Green energy remains more talk than action, where is the green economy? We already know we do not have an energy policy, really, and for sure no green energy policy. We do have a patchwork of rules, regulations and incentives, but many of them can be counterproductive, regardless of the best intentions. If it were possible to map a cohesive and sensible energy strategy, there is an endless array of loopholes and internal contradictions that would have to be eliminated. Grid parity is being misused in a number of ways, perhaps unintentionally, but it is a concept that is widely misused if it is relevant at all. Green energy would have to be looked at as what it is, an absolute winner, and an alternative to perennial energy bills in the form of FREE renewable energy.
This blog is devoted to green energy on the grid, but even that is in a state of flux, for not everybody agrees on what is green, or renewable energy. Large hydro is taboo in lots of places, like the list of green energy for the state of Connecticut. Interestingly methane from landfills made the list. Clearly the damage to fish populations is causing big hydro to be disqualified in more and more places. There are still folks who think nuclear fission energy is green, and while they may be nominally right, because it does not produce CO2 emissions, it is hard to believe that people could be oblivious to Three Mile Island, Chernobyl, and Fukushima. Who needs that kind of green? One way or another, this blog is focused on green energy from the grid, which is at least something anyone can do immediately, and with the referral program we advocate, you can green your wallet at the same time.
Macro-economic madness: grid parity and energy efficiency
Policy makers rely on macro economists, which is as it should be. However things go wrong when the high level view of macroeconomics is used as is to drive microeconomic policy. And this is what is happening in energy on at least two fronts: grid parity and energy efficiency, which both are de facto being used, and used incorrectly, to justify the slow adoption of renewable energy. The Grid Parity Definition is simply the idea that the cost to the grid should be equal to carbon energy, but all this while CO2 emissions continue to be ignored in the equation. It will not be like that forever, and if you invest 30 year money, you might want to look ahead.
Wind Grid Parity or solar, mean that the performance numbers are evaluated in the context of powerplants, and at a wholesale, macro- level, on the grid. That may not be relevant. Both technologies however also exist on a building scale, and so do geothermal and other heat exchange technologies. Thus, if we look from the ground up, much more is possible than the macro-economists think. Also remember at the demand side of the grid, we are competing with retail prices, not wholesale!
Energy Efficiency is a secondary issue, not a primary objective, yet macro-economists are constantly telling us that energy efficiency will give us the most bang for the buck, and from their vantage point it sure seems to be so. Except it's wrong if you generalize it, and use it to drive policy. The question is: What are you making more efficient? If your point of departure is the carbon energy model, you are prolonging the tenure of carbon energy, just when even The New York Times made the catastrophic carbon levels front page news.
The fact is that energy efficiency is always an attractive investment at first, but then diminishing returns soon reveal the practical limit, and the reason why the old saying says you can't save yourself rich. Once you start on the road to energy savings in the existing model as a basis for investment, you will quickly paint yourself into a corner, for as you save, every subsequent investment has higher and higher costs, with less and less impact, and so the returns run away from you, and you are stuck unhappily paying energy bills forever. So what they were 20-30% lower when its several price hikes ago? This is a trap.
- Solar Power comes with a 30 year trail without bills
Green energy investments always start with a large investment, but they produce a long tail of zero energy bills and low maintenance costs to the extent of whatever portion of your demand they can replace, and now successive investments should gradually decline. Therefore, if you pick the right opportunities, and you do a proper 30 year comparison on a net present value basis (the Capital Asset Pricing Model), you are likely to find a higher value added to your property, than by a smaller energy efficiency investment. Not only that, if you get your engineering right, subsequent investments can produce synergistic effects, and compounding returns instead of the diminishing returns of the energy efficiency case.
Grid parity amounts to obfuscation, for it looks at when is green energy competitive with carbon energy in the current system. Long before grid parity is reached there are niche opportunities where renewable is economical before it is generally the case. Anyone who can read energy price forecasts can determine when it is worth putting on a hedge, and generating your own FREE renewable energy is definitely a hedge against energy price inflation. You can invest into an environment of rising prices, even if it is touch and go today, for with every passing year that investment will look smarter.
It always happens on the margin: off the grid
Net-zero homes are happening, and homes are coming off the grid, even existing ones. The numbers may still be small, but any marginal phenomenon that shows 30+% growth for a decade or more is worth watching. Some people may have a survivalist agenda, and pursue going off the grid for ideological reasons, but the majority of cases are economically sound. So much so that it behooves everyone who owns property to seriously look into their options, and once you can find one project to start your move to energy independence, it becomes easier and easier. Only you do need to make a long-term energy plan to prevent one investment from locking out another over time. Mistakes are expensive.
Any economist should be paying attention to what happens on the margin, and net zero homes and buildings are growing fast, and even retrofits are starting to happen. Besides technology is advancing all the time and in many situations newer wind turbines optimized for building mounted installation, are making Wind Energy more powerful than solar, and at least as competitive. Any building owner should look at all Renewable Energy Sources, not just one.
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