So a sample of my complaints: She trumpets the fast declining price of solar panels by picking a factoid out of a story in ComputerWorld: “declined an estimated 60 percent since the beginning of 2011!” ComputerWorld? Maybe the work of the U.S. Department of Energy or other more traditional information sources wasn’t sensational enough (claiming as it does, merely that ”U.S. solar industry is more than 60 percent of the way to achieving cost-competitive utility-scale solar photovoltaic electricity”).
An investment company would have to acknowledge that cherry-picked past results are no guarantee of future performance, but it isn’t even clear that she is firm on the idea of “cost.” Folbre declares that generous subsidies and feed-in tariffs have “allowed solar photovoltaics to achieve vastly lower unit costs.” Really? Well maybe if we subsidize it a little harder, it will become free for everyone!
C’mon professor, get serious! Perhaps it is true that generous subsidies and feed-in tariffs have allowed owners of solar PV systems to experience lower out-of-pocket expenses, but it is a little embarrassing to see a distinguished economist make this mistake about costs. Should we conclude congressional junkets overseas don’t cost anything because the government foots the bill?
Federal environmental officials now estimate more than 20,000 gallons of crude oil — double the initial estimates — leaked from a pipeline into a nature preserve in southwest Ohio.
The 374-acre nature preserve in suburban Colerain Township is part of the Great Parks of Hamilton County system. Wildlife officials say animals including crawfish, salamanders and frogs have been affected by the oil, with a few found dead at the scene. Contaminated animals are being collected, cleaned and released, officials said, adding that colder weather, with freezing temperatures at night, has reduced the number of wildlife moving through the leak area.
If the faces of renewable energy critics are not red yet, they soon will be. For years, these critics — of solar photovoltaics in particular — have called renewable energy a boutique fantasy. A recent Wall Street Journal blog post continues the trend, asserting that solar subsidies take money from the poor to benefit the rich.
But solar-generated electricity is turning into a powerful environmental and economic success story. It’s also threatening the balance sheets of electric utility companies that continue to rely heavily on fossil fuels and nuclear energy.
As their costs per kilowatt hour have fallen through the floor, solar arrays have hit the rooftops.
The average price of a solar panel has declined an estimated 60 percent since the beginning of 2011, and this year the total photovoltaic capacity in the United States is projected to reach 10 gigawatts, the energy equivalent of several nuclear power plants. (By one estimate, photovoltaic costs crossed over to become cheaper than electricity generated by new nuclear plants about four years ago.)
An analysis of remodeling and construction permit data from 77 municipalities around the United States reveals that solar installations — primarily photovoltaic rather than solar thermal — grew by a third last year alone. With a relatively short payback period, these home-improvement investments are now within the reach of many middle-class families.
We learned something really surprising about the wind energy industry from President Obama's FY2015 budget proposal. He doesn't believe that the industry will ever be capable of economically sustaining itself.
Here's how we know. Tucked away within the proposal, President Obama is proposing making the wind energy production tax credit permanent.
Mr. Obama’s budget would permanently extend the production tax credit for wind electricity, which expired last year after Congress failed to pass a bill renewing it. Over the next 10 years, the tax credit would cost $19.2 billion, according to the budget plan.
Senate Finance Chairman Ron Wyden (D., Ore.) has indicated he wants to pass a bill extending this tax credit and other temporary ones. But it’s unclear whether he has enough support to pass it in the full Senate, and the House seems even less likely to support such a proposal.
Originally established in 1992, the wind energy production tax credit has had a lot to do with fueling the growth of the nation's wind energy generating capacity since its inception. ...
[snip the analysis]
... From 2000 through 2012, what we find is that wind energy delivered anywhere from 18% to 29% of its installed capacity, demonstrating a considerable degree of unreliability for utility consumers compared to other methods of generating power. Going by the wind energy industry's own claims, instead of powering the equivalent of 15 million American homes, it's actually only powering enough power for somewhere between 2.7 and 4.35 million of them.
This is an old one (March 3). Forgive my lack of chronological consistency while I try to clean up my inbox:
North Carolina regulators said Monday that five power plants owned by Duke Energy have been cited for violating water pollution laws, three days after announcing a similar action against Duke’s plant in Eden, N.C., where 39,000 tons of coal ash fouled the Dan River last month.
The citations, which charge Duke with failing to obtain storm-water permits under federal law, could lead to fines of $25,000 per day for each of the six plants.
The enforcement actions by the state’s Department of Environment and Natural Resources came after weeks of public outrage about the spill. But according to documents in recent court proceedings, regulators within the agency have tried for several years to force Duke to bring its plants into compliance, only to be frustrated time and again.
“Over the last year and a half, we repeatedly asked for a status and direction on these, and we have been given none,” an environmental engineer in the department wrote to colleagues in September, referring to efforts to require storm-water permits.
Current and former employees of the environmental agency have said that under the administration of Gov. Pat McCrory, a Republican, and the Republican-controlled legislature, regulators were told to play down enforcement of pollution laws in favor of spurring economic activity and jobs.
$25,000 per day for 6 plants? That is $150,000 per day and $4.5 million per month. That is real money.
Of course, it will be paid through rate increases. Isn't there something weird about a public utility fighting back against environmental regulations that are designed to protect the public (like a private business firm would)? It seems like a public utility would recognize a potential environmental problem, figure out how to clean it up and ask for the rate increase ex-ante, because that is part of the true cost of energy.
The company’s “comprehensive ash basin plan” takes up all of one single-spaced page.
In that summary, Duke said it plans to remove ash from three sites – Dan River, Riverbend and Asheville – and place the waste into modern, lined landfills where it will be stored in dry form. Riverbend will take the longest to complete, up to 4-1/2 years.
The company has not decided what to do with its other 11 sites, whether the ash will be dug out and moved to lined landfills or whether it will be dried, capped and stored in existing ash pits.
Duke also said it would use a “risk-informed” analysis, which means that the 14 ash storage sites will be scored on their potential environmental risk, and those with lower scores will be subject to less costly measures.
This is a sort of benefit-cost analysis where, instead of comparing projects with similar benefits and choosing the least costly alternative as in cost-effectiveness, the projects are ranked in terms of non-monetized benefits (i.e., risks avoided) and more effective remedies are pursued for those at the top. But this seems clunky since the thresholds for less effective remedies doesn't seem clear. Monetizing the benefits would provide a clear threshold, negative net benefits, for moving to less costly remedies.
I can see a number of reasons why Duke Energy doesn't want to monetize the benefits (other than it is costly to monetize benefits ... yet, I can imagine having a reasonable first approximation benefit estimate at each of the 14 sites in less than a week). Foremost might be that the benefits of cleanup at all 14 coal ash pits might justify the most costly remedy.
The hand-wringing over what to do to help Ukraine has had a very positive impact on the U.S. oil and gas industry. Politicians like Sen. Lisa Murkowski (R-AK) are seizing on the crisis to call for a lifting of the ban on U.S. oil exports — the better to counterbalance Russia’s petro-influence. While the Wall Street Journal this morning wrote that western politicians are working on a variety of options to help “loosen Russia’s energy stranglehold on Ukraine” including “larger exports of U.S.-made natural gas.”
Nevermind that the U.S. currently exports no natural gas in the form of LNG because new liquefaction plants won’t be completed until late 2015. The bigger point was made by economist Ed Yardeni in his morning note today: “By invading Crimea, Russian President Vladimir Putin may have succeeded in resolving the debate in the U.S. about whether or not we should export natural gas and crude oil.”
From an efficiency perspective, any ban on exports is a bad thing. While domestic consumers of natural gas benefit from lower domestic prices, those lower prices come at a costs--the hiogher prices domestic producers could receive on the world market. A basic result in the economics of markets is that any restriction on price or quantity will come at a net cost to society. I am not saying that we should remove the export restriction just becaues it benefits domestic producers, but rather, the export restriction causes a loss to domestic producers (and world consumers) that outweighs the benefit to domestic consumers. In other words, the net benefits from natural gas production are lower with the export restriction than without--regardless of who gains and who loses.
If we (in the collective) are happy with accepting a smaller pie because we like the way the pie is divided, then by all means, keep the export restriction. But we need to recognize that it comes at a cost. And by leaving the export restriction in place, we are making a subjective judgement. Personally, I don't like making that judgement for others.
This recent post on MIT's Tech Review provides an interesting technology solution and information asymmetry problem in the same article.
The basic problem is that most electric vehicles will require overnight charging so that they are ready when the owners need their cars for the morning commute. Any given grid will have a certain amount of excess capacity which it can devote to this problem. But if the number of cars is large, it cannot charge them all.
So the idea that Yingjie and co explore is to find a fair way to charge as many as possible with minimum disruption.
Their system is fairly efficient. The math is pretty intense in the actual paper, but the takeaway from their algorithm is this:
“The proposed scheme needs only 5 per cent more than the power demanded to ensure all the vehicles departing with delay in a few minutes,” say Yingjie and co.
But as always, incentives matter.
But there is a potential problem. It’s not entirely clear that users would be honest about their requirements, perhaps saying they will leave earlier than planned and that they have a longer commute, to ensure a full charge. In fact, it’s hard to imagine that people would not attempt to game such a system.
And therein lies a fundamental problem for humanity– how to distribute a limited resource fairly.
This is where economists can assist. First, although this is not addressed in the article, I think that worries about such a system exacerbating our electricity usage and therefore pollution are warranted...without a carbon tax or cap and trade system. Instituting a price on carbon would mitigate the potential for carbon-intensive energy production beyond the optimal quantity. See here, here and here for details on the why and how.
Second, I think that the problem of information asymmetry here is an interesting one with a few potential solutions. Any solution for this problem assumes that we want to allow power companies or some benevolent regulator to know what time we need our car in the morning. I'll assume that this is part of the agreement we sign when we agree to do business with our electricity provider. In order to provide incentive for users to provide accurate information, economists typically decide to subsidize those who provide accurate information or tax those who are dishonest.
The potential problem with this is that we cannot always predict exactly what time we're going to leave in the morning. If the baby gets sick in the night and we have to leave early for a doctor's appointment or the alarm doesn't go off and we leave late to work, we end up having to pay a penalty that may seem unfair. My first thought is that instituting a tax system for inaccurate predictions with a certain number of passes for each customer to allow for emergencies or "bad days" might work. The tax curve would have to fit with the additional cost spinning up the additional power sources for increased capacity.
An implicit tax might work better (from a behavioral point of view) by providing a "decreased rate" for those who are consistently accurate in their predictions. Both of these policies could be used in conjuction with the findings of California's behavioral electricity billing tests for an overall more efficient grid. Thoughts?
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