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Why Renewable Energy Is at an Impasse

by Justin Rohrlich
Minyanville, July 7, 2010

Arguments for sustainables have been overruled as infrastructure and policy concerns surface.

In today's New York Times, Matthew Wald writes:

Engineers say that if the power grid becomes more reliant on renewable energy, a lot of new transmission lines will have to be built at some point or there will be unhappy consequences. But the future may have arrived last month, when the Bonneville Power Administration, a federal agency that oversees power transmission in the Pacific Northwest, had more energy than it could comfortably use.
He goes on to explain that:
The BPA is accustomed to a surplus of hydroelectric power in the spring, as the winter snow pack melts. Last winter there was only about 60 percent as much snow as usual, according to energy experts. But in the late spring heavy rain arrived. Unlike snow melt, which can be predicted by temperature, rainwater gives little warning. And suddenly there was a surplus.
Now, most would assume a surplus of energy to be the answer to our dreams of energy independence -- which has been a rallying cry since the days of Richard Nixon's presidency. However, it seems as if the push for renewables has now gotten slightly ahead of itself.

The United States simply does not currently have the energy infrastructure in place to handle anything more than good intentions. Wald points out that:

When it runs out of neighbors that can take the power, the BPA can also let the extra water run down the dams' spillways, bypassing the power-producing turbines. But that turns out to pose an environmental problem. Water that goes down the spillway gets frothy, and the excess air bubbles can kill salmon and steelheads, an endangered species in the upper Columbia River. So the BPA solved the problem by running all the water through the turbines, making power it didn't need.
Simply put, while the call for increased use of renewables gets louder and louder, its supporters might be better served by lowering the decibel level until a viable transmission backbone is in place.

When BPA had offloaded all the surplus power it could to anyone and everyone willing to accept it, BPA asked Energy Northwest, a public power joint operating agency, to reduce output at its Columbia Generating Station nuclear plant by 78%.

While it may not sound like a particularly difficult task (just turn some sort of knob counterclockwise, right?), it's actually very challenging.

Existing nuclear reactors, by design, are built to run at two settings: full power and zero power. The astronomical construction costs are theoretically recouped by operating 365 days a year, 24 hours a day, at peak output.

And now, as BPA adds wind power to the hydropower at its core, Wald quotes industry officials who say there will be surpluses that can't be exported over existing power lines.

This is a textbook example of over-enthusiasm getting in the way of reality.

"The problem is driven primarily by ignorance of the realities of energy use in our society and the absolute need for affordable and reliable power," Kenneth Green, an environmental scientist by training and a resident scholar focused on environmental and energy policy at the American Enterprise Institute, tells Minyanville. "People are in denial about the extremely limited potential for new sources to displace conventional energy and the environmental consequences of those sources. They simply don't acknowledge the environmental damage that would result from expanding, say, biofuel usage. How much of the rainforest would you be willing to give up for that bio-diesel? How many acres of forest or farmland would you be willing to put under the plow for corn ethanol? A lot of people are living in a fantasy world of free lunches and no trade-offs."

If you think this is a partisan political viewpoint, you're incorrect.

On the other side of the aisle, Ellen Vancko, nuclear energy and climate change project manager for the Union of Concerned Scientists, agrees that these free lunches are exactly what caused the mess that passes for energy policy today.

Take the massive nuclear loan guarantees eagerly accepted -- and heavily lobbied for -- by energy companies including Ameren (AEE), Constellation Energy Group (CEG), General Electric (GE), Duke Energy (DUK), and Southern Company (SO).

"Why loan guarantees? Because six top investment firms told the Department of Energy in 2007 that they were unwilling to finance new reactors in light of the industry's horrible financial track record," Vancko writes. "Utilities don't want to take that risk, either. But both would consider new reactors if taxpayers assumed the risk -- in the form of federal loan guarantees."

Vanko elaborates:

Based on the industry's history of cancellations and defaults, both the Congressional Budget Office (2003) and the Government Accountability Office (2008) estimate that the average default risk on a federal loan guarantee for new construction could be as high as 50 percent.
Robert Hahn, a visiting senior fellow at the Smith School, Oxford University, and Peter Passell, editor of the Milken Review, have this to say:
What passes for energy policy is a Rube Goldberg construction, a machine powered by direct subsidies, tax breaks and mandates that is going in no particular direction. Is ethanol worth the cost in lost taxes and higher food prices? If General Motors' heavily subsidized plug-in electric car catches on, will there be enough electricity to keep them on the road on a hot summer afternoon? Don't ask Congress or the White House -- they don't have a clue.
And Jim Riccio, head nuclear policy analyst at Greenpeace, says, "Warren Buffett's corporation Mid American has already determined that new nuclear power doesn't make economic sense. The president should have listened to ‘the World's Greatest Investor' rather than nuclear industry lobbyists."

Additionally, the Harvard International Review states that "about 800 large reactors would have to be built around the world by 2050 just to achieve a significant reduction in the expected increase in carbon dioxide emissions. This would require building as many as one reactor every 18 days for 40 years."


Considering that it takes at least 10 years to construct a single nuclear power plant in the US (mind you, this comes from Paul Genoa, director of policy development for the Nuclear Energy Institute, a trade group whose self-described objective is to "ensure the formation of policies that promote the beneficial uses of nuclear energy and technologies in the United States and around the world," not an anti-nuke activist organization), the answer to that question is, undeniably, no.

Jerry Taylor, a senior fellow at the Cato Institute who is among the most widely cited and influential critics of federal energy and environmental policy in the nation, sums it up in his inimitably succinct style:

Getting this industry off the government dole would finally force it to innovate or die -- at least in the United States. Welfare, after all, breeds sloth in both individual and corporate recipients. The Left's distrust of nuclear power is not a sufficient rationale for the Right's embrace of the same.

When the day comes that the electricity from solar or nuclear power plants is worth more than the costs associated with generating it, I will be as happy as the next Greenpeace member (in the case of the former) or MIT graduate (in the case of the latter) to support either technology. But that day is not on the horizon and government policies can't accelerate the economic clock.

When Cato agrees with Greenpeace, which agrees with AEI, which agrees with the Union of Concerned Scientists, which agrees with Wall Street, there's no better indication that the government has a lot of homework to do.

Problem is, the lobbyists seem to have eaten it.

Justin Rohrlich
Obama Announces Nearly $2 Billion in Solar Loan Guarantees
Minyanville, July 7, 2010

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