A new energy policy-Give us the money instead

Posted in Energy, Society at 8:58 by RjZ

I promise to get off this topic of energy policy soon. I really do have other things to talk about but here’s one more just the same.

During a visit to the National Renewable Energy Laboratory (NREL) in Golden, Colorado I asked if current policy actually maintains that the hydrogen economy for fuel cells really has any merit. It seemed to me that hydrogen gas stations just wasn’t going to work for dozens of different reasons. (Did you know that the flame from a burning hydrogen leak is completely invisible? Well it is until the high temperature flame burns right through your pants and your leg….) I was surprised to learn about a model that does make sense though. NREL pointed out that if consumers generated their own power, at home, they could store it in hydrogen fuel cells for cars (or other applications) and remove all (or at least most) of the distribution problems associated with hydrogen.

Let’s suppose it costs around $10,000 for enough solar panels to power your home. You’re off the grid now and occasionally even selling energy back to the utility but your payback on this investment in savings is more than 10 years, even at current energy prices. Aside from Ed Begley Jr. few of us are committed enough to afford this kind of investment. But what if we could?

According to Lawrence Livermore National Laboratory (LLNL) of all 27.8 out of 40.3 exajoules (69%) of power for residential, commercial and industrial use is lost energy. Open this link (it’s a great graph) U.S. Energy Flow Trends –2002 in a separate window and follow along. That loss is due to inefficiencies in energy distribution from inductive storage to resistance along the power lines. More than two thirds of our electric power is thrown away, the majority of which as a result of moving it from the power plant to your home. If we saved just over 76% of this power lost we could stop using coal completely. Coal is used almost exclusively in electric power generation and we could eliminate coal just by reducing loss (not consumption, just loss!) Putting solar panels or a wind generator on your property eliminates all that distribution loss for the energy you consume.

Democratizing energy distribution has other advantages as well. Obviously emissions decrease, but also security risks. I’ve been to power plants and I can assure you it would be extremely easy for terrorists to cause major disruptions to power generation without even flying an airplane into a building. Democratized energy is more robust in exactly the same way the internet is. Knock out one server and the others take up the slack. Centralized power distribution is easily threatened.

Meanwhile on 8 August, 2005, President Bush signed the Energy Bill of 2005 into law. “Of the $14.5 billion tax package, renewable energy and energy efficiency received only $4.5 billion while fossil fuels received $5.6 billion and nuclear power received $1.3 billion.” The law supports renewable energy and has other small victories but overwhelmingly supports the status quo energy policy. Suppose we took just half of that $4.5 billion and instead of offering subsidies to power plants and oil companies we offered loans (not even a subsidy, just a loan that has to be paid back) to individuals who put solar or other zero emission energy generation on their homes. The loan has to be paid back in, say, 10 years.

Clearly, only the wealthy and upper middle class have houses big enough to start installing new solar panels, but what if, thanks to this government loan, a mere half a million people did so. I know I would. I know friends of mine would. I don’t mind paying for solar panels, but $10K is just too big a pill especially for a house I may not live in forever. I may never even see the payback. With the loan I can afford it now and my return on investment starts happening immediately. Do you think the price of solar panels and installation would remain so high? Imagine the boost to the economy from this new industry selling, installing, and servicing wind generators and solar panels on single family dwellings. Every one of those installations reduces emissions not only from their consumption, but also from the two thirds loss thanks to distribution. Every one of those installations increases security in the U.S. Costs of solar and wind plummet and it becomes affordable for commercial and less well-to-do customers. And, in ten years all those loans are paid back.

We won’t eliminate distribution or distribution losses completely. We will still need power plants. There will still be plenty of homes and apartment complexes that won’t be served well by solar or wind. But suddenly asking everyone in Iowa to move away to make room for the wind generators isn’t necessary to achieve the goals of increasing zero emission power in our mix. As I’ve noted before, renewable energy (even the emission producing kinds) currently make up only around 1% of the U.S. energy sources. If we were to double the amount of solar and wind farms we still would barely make a dent. But by democratizing energy production, our impact is greatly improved and the only cost is some ugly roofs (which I think will be seen as cool really quickly) and the government giving up it’s attachment to the status quo.

I’d love to have solar panels on my home. It’s time the government stopped subsidizing business (or, as in my proposal only reduced it’s subsidies) and enable an actual, grass roots shift in energy generation and distribution. It’ll be cheaper for all of us in the long run.


  1. pat said,

    December 14, 2005 at 18:55

    The concept of each house generating its own electricity is compelling and will make some entrepeneurs extremely wealthy within the next two decades. With today’s technology, though, I’m not sure that $10k is enough for a system that would let a house fully disconnect from the power grid, given the highly variable nature of solar and wind energy.

    Assuming that $10k is enough, however, here’s one way to look at the numbers. The government could take $4.5B and solar-equip 450,000 homes (generating a total of about 0.5 GW), or it could build outright 2 or 3 GW-class nuclear or coal power plants. (Actually, $4.5B of capital would go a lot farther with financing, so probably more plants could be built.) The end result would be more than 4 times as much energy from the big plants. The transmission losses are not big enough to make up for that difference.

    With numbers like these, the Bush energy subsidies don’t seem so crazy to me. With renewables around 1%, nukes around 10% and fossil fuels generating the rest of our electricity, the renewable subsidy per watt generated is many, many times the fossil and nuclear subsidies. A much larger renewable subsidy could only be justified if there was an expectation that some technological breakthrough might make renewables vastly (10 times) cheaper (so that they will start generating many more watts). Lots of people have been working on this for decades, and the outlines of that breakthrough are not yet visible.

  2. RjZ said,

    December 15, 2005 at 8:36

    Thanks Pat,
    Distribution losses, according to the LLNL graph are 67% so our 0.5 GW becomes 1.5 GW of equivalent power which is at least close to the 2 – 3 GW power plants even if it’s not all the way. As I’ve said, democratizing the power would also increase security and likely reduce prices and drive the economy for these solar and wind power-at-the-home solutions.
    Secondly, my proposal isn’t strictly a subsidy. If we could manage it, I don’t want to offer a tax credit, but a loan. (I don’t know if that’s tractable with government bureaucracy and all but…) As a result, this reduces cost to the government.
    I don’t think the Bush energy subsidies are crazy actually. I do think that they simply support the status quo and that doesn’t seem to be working. My proposal puts a lot of the economy’s might behind finding that breakthrough.
    Also, as I am sure was obvious from reading my other posts, I am not opposed to nuclear power nor does my plan imply that we shouldn’t build at least some of the power grid that you propose. I would just like to see us spread this money around, since, relatively, the amount of money I am talking about is a cheap experiment.

  3. Penelope said,

    December 15, 2005 at 12:13

    I’m interested in learning about a complicating factor, which energy-industry professionals (like Pat and Ron) may be better able to explain than a Google search of my own would:

    How do the two options Pat describes (spending $4.5B subsidizing large coal and nuclear plants versus spending the same amount equipping houses to generate solar power) compare in long-term effectiveness?

    I’ve read (and heard from Ron) that the world is running out of fossil fuels, and scientists and planners are wondering what we should do to prepare for the time, 5 to 50 years from now (but probably around 15 or 20) when we no longer have enough oil to run the world’s cars. Are we running out of coal at the same speed, or will coal be a viable option for a longer time?

    If the world has enough coal to be useful for the long term, building large coal plants may be the best use of money, but if we’re going to run out in 20 years anyway, encouraging solar-powered houses sounds like the way to go. Of course, nuclear plants can help long-term if they are built, but the nasty public opinion about nuclear makes it more difficult to build any new nuclear plant. (As debate on this blog shows, this sentiment may or may not be justified, but in any case, Joe Public generally doesn’t think about the trade-offs as thoroughly as Ron does, so public outrage will surely continue to stand in the way of nuclear energy.) Does the reality of finding a site for a nuclear plant, over protests and blocking tactics, still make nuclear a better option?

    Of course, I’m feeling particularly pessimistic this week, so I assume that, in reality, the US government’s energy policy is and always will be a combination of serving the status quo (because it’s easy and causes less outrage among potential voters) and helping out whoever the President and other decision makers have long-standing business deals with. Still, it would be interesting to know what the best plan would be in an optomistic world.

  4. RjZ said,

    December 15, 2005 at 12:24

    I’ll make a few comments on Penelope’s post, but I am hardly an expert!
    We’ve don’t have an infinite amount of coal, of course, but easily another 50 years. Power plants, coal or nuclear, both have limited lifetimes, so we’ll be asking these questions regardless of whether we have enough fuel because we’ll have to rebuilt the plants. Coal plants are designed to last about 40 years but this is almost always stretched out quite a bit. Nuclear are designed for 50 year lifetimes.

    However, this isn’t a big help for these home wind and solar generators. I don’t have any data on this, but I would estimate about 10 years to failure for a consumer system. Failure will not be as costly to repair and the cost will be pushed into consumer hands instead of the government’s but they will break too; and I would guess even sooner! An advantage of this democratized power model is that one broken plant doesn’t cripple the network of power.

  5. Tim Rohrer said,

    December 20, 2005 at 22:09

    Ron, you can put PV solar panels on your home and a net metering meter right now–the payback period would likely be about 17 years (more or less) and considering the maintenance and operating costs on it. The panel’s life expectancy is typically 30-40 years, but other parts may have a shorter life expectancy. Rules for netmetering in Colo, as required by Amendment 37’s passage last November, will be formalized by April 1 2006…though I understand Xcel has a some semblance of a program already up and running.

    It turns out I misspoke in an earlier thread on enrgy and there are some tax credits now available to do that. While I had thought the 2006 and 2007 tax credits were limited to conservation measures like windows and insulation, it turns out that there is a different new tax credit (possibly from a different act so that explains why missed it) for solar hot water and solar PV electric. That deal appears to better than the former–a 30% tax of cost credit capped at $2000 a year, as opposed to the 10% of cost capped at smaller amounts for sndows. inuslation and other conservation measures (depends on type of project). The article linked below explains it a bit, although of course anyone should check with the IRS/their accountant before doing anything.


    Ot you can use this handy calculator from the bpsolar (that’s British Petroleum) website to estimate the cost of a PV project (probably using their rather expensive panels). For a house like yours I suspect their estimate would likely be at least $27,000 with a bill savings of $30 to $40 a month at current power rates. There are ways to raise the amount saved depending on how you finance it (tax deductible loans, tax credits, etc.) And electric rates will rise, which is also part of how the estimate gets to usually be around 17 years on average for a payback time. However, and on the side that it is likely to increase your payback time, they rarely take into account better conservation and improvements in energy efficiency (such as replacing incandescents with compact fluorescents, or CF with white LEDs as will be all the rage in two or three years). Here’s the BPsolar calculator link.


    Of course, with a netmetirng project, you can design a PV generation system for a less than a full load, start smaller and more inexpensively, and still see some savings.

    A much better and much more cost effective option than solar PV is adding a solar hot water system, especially if you can use part of that system for heat–say in your cold basement. You can retrofit either a hot water or a forced air solution.

  6. Tim Rohrer said,

    December 23, 2005 at 11:26

    Today’s Bopulder Daily Camera has an article on the local economics of solar electricity and solar thermal.


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