Whither Solar Power?
If you’re in solar power these days, business is booming. Installations are up globally and even here, in the climate-politicized United States, solar power has shown a dramatic rise, with 2016 expected to be the best year for solar installations ever. In fact, if all 9.5 gigawatts of expected utility-scale solar are added, it will cross an encouraging threshold: the first time that solar has topped the list of new U.S. energy installations.
Solar advocates believe this is just the beginning and hope the trend will accelerate, driven in part by a dramatic decline in solar panel prices—some 80 percent over the last five or six years—and also by a new international commitment to address climate change, itself fueled by recent low-carbon commitments by the world’s two largest greenhouse gas emitters, the U.S. and China.
But some energy experts say “Not so fast,” and describe today’s enthusiasm around solar as akin to yesteryear’s “irrational exuberance” around stocks: a bubble destined to pop. While prices for solar panels have indeed fallen dramatically, they haven’t fallen nearly enough to compete with fossil fuels, they say, and government attempts to push solar onto the electricity market through an array of subsidies, tax breaks, and favorable electricity pricing are ultimately doomed to fail.
In fact, they say, early strains are already appearing where renewable penetration is high, including countries like Germany, whose renewable energy economy has high wind and solar, high residential electricity prices, and, paradoxically, carbon dioxide emissions that, after years of decline, have begun to rise.
Similar strains can be seen elsewhere, they argue, including here in the U.S., where renewable penetration is rising and sometimes doing strange things to electricity prices—driving them close to zero and even negative—and setting us on a path that could ultimately lead to utility company bankruptcies. U.S. utility companies, meanwhile, aren’t waiting until they have to hire bankruptcy lawyers. They’re pushing back hard at the state level against policies designed to encourage small-scale, rooftop solar power, and having some success. They’ve added fees for solar customers in Nevada and Arizona that have raised costs and forced solar installers to lay off workers and curtail operations. These rollbacks are occurring in the very places whose ample sunshine makes them ideal for this kind of power generation.
Solar’s problems are not just ones of cost, a point on which both advocates and detractors agree. Solar is not a 24/7 power supply, leaving other sources to fill in gaps when the sun doesn’t shine. It’s also most efficiently generated in sunny places like Arizona, Nevada, and other states of the
American desert Southwest, far from the nation’s biggest population centers.
A global boom
Despite the debate over solar’s future, there is little debate that solar power has come a long way. From an energy afterthought little more than a decade ago, solar today is one of the world’s fastest growing sources of electricity—a trend that forecasts expect to continue.
The International Energy Agency, in its “Medium-Term Renewable Energy Market Report,” said that in 2014 renewable power—largely wind and solar—represented over 45 percent of additions to the global energy supply, measured by gigawatts of capacity, though the percentage of actual power generated is far lower due to the intermittency of renewables. By 2020, the IEA expects renewables to account for two-thirds of new capacity additions globally, with solar the second-largest source after wind. These are expected to make up nearly all new energy installations in the world’s richest countries, those among the Organization for Economic Cooperation and Development (OECD). In addition, three countries—China, India, and Brazil—are expected to account for two-thirds of new renewables installations.
A November 2015 report by consulting firm KPMG, meanwhile, says that solar power in India is poised for growth potentially rapid enough to disrupt the energy market there. The report, titled “The Rising Sun: Disruption on the Horizon,” contends that solar power may have reached the point where it is competitive with coal-generated electricity, with solar power prices within 15 percent of coal and they expect solar prices up to 10 percent lower than coal by 2020.The report acknowledges, however, that estimates “may not fully capture” costs of integrating solar into the grid to provide on-demand capacity from coal plants, energy storage devices or redistribution by transmission from areas where the sun is still shining.
In the United States, the record 9.5 gigawatts of new utility-scale solar expected in 2016 tops the 9.4 gigawatts installed over the prior three years, but may have something to do with a rush to completion before the 30 percent federal Solar Investment Tax Credit is set to expire at the end of the year. Recent federal action extended the credit through 2019.
The Solar Energy Industries Association projected that the tax credit extension will result in an additional 72 gigawatts of solar photovoltaic installations through 2020, and that by then solar will provide 3.5 percent of U.S. electricity generation, up 3,000 percent from 2010, when solar provided just 0.1 percent. By then, the industry expects to be adding 20 gigawatts of capacity annually, equal to the total installed solar that existed in America as recently as 2014.
Reality check for the solar industry
William Hogan is the Plank Professor of Global Energy Economy at the Harvard Kennedy School (HKS) and Harvard’s resident expert on the electric grid—and his message might be hard to hear for those who view solar’s apparent success as good news and a positive step in addressing the global threat of climate change. Solar’s problem, Hogan says, is fairly simple: it’s too expensive. Forcing it onto the market through the subsidies, tax credits, and favorable pricing common today will cause unintended consequences that twist the electric market into knots, potentially driving utility companies bankrupt.
“It is true that costs have come way down, but there’s a strong argument [that it’s] not enough and it’s still too expensive,” Hogan said. “The countervailing view is it’s reduced the cost of renewables and they’re now competitive in the market. You’ll see that in a lot of places. But there’s usually a caveat to make.”
Statistics showing solar to be competitive with other sources typically have one of three problems, Hogan said. First, they might be cherry-picked, numbers from places with the most ideal conditions to generate power, while ignoring additional costs like transmission or those due to intermittency, costs which have to be paid in the real world. Second, he said, is the problem of dumping. The Chinese, who are one of the world’s largest manufacturers of solar panels, have overbuilt capacity and are selling panels below cost, which has not only prompted accusations of undercutting other nations’ solar manufacturing industries, it’s also artificially lowered prices.
Third, he said, are the subsidies: the investment tax credits to get plants built and guaranteed higher prices for power once they’re running. These supports artificially lower costs and insulate solar plants from the market.
“That makes it confusing when people say we have these fantastic opportunities,” Hogan said. “This is not sustainable. It’s a bubble, we haven’t turned the corner for the future.”
Solar is expensive enough that Hogan believes the industry’s biggest challenges are not ones of marketing and deployment, as current policy design would indicate. Rather they are of research and development. Solar, in effect, needs to go back to the drawing board.
“I think the basic story is we’ve done enormous things to improve the economics of renewables—not enough—but enormous things,” Hogan said. “We shouldn’t give up hope that we can innovate and improve it enough, but it is an R&D problem, not a financing and deployment problem. We’re spending a lot of money to use the technology we currently have, spending too much money.”
Figures from the most recent U.S. Annual Energy Outlook, released in April 2015, predicts that in 2020, solar power will still be significantly more expensive than that from other sources. Solar’s “levelized cost of electricity”—considered a good statistic by which to compare power from different sources—is projected at $125.3 per megawatt hour compared with $95.1 per megawatt hour for coal, $75.2 for conventional natural gas, and $73.6 for wind.
It is subsidies, however, not cost, that determines what gets built and what doesn’t. The subsidy with the largest impact in this country is a 30 percent solar investment tax credit, which has just been extended through 2019. After that, it will fall to 26 percent in 2020, 22 percent in 2021 and then to 10 percent in 2022 and beyond for commercial installations. It is eliminated entirely after that date for residential solar installations.
“There’s an adage in solar power: ‘We put up panels where the subsidies are, not where the sun is,’” said Associate Professor of Public Policy Joseph Aldy. “You see a lot of solar in Germany, where it’s not sunny, and a lot in Massachusetts. We live here, we know it’s not sunny.”
In addition to that generous tax credit, Aldy said that U.S. solar facilities can utilize accelerated depreciation worth another 10 percent of the cost, and qualify for additional state credits to meet renewable power mandates.
Aldy said it’s clear investors believe that solar’s future is in large, utility-scale installations, where there’s more potential to compete should subsidies be lowered or eliminated and a price on carbon levied. Today’s investors however, are attracted by the sizeable tax credits bundled in long term power purchase agreements that lock in a price for electricity.
“From an investor’s standpoint, that’s removing one element of risk or uncertainty to the returns,” Aldy said. “There’s a question of whether there are ways to do financing of solar in a future market with a carbon price.”
Distributed solar, the small-scale installations whose panels dot your neighbor’s house and the roofs of some local businesses, can also take advantage of “net metering,” an increasingly controversial requirement for utilities to pay small-scale solar generators the same retail rate for power that the utility itself charges customers. Utilities complain that the policy effectively exempts residential solar customers from paying the distribution charge other customers pay, which approaches 50 percent of a typical bill. That means solar customers are not paying for a distribution system they are nonetheless still dependent upon for power when the panels aren’t producing.
“It’s worth 35 percent of what we’re paying for it. As a country, it seems to me that’s a problem,” Hogan said of rooftop solar. “I like the old aphorism. If you’re willing to spend enough money, you can make anything look cheap.”
Such small-scale solar installations that can take advantage of net metering have been rising rapidly, according to EIA figures, increasing from about 1 gigawatt installed in 2011 to 2.2 gigawatts in 2015. That popularity may be why the battle over rooftop solar isn’t going away. While utility companies have been successful at putting additional fees on customers’ bills in some states, the solar industry is engaging customers in fighting back, including a ballot initiative in Arizona that would put a right to net metering in the state constitution.
Still, Hogan believes that the money spent on tax breaks and expensive power would be better spent on research for a breakthrough solar technology that is truly cheaper than fossil fuels, even if it means waiting a decade to deploy new solar.
But Hogan also cautions that there’s no guarantee that research would be successful, and in any case will likely depend on the politically-difficult implementation of a carbon tax that would make coal and natural gas—which each generate about a third of U.S. electricity today—more expensive.
“The question is how long should you wait [to redeploy solar]. My calculation, to a first approximation is that if you don’t have a CO2 tax, you never make it,” Hogan said. “You should wait forever because it never gets cheap enough. With a CO2 tax you should wait a decade or more. So even with a CO2 tax it’s too early to deploy the technology we have now.”
Hogan bases that conclusion on figures from the U.S. Department of Energy that indicate that, even with a carbon tax, the cost of electricity generated by current solar technology “isn’t even in the ballpark” of that generated by other sources.
“This is considered to be extremely bad news,” Hogan said, “but I think that’s what underlies the factual situation.”
Solar’s current success, Hogan said, has come in part because it’s still small enough that the grid can absorb it without significant negative impacts.
“It’s destined to fail. That’s what I think. It takes a while, as soon as it gets to be large enough, then it’ll fail,” Hogan said. “When it’s small, who cares?”
Strains in Germany
Some nations that have rapidly increased their reliance on solar have seen their energy systems struggle or dealt with unintended consequences from government subsidies. Spain, Hogan said, guaranteed solar generators a high price for energy through a “feed in tariff” but borrowed instead of passing the higher prices on to consumers. The result, Hogan said, is an accumulated debt that totals the cost of an entire year’s electricity—they’d have to double rates to pay it off—and a national pullback from solar power.
“They said, ‘No mas, we’re not doing this again. This was a big mistake,’” Hogan said.
China enacted similar guaranteed high prices for solar-generated electricity—which prompted a rush to build solar facilities in the sunniest, most ideal locations, according to Michael McElroy, Butler Professor of Environmental Studies and Chair of the Harvard China Project. The problem, McElroy said, was that wasn’t necessarily where the people were. So Chinese officials added location requirements to the tariff to ensure the new solar goes in where the demand is.
Germany has had similar problems but, like China, has not wavered in its support for solar and wind power. Germany has been widely hailed as a renewable power success story, generating about 30 percent of its electricity annually from renewables, including wind, solar, and hydro. To foster renewables, the nation requires renewable power to be used on the grid first and has a feed in tariff that guarantees high prices, which are passed on to residential customers. The country has also raised the stakes on its renewable power bet, by deciding to close its nuclear plants by 2022.
Recent headlines, however, have hinted that beneath the nation’s apparen success in fostering renewables, there is trouble. While a significant portion of German electricity comes from clean renewables, coal—locally mined and cheaper than natural gas imported from Russia—has become the nation’s next choice, a decision that actually increase carbon dioxide emissions in 2015.
“[Renewables] can be an expensive decision and you see it in the cost of the grid they maintain,” said Joe Lassiter, Senior Fellow at Harvard Business School and retired Senator John Heinz Professor of Management Practice in Environmental Management. “You have to have a collection of different power generation assets … that can deliver the hour-by-hour profile of power that consumers and industry need in summer and quite a different profile in winter. That results in a lot of capacity idling—typically much of that capacity can’t be throttled up and down quickly—making it remarkably inefficient, remarkable high-polluting.”
But Aldy said Germany’s rising carbon dioxide emissions result not from subsidies alone, but from the interplay of the German renewable incentive system with the European Union’s capand- trade emissions trading scheme, of which they’re part. Germany’s aggressive renewables policy has flooded the market with clean power that lowers demand for carbon dioxide emissions allowances. That lowers their price and makes the cost to emit carbon dioxide so low that it makes financial sense to burn dirty coal instead of cleaner and more expensive natural gas.
The principle that underlies cap-and-trade is that regulators don’t—and can’t—have as much information as that held by hundreds or thousands of individual companies, Aldy said. A cap-and-trade system sets an overall limit on how much can be emitted, sets an allowance price for emissions under that cap, and then steps aside and lets ingenuity go to work. Companies that can figure out how to emit less CO2 can sell their emissions allowances to companies that still need them, and that financial incentive drives the system to lower and lower emissions. Telling companies how the cuts have to be achieved—through a strong renewables policy—changes the incentives, sometimes in unpredictable ways.
“As soon as you say you have to do so much wind and solar, it’s contrary to the fundamental logic of market-based approaches like cap-and-trade or an emissions tax,” Aldy said. “It’s not going to do anything for the environment.”
That same dynamic could emerge in the United States, Aldy said, in places like California, which has both a cap-and-trade system and a state renewable portfolio, and in the Northeast, where Aldy described the regional greenhouse gas initiative as effectively a “power sector CO2 cap-and-trade” system, and where each state also has renewable power portfolio standards requiring a certain percentage of power from renewable sources.
Policy growing pains
Where some see fundamental flaws, however, others see growing pains, all part of the process of bringing a society’s changing values alive through shifting public policy and of figuring out how to integrate a new energy source into an aging system.
“They’re meeting their renewable energy targets and doing it without [significant] public pushback on the system,” said McElroy, who expressed confidence Germany would eventually adjust policies to counter whatever forces are pushing emissions upward.
Henry Lee, Jaidah Family Director of Harvard’s Environment and Natural Resources Program and Senior Lecturer in Public Policy at HKS, said what’s happening with solar today has happened with other resources and in other contexts before. Policies that go awry will eventually get fixed, Lee said, which is part of the reason subsidies are temporary. If the public pushes back, they’ll get adjusted, here or abroad.
In the meantime, Lee and McElroy said, the German solar industry is benefitting from both economies of scale and from the learning and innovation occurring in production, distribution, and installation. Because of these processes, McElroy said, solar panel installation costs about half in Germany what it costs here. That’s something McElroy knows from personal experience. He recently had solar panels put on his home at a cost of about $5.20 a watt, compared to $2.60 a watt in Germany.
More efficient solar panels are also in the offing, Lee said. Those sold today are typically 15 to 16 percent efficient, but 20 percent efficient panels are in the lab and will eventually make their way onto the market. Though less concerned about market effects of current subsidies, Lee agreed that the ultimate goal is for low-carbon, low-cost power to “become market competitive,” something he believes that subsidies alone can’t affect.
“I can subsidize my way to a small percentage of renewables, but if I want it to take off, I have to make it cost-competitive because the government can only force this so much,” Lee said.
David Keith, McKay Professor of Applied Physics and Professor of Public Policy, however, expressed skepticism that the goal for solar power ought to be to make it price competitive with fossil fuels. Rather, he said, the goal is a cleaner environment.
Government regulation of environmental damage is nothing new and often has imposed new costs on society, he said. It happened with the Clean Air Act, the Clean Water Act, in banning leaded gasoline, and in changing the chemical coolants in refrigerators and air conditioners to prevent ozone depletion. Those all raised costs but were done anyway in order to protect the public.
“We have solved lots of environmental problems before by hard laws and not just because things have gotten cheaper,” Keith said. “I actually want to protect people’s lives, and I think it’s worth paying something for environmental protections.”
That doesn’t mean that there isn’t a need to innovate and lower costs, Keith said. A low carbon world, he said, should also be a high-energy world, one that provides ample energy to developing as well as developed nations.
“I want to see a high-energy, high-wealth society,” Keith said. “As far as I can tell, only two technologies can plausibly scale to do something like that without an environmental holocaust: nuclear and solar.”
Whether or not solar ever becomes price-competitive with fossil fuels, the fact that solar systems only generate power when the sun shines remains a significant problem. This intermittency affects both its integration into the current grid and its prospects of becoming the foundation of a future low-carbon, low-fossil fuel grid. Experts offered two potential solutions, one lower tech but fraught with political problems and the other high tech and still being developed.
The low-tech solution involves building robust, long-distance power transmission lines, allowing electricity generated where conditions are most favorable to be moved to places where it is most needed. That would enable solar power generated in America’s sunny Southwest—or wind power in its windy Midwest, for that matter—to light the night in Chicago or even the cloudy cities of the Northeast. If the lines crossed multiple time zones, they could help even out peaks and valleys in demand in different parts of the country.
Transmission would only be a partial solution, however, as night eventually falls across the entire country. In addition, it has political problems, Aldy said. People living in between, whose communities and properties the new transmission lines would cross but who would get no real benefit, don’t want them.
“If you’re in Iowa or Minnesota, you don’t want to pay for the line bringing wind power from South Dakota to Chicago,” Aldy said.
The second potential solution would be to store solar or wind power generated when conditions are favorable so it can be used when demand is highest. Operators of today’s grid have few ways to store power and instead typically match supply and demand hour by hour, day by day.
A relatively new type of solar plant incorporates storage into its design. Instead of the more familiar solar photovoltaic design, in which photovoltaic cells convert sunlight to electricity, solar thermal plants use an array of mirrors to concentrate solar energy onto a central structure where the heat generates steam that turns a turbine. A variation on this design, in use at the Crescent Dunes solar energy plant in Nevada, can also store heat in molten salt, which can be used to generate power when the sun doesn’t shine. Though it offers the promise of addressing solar’s intermittency, a concentrating solar plant makes the cost problem worse. The Energy Information Administration projects a levelized cost of electricity of 21 cents per kilowatt hour by 2020, almost double that of photovoltaics.
“Some of these technologies are quite promising, but really first of a kind,” Aldy said. “It’s not, ‘Can I put up the same panels on your house as two years ago but now they’re cheaper to manufacture.’ It’s bringing to commercial scale a new technology. There’s going to be learning opportunities.”
Battery storage is another option, but developing a battery large enough to be useful at a grid scale, at a cost that the public might be willing to pay, has been a challenge.
“It’s not like people aren’t trying everywhere. A lot of money has been spent and progress is very, very slow,” Lassiter said.
A Harvard team has hit on a combination they think might do the trick. A 3-kilowatt demonstration battery based on their technology is being developed by a Connecticut company and is expected to be ready within a year, at which point they’ll have a better idea of how much it’ll cost.
The team, including Michael Aziz, the Sykes Professor of Materials and Energy Technologies, Roy Gordon, the Dudley Cabot Professor of Chemistry and Professor of Materials Science, Theodore Betley, Professor of Chemistry and Chemical Biology, and Alán Aspuru-Guzik, Professor of Chemistry and Chemical Biology, has devised what is called a “flow battery” that they believe has the potential to be just such a grid-sized storage device.
Storage in familiar solid lithium-ion batteries is currently too cumbersome and expensive to deploy on a large scale, Aziz said. A recent entrant into the market, Tesla’s Powerwall battery, costs about $350 per kilowatt hour of energy capacity, three times the potential cost of the developing flow battery.
“Lithium will come down too,” Aziz said. “The $64,000 question is can lithium come down by a factor of three. Most people I talk to doubt it, but Elon Musk might have a different opinion.”
The average retail price of electricity in the U.S. is 10 to 12 cents per kilowatt-hour. To be commercially viable, Aziz said, the added cost for storage cannot be more than another couple of cents. The demonstration battery being built now will help them better understand costs, but Aziz said they may come in under about 2 cents per kilowatt hour. “If it ends up costing $120 per kilowatt hour when it’s at mass production scale, and the useful life of the battery is 10,000 cycles, say one cycle per day for 27 years, then for $120 you’ve put 10,000 kilowatt hours into your battery and taken them out again. That comes down to 1.2 cents per kilowatt hour, before you raise it a bit for efficiency losses.”
“The low cost and high performance of our energy-storage chemicals gives us a fighting chance of reaching these targets, but I can’t say we’re there yet,” Aziz said. “It will take building and testing at larger scale.”
The concept of the flow battery has been around since the 1970s, but finding the right liquid chemicals that can provide utility-scale storage at a cheap price has been a challenge. Flow batteries are on the market now for special applications, using vanadium ions—which Aziz described as “rare and expensive”—as a key component.
The Harvard team screened over a million molecules, and created a battery with quinones—an inexpensive organic molecule made of earth-abundant elements—on one side, and ferrocyanide—an inexpensive food additive—on the other. These chemicals are dissolved in water and flow from the positive and negative tanks to interact at the electrode, sending electrons into the circuit. The depleted chemicals then cycle back to the tank, ready to be recharged when surplus power is generated.
Though the Harvard team put an emphasis on finding non-toxic, non-corrosive components, the biggest advantage of a flow battery is scalability, Aziz said. If a lot of storage is needed, you don’t need to add a lot of complex technology or extra expensive electrodes, just bigger tanks to hold more chemicals.
“If you need more energy for a given power, instead of stacking banks and banks of batteries with more electrodes that you don’t need, with a flow battery you just get big dumb tanks,” Aziz said. “The goal is sufficiently safe, inexpensive and scalable storage to make intermittent renewables dispatchable.”
Another possible solution to solar’s intermittency problem may one day be sitting in our driveways, McElroy said. Today, tailpipe emissions are a big part of the carbon problem and electric vehicles a potential solution. If, over the next 20 years in the U.S., 110 million of the 230 million cars are electric, all of their batteries plugged in in garages across the country would represent a huge amount of storage potential.
McElroy described a scenario where plugged in cars charge at night when demand and prices are low. During peak hours, cars not being driven could reverse the flow and supply electricity to the grid, helping even out demand.
“That’s a big, big deal,” McElroy said. “I think that’s a smart way to go.”
Though work remains to be done, the fact that these problems are being taken seriously—not just by scientists, but by society at large—represents a sea change in attitude that is largely attributable to the steep decline in the cost of solar power, according to Daniel Schrag, Director of the Harvard University Center for the Environment, Hooper Professor of Geology and Professor of Environmental Science and Engineering.
“Whatever the strategy you choose to manage the intermittency of solar, cheap solar is getting many locations close to the point of creating the markets for those solutions, which never existed before,” Schrag said.
That effect is important even though solar power still isn’t cheap enough to transform the global power system, Schrag said. The price decline, combined with subsidies, is driving an installation boom that has forced utilities, customers, and regulators to sit up and take notice of a technology that not too long ago was easy to ignore. There may be management issues in Germany, California, and elsewhere that point out needed policy reform, but it is encouraging nonetheless that the discussion is beginning to happen, according to Schrag.
“Policies and the way people bill will be rethought. In some ways, that’s what’s great about cheap solar because it’s driving that,” Schrag said. “Ten years ago we didn’t think we’d get close to that anytime soon, and now we’re pushing that in a number of locations, with wind in Iowa, sun in California.”
A future grid
For those wondering what the grid of tomorrow might look like, 2016’s anticipated installations might provide a preview, at least if subsidies continue. Renewable sources will make up more than 60 percent of new capacity, with wind’s 6.8 gigawatts joining solar’s 9.5. Throw in another 1.1 gigawatts from the country’s first new nuclear plant in 20 years—the Tennessee Valley Authority’s Watts Bar 2 plant in Tennessee—and two thirds of 2016’s new capacity is expected to come from low-carbon sources.
Fossil fuels, however, haven’t gone away, and the flip side of the dramatic decline in solar panel prices has been an equally dramatic decline in natural gas prices. Any future grid, experts said,
is likely to have significant power generation from natural gas, which can be ramped up and down to backstop renewables’ intermittency. In 2016, about 8 gigawatts of natural gas is expected to be added though the year will see almost no new coal. In fact, 2016 is expected to be the year that natural gas supplants coal as the dominant fuel source for U.S. electricity generation, with each providing about a third. Coal’s trajectory is opposite that of natural gas and experts see coal making up less and less of America’s electricity generating mix. Perhaps a sign that is the fact that, in 2015, 80 percent of the 18 gigawatts in plant retirements were of coal plants, according to the Energy Information Administration.
A major factor in shaping the future grid, at least in the United States, will be whether the country adopts a price on carbon, either via cap-and-trade or a carbon tax. Though still considered politically difficult, such a move would make fossil fuels more expensive—though natural gas would likely remain competitive—and renewables more competitive. It would help drive carbon out of the electricity system and likely be cheaper than subsidies to boot.
“Putting a cost on carbon is feasible, it’s also a lot less expensive. It is this latter point that people don’t understand,” Lee said. “People don’t see that they’re paying for these subsidies, but they do see that they’re paying for a price on carbon. Most every reputable study that I have seen says that it is far less expensive to put a tax or price on carbon to reduce emissions than it is to try and reach the same reductions through regulation or subsidies.”
The role of nuclear power in a future energy grid is a bit of a wild card, experts said. Some see nuclear as a preferable partner to renewables over fossil fuel-burning natural gas. Climate change concerns were actually beginning to soften no-nuke attitudes, Aldy said, until the disaster at Fukushima hardened them again.
The construction of new U.S. nuclear plants, however, has become so costly and bound in regulation that it’s unlikely many new plants will be added to the nation’s energy mix. Installed nuclear, meanwhile, still supplies 19 percent of the U.S.’ electricity and those plants’ eventual retirement represents a potential climate setback if they’re replaced by fossil fuel-burning plants.
Lassiter expressed some hope that new, safer and much cheaper nuclear designs will spark a renaissance of the industry, at least outside the U.S., in the 2020s; but, in the U.S., a complete rethink of the regulatory process is needed that dramatically cuts the cost and the time required to license new nuclear designs if those designs are to be brought to market in the U.S. any time soon.
Lassiter and Keith also pointed out, however, that the energy future—clean or otherwise—is different in different places, each dealing with different climates, different natural resources, and different governments.
“There are different solutions depending on the local economics and the local politics in different parts of the world,” Lassiter said. “Until you disaggregate, you get this uninteresting average. It’s like putting vegetable soup in a puree machine, you get glop.”
Germany’s renewables policy, for example, is affected by its decision to eliminate nuclear power and its desire to limit reliance on Russian natural gas. That favor renewables and drives up costs, which so far the German people seem willing to pay.
The situation might be different in a poorer nation, Lassiter said. Absent the solar “disruption” predicted for India by KPMG, Lassiter expects that the developing world will continue to install coal plants to power the cities and factories that drive economic development while distributed solar microgrids have the prospect of leap-frogging to the rural areas, where people do not want to wait for the traditional power grid to be run out to them.
“Rich countries can do what they want,” Lassiter said. “Poor countries will do what they must.”
- Alvin Powell
This feature story originally appeared in Environment@Harvard - Volume 8, Issue 1