system subsidies. That's $271 Billion of additional government spending, all adding to the deficit for the federal portion of the subsidies and the remainder requiring scarce state tax dollars.

Sanders would have us believe ("This country spends, in a typical year, $350 Billion importing oil from Saudi Arabia and other countries.") that somehow this solar plan would save us from importing all this oil. That's nonsense. The reality is that a minuscule fraction (less than 1%) of today's U.S. electricity is produced from oil. He mixes all energy sources together on the dubious assumption they are interchangeable.

Solar may have some value to provide electricity for future electric cars if they are charged when the sun shines. Those vehicles will reduce demand for oil by a tiny amount.

The fallacy of his proposal is the implication that baseload electricity needs (the 7x24x365 requirement that's still needed when the sun doesn't shine) can be reduced by adding solar to the mix. At best, some small daytime demand for electricity can be met by solar, but the coal, nuclear, natural gas and hydro plants must remain and operate when the sun does not shine (or the wind does not blow). No effective technology yet exists for storing electricity at the scale required to overcome this basic fact.

If his plan has substantive value, Senator Sanders should clearly explain what portion of today's or tomorrow's U.S. electricity demand will be produced by his plan. Further, he should be asked to explain what portion of baseload generating capacity will no longer be needed if his plan were implemented.

The Problem of Scale

Because the story may not be viewable after a while due to the WSJ policy of limited time for reading without a subscription.

Mr. Bryce, the author, is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'"(Public Affairs, 2008).

He clearly points out the difficulty with the whole notion of 'energy independence' showing the tiny contribution of wind and solar to the energy requirements of our country. To grow that proportion will take an enormous amount of time and funding.

In the story, unfortunately, Bryce bounces between total energy and electricity with his data. This may create some confusion, but his facts seem correct in each domain.

"...the key problem facing Mr. Obama, and anyone else advocating a rapid transition away from the hydrocarbons that have dominated the world's energy mix since the dawn of the Industrial Age, is the same issue that dogs every alternative energy idea: scale.

Let's start by deciphering exactly what Mr. Obama includes in his definition of "renewable" energy. If he's including hydropower, which now provides about 2.4% of America's total primary energy needs, then the president clearly has no concept of what he is promising. Hydro now provides more than 16 times as much energy as wind and solar power combined. Yet more dams are being dismantled than built. Since 1999, more than 200 dams in the U.S. have been removed.

If Mr. Obama is only counting wind power and solar power as renewables, then his promise is clearly doable. But the unfortunate truth is that even if he matches Mr. Bush's effort by doubling wind and solar output by 2012, the contribution of those two sources to America's overall energy needs will still be almost inconsequential.

Here's why. The latest data from the U.S. Energy Information Administration show that total solar and wind output for 2008 will likely be about 45,493,000 megawatt-hours. That sounds significant until you consider this number: 4,118,198,000 megawatt-hours. That's the total amount of electricity generated during the rolling 12-month period that ended last November. Solar and wind, in other words, produce about 1.1% of America's total electricity consumption..."

Energy tech innovation threatened by economy | Green Tech - CNET News

Energy tech innovation threatened by economy | Green Tech - CNET News

An interesting report. Two things stand out for me:

1./ What will be the price of electricity for consumers in year 5 and year 10 if the U.S. embraces cap and trade and the development of alternative/renewable sources under President Obama's proposals. This should be estimable. Does anyone have a source for this information? Is anyone in the media asking?

2./ What will be the price without cap and trade, i.e., letting development of alternative energy sources take its natural/normal course of growth, along with the unhindered price of coal and natural gas with whatever subsidies and spending the government decides to enable for alternatives.

The alternative energy establishment is powerful and growing, but is saying they are stymied because we are in a recession. If the price of fossil fuels and capital determine the pace at which alternatives become a larger part of the mix, then they are really saying that the only way for alternatives to grow is with a dramatic change in public policy and massive government funding and subsidies.

We should keep in mind the following realities as this debate unfolds:

Electricity Sources (U.S. Nov 2008)

Coal 48.4%
Petroleum 1.1%
Natural Gas 21.4%
Hydro 6.4%
Nuclear 19.4%
All other 3.3% (wind, solar, geothermal, biomass, etc.)

It's obvious that the real purpose of cap and trade has little to do with climate change and everything to do with pricing coal out of the market as a source of electricity because nuclear and hydro have essentially no carbon emissions. Natural gas is also relatively clean and petroleum is a de minimus source of electricity.

So, anyone with the answers to my two questions, please step forward. The price of energy will be high. Please tell us how high.

Utility AEP plans backyard energy storage | Green Tech - CNET News

Utility AEP plans backyard energy storage | Green Tech - CNET News

Both grid and neighborhood scale storage technology to cope with the vagaries of wind and solar produced electricity will need to come a long way to be cost effective. Nevertheless, it's encouraging to see companies and researchers devoting resources to new developments in this field.

We hear little about this in the popular media, which may lead people to believe incorrectly that solar and wind are direct replacements for baseload power from nuclear, hydro and coal. Without storage capacity, they will continue to be bit players on the electricity stage.

Let's remember these are real costs to added to the sources of renewable/alternative electricity when they grow beyond today's minuscule contribution they will make to our electricity supply.