Energy will be one of the most pressing issues of our generation. Climate change and increasingly expensive energy resources are pushing the United States, and many parts of the world, toward an energy revolution. This "green revolution" will, theoretically, lead us to a more sustainable economy and a healthier planet. But while these changes will be necessary, we must be realistic about our progress and implement policy accordingly.
States across America are pursuing aggressive renewable energy projects, only to find out that the costs of such activities still greatly outweigh the benefits. For example, California has been aggressively building its portfolio of renewable energy over the last decade. With over 1.5 gigawatts of combined solar and wind capacity complementing the world's largest geothermal power plants, the state is well on its way to achieving its goal of getting one third of its electricity from renewable resources by 2020.
But this impressive buildup of renewable energy potential can be troubling upon closer inspection. In an article on California's push for renewables, Rebecca Smith of The Wall Street Journal points out that this heavy reliance on renewable energy could negatively impact reliability as soon as 2015. Because the supply of electricity from renewable energy technologies fluctuates with the time of day and with weather conditions, large renewable energy capacities require conventional power plants to be operational and running, ready to provide electricity upon demand. This requires capital expenditures on renewable technologies and power plants, as well as fuel costs to keep conventional plants ready to deliver needed power on short notice. Even with increasing capacity, California's utility executives are rightfully concerned about the flexibility of the state's grid. The intermittent nature of solar and wind technology could prove disastrous for the state.
When it comes to solar energy potential, New Jersey ranks in the bottom quarter of all states. Nonetheless, it just completed a $515 million project to generate 80 megawatts of power, theoretically enough energy to meet the needs of 64,000 households. However, the spokesman for the utility company tasked by the state with installing the panels conceded that, during peak demand, the panels will realistically only provide 24 megawatts, enough to power 20,000 homes.
Thus, the project will cost $26,000 per household, or 20 times the average yearly electric bill in the United States. Given that the panels' lifespan is only in the range of 25 years, and maintenance costs have not been factored in to the project's cost, solar energy in New Jersey will be costly to its residents. But this should be expected from a project in which thousands of solar panels are individually mounted. There are large returns to scale in solar power, and mounting panels on telephone poles fails to capture these scale economies. The United States could more effectively make use of its solar potential, but this will not happen until we begin to understand the full costs of these projects.
There are still many more initiatives that do not make sense when all of the costs of the program are considered. One of the best examples may be federal and state subsidies for electric cars. These subsidies are meant to persuade consumers to purchase a greener car. But the subsidized cars are not nearly as good for the environment as governments may like to believe. The manufacture of an electric car produces more than twice the carbon emissions of a comparable conventional car, due largely to the energy-intensive nature of lithium mining. This difference may eventually be made up for over the lifetime of a car. Nonetheless, it turns out that electric cars only wind up being only marginally better for the environment.
As energy continues to play a major role in each of our lives, it will be important to ensure that we are harnessing power sustainably. But we also must be realistic about what policies we advocate and pursue. There are plenty of cases where intention and impact do not line up. It is up to us to seek to understand the implications of what we advocate and make sure that we are pursuing policies that meet our end goals.
