Opinion: Americans, electrify!

by Hugh Carter Donahue, Ph.D.

Americans, electrify! Electricity of the people, by the people, for the people is at hand! Carbon’s fading out! There is nothing but pollution to lose!!

Technology and policy coincide for progress and hope. Internet, wireless and ever more efficient renewable generation technologies now diminish dependencies on carbon producing energy. These capabilities, though yet emerging, comprise, animate and constitute a generational transformation every bit as important and potentially as far reaching as earlier industrial and information economy innovations. Just as rail, coal, steel, telephone and telegraph spurred an industrial economy, the binary core memory of main frame computers enabled the information age, and Internet/transmission control protocols under-girded distributed computing for a flourishing Internet, the combinations of communications and emerging distributed, renewable energy generation technologies promise more electricity, less pollution and a flourishing electricity sector.

Technology and markets

Communications technologies are paving the way. Ubiquitous radio frequency and wireless functionalities are driving down metering costs and expanding functionality. Wireless and wireline broadband roll outs permit more pervasive adoption of web services and plug-and-play applications integrating core control with peripheral application. Open source software, both the increasing availability of its codes and greater facility among larger numbers of people handling computer code and developing Internet functionalities, permits less costly market entry and readier user adoption for web services, which will promote faster, wider adoption of distributed generation and speed smoother network integration. Ever increasing consumer confidence and ease with control technologies to generate and transmit electric power are present and irreversible as outgrowths of adaptation to information technologies like desktops, laptops, mobile phones and storage devices (iPods) and ease of use of interfacing and interacting with programming languages (My Space, Facebook, Twitter and hyper text mark-up language generally).

Renewable energy technologies are making huge strides.

Declining costs of power and information storage, including smaller, lighter more powerful batteries, and memory are reducing the costs of programming institutional, commercial and residential heating, cooling and lighting controls and are also promoting vastly improved energy efficiencies. These functionalities can be deployed for distributed generation from renewable inputs; a number are commercially available at this time.

Improving ratios of generation output to mass, array and footprint mean that solar units will become more capable of yielding and producing more juice in less space. At this point, output to footprint ranges from ratios of 10 percent to 20 percent. As ratios of output to footprint increase, diffusion and adoption will speed.

Better storage capacities for inherently episodic and variable wind and solar sources will promote adoption.

As huge as the carbon based, thermal input economy of steel, rail and heavy manufacturing is, the green switch now elicits thoughtful presidential leadership. The propitious coming together of technological innovation, emerging markets and public policy in the Obama initiatives present generational opportunities for industry participants and consumers. This generation transformation unshackles the citizenry and industry from pollution.

Electricity industry leadership is indispensable. Generators, distributors and regional transmission organizations can empower the transformation from a carbon economy to a renewable one. Save for reasonable concerns about line of sight degradation for solar array and wind power sites and spent battery storage for plug-in cars, one is hard pressed to hear or read or learn of widespread concerns from the general public about going green.

Policy

President Barack Obama grasps the significance of these market potentials and technological innovations, and his administration is investing in Americans to address current problems and to jump start future opportunities. While the plain language of the Recovery Act necessarily specifies programs and funds for specific generation, transmission and energy efficiency applications, Act initiatives and programs have the capacity severally and as a whole to transform generation and transmission so that institutional, commercial and residential users will more and more pervasively use and come to rely upon distributed electricity generation.

Specific Recovery Act programs address current problems by providing $483,000,000 for environmental cleanup and $390,000,000 for uranium decontamination, $4,500,000,000 for electricity delivery and energy reliability and $80,000,000 for regional transmission. Prospectively, Obama’s plan authorizes $100,000,000 for technicians, trained in renewable energies, $750,000,000 for training for other high growth and emerging energy sectors, $500,000,000 for research and to prepare workers for careers in energy efficiency and renewable energy, and $1,600,000,000 science funds for research to address mercury issues at fossil plants, develop fossil sources, promote collaboration among energy supplier and battery developers on recharging interfaces for plug-in automobiles and to abate carbon.

Bush dissimulated and retarded this generational transition to cleaner, renewable, more democratic energy generation. The asset bubble triggered international investment in speculative financial instruments by luring investment in depreciating assets as if they were appreciating values. Bush rode the asset bubble to disguise or alter the appearance of inflationary war and energy costs.

Quite aside from the Iraq war, the spot market price for electricity for the mid Atlantic states soared from an average cost of $25 per megawatt hour in 2002 to $60 per MWh in 2005 till settling at $55 per hour in 2007. Natural gas peaked at approximately $9.00 per million British Thermal Units in 2005 from an average of $3.00 per MMBTU in 2002 till averaging approximately $7.00 per MMBTU in 2007. One hundred percent increases in both cases from 2002 to 2007. Due to inflowing asset bubble investment, however, neither inflationary energy nor war costs exerted commensurate inflationary effects through the economy. Gasoline prices, instead, seem to exert more effect in 2007 and 2008. As the asset bubble expanded, Bush either did not attend to energy problems or offered weak palliatives. Americans heard highfalutin State of the Union Address rhetoric about ending a national addiction to oil, hydrogen powered cars, switch-grass as a bio-mass generation source from him. In so doing, Bush slowed, held back, delayed — that is, retarded the emergence of competitive, cleaner energy sources. He’s now retired and the bubble’s burst.

In addition, federal and state legislators, regulators and utility executives are actively promoting greater distribution for wind energy through regional and potentially national wholesale renewable energy portfolio markets.

State and municipal governments are looking into using structure roofs, brownfields and undeveloped land to generate power to economize on street illumination, building efficiency and other energy costs.

As these market, consumer, institutional and regulatory forces cohere and synergize, investments in distributed renewable generation will be less costly, and Americans will recover their money faster, be able to vend electricity into networks and enjoy savings in the future.

Institutional, market and consumer forces are now poised to combine and to exert regulatory and market power with the potential of transforming wholesale and retail electricity markets. Indeed, to some extent, retail choice of generation suppliers and limited adoption of home generation prefigure these emerging transformative forces in electric power.

Policy, technology and markets

In real senses, and rather distinctly at this moment in time due to the Obama initiatives, corporate interests of generation and distribution enterprises and of regional transmission organizations coincide with and, with sagacious management, can advance the public interest. Largely because the times are transformative, capping carbon, adopting, empowering and accessing peripheral, less polluting inputs, and employing available communications technologies for systemic, interactive, real time or close to real time core controls and peripheral applications, electricity industry capacities to effect these outcomes, to shape their design, pace their adoption and define areas of deployment do more to help than to hurt the public interest.

Electricity industry participants come to the table with many strengths, which they can employ to corporate advantage and for the public interest. For power generation companies, Recovery Act remediation programs could free fresh generation and address greater efficiencies with fossil fuels. For distribution companies, delivery and reliability could become less problematic, and there will be many more chances to collaborate with customers.

Regional transmission organizations can leverage their information strengths, because unit in put costs for smart grids and smart homes are falling at faster rates than unit in put costs for generators and transmission wires and poles. Web services and peripheral plug and play functionalities in home and workplace monitoring both inure to transmission companies’ advantages while providing vehicles for distribution and generation companies to transition to greener generation produced by their customers.

Importantly, all electricity industry participants share common, if necessarily distinct, commitments to service. All manage servicing relationships. Generators service relationships among energy source suppliers, distributors and transmitters. Regional transmission organizations service relationships among distributors and generators by transmitting electricity. Distributors service relationships among generators and transmitters and government, institutional, commercial and residential users and customers. Servicing shapes and defines institutional conduct, corporate goals, successful careers and sector identities. Servicing is so important and vital an orientation that it is often overlooked or discounted simply because it so obvious.

Other sectors do not express comparable service orientations. High tech is an endless loop of investment and innovation chasing the next big thing till corporations like Microsoft, Apple, Dell or Google clear the decks dominating key markets. Financial services largely pursue fast returns, though that may change. Manufacturing forever focuses on sourcing, tooling, scale economies, inventories, distribution, advertising and capital costs in competitive global markets, and, in America at least, is yet to successfully integrate the Internet into marketing, retailing and advertising. All of these sectors will require longer durations to recover and to ramp up to Recovery Act opportunities, and some, like manufacturing, face dauntingly changed markets.

At this moment in time at these historically specific conditions, the electricity sector’s servicing orientation places it at competitive advantage with other sectors. Servicing attitudes and commitments cut the transactions costs and ramp up time for transformative changes due to their breadth among industry workers throughout generation, transmission and distribution providers. The servicing orientation acquired during the twentieth century now positions electricity more effectively than other sectors to address and effect these transformative changes of distributed generation from renewable sources. In so many words, institutional depth leverages knowledge and investment to expedite efficiency.

Prospects

The electricity sector’s wealth and market power will increase relative to other sectors with greater distributed generation from renewable sources. Democratizing participation and liberalizing market entry through distributed generation will boost income and profits for generators, distributors and transmission organizations.

The electricity sector’s wealth and market power will increase, because electricity is both a substitute and a complement. This vital, inherent, essential character or nature, also often unnoticed or overlooked because it, too, is so obvious, distinguishes separates electricity from other sectors.

By contrast, in broadcasting and publication, for instances, Internet/transmission control protocols, wireless, radio frequency and information storage technologies enable market liberalization and democratic participation that are fundamentally altering and many would now acknowledge have transformed the incumbent analog and print economics of each sector, by enabling outright substitution. Peripheral devices can do more and more with less and less weight at increasingly faster speeds virtually in real time, so the value adds of broadcasting and publication as vehicles for advertising to spur aggregate demand diminishes with deployment and adoption each new communication innovation.

Similarly, with music and video entertainment: file sharing can undo intellectual property and copyright, for consumers are able to acquire palatable similarities to the authentic original at vastly less or at no cost. Indeed, it is the genius of the iPod that it manages rights management and makes it effortless for consumers to exchange money for auditory content employing a light weight, well designed, portable storage device.

Electricity benefits from Internet/transmission control protocols, wireless, radio frequency and information storage technologies innovations, coupled with renewable generation, because there’s no disintermediating the need for power. Civilization, state, society, people, no matter how one classifies users, have to have electricity.

The ways that electricity will flow through networks will change and sourcing inputs will become more diverse. Various combinations of distinct inputs, e.g., fossil, nuclear, hydro, solar, wind, will take the places of other inputs as distributed generation becomes increasingly feasible. With greater efficiencies, renewable inputs from distributed generation will substitute for more of the carbon emitting inputs. However, the likelihood that the electric system could flip to renewable inputs is very remote and may likely never occur. Therefore, renewable substitutes actually take on the character of complements. For instance, generators will likely find that distributed generation of renewable energy enables them to migrate from carbon and to distributed renewable generation of their own as regulation and permitting adjusts to market innovations. While distributors may find that retail sales may decline as individual users become renewable generators, distributors will also benefit from carrying power upstream to transmitters, servicing, and lower transmission costs to users. Metrics and dynamics are complementary and substituting both, and the sector will flourish by cultivating each approach and vehicle.

The electricity sector will also prosper, because pollution is expensive. The millions of metric tons of carbon dioxide and nitrous oxide and mercury that are put into the environment, coupled with storage costs for spent nuclear fuel, comprise the prices that society pays and the burden the industry carries to power the nation. Economists categorize these poisons as negative externalities.

As distributed generation from renewable inputs becomes increasingly viable, the electricity industry’s negative externality costs will fall. The electricity industry will concomitantly become more and more capable of transcending the dilemma of trading off power and pollution. Those negative externality costs are often termed, designated or denominated as regulatory costs. In fact, regulatory costs are the expression of coping with poison, denominated as pollution, the negative externality. To date, it’s mostly good effort: scrubbers here, an attempt at pressurized fluidized bed combustion there — each essentially mitigating pollution, all improvements within the carbon system. And, of course, there are industries and careers — attorney, advocates, regulators, politicians, engineers, investors, and bankers — all participating in managing and addressing the power/pollution dilemma.

In fact, it’s historically more precise to see the continuity of public funds, along the lines Obama is proposing, shaping these transformations than to champion markets as sui generis solutions, particularly in network industries. Network technologies for transportation, energy and communications have historically gotten going through statute, license or regulation. Conservation, championed by Theodore Roosevelt, was the original force animating energy regulation at that time for hydro electric power, which the Federal Energy Regulatory Commission now oversees.

The vitality of this transformative, generational moment expresses and overcomes its retardation, held back as it was most of this 21st century unit decade. President Obama enables us to shed pollution with these visionary, grounded plans.


Hugh Carter Donahue, formerly associate director for the Information and Society Program at the Annenberg Public Policy Center of the University of Pennsylvania, is Adjunct Professor of History, Rowan University, Glassboro, New Jersey. Donahue advises energy, telecommunications and high tech firms on regulation and business development. He is the author of “The Battle to Control Broadcast News” and numerous articles and essays. Donahue holds a doctoral degree in Communications and Policy Analysis from MIT. His email is hcd@dca.net.

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