Back in the 60's we used to laugh at the 20 year plans of the former Soviet Union, but now we are doing the same things in our renewable energy policy, or what goes for it. To stay close to home for me, plans like PlaNYC (Née 2030, but the target date has been dropped from the nomenclature recently in apparent anticipation of missing the deadline), and its outflows (local laws 84/85/86/87), including the NYC Clean Heat program, all are examples of planned failures, because they drive policy at the detail level from macro-economic views which ensure that average results become the norm and real progress is stymied, because by aiming for "average," below average, or worse, is what comes out.
The problem in this case also goes back to the federal level, the lack of a coherent energy policy, and the way energy incentives have been structured traditionally. In the end, all of this goes back to the beginning of the energy crisis of '73 and the macro economic view that it was cheaper on the margin to reduce energy demand than to increase supply (power plants). Cheaper to insulate your house than to build a new power plant, etc. Energy efficiency thus became sanctified and became a national pastime, regardless if it is good for you or not.
N.B. This is written with a view to New York State, but the same most likely applies with only minor variations to every state of the Union.
The Energy Efficiency Fiasco
Naturally, increasing efficiency of the systems we do have, which are by and large carbon-based energy systems, adds up to making the carbon economy more efficient. If at the same time we realize that we want to wean ourselves from carbon energy, and switch to green energy, then we do not want to just invest our money in making the old system more efficient. In short, if we pursue efficiency of the existing carbon-based system, we are talking ourselves out of the alternative, green energy. Hence the ConEdison GreenTeam should be renamed the BrownTeam. This is what has happened with energy policy in general and specifically with the various incentives, which tend to favor either energy companies manufacturers of certain equipment, if they are focused on simplistic concepts of energy efficiency.
On the whole, renewable energy has literally been marginalized, by treating it as an option to make our energy system more efficient, and comparing it to other efficiency investments. By framing the comparison in this fashion, renewable energy becomes a marginal phenomenon, and is analytically shuffled under the rug, as I have demonstrated in detail in this blog earlier in the case of the NYSERDA MPP program.
The thing we need to do is realize that we have two competing energy paradigms, carbon-based energy and green energy, and that they come with very different opportunities and challenges. Since we already know that carbon-based energy is going to lose, and should lose, our programs need to encourage green energy, and not carbon-based energy, as is most often the case today. Until then, the NYC Clean Heat program should be renamed the NYC Slightly Less Dirty Heat program. We need to stop talking about renewable energy, and start doing something about it--our current programs mostly are preventing it from happening.
Energy Efficiency and Ossified Incentives
The biggest problem with various incentive systems and programs is that they are targeted at too low a level of detail, and it ends up with engineers not being able to specify the right systems because the accountants in the crowd see a bigger tax deduction that year with some other technology, and the accountants don't understand long term economics of the property. This ends up with the blind leading the blind, and has been analyzed in depth in this blog. The alternative that would set green energy free is a portfolio standard for renewable energy retrofits, which I have proposed recently with my consulting company DaBX Demand Side Solutions, Inc.
Green Energy: Square Pegs into Round Holes
The show has been held up by the public focus on "grid parity" and other such irrelevancies, and nobody seems to have noticed the sustained growth of net-zero construction in the last twenty years or more. In short, on the margin, clearly a combination of renewable technologies and energy efficiency is found to be economical, we just have to get serious about doing it at scale, and again, here is where a streamlining of incentives is necessary, so that green energy is no longer marginalized as an "energy efficiency" factor, but given the lead role that it should have. Renewable energy retrofits for existing buildings is where it is at, as proposed by the Urban Green Council in its 90by50 report, and by my own consulting firm in our DaBx PlaNYC2020 report, published in 2011. By now numerous other reports are emerging addressing parts of the issue.
Renewable Energy Policy that Works
Arguably you can not discuss renewable energy policy without having some acquaintance with the pros and cons of the German approach. For one thing they have their priorities straight: first comes the make or buy decision: am I going to buy my energy (gas from Russia, oil from OPEC, etc.), or make my own? Energy Efficiency is only a secondary goal after that, but obviously greater efficiency will reduce the absolute amount of installed capacity needed.
The details do not matter, we are never going to emulate Germany here, but, the Portfolio Standard for Energy Retrofits is one potential component of policy making, and incentive systems which would yield vastly improved outcomes, particularly as soon as property owners really take on board the fact that renewable energy moves energy from the liabilities column to the assets column, and that therefore if they learn to be smart investors, they will steadily improve the asset values of their portfolios.
Green Energy to the Fore
We should abolish the faulty policy frameworks like the NYSERDA MPP which treat renewable energy as a component of energy efficiency. It should be the other way around. Energy efficiency of carbon-based systems is better than nothing, but it will get us nowhere fast, and with the growth of net-zero buildings, building values will eventually start to reflect this. So, if policy making continues to fail, eventually the market will do the job, but it will be a lot more painful than constructive policy making would be.
Conclusion
By framing green energy as an energy efficiency opportunity, it has been systematically marginalized, and renewable energy policy failure has resulted. It is time to bring renewable energy out of the shadows, and understand it as an alternative to carbon-based energy at the building level. Financially, green energy technology offers compound returns in implementation, whereas energy efficiency offers diminishing returns and the two are competing concepts. Renewable energy policy can only succeed if green energy technology is brought to the fore, and energy efficiency is understood as the secondary issue that it is.
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