Tag Archives: utilities

Solar and Batteries are Knocking on Utilities’ Door – Part 2

solar-panelsRock Creek, Montana     Bill McKibben, professor and environmental advocate, most notably through 350.org, wrote an interesting piece in The New Yorker, making the case that we are on the verge of the big leap to solar and, essentially arguing that utilities are standing in the way of systemic change. Solar, wind, and other renewables are increasingly able to provide the power, costs are plummeting, batteries are improving, and the monopoly utility cost and financing structure and their resistance to change are now the essential stumbling blocks according to McKibben.

The heart of his argument is “…that innovation, energy-saving and energy-producing technology is now cheap enough for everyday use.” Significantly the story line behind this is what he bills as a regular working class house for a regular working class family in Vermont. The Canadian-owned Green Mountain Power had financed an energy makeover for a family with new insulation, heat pumps for the water heater and to warm the house, solar panels on the garage, and LED light bulbs. The family reduced the “energy footprint of their house by eighty-eight per cent in a matter of days, and at no net cost.”

McKibben is on solid ground on the declining price of solar panels. He notes that “price has dropped ninety-nine per cent in the past four decades, and roughly seventy-five per cent in the past six years.” I’m on record as a believer in their ability from my experience on the receiving end on Rock Creek. Most of the rest of the piece was his effort to establish that utility companies are in “a death spiral,” as their industry trade group, the Edison Electric Institute, has warned, and that they need to change or be made to change. His exact words “are waiting for someone to tell them what to do.” By that he means all of us as customers or the government.

McKibben’s view of black and white, good and evil is appealing, and god knows we’re on his side, but a careful reading really establishes that we are close, but not quite there, and part of the problem is plainly the economics still aren’t there as Melanie Cranston detailed in her current article running in Social Policy. The “biscuit cookers” as the old Arkansas energy czar Witt Stephens used to call utility customers are subsidizing the upper income users who have made the shift in places like California for line use, peak demand access, and all back up supply. Indirectly, McKibben even furnishes a good example of how close the cost factors really are for both customers and wannabe renewable users and the utilities. Arizona utility regulators approved a minimal $5 per month user connection fee for customers converting to solar, 90% less than Arizona Public Services (APS) had requested, and the numbers still worked for companies like Solar City who were installing the panels. The Salt River Project, which is also in Arizona unilaterally put a $50 per month charge on solar users, and the installers moved elsewhere because the numbers didn’t work. McKibben doesn’t explain that Salt River is not under the Arizona Public Service Commission because it is an operation more along the lines of the TVA, more public, than private.

Utilities have not sufficiently earned the trust of most customers that is adequate to allow them to control demand within a customers’ home which is part of the quid pro quo on the Vermont story, along with liberal financing from the utility, which is also not something being offered or incentivized in much of the country, including the “sunny” belt of the South. For lower income and working families especially it is not enough to find that there is “no net cost” in this kind of wholesale conversion to a new technology. There needs to be a real savings, and if there’s not a substantial savings then there has to be a program from somebody somehow that shoulders the transition costs for the user.

When the economics are so tight on the conversion that a regulatory swing of $500 like in Arizona makes the whole solar project collapse, the ice is just too thin still for most people. Sadly, I know they are for me. I also know the politics of too many Southern and Western states, the legal requirements binding the regulatory bodies, the power of utilities during the legislative sessions, and how few of the regulators are elected these days. $5 today could be $50 tomorrow or $100, and that doesn’t work, especially when energy is still relatively cheap in the USA for most people. I’m not even sure I know what to make of David Crane of NRG, “the country’s biggest independent power provider,” as McKibben calls them, and his statement about eight per cent of a family “disposable income.” Why did he use the word “disposable?” Did we just reduce overall income to a lower subset to boost energy expenditures up to 8%? And, when Crane says “on all forms of energy,” does that include what we pay at the pump to put our cars and trucks on the road for work and whatever?

McKibben is right and on the side of the angels here, and his advocacy resonates with what we need to achieve climate change and environmental health, but short term low and moderate income people can’t make the leap across the divide until the money is right, and the figures, unfortunately, are still way too tight. The clock is ticking, but a lot of us are going to have to wait until the savings are on our side just because our wallets are lighter than our energy bills, no matter how much we hate our utility companies and would like to let the sun shine our systems.


Winning the “War of Attrition” Against Coal-Fired Power Plants

Coal-Fired-Power-PlantNew York City      The first day of the annual Energy Finance conference convened in New York University’s Law School buildings on Washington Square by the Institute for Energy Economics and Financial Analysis was – believe it or not – fascinating.  Not only did I get to catch up with Daniele Pommes and his No Al Carbone campaign around coal-fired plants in Brindi, Italy, but also with a lot of other campaigns, old and new, around coal operations in the USA and elsewhere around the world.

None of that was really the subject at hand on the first day of the conference though.  Tom Sanzillo, the IEEFA finance director, had brought in some financial hotshots including Dr. Tony Yuen from Citigroup and Julien Dumoulin-Smith from UBS Investment Research specializing in energy markets, as well as Tim Buckley, now with IEEFA and formerly an investment banker from Sydney, Australia to talk about what was really happening in coal markets, and it added up to an amazing immersion course over several hours in high line energy economics.

The UBS whiz kid summed it up most forcefully as he repeatedly argued that there was a “war of attrition” on coal, coal was losing, and now would clearly not prevail.  Dumoulin-Smith argued essentially that the price of gas was now so low that the cost spread between gas and coal for new power plant construction allowed utilities to lock in costs, build the plant, and be profitable just on the price differential alone.  Buckley focusing more on coal shipped into markets that were forced to import the supply came at it from another angle, but between the strength of the dollar and falling prices of other currencies, the cost of “dispatch” or transportation, and the pricing of coal even though the market had dropped, it was a dead letter, especially given the Indian commitment to be 50% dependent on its own coal in the next several years and Australia’s existing products.

A number of speakers argued that the impact of just the USA-China agreement that President Obama announced as a commitment that both would cut down their carbon emissions by 50% was sufficient enough already to indicate that CO2 emissions would not get worse. Listening to the mega-domes talk about the lowering cost of renewables like wind and sun, the problems of pipelines, the low cost of liquid natural gas, the refining of byproducts, there almost seemed to be hope, if you believed the experts that capitalism might save the world yet for our grandchildren regardless of what we all might have thought as we’ve fought the son of a gun utilities on these issues for the last more than 40 years.

My thoughts kept coming back to the fights in the 1970’s that ACORN waged to cut the size of the Middle South Utility, now Entergy’s, White Bluff plant on the Arkansas River between Little Rock and Pine Bluff.  They mentioned an ongoing fight with the Colstrip plants in Montana.  I can remember well sitting with the organizers and leaders of the Northern Plains Resource Council in Billings on winter nights in the early 70’s strategizing on how to clip the company plants for building Colstrip II.

A number of questioners tried to ask the experts how they would place a financial “market” value on the fights they had waged to stop plants in their towns.  Sanzillo was clear that the campaigns were central, even if there was no easy way to put a number to it.

Having been in these fights over five decades, many of us could have assured the questioners that price is just one part of the puzzle, because it has been boots on the ground and voices raised that have potentially put is in the winning column against coal way more than the magic of capital markets and supply and demand.   Breathing and living on the planet turns out to be a huge value added, no matter how the numbers shake out.


The Dubliners – Springhill Mine Disaster Performed by Luke Kelly