I Think, therefore I drive

dscott, I am nothing more than an interested amateur, so maybe I don’t know what I’m talking about. But I do read a lot on the subject of energy alternatives, and it seems to me that, with all due respect, you are painting the worst-case scenario. Your analysis appears to be based on the fundamental assumption that the current state of any technology involved will remain static over time. For example, your analysis fails to account for the possibility that oil, gas, and/or coal prices may rise. If that happens, then basing your comparison on current prices is a false one. After all, one of the advantages of wind, solar, nuclear, hydroelectric, or geothermal is that the O&M costs are low. Thus, once such a plant is built you basically lock in your price for the lifetime of the plant. O&M costs of coal and gas plants, on the other hand, are very dependent upon the costs of coal and gas. Thus, a comparison based on projected levelized costs seems like a better way to compare the various alternatives than current prices. Second, your analysis assumes that any shift to other forms of power will not be accompanied by technology improvements (e.g., an increase in the efficiency and durability of PV cells or any other new technology), cost decreases associated with economy of scale of any new technology, or accompanying adjustments in the transmission network. None of those things seem like reasonable assumptions to me.
To be sure, sources such as wind, solar PV, and solar thermal all have their limitations. One of the major limitations at present is that their capabilities for suppying power are very different than more traditional sources, and thus require a change in the traditional mind-set in order to be optimized. For example, as you pointed out, wind is unreliable. However, as the recently released study by the DOE points out, if wind farms in widely distributed geographic areas all feed into a widely distributed network, then their intermittencies average out and they resemble a base load source in the traditional sense. Solar PV and solar thermal are unique in the sense that they are essentially “load following” sources: i.e., they produce the most power in the middle of the day, which is when demand is usually highest as well. No other supply source does that. But because they do they necessarily change one’s thinking about the concepts of “base load” and “peak load” away from their traditional meaning. It is also the case that if solar PV and solar thermal sources in widely distributed geographic areas are connected by a widely distributed network (it’s not noon everywhere at the same time), their load following capabilities are broadened even without any storage capabilities. And the fact that storage capabilities in the case of solar thermal plants is a near-term probability broadens their load following capabilities even more. Under those conditions, the need for gas fired “peaker plants” would be greatly reduced. That was one of the take-home messages of this paper. Although that one too presupposes the development of a widely distributed network.
A grid can be “distributed” on a small scale as well, but in a completely different way. We are beginning to hear a lot about “smart grid” technology. A “smart grid” is one that allows sophisticated, flexible interaction between the supplier and individual consumers. When fully realized, if you’re on a smart grid you can sell back to the grid the excess energy you produce via solar panels on your roof, your backyard wind turbine, the run-of-river turbine you have in your stream, or even your plug-in hybrid. You can have the grid interact with your appliances (not now, of course, but soon), allowing the grid to decide when it’s cheapest to defrost your refrigerator, run your washer and/or dryer, or charge your electric car. I see smart grids as a particularly key technology, and apparently I’m not alone. Boulder CO is in the process of converting to smart grid technology. Austin, TX appears to be next. Most recently, Duke Energy announced plans to convert all of Indiana to the technology. Other states are seriously considering it.
One more thing before this post gets too long… one thing that has been given little thought (at least in the USA, Europe and Japan are different) is energy productivity. In the US anyway, some consideration has been given to demand side productivity (energy-saving appliances, better weather-proofing, and the like), but until recently essentially nothing has been done about supply side efficiency — or the interplay between them. That’s finally beginning to change (smart grids are an example). And that’s a very good thing, because there is a lot of low hanging fruit there.
One more one more thing… especially when it comes to altering the infrastructure, the government is going to have to get involved. They already are, and there is no way they can’t be. If you accept the need for a widely distributed grid a significant amount of central planning and regulation is necessary (kinda like what happened with the interstate highway network, or the construction of large hydroelectric plants, or nuclear plants — all of those things required a significant amount of government financing and involvement). Likewise, if you want smart grids you have to allow the utility companies to decouple profits from sales.

Steve Stip, have you priced nuclear plants lately? I’m just asking, because someone has to. I have nothing against nuclear power. In fact, I think it has to be part of the solution. But I also think it’s unrealistic to assume it can be the entire solution. Apart from safety and waste issues, the fact is the current generation of nuclear plants are very capital intensive to build (even without construction delays, which are more the rule than the exception), and require a very long time to build. Future generation nuclear plants may be different, but the operative word there is “future”. That has to be recognized. Also, if you’re a nuclear advocate you have to come to terms with the fact that no nuclear plant, either here in the US or anywhere else in the world, has ever been built without substantial government investment in the form of tax breaks, loan guarantees, insurance caps, and usually outright subsidies for both the plant and the transmission lines required to connect it with its service area. And that’s unlikely to change anytime in the foreseeable future. So it seems to me you can’t be both a nuclear advocate and a free market advocate at the same time. I’m afraid it’s an inescapable contradiction in terms.
Certainly government screws up. But to be perfectly fair, they aren’t the only ones. Over and over again we’ve seen examples where, left to its own devices, the market does a pretty good (bad) job of screwing up all by itself. The housing/credit crisis, the airline troubles following 9/11, the dot com bubble, the Enron incident, the S&L debacle… keep going back and you can come up with many other examples where government had to step in to clean up the mess that one or another market created for themselves. Those are examples when government had to act reactively. Free market advocates seem to ignore those incidents, even though a strong case could be made that if the government acted more proactively — which is tantamount to saying if they interfered with the market before they failed rather than after — the costs wouldn’t have been nearly as severe. I could provide what I consider several examples of the proactive situation, too. But when government acts proactively, and things work out, people tend to take them for granted. It’s only when attempts to act proactively fail that they become the subject of ridicule. Unfortunately hindsight, though usually much more costly, is always 20-20. Foresight, though usually much cheaper, is never 20-20. Therein lies the dilemma. That might be worth considering. It might also be worth considering that there are several convergent lines of evidence suggesting that our reliance on fossil fuels in general, and foreign sources of fossil fuels in particular, are going to get very problematic. IMO, we are witnessing only the opening salvos of that right now. I might be wrong, but it seems to me we really need to think about becoming proactive rather than relying on being exclusively reactive.

Here in this country nuclear has price problems because of every plant being a one of a kind, very inefficient, and bigger problems because of a legal system that allows meritlesss lawsuits to tie up the plant for years or decades forcing up costs to an incredible extent. This is the cause of the “construction delays” you are talking about. Some dishonest “special interest” gets an injunction and building stops, sometimes for years, while it meanders through the courts.
I assume France recycles waste, you’d have to be absolute idiots not to; which explains our decision not to reprocess and instead to call it waste.

We haven’t had really ‘free markets’ in a long time. Government always has it’s finger on some part of it. Banking is only one ‘finger’. There are always rules and restrictions. Nuclear power takes a long time to build because of regulation, environmental impact, and endless lawsuits to delay it. Recall the demonstrations and outright sabotage in the late 70’s? No business in their right mind would venture into that realm without government support.
As for recycling spent fuel, Jimmy Carter decided that we wouldn’t do it. Too much chance of bad guys swiping nuclear material. France hasn’t had that problem, they’ve recycled for many years. We have a huge stockpile of spend fuel rods and stuff leftover from the weapons program sitting in cooling tanks. We could reduce the volume of bad stuff by 90% and recover a huge amount of useable fuel by reprocessing, if we had the will to do it.
Pure electrics may never take a big share of the car market, but for some folks, like our mentor, they are a viable option. Hybrids make a lot of sense, just from an efficiency standard. That’s the real key to our energy needs, to become more efficient. The Prius is the model “T” of hybrids. It works, but in ten years, I think we’ll have far better.
As for ‘death traps’, I rented a Kia Spectra in the Windy last year. Got 40+ mpg. After driving it for a couple of days, I was convinced if I hit a kid on a tricycle, the kid would win. Had to close the trunk carefully to keep from denting it. I doubt the ‘Ox’ is worse than that.

“Certainly government screws up. But to be perfectly fair, they aren’t the only ones. Over and over again we’ve seen examples where, left to its own devices, the market does a pretty good (bad) job of screwing up all by itself. The housing/credit crisis, the airline troubles following 9/11, the dot com bubble, the Enron incident, the S&L debacle… keep going back and you can come up with many other examples where government had to step in to clean up the mess that one or another market created for themselves. Those are examples when government had to act reactively. Free market advocates seem to ignore those incidents, even though a strong case could be made that if the government acted more proactively — which is tantamount to saying if they interfered with the market before they failed rather than after — the costs wouldn’t have been nearly as severe.”
Rico, the truth is almost perfectly 180 deg. different from everything you said. You promised to give us example where the market screwed up all by itself, but then you proceeded to give us examples of markets being screwed up by the government. Housing/credit crisis? One of the most heavily regulated industries around. Try getting a house loan that is not VA/FHA/ or Fannie Mae. Fair lending practices, so called, practically required lenders to loan money to unqualified borrowers. There is no free market in home loans in the US. I remember the last home loan/S&L crisis when federal regulators ordered S&Ls to divest from “junk” bonds at a multi-year bottom, thus putting many weak S&Ls into insolvency just at the time junk bonds enjoyed the beginning of a multi-year bull market. And don’t get me talking about the FDIC/FSLIC/RTC fiasco. I was involved professionally in that mess. The gubbermint wasted hundreds of billions of dollars “fixing” a mess they created in the first place.
Airlines? Heavily subsidies industries tend to over invest. In any event, 9-11 was more a failure of government to perform the one function they allegedly do best.
Enron? Simple criminality, which occurs inside government as much or more than outside, where it is easier to detect and prosecute.
The dot com bubble? That might be the closest you come to an example of markets “screwing up” by themselves. Note however, that the bubble corrected itself without much cost to the taxpayer.
The S&L debacle? 100% made in Washington D.C.
Now, I am not saying that markets left to themselves never make mistakes. To the contrary, individuals constantly make mistake. Whenever A sells 100 shares to B, one of them will make money and one will lose. The loser bears the cost by himself. But when governments make mistakes, we all pay the price.
Governments should act “proactively”????? Are you drinking heavily? We are talking about bureaucrats here. That is, people making decisions with other people’s money when the risk of being wrong is nothing compared to the risk of not pleasing one’s superior, in an environment where economic considerations weigh very little compared to political considerations. You actually think government can predict the future?
We tried that. They called them Five Year Plans. How did that work out?
Should we trust individuals to take risks and make profits and mistakes with their own money, or trust bureaucrats, driven purely by political considerations, to plan the economy for us?
How well did the bureaucrats act pro-actively for 9-11, since you brought it up?

The housing loan crisis has nothing to do with regulation. The problem was that the people selling the loans did not end up with the risk because they hid the risky loans in CMOs. The investment banks bought and sold these without looking too closely at them because they were making a lot of money doing so.
That was the final straw that broke the camel’s back, but to blame the banks solely is incorrect, the debacle started when government regulators told the banks they couldn’t redline communties where property values didn’t warrant loans at 90% LTVs and the regulators via Sallae Mae and Freddie Mac set the loan requirements so low as to draw in people who normally wouldn’t be in the housing market in the whimsical thinking that everyone should be a homeowner. They set the standards to buy those loans and the banks just followed suit. Pretty stupid if you ask me.
Everyone is not capable of being a home owner, that’s why we have landlords providing apartments for rent. Those people who traditionally would have just moved out of their apartments to double up with someone else when they have a cash flow issue were basically attempting to do the same thing with home ownership. This is what happens when you misinterpret what equality means by claiming equality of outcome instead of personal responsibility. Also you oversimplify the situation since builders using cheap illegal labor were cranking out too many houses. And since the regulators were allowing loans to be bought with 90% LTVs that also encouraged people to buy up using their first home as collateral for the down payment and when they couldn’t afford the 2nd mortgage payment, they simply walked away from their first house and let the banks choke on it. Ordinarily, such home owners would have sold their first house, but because of the overbuilding, they choose the second best option for them, walk away and let the bank deal with it since the first house became 100% LTV in becoming the collateral for the new house.