It Might Be Closer than You Think
If every American family improved their household energy performance and installed solar panels, we’d go a long way toward zero carbon emissions. Solar panels on a majority of houses at one time seemed unattainable—it was simply too great an investment, with too long a payback time. But with new financial instruments and plunging prices for solar panels, we’re closer than most Americans realize to drastically shifting our energy usage—at least if we have the collective will. And, while such matters as improved insulation might seem humdrum, they too may be accelerating toward widespread adoption. From there, it’s not that far a reach to other renewable sources, and a near-zero carbon economy.
One must always be wary of rebound, the phenomenon that saving energy—and money—may lead to careless use of energy, or spending the saved money in other ways that are environmentally problematic. Yet too much worry about rebound can lead to paralysis. What’s important is an environmental ethic in combination with a whole suite of changes, beginning with individual behavior and ideals regarding consumption. Indeed, the push for renewables and energy efficiency in Europe seems to have avoided a major rebound effect: “The European Union succeeded in reducing its greenhouse gas (GHG) emissions by 15.5% by 2010 from 1990 levels, while the economy grew during the same period by 41%, proving that it is possible to decouple emissions and economic growth” . The U.S. needs to follow this path, although in a less top-heavy way. Solar panels at the individual level may act as a visible sign of the necessity of an environmental lifestyle, while improved insulation is an indicator that a new ethic has spread to more ordinary parts of daily life. Such changes are now within easy reach.
Saving Money with Efficiencies
The typical homeowner can save up to 25% with such measures as insulation, sealing air leaks and selecting energy efficient appliances, according to the U.S. Department of Energy. The best way to get started is to sign up for an energy audit, which includes such items as a blower door test and an infrared thermal scan for energy leakage. However, even with government subsidies, it has been difficult to get consumers to undertake such an audit and make the various improvements recommended. The process can cost several thousand dollars and the payback time can be five or ten years. Because savings after that are 100% and energy prices are likely to rise, it’s still a smart investment, but individuals are reluctant to part with that kind of money upfront. Psychology is central to why we spend money. Insulation isn’t sexy; you can’t show it off to your friends. Plus, we’re in financially pressed times, so some people simply can’t afford it.
Fortunately, the solution is at hand, as recently touted by Bill Clinton —an innovative finance system in which the customer pays zero down. Instead, the cost is amortized through a monthly charge on the energy bill, which is less than the money saved for that month. With no cash up front, homeowners have no reason not to implement major energy-saving measures. And finance companies are practically guaranteed a profit. Indeed, such a system is already being implemented at the state level in Nebraska and New York. Jobs are created, and energy use goes down. All that’s needed is for this system to become more widespread.
The Solar Leasing and Falling Prices
A similar mechanism is already in place for solar panels. It’s called solar leasing, and again the consumer is not required to pay anything upfront. The leasing company makes money via a monthly lease payment—less than the consumer saves on her electric bill—as well as through bundling and selling tax incentives. So why not do it? In the long run, the individual who buys the system outright will save more money, but the leasing concept enables individuals who can’t afford the upfront costs to go solar, breaking down financial and psychological barriers about the technology’s high initial costs.
Speaking of photovoltaics (PVs), the price of the equipment has plummeted in recent years. The cost per watt of solar energy has dropped from $22 thirty years ago to under $3 today—and can be as low as $1.49. Prices are expected to keep dropping, although not as much as the whopping 70% reduction that has taken place from 2008 to 2011. Much of this decline is due to an increase in the manufacture of silicon and the production of inexpensive solar modules in China. The technology could become a huge part of our electrical generation. According to the International Energy Agency, “PV installed on appropriate rooftops, facades, and building envelopes in the United States could meet about 55 percent of U.S. electricity demand.” Although this would mean changing the “face” of America, with ubiquitous PV clusters, it’s not as though technological changes haven’t altered the landscape before; look only at the advent of the automobile. For PV, the results would only be beneficial.
Upgrades Across America
A similar logic works for businesses, public buildings, apartment buildings, and so forth. Such financial mechanisms simply need to be applied at a larger scale to allow buildings to upgrade their energy efficiency and increase their capacity for generating solar power. If there is money to be made—and there is—the more widespread deployment becomes, the more rapidly it will become even more widespread.
Yet energy efficiency and PVs on individual buildings will not solve all our electricity needs. The big problem with PVs, of course, is intermittency—the sun doesn’t shine all of the time. Still, solar energy mostly coincides with peak electrical usage, although evenings are a problem (albeit less of a problem if electric cars come to be used as local power-storage devices). However, two types of renewable energy don’t suffer from intermittency: geothermal and concentrated solar, the latter of which uses molten salt to store power. These can provide baseload power 24 hours a day. Yet another solution is a comprehensive electrical grid that can switch power over a large geographic area. Google is among the funders of one such system, a transmission backbone along the Atlantic coast that will allow energy to be switched among a variety of wind farms—if it’s not windy in one location, it will be elsewhere. Similar plans are being developed for Europe in the North Sea, while a major solar grid for North Africa and the Mediterranean is also in the works .
The point is the technology exists, there is money to be made, albeit over a long time period, and investment plans aimed at the individual can provide guideposts for larger-scale projects. We can, indeed, obtain a zero-carbon electrical system (transportation is more difficult, but still viable, but that’s a topic for another blog). The Obama administration (http://www.nytimes.com/2012/02/15/opinion/obamas-pitch-on-energy.html?_r=3) has already proposed the first step: eliminating $4 billion in tax breaks to the oil and natural gas industries. We are effectively subsidizing emissions that put our collective future at risk; we simply need to stop. The next step is a tax on carbon; those who endanger our future should pay for the harm they cause. Subsidies for renewables need to continue during a transition phase, allowing them to catch up to the existing dirty fuel infrastructure; however, once renewables are competitive with fossil fuels the subventions can be retired. Unfortunately, removal of harmful subsidies faces furious opposition by powerful fossil-fuel lobbyists intent on putting their short-term profits before the interests of the planet.
In a true, well-regulated, capitalist system, one in which government sets fair rules, charges polluters for the damage they do, and lets innovative companies innovate, renewables will win. Unfortunately, what we’ve got at present is crony capitalism in which government is often on the wrong side. Until that changes, individuals should not fall victim to “what can one person do” syndrome. We can take advantage of new financing mechanisms to begin to build a renewable, energy-efficient economy.