# Presentation: 390328

## The Relative Failure of Renewable Energy in the United States: A Case of Technology – or Something Else?

- Dr. Benjamin K. Sovacool
- Network for New Energy Choices
- _[sovacool@vt.edu](mailto:sovacool@vt.edu)_
- Dr. Richard F. Hirsh
- Virginia Polytechnic Institute & State University (Virginia Tech)
- _[richard@vt.edu](mailto:richard@vt.edu)_
- Seminar presentation at
- National Renewable Energy Laboratory
- Washington, DC
- November 9, 2006

**Notes:**
See Excel Spreadsheet for BRT member activity with OIT

See Fact Sheets on:
IACs
Plant-wide Assessments
3 PWA case studies (Appleton Paper, Amcast, Anchor Glass)
Software and Training
Energy Tips – Motors
Energy Tips – Steam
Energy Tips – Compressed Air

## The promise of Renewable Energy Technologies (RETs)

- Given a host of energy problems, renewable energy technologies seem to have great promise
- Climate change and externalities
- Energy insecurity
- Rising energy prices
- Dependence on foreign supplies of fuel
- Reliability and modularity

## Some RETs can be considered part of a Distributed Generation (DG) system

- California Energy Commission at http://www.energy.ca.gov/pier/environmental/project_fact_sheets/500-00-033.html

## Advantages of DG

- Since DG customers draw no/less power from grid
- Reduces congestion on network (contributor to 2003 blackout)
- Increases energy efficiency(no line losses from distant transmission).  Cheaper as well in some cases.
- Reduces need to build upgrades to transmission grid
- Improves security of system
- Insulates some users if a transmission line or central power plant is knocked out of service.

**Notes:**
Perhaps incongruously, DG facilities offer potential advantages for improving the transmission of power.  Because they produce power locally for users, they aid the entire grid by reducing demand during peak times and by minimizing congestion of power on the network, one of the causes of the 2003 blackout.  And by building large numbers of localized power generation facilities rather than a few large-scale power plants located distantly from load centers, DG can contribute to deferring transmission upgrades and expansions—at a time when investment in such facilities remains constrained.  Perhaps most important in the post-September 11 era, DG technologies may improve the security of the grid.  Decentralized power generation helps reduce the terrorist targets that nuclear facilities and natural gas refineries offer, and—in the event of an attack—better insulate the grid from failure if a large power plant goes down.

## DG experiments underway... in Iraq

- Centralized system is literally under attack
- Less capacity and MWh than before war. Brookings Institute report, 10/06.
- People use DG technologies to provide basic power needs.
- Demonstrates security value of DG.

- Caption from USACE: “In the shadow of the old tower wreckage, a new tower is raised on the Baghdad South to Diwaniyah transmission line.” http://www.hq.usace.army.mil/cepa/iraq/Electricity/electricity.htm

- CNN caption: “A man turns on his generator as electricity shuts off again in Iraq on Friday.” http://www.cnn.com/2003/WORLD/meast/08/15/iraqi.advice.ap/index.html

## Less dramatically (or more?): RETs in Africa

- Use of DG/RETs where no central system exists
- 85% of Africans live in rural communities without electricity.
- RETs used for pumping water, providing basic lighting, operation of small workshops, etc.

- www.kamtexindustries.com/solar.html

- http://www.enviroharvest.ca/awp_3_6.htm

- Africa Wind Power 3.6.  850-1600 W

## One would think RETs would be used more.  Consider price:

- .

***    ***

| Technology  | LCOE, in 2005 $/kWh |
| --- | --- |
| Wind | $.028 |
| MSW-Landfill Gas | $.030 |
| Advanced Nuclear | $.035 |
| Scrubbed Coal | $.044 |
| Integrated Gasification Combined Cycle (IGCC) | $.044 |
| Advanced Combined Cycle Gas/Oil | $.047 |
| Conventional Combined Cycle (CC) Gas/Oil | $.050 |
| Biomass | $.050 |
| IGCC with Carbon Sequestration | $.059 |
| Advanced Combustion Turbine | $.067 |
| Advanced CC with Carbon Sequestration | $.069 |
| Conventional Combustion Turbine | $.077 |
| Solar, PV (30%) | $.235 |
| Solar, PV (10%) | $.310 |

- Source: Karmis et al 2004.
- Assumptions: Prices are in real (inflation adjusted) LCOE with federal tax credits, and assume high capacity factors.  LCOE costs include fixed overnight construction costs, variable operations and maintenance charges, and fuel pries.

**One would think RETs would be used more.  Consider price:**

## Amory Lovins reached a similar conclusion:  

***    ***

**Amory Lovins reached a similar conclusion:****  **

## The paradox:  if RETs are so wonderful, why aren’t they used more?

- U.S. EIA estimate of electricity consumption by fuel source, in 2003 kWh

## 
One answer is that the technology doesn’t work, like “going to the moon with 1950s technology.”
Complements a long line of thinking, e.g. electric car, Picturephone, and Challenger accident. 
A more sophisticated answer looks at an amalgam of social, political, economic, cultural, and technical components.

**One answer is that the technology doesn’t work, like “going to the moon with 1950s technology.”**
**Complements a long line of thinking, e.g. electric car, Picturephone, and *****Challenger***** accident. **
**A more sophisticated answer looks at an amalgam of social, political, economic, cultural, and technical components.**

**One possible response: It’s the technology**

## Let’s look at problem differently... with the social-science systems approach

- Systems approach doesn’t focus solely on technical considerations
- Rather, it looks at social considerations, defining technological systems differently:
- System = seamless web of economic, educational, legal, administrative, and technical elements

- Tom Hughes, creator of social science version of systems approach, and Hirsh in 2000

## Perhaps surprisingly, major impediments may relate to history and culture

- Put differently:
- Hardware is easy part of the problem.
- Past success of utility system and understanding (or misunderstanding) has inured public to physically obvious RETs.
- I.e., social considerations are difficult part of gaining acceptance of RETs.

## First: What killed DG in early 20th century?  Clues for today?

- Traditional explanation
- Economies of scale from central power plants
- Higher efficiencies, more interconnection
- True, but not the entire story

## Success of Isolated Plants (DG)

- As late as 1912-17, more kWh and MW from isolated plants
- Even without economies of scale, isolated plants retained efficiencies from use of waste heat.

- http://americanhistory.si.edu/powering/generate/edison.htm

## Nontechnical Causes of Decline

- Dominance of electric industry by central-station men (i.e., Samuel Insull)
- Regulatory policies (reg. advocated by Insull)
- Example: Mass. regulators prohibited sale of power across street unless regulated
- Pressures on manufacturer to sell equipment to utilities
- “Unfair” competition
- Utilities built steam plants at a loss to serve industries to eliminate competition

## Growth & Stagnation of DGin early 20th century

- Crossover

- Source: U.S. Dept. of Commerce, *Historical Statistics of the United States: Colonial Times to 1970*, pt. 2 (Washington, DC: US Bureau of Commerce, 1975), pp. 821 and 825.

## Success of centralized system has made people unaware of concerns

- Success of early system
- Cheap, reliable, and available power
- No need to think of energy

## Consider that the public lacks basic knowledge about energy:

- With so much information readily available, how can consumers not be knowledgeable?
- Yet:
- 70% of flex-fuel vehicle owners don’t know their car can utilize alternative fuels.
- When surveyed about ways to expand the supply of power, many consumers have suggested more outlets in homes.
- 58% of consumers cannot name a renewable source of electricity.

## Misunderstanding about what is needed to generate and distribute electricity;
Entrenched utility managerial practices that favor large fossil fuel plants;
Envelopes of familiarity and historical consciousness;
Distorted electricity markets (lack of real time pricing, inclusion of externalities)

**Lack of knowledge has spawned deep-seated social and behavioral Impediments related to:**

- .

***    ***

- Misunderstanding about what is needed to generate and distribute electricity;
- Entrenched utility managerial practices that favor large fossil fuel plants;
- Envelopes of familiarity and historical consciousness;
- Distorted electricity markets (lack of real time pricing, inclusion of externalities)

## Flawed expectations among politicians and regulators
On/off production tax credits (PTCs) and unequal subsidies
Lingering utility monopoly rules and barriers to entry, such as stranded costs and Interconnection

**Paradigm is reflected in political and regulatory hurdles:**

- .

- Flawed expectations among politicians and regulators
- On/off production tax credits (PTCs) and unequal subsidies
- Lingering utility monopoly rules and barriers to entry, such as stranded costs and Interconnection

## Perceived higher capital costs and returns on investment
Historically low costs of energy
Difficulty in dispatching units
Difficulty in setting standards
 monitoring
 permitting
 interconnection

**Further obstacles arise from business and utility practices**

- .

- Perceived higher capital costs and returns on investment
- Historically low costs of energy
- Difficulty in dispatching units
- Difficulty in setting standards
-  monitoring
-  permitting
-  interconnection

## Conclusion 1: History is important

- History & culture helps explain opposition to RET/DG.
- Big, centralized plants are generally invisible—“out of sight; out of mind.”
- Moreover, they (and their associated technologies, such as transmission lines) have become part of the man-made landscape and are viewed as “natural”—even as signs of progress earlier.

## RETs are often smaller, more visible

- By contrast, smaller, more numerous DG units intrude on physical and intellectual landscapes more obviously.
- People become VERY aware of some RETs as sources of power and object.
- Therefore, history of successful, largely invisible system and cheap energy may discourage visible RETs.

*Roanoke Times* 16 May 06

- TVA turbines at Buffalo Mountain, TN

- http://www.industcards.com/wind-usa-e.htm

## Conclusion 2: Nontechnical impediments may predominate

- People are generally unaware of source of electricity and the need to make choices.
- Success of RETs may depend (to a large extent) on public’s understanding (misunderstanding) of entire energy system.

## Conclusion 3: Public and private R&D strategies need to change

- Society needs to invest more in energy R&D
-  Private funding is diminishing
-  Government spending is concentrated in other areas

- U.S. Federal R&D, 1955 - 2002

## Final reflections

- If nontechnical barriers are the true problem, the public and private sectors need to stop focusing exclusively on technical impediments.
- Social factors remain important elements determining the successful implementation of energy technologies.
- Education of the public (and policymakers!) may help reduce impediments.

**Final reflections**

## For holiday reading

- Many thanks!