The future of energy is natural gas. End of story.
Alternative natural gas production -- "fracking" generally -- has been researched, prototyped, implemented, and grown over the past 15-20 years to the point where one can reasonably envision a future where natural gas displaces coal and crude oil to become the most important energy sources in the world.
It emits way less carbon than coal or oil, it is everywhere, it can be liquified relatively cheaply and transported around the world by super tanker, people are less afraid of it than nuclear power, and the technology to actually use it has been around forever. Electricity...home heating...hydrogen fuel cells...all easy with natural gas.
As a general rule, when The Economist publishes a 14-page spread about something, it's pretty much hit the mainstream. They did that 2 weeks ago. http://www.economist.com/node/21558432
Less CO2 than coal or oil is still too much CO2. Natural gas will release about half the CO2 per joule than coal. This is still way too much to have a modern lifestyle and avoid rolling the dice with the earth's climate.
As an interim solution though, it's still pretty good.
It's an easy way to wean people from coal (particularly brown coal) while they figure out how to get solar, wind, geothermal and nuclear up and running.
As long as it's not seen as an end in itself - if we stop at gas, we're still doomed.
The best thing about shale and coal seam gas is that it is typically domestically produced.
This has two advantages for the domestic producer : 1) you're not funding a government that might have a different idealogical bent to your own and 2) higher shipping costs mean that it becomes advantageous to locate production closer to the gas source (or pipelines). Costs for Natural Gas vary widely across the world, depending on supply.
A fundamental lowering of energy costs is the best way to get an economy on track because it increases productivity quickly.
A fascinating bit of technology that is popping up around the place is microturbines. These take natural gas as a raw feed, and produce power and heat on-site. They are effectively low-maintenance electricity generators with heat re-use (either for heating or cooling). This can isolate a building/factory/whatever from the grid, and provide a very high reduction in energy costs, making the investment decision pretty easy.
Capstone Turbine is an emerging player in this market - their website is well worth a peruse:
http://www.capstoneturbine.com/
Note: I have nothing to do with them, I just find the tech interesting.
I teach English to a guy who sells these in Japan. Massive boom after the 3/11 quake because distributed power sources are much more resilient to the single point of failure of one. It power plant. He's learning English to make inroads into China.. And it looks to be going very well.
Lots. We are just now beginning to unlock vast fields. The USA alone has 200 years worth of domestic supply (cite: parent's economist link, not sure if it includes consumption growth).
The good news is that hydrocarbons cannot get much shorter without turning into hydrogen. At some point solar will be too cheap to use anything else. Gas is thus an economical holdout until then so we can avoid a Malthusian future.
There are maybe 60 years worth of proven reserves if we don't increase demand, at least according to BP in 2009. If that is end of story for the future of energy, then it is a fairly bleak story.
All mineral reserves are basically 20-60 years into the future. That's because there is no incentive for a company to go out and find more reserves than it needs.
I'm not arguing against you, but using company reserves to predict the future is like using the length of a current employment contract to work out the future of your own employment. If you have a contract for 2 years worth of work, you're not necessarily going to be unemployed in 2 years. There's just no need for you to arrange more work just yet.
The same principle is at work with company hydrocarbon reserves.
The other curve-ball is changing technology. Many fields that are producing now were considered uneconomic in the past, but improvements in technology change that.
All in all, they are a very poor way of judging how much 'stuff' is in the ground. Which is why people, when looking at proven reserves 10, 20, 50 years ago would have concluded that things would have run out by now.
All mineral reserves are basically 20-60 years into the future.
Not true, proven bauxite reserves are in the hundreds of years range.
But when it comes to the acceleration of technology argument, I just think that when compared to solar/storage, fossil hydrocarbons will become uneconomic as a fuel source long before they run out.
That's probably one of the best articles I've read on the real nature of 'alternative' energy in a while.
My rule of thumb is simple : if someone calls it 'Alternative Energy', it means it's an alternate to having a cheap, ready supply of energy. Otherwise, it would just be called 'energy'. Nobody calls Nuclear power alternate energy, even though it's radically different to anything else that came before it in terms of generating power.
The percentage of power generated from wind globally, currently, rounded to the nearest decimal place is zero.
Trillions of dollars have been spent on windfarms and solar panels around the world, and, as the article notes, it has made zero difference to the overall energy mix. Yet it has affected national economies in real ways - the bankruptcies in Germany, Spain and elsewhere have real costs, as does taking the most basic economic input - energy - and making it more expensive for zero environmental gain at the global level. Despite the countless examples of failures to point to, the boosters insist that it's the right course, when any plain analysis shows the exact opposite.
There are plenty of people who hand-wave around the very real problems as outlined in the article, and say things like 'give it time, it will work out'. But you have to be a starry-eyed believer who trusts in state-coerced solutions to gloss over the myriad of problems of trying to jump-start essentially niche technologies into mainstream adoption.
It takes real courage to rely on human ingenuity to solve problems and come up with solutions. It's frightening to look at an issue and realise you have no answers at all.
But what's worse is to set off on a futile and damaging strategy just to be seen to be doing something, when that thing is ineffective at best, and damaging at worst due to the self-delusion inherent. This holds at the personal, family, business, state, national and global level.
> The percentage of power generated from wind globally, currently, rounded to the nearest decimal place is zero.
This is just not true. I'm not sure what it is globally, but in the US it's several percent (which is not zero percent under any rounding I'm aware of). More to the point, it produces more than 10% of the electricity in five U.S. states. It's also the fastest-growing energy source in the world, even faster than natural gas.
> Trillions of dollars have been spent on windfarms and solar panels around the world, and, as the article notes, it has made zero difference to the overall energy mix.
Nowhere near "trillions of dollars" have been spent on wind farms. You're just making things up.
> Yet it has affected national economies in real ways - the bankruptcies in Germany, Spain and elsewhere have real costs, as does taking the most basic economic input - energy - and making it more expensive for zero environmental gain at the global level.
The bankruptcies in Germany, Spain, etc, are the fault of alternative energy?
> Despite the countless examples of failures to point to, the boosters insist that it's the right course, when any plain analysis shows the exact opposite.
The analysis of the "skeptics" almost always leaves out the vast externalized costs of traditional energy sources. E.g. if hundreds of billions of dollars of externalized costs from coal were factored into the price of coal, coal power would be more expensive than wind power: http://www.huffingtonpost.com/dave-cooper/harvard-study-coal....
> But you have to be a starry-eyed believer who trusts in state-coerced solutions
There is nothing starry-eyed about the economists who point out that the free market naturally underproduces fundamental R&D. Pick up an Economics 101 book sometime.
- Globally wind power produced < 0.5% of energy last year. Most people forget, or don't realise, that the current obsession with alternative energy is limited to parts of Western Europe and parts of the USA. It has virtually no traction elsewhere in the world.
- You're right, I should have written billions instead of trillions, though I'd be surprised if it hasn't reached a trillion by now. It's still an insane amount of money.
- Bankruptcies in Germany and Spain by solar companies are very much the cause of bad policies - by pumping up a sector with unsustainable subsidies, then being forced to remove subsidies precisely because they are unsustainable. This creates a bubble into which resources rush, which then bursts and creates a lot of problems.
This is the fundamental problem, of trying to coerce a particular set of technologies into place when they aren't suitable for it. The correct response is to admit there is no current technical solution to affordable energy without burning stuff. There is a noisy subset of people who don't agree with this position, and that's fair enough. History has always proven that major advances come from unexpected areas, and tend to render prior technologies obselete almost overnight.
> Globally wind power produced < 0.5% of energy last year. Most people forget, or don't realise, that the current obsession with alternative energy is limited to parts of Western Europe and parts of the USA. It has virtually no traction elsewhere in the world.
Who cares about places that aren't Western Europe or the USA? Those places are technology followers. 15 years ago, the internet was only a statistically significant phenomenon in Western Europe and the USA. Yet other countries are now reaping the benefits of that technology. So to will be the case with energy technology.
> - Bankruptcies in Germany and Spain by solar companies are very much the cause of bad policies
This argument is non-sensical. STD's and babies are both caused by sex, that doesn't mean that STD's are the fault of babies.
> The correct response is to admit there is no current technical solution to affordable energy without burning stuff.
"Affordable" is a very relative term, especially when you look at true costs, including externalities, rather than just observed costs. Where I live (Illinois) wind power is approaching a factor of two of our average electricity price. Is that affordable? Almost certainly.
"the current obsession with alternative energy is limited to parts of Western Europe and parts of the USA. It has virtually no traction elsewhere in the world"
"The correct response is to admit there is no current technical solution to affordable energy without burning stuff"
And, from there, the correct conclusion must be that we should continue burning stuff at ever faster rates?
IMO, we should start using renewable sources ASAP, start using less energy, and work on energy-efficient ways to decrease the amount of greenhouse gases released (IMO, building factories to pump CO2 into the ground is not the best solution here)
These comments are not necessary exclusive. Parent said electricity while brc indicates globally wind power produced < 0.% of <energy>.
Of course, no thermal plant has been built in the US in the past 50 years without some subsidies -- both direct and indirect. So, it's a bit of a red-herring argument.
The "no subsidies" bit is really a massive red-herring.
Even without taxes, fossil fuels are hugely subsidized. The lack of effective legal frameworks to prevent e.g. coal plants from shifting the inherent costs of coal power onto people in surrounding neighborhoods is an implicit subsidy. Letting them shift $100 of environmental damage onto the residents of West Virginia is exactly the same as giving them a $100 check.
It's not just that. It's also that the majority aren't as heavily subsidized, both directly and indirectly, as burning coal or oil.
In the U.S. more than half our electricity comes from coal. When the enormous external costs of coal mining and burning are factored in (http://www.huffingtonpost.com/dave-cooper/harvard-study-coal...) the per-kilowatt hour cost of coal should be more than double the artificially low cost we see today. And in certain parts of the country (particularly the midwest), wind power is already within a factor of two in price.
The analysis of the "skeptics" almost always leaves out the vast externalized costs of traditional energy sources.
Yes, this is the chief fallacy in the article and it deserves to be highlighted. Fossil fuels are even more heavily subsidized than alternative energy sources, but the subsidies are hidden in other expenses such as medical costs and drought-driven food prices. There is after all a reason that we're looking for alternative energy, and it's because we're finding the true cost of fossil fuels is much too high, regardless what the subsidized price may be.
I disagree. The article reads to me like a partisan anti-renewable energy opinion piece with the facts chosen to fit the author's point of view. A scientific examination of the issue value would evaluate a hypothesis, not state the viewpoint at the outset.
It might also use actual numbers for solar radiation in Bavaria instead of childhood recollections.
Bavaria is surprisingly not terrible for solar power. Most of Bavaria gets 2/3 the solar radiation of the best spots in Spain, and is even about 50% of the best spots you'll find (like in Chad, but then you'd have electrical power in Chad instead of Germany.)
Germany is actually great for solar power, like the American midwest. The reason is that it's not just about average solar radiation, but also about average temperature. Solar cells are much more efficient when it's cold than when it's hot. Excelon recently built a huge solar facility up in Chicago, and it generates something like 80-90% as much power as plants in much sunnier places, because Chicago is so cold for so much of the year.
Indeed. I got as far as the author dismissing solar and wind on the basis of "capacity factor" (average output over peak output), which is completely meaningless. That "peak output" number has no relevance to anything. What matters (all that matters, in the context of the article) is obviously cost (in money, perhaps corrected for things like real estate occupied, etc...) per net power. And it doesn't even get mentioned. Yawn.
Still, it's better than the really awful junk Burt Rutan wrote last year.
I found this piece to be depressingly pessimistic and downright whiny. Many people have argued that humanity has become excessively risk-averse and in-ward looking. "It's hard" is no longer a challenge to be overcome, but a reason to sit back and kick the can down the road.
It's not about something not being possible. It's about something not being "commercially profitable". We could abandon all the coal and oil in a decade or two and move completely onto renewable energy sources, it is possibe - it's just nobody gives a damn about it, because it would have a dent in quality of life, especially in western countries.
It's our selfishness and greed holding us back, rather than laws of physics.
nuclear power. In Germany just lately there was another (though as always shortlived) surge of news about how politicians played their games with nuclear waste. Our final storage of nuclear waste is a joke from the past by corrupt politicians.
When you can't trust people to think about the (instead of their) future it's hard not to fear nuclear energy.
I'm wary of anyone who uses terms like "state-coerced" - it suggests that the author has bought into an ideology that is decidedly not reality-based. Too often, phrases like that run in packs with ideas like "taxation is theft" (it isn't, of course).
In the countries that actively pursue renewables, they take a good share of the energy mix. Germany went from 6% of renewable electricity (nearly all hydropower) in 1990 to 21% in 2011 and about 24% now, and from 3% of overall energy mix (including heating, fuels, etc., not just electricity) in 1990 to 12% now. And current rates of adoption is at least 2% per year for electricity and 1% for overall mix. That's a big deal. Most renewables have already worked themselves out to be competitive.
He ignores completely hydro and geothermal power. They help Iceland (100%) and New Zealand (77%) amongst others to near complete sustainability for electricity generation.
While mentioned, the cost of co2e emissions from gas is glossed over. Charge the true economic value for emissions and hydrocarbon sources are going to be wildly more expensive.
He criticizes China for unfairly subsidizing wind on the one hand (their solar story is amazing btw) then complains China is building too many coal plants shortly thereafter.
Iceland is a geologically new island formed by the spreading of the mid-atlantic ridge.
NZ is basically a giant mountain range sticking out from the bottom of the ocean, in a climate where it rains and snows, a lot.
They are interesting cases in using technology to generate power both at low cost and minimal environmental impact, but in no way at all are they models for the rest of the world.
An externality can't be costed because there is no way to know the cost. You can only model it. As there is no way to validate the model, you end up with many competing models with no way of knowing which one is correct. As such, you can't give an accurate price.
Borehole geothermal is possible too. Basically, find a large, hot mass of rock close to the surface, drill down a couple of kilometres, pump water down and get steam out (typical temp is ~200-300C).
That's in Australia, known for its geological stability, lack of active volcanoes, etc.
Drift? Not in Australia. Even in other parts of the world, most of the boreholes are proposed in large granite masses (they're hot because of radioactive decay as well as conduction) which are relatively static.
Mostly it's just an issue of getting enough investment to get a plant off the ground - there's no major technical impediment involved.
Yes, even in Australia. We're very stable by geological standards, yet we still have minor fault lines and the whole plate is still moving north.
When your borehole is kilometres deep it only takes a tiny amount of drift to start breaking stuff all up and down the system.
And superhot steam is not exactly a friendly substance to begin with.
The main company who've been working on the Australian deep-drilling geothermal problem is Geodynamics. And they have been at it for years and years. They've consumed tens of millions of dollars and have, so far, not successfully produced a deep-geothermal plant.
Laugh if you like; but the stuff used in stationary plants isn't full of an unpredictable cocktail of dissolved minerals and hydrocarbons.
Truthfully I am not across the detail of the problems with deep boreholes.
I am however across the fact that it hasn't worked yet. And we're talking stuff that Very Intelligent People With A Lot Of Funding have been working on for quite a while at this point. And they don't even have a working proof-of-concept plant working yet.
Deep borehole geothermal sounds great on paper, but the engineering challenges are enormous and yet to be surmounted. By comparison oil, gas and especially coal are absolute doddles with work with.
He doesn't ignore them, but the capacity for hydro and geothermal is finite and very geographically specific (there is only so many cubic km of riverflow and only so many geothermal sites). The TWatt output of NZ and IS is negligible, on a global scale, therefore they have little impact. It's great for those countries, but they're not a solution to CN's or IN's energy questions, for example.
Iceland has so much extra hydro and geothermal power that they built an aluminium plant just to use the excess.
But that's hardly something that applies to the rest of the world. On a global level hydro and geothermal energy is maxed out, every usage that practical is already being done.
Clean energy is expensive, takes a long time to build, and introduces more problems, but we have no other choice! We can either suffer the consequences of global warming or try to avoid the worst of it. Sticking with fossil fuels is not a choice unless we can somehow make them out of C02 we remove from the atmosphere for that purpose. All the choices we could make to deal with the global energy crisis are terrible, we have to pick the one that hurts the least. We can hurt the economy and stop burning fossil fuels, or we can take almost certainly catastrophic risks with the only planet we have to live on.
People love to blame China, but they are polluting to make goods we then import in many cases and are not responsible for squandering the giant fossil fuel inheritance of the modern age. Of course they may wish to get their share of what remains as long as everyone else is burning it anyway.
The problem with your position is that, on current calculations, and assuming the IPCC calculations are correct, all of the current policies with building solar + wind + other alternatives will change the trajectory by a year or two.
The big lie is that building endless solar panels and windmills is the solution to the problem, when it patently is not. A large game-changer would be needed, and niche technologies patently are not.
Any solar panels or windmills must be backed up by another form of energy, or their intermittent power will be unpredictable and extremely bad for quality of life. So if you have to build a regular power plant to make up for the intermittent nature, then why not just have the one power plant?
If you strongly believe that 'we are taking almost certain catastrophic risks' (paraphrasing) then trying to solve the problem with solar + windmills is like throwing buckets of water onto a housefire. It is simply ineffectual except for making people believe they are doing something.
I never said I thought the current policies that exist are sufficient. Quite the contrary. I completely agree that intermittent power is very hard to work with and I don't know what I said that made it seem otherwise. However, maybe we will have to live with it? Just because it sucks doesn't mean it isn't our best option since we can do a lot to match power demand to irregular power production and make it suck slightly less. I would call modern fission power "clean" energy also in that it doesn't emit loads of carbon. I would support any plan that stops releasing greenhouse gasses and can actually be implemented if enough people support it. Such a plan can include fission, solar, wind, whatever, as long as it meets most of our energy needs, it is possible to build it, and doesn't depend on inventing something new that doesn't exist. Maybe this plan would require us to drastically change how we use electrical power and only let us use "luxury" power when solar power production is high. Who knows. Anything that adds up!
or their intermittent power will be unpredictable and extremely bad for quality of life. So if you have to build a regular power plant to make up for the intermittent nature
You don't have to build a power plant, you have to build power storage, preferably with long distance interconnects.
A back of the envelope calculation shows that solar and wind power can both be useful components of an overall energy solution (http://physics.ucsd.edu/do-the-math/2011/12/wind-fights-sola... also see David MacKay's excellent book free online http://www.withouthotair.com/). Ultimately, solar is more abundant than wind and is sufficiently abundant that it can be useful in dealing with the energy crisis. But, I don't care, I want any plan that adds up. Solar and wind could be a piece of such a plan so I don't rule them out. Fission is very attractive as well, especially for baseload power. None of these things solve the liquid fuels crisis and there is no sign that we are building ANY of them on a sufficient scale anyway, so we are probably doomed to play dangerous games with the earth's climate.
I don't understand how can you tell that solar is 'too small to matter'. Sunshine is abundant, technology issues have been cracked, panels are already dirt cheap (latest quote i got was 43 cents a watt - but that's for modules, not assembled panels). Nothing technically limits deployment on whatever scale.
Current production capacity is about 60GW/y of cells worldwide but that can grow easily, it was only 6GW/y just 6 years ago, it will be just a decade or so when it arrives to terawatt range, which is enough to cover the (electric) energy needs of the Earth.
There is another choice: geoengineering.[1] Instead of reducing emissions to slow down global warming we actively remove these pollutants from the enviroment around us. I'm not going to comment on it's efficacy though.
As for reality, the problem is that nobody can be precipitous. Those who go with more expensive fuels will immediately put a burden on the local economy and throw themselves out of the competition.
The only thing slightly more horrifying than geoengineering is letting global warming just happen, so I guess you are right. To make what I said more precise, I am looking for a choice that doesn't do dangerous experiments with the earth's climate. Geoengineering does such experiments, but it may be the default choice of inaction we are taking right now.
I'm not sure what to make of that last chart... it's showing wind power increasing from 0.09% to 2.91% in only 20 years (which is the blink of an eye in an industry that moves as glacially slow as electricity production--Chicago just this year shut down a couple of coal plants that were over a century old). If the trend holds up then in another 20 years alms tall our electricity will be produced by wind!
I think his point about that is that promises of renewables replacing traditional sources in ten and twenty year time-frames (such as the proponents he cites) is wildly optimistic. I think the time frames to adoption and ramp-up to significant share are his main points of contention, via a vis boosters of renewables as solution to our energy problems.
It seems like a very "neener-neener" argument to me. Okay, so what, proponents of wind and solar a decade ago were overly optimistic about how quickly such technologies would take over. NASA scientists also thought we'd be going to Mars by 2025. What does that prove?
At the end of the day, the installed capacity of wind power has tripled in just the last several years. The price of solar panels has fallen through the floor. A number of U.S. states are seeing immediate local benefits from supplying > 10% of their electricity through wind power. I'm not quite sure why "% of global electricity consumption" is the only salient metric. Even if Texas's gas guzzling keeps the overall % low, Iowa still has cleaner air by supplying 14% of its electricity needs through wind power.
> NASA scientists also thought we'd be going to Mars by 2025. What does that prove?
We don't _have_ to go to Mars tomorrow. We _do_ need energy right now. Panel prices have fallen through the floor, but panels are only one component in the PV energy production cycle. He cites that residential PV production cost per kW/h hasn't changed significantly since the 2000's. (~¢30 sunny and ~¢60 cloudy areas) traditional production means average 11 to ¢12 kW/h.
>A number of U.S. states are seeing immediate local benefits from supplying > 10% of their electricity through wind power.
That's definitely a positive outcome, but an investment in anything will bring jobs (tearing up roads and repaving). I think he's trying to find out it it makes economic sense to invest in wind power versus something else. I think it's debatable, at least. He might be proven wrong, but so might others.
>I'm not quite sure why "% of global electricity consumption" is the only salient metric
I think it's because his main point is about trying to prevent going over the 450ppm of CO2 in the atmosphere --which isn't regionally manifested but globally manifested.
I actually think that first chart is the bad one. Inconsistent mixture of US/global, best/average. And inconsistent presentation -- why the single dot on "best wind farms/global average: 21%"?. The data should be visually grouped by energy type. Range bars are important, for example to show the enormous latitude/climate variation for solar PV (10-25%).
You could squeeze far more data into this graphic, and more clearly.
HN is not good with discussing these kind of articles. Far too many armchair experts. At least with the programming articles you get the occasional comment from someone who really knows something. Here its just a lot of noise.
Instead of any sort of useful statement about the article, what's this? A thinly-veiled appeal to authority, simultaneously claiming that I am the weak link in this thread? Yes please...
I don't understand your point. Is there a rule against discussing the discussion? Its not appealing to any authority or claiming anything of the sort you describe - you are putting words in my mouth...
The article notes that the total CO2 emission from India and China is rising and crossing the US. This is true but the per capita emission is still a fraction of that of US[1]. It will be impossible for China and India to compete if they aren't allowed the same per capita emission as the developed world. Per capita the US CO2 emission is huge.
I don't think his main point was to compare per capita emissions but to illustrate the futility in deploying comparatively costly alternative energies when the great majority of new energy production is "dirty".
This article article is ridiculous. He acts as if alternative energy sources must be cheaper than our current energy sources to be worthwhile. Of course alternative energy sources cost less, if they didn't we wouldn't be having this discussion. There would not be much of a need to worry about co2 emissions.
But in fact we do live in a world where co2 emissions are an issue. The author more or less acknowledges this and then simply ignores it. What exactly is he proposing as an alternative? Nothing. If we are to avoid the worst effects of global warming we're going to have to pay a price.
Solar module prices have dropped 50% over the last decade. Working backward from the numbers on solarbuzz that would mean that a residential scale system's price has dropped 25%.
And by cherry picking the prices for a residential scale installation (28.9 / 63.1 cents per kwh) he ignores the fact that industrial scale systems are much closer to parity. The price for these systems is half of that 15.15 / 33.3. And these numbers have been declining. While the age of mass scale decentralized solar generation may not be here yet, the age of solar may be here much sooner than the author would like to admit.
There can be no denying that solar panels and other alternative energy sources _are_ an extremely good long-term investment for those who own homes or brick and mortar companies. Don't let any amount of "skepticism" fool you into thinking it is not a good investment.
approx. 8 year payoff (to break even with what you would have paid for utility bills) with around a 30 year lifespan at least...4x ROI. How is that a bad investment??
Because it relies on someone overpaying you for the electricity produced, which is added onto someone elses' bill.
In a democracy, that's not sustainable. Sooner or later, someone will get voted in that promises the remove the subsidy.
Indeed this is happening all over the world.
It also leads to resource misallocation whereby time + money + manpower is spent farming subsidies over other productive activities.
If your example is for an unsubsidised installation, then it's a good ROI. Otherwise, it's a bad idea as well as morally questionable. The poorer members of society shouldn't pay more for basic energy to make richer members get excessive returns.
You assume specific aspects regarding the regulatory environment for the parent. Are you sure that they're talking about a full-NEM style arrangement like found in California, or is it something akin to Australia (or Wisconsin) where you're credited at avoided cost for exports to the grid?
I strongly agree that subsidies distort markets (usually to the detriment of society). However, with energy, emerging technologies are competing with incumbent technologies with a host of direct and indirect subsidies.
Regardless, for the parent -- solar isn't always a good investment. You need sunny areas with high electricity prices. While this is found frequently, it is not ubiquitous.
Most of Australia has had what are called 'FiT' or 'Feed in Tariff'. This was a price above and beyond the retail price of electricity that was paid for solar panel owners.
It varies state to state, but was up to 44c kwh.
However, because of the fact that these schemes blew out in cost (original estimates in NSW were about $1.6b in total, but ended up something like $6b per year) - principally because of the same analysis as the parent comment - 'hey ! free money!' - the schemes are being wound back agressively and closed to new entrants. In most cases, they have been trimmed back to pay the wholesale cost of electricity if your house is a net producer.
The perverse incentives meant that many people would turn everything off during the day, and then switch it all on again as soon as the solar panels stopped producing power. So daytime usage would end up exporting maximum power to the grid, while nighttime usage would climb as homeowners used power-hungry appliances like clothes dryers after dark.
The end result is that a lot of small businesses that started up will now close in a classic boom-bust cycle that could have been prevented.
In case it's not clear, I have a very real moral problem with subsidised solar power. Nobody would float the idea of a law that meant bus prices were increased to pay rebates to owners of a Mercedes, but effectively that is what solar FIT regimes do. They increase the cost of energy for people who cannot afford a solar panel install (those in rented accomodation, or in multi-unit dwellings) to benefit those who have their own house and the spare capital to spend on solar panels.
The issue is that coal is quoted at 10c/kWhr, solar at a higher rate, but that neglects subsidies and negative externalities like climate change. Once you balance the subsidies and introduce a carbon price, coal starts to look a lot worse.
anthonyb - the article is not clear on what the subsidies were. It also doesn't factor in the royalties that developed fields will produce. So I can't really determine that.
However, in nearly every case where I see 'x industry gets y billion' in subsidies, the numbers are usually things like tax rebates on R&D, which apply to every industry, including software, and, in Australia particularly, the off-road diesel fuel excise rebate, which is not a subsidy but merely a refunded tax because diesel excise is for investing in the road network. Again, many industries receive a diesel excise exemption, including fishing and agriculture.
Whereas most 'renewable' industry subsidies are direct payments.
It is a bit light on detail, but still there are significant subsidies which are paid to the oil, coal and gas industries. There are some fairly detailed numbers released by the Greens: http://nonewcoal.greens.org.au/coal/speeches The basic gist is that solar gets ~1/20th of the subsidy that coal does.
All of that overlooks the built in subsidies though, namely that fossil fuel power plants can dump pretty much whatever they want into the atmosphere. The health impacts of that alone are immense, and there's no other industry which gets away with that.
[I got this from the do the math blog: http://physics.ucsd.edu/do-the-math/2011/11/a-solar-powered-...] "Comparing annual insolation for 239 U.S. cities over 30 years leads to the startling conclusion that the best place in the continental U.S. (Mojave Desert) outperforms the worst place (Olympic Peninsula) by only a factor of two!" Obviously that doesn't mean these variations don't matter or that seasonal variations also aren't an issue, but it is still very interesting.
All electricity installations are subsidised, one way or another. What we need to ask is what the subsidy is for and if it is likely to help. As far as I see it the question comes down to how much investment it would take so that solar is cheaper than other forms of energy production. If we are in the situation where that is about to happen soon and where a major factor in keeping prices high is economies of scale, then the subsidy is sane and is likely to result in economic benefits that massively outweigh the cost of the subsidy. Otherwise it isn't.
Let's take your 4x ROI over 30 years at face value. This produces a 4.73% CAGR (smoothed annualised return). The 30-year Treasury presently yields 2.55% [1].
This leaves 2.18% of the investment to deal with power volatility - one has to account for the risk of electricity rates plunging below one's assumed power rate (reducing the return). Power is a volatile commodity, though without numbers it is impossible to place whether there is more upside than down and at what threshold a hedge ought to be placed.
The investment is thus rational only if we ignore the liquidity characteristics of the investment and assume low interest rates and low to moderate power volatility (or upside on power rates). Given that I can produce liquid, AA-rated securities yielding over 5% for 30-years [2] it seems comparatively irrational. Look, I even found one issued by a power company [3] so you don't get mad if power rates sky-rocket because of all the high-cost renewable energy we stuff onto the grid :).
Note that irrational isn't necessarily bad - I love my Roomba despite retaining a housekeeper. But we should know that we are indulging in an irrationality, e.g. the self-perception of eco-friendliness, versus making an informed investment.
Yep, this plainly correct argument has been persistently ignored by everyone on the bandwagon for an embarrassingly long time now, and that is leading, predictably, to some unfortunate situations. Nice to see that the IEEE has at least an ounce of integrity left.
The article somehow implies that the feed-in tariff is Germany was 0.57 EUR until 2011 when it was cut 29%. In fact, there is a formula for automatic tariff cuts built into the law that introduced them: if i recall it correctly, tariff goes 8% down each year at least, but more if there is over 3.5 GW installed. That way, they descended to the levels that are currently much below retail electricity prices there, 0.17-0.24 EUR depending on the size of installation, with electricity being 0.24-0.29 depending on the region. And yet it is highly profitable to install solar systems there.
Or many of the other promising and fascinating technologies currently being developed. Not all of them will work, but a few innovations will go a long way to fixing the energy problem.
Solar with storage will become ubiquitous when the price point on the storage becomes low enough. The panels themselves are right on the edge of mainstream viability right now, and the technologies involved are getting cheaper and more efficient all the time and unlike most other energy production methods, can be successfully integrated into existing urban architecture.
It's hard to take those graphs seriously when they are not logarithmic, but I see your point.
Also, comparing to oil is terrible - they should compare to electricity instead which has hardly changed in price.
And if the price is really falling so well, why are we pushing things? Let the price keep falling and people will naturally switch, with no need to subsidies.
Speaking of - does that price take into account subsidies?
Alternative natural gas production -- "fracking" generally -- has been researched, prototyped, implemented, and grown over the past 15-20 years to the point where one can reasonably envision a future where natural gas displaces coal and crude oil to become the most important energy sources in the world.
It emits way less carbon than coal or oil, it is everywhere, it can be liquified relatively cheaply and transported around the world by super tanker, people are less afraid of it than nuclear power, and the technology to actually use it has been around forever. Electricity...home heating...hydrogen fuel cells...all easy with natural gas.
As a general rule, when The Economist publishes a 14-page spread about something, it's pretty much hit the mainstream. They did that 2 weeks ago. http://www.economist.com/node/21558432