Published on December 12th, 2013 | by Zachary Shahan16
Cleantech Developments Stimulating Renewable Energy Growth
December 12th, 2013 by Zachary Shahan
Senior editor at the outstanding progressive news outlet AlterNet, Tara Lohan, recently contacted me because she was writing a story on “which developments in clean tech are the most promising in terms of making renewable energy more prevalent.” She asked if I had any suggestions. If you know me and know how easy it is to get me to go on a monologue about clean energy and electric cars, you already know that I responded at length. Tara actually ended up making the 3-page article more or less an interview piece. It’s a very good read, imho, and she does well to add some other points and perspective, so I recommend checking it out.
Of course, I provided far more commentary than would be utilized in that story, but I didn’t want it to “go to waste,” so I am reposting my comments below. As is almost always the case, looking at my comments again, I felt there was a need to clarify or better communicate some of my points and to add some other pertinent information, so I’ve added those points in brackets (American brackets —  — not British brackets, which I use obsessively and used in my initial responses to Tara).
Before finally sharing my response with you, just remember that Tara was asking about “which developments in clean tech are the most promising in terms of making renewable energy more prevalent,” not “which developments in clean tech do you think are the best.” On to the comments…
Feed-in tariffs have been used for the majority of wind and solar power capacity growth around the world. They continue to be very important for growth in these industries, especially the solar industry. However, as the costs of those technologies fall off a cliff (as they’ve been doing in recent years), many FiTs are getting scaled back or cut completely — just as was always planned. I think FiTs will continue to be extremely important, especially in countries without mature markets, and also for more nascent technologies (e.g., wave energy and tidal energy), but they are already accomplishing their key target, which is to bring down the price of renewable technologies through a ramping up of deployment and resulting economies of scale. Without turning this into a long and detailed article about FiTs, I’ll just add a couple more things. Firstly, one of the wonderful things about FiTs is that they enable the renewable energy revolution to be democratized more than almost any other policy. Also, they can very simply make up for the unpriced externalities of dirty energy sources — decision-makers can just add that missing price into the rates given to renewable energy producers. I may not be in the majority, but I actually think that FiTs should be used in that way and that, rather than scaling them back when solar and wind become competitive, an estimated “externality cost” for natural gas or coal should always be provided above and beyond what solar and wind power plants could themselves earn on the “fair market.” [Clarification: I don’t think this is actually how legislators use the policy, and I don’t think this is an ideal solution for dealing with externalities — better would be an adequate tax/price on GHG and other pollution. But I do think that as long as the playing field is not level — as long as fossil fuels are not forced to internalize all of their costs — adding on a certain $/kWh that clean technologies should get boosted, perhaps as part of a FiT, would be a half-decent solution.]
Net metering is another simple policy that is not exactly “sexy” but is very effective. The short summary, as this is often used, is that it pays owners of renewable energy systems (most notably, solar PV systems) retail electricity rates for extra electricity they produce and send back to the grid. While this may often be lower than what is offered through FiTs, the policy is implemented in a more stable and long-term fashion, and it still goes a long way in helping owners of renewable energy systems to get their investments back and eventually make money off of their systems. Also, being one of the simplest policies out there, it’s easy to explain, easy to replicate, and hard to deny. Net metering is currently in place in 43 US states. [Of course, there are currently some ALEC-led and utility-led attacks on net metering, but net metering should theoretically exist “forever” — it’s a policy to pay solar electricity generators a more or less fair market value for the electricity they generate. Also worth noting is that not all net metering policies are of the same quality. Freeing The Grid offers a great evaluation of net metering policies state by state if you want to dive deeper.]
Solar leasing is a much different and I would say much more controversial type of cleantech development. Nonetheless, I think it could eventually have as much impact as the policies above. The key thing about solar leasing is that the leasing company takes care of almost everything for the customer, including the upfront cost of a system. Most people (I’m not one of them) prefer to pay as little as possible up front for something, even if that means they pay more down the road. People are also not that thrilled about taking out large loans that put them in a lot of debt. Solar leasing allows people to go solar and save money on their electric bills from day 1 without having to put much (if any) money down and without having to deal with a bank or loan. People are very, very attracted to this model, and it dominates in the places where it exists, often accounting for 75% or more or the residential solar market. There are some strong critics of the solar leasing model. These people often complain and warn people that it sends more of the homeowner’s profits to a large (leasing) company. I think that is often the case. However, solar leasing companies are [supposedly] often able to take advantage of solar incentives that their customers can’t take advantage of, theoretically allowing them to make their profit on money the customer wouldn’t get anyway. Also, I’ll just reiterate two points I stated and implied above: 1) even if it isn’t logical when you crunch the numbers, people are very averse to large, upfront investments (even taking out loans) and will pay more to avoid that; 2) many people don’t want to think or worry about anything, especially technical and financial matters, so they will pay to be able to avoid that. It’s not just people, either. Large companies such as Walmart and GM have gone the solar leasing route in order to leave it in “the expert’s” hands. [Note that there are actually nationwide $0 solar loans and PACE programs available that seem like they’d be much more competitive than a solar leasing contract. However, there’s no denying that solar leasing companies have been very effective at convincing customers that their options are the best around… I’m still scratching my head a little bit, but there’s no denying that solar leasing is a huge trend in the industry, and no one is forcing 75% of Californians who are going solar to lease rather than buy.]
Electric cars, in general. They’re better than gasmobiles in almost every way. They have better pickup. They drive more smoothly. They are much quieter. They are much greener, and do not emit any pollution near the consumer/driver. [Woops, I should have been very clear that they don’t emit any pollution. Power plants that produce electricity might, but the cars don’t, and the cars can run on clean power.] They are much simpler and require much less maintenance. And many are also cheaper than their gas cousins over the lifetime of ownership, something that will become more and more common. As people come to realize that electric cars are on the road and so much better than gasmobiles, sales will take off. They’re already starting to. Furthermore, because much of the upfront cost of an electric car is in its fuel — its battery — I think innovative ways of financing these cars will help them to really take over the market. Elon Musk, who is the CEO and Chairman of Tesla Motors (the world’s leading electric car company) and also the Chairman of SolarCity (a leading solar leasing company), has stated that he thinks electric cars will go this leasing route, just as solar has. It matches the reality of how most consumers approach purchases. Shai Agassi, a longtime tech leader and electrification entrepreneur has recommended a route more similar to that taken by cell phone companies or by Apple (or a combination). You can read that in detail here and here. As a final note on electric cars, I’ll just add that I was once a big “car hater.” My master’s degree is in city and regional planning — cars are horrible for cities — and my master’s thesis was on bicycle planning. But I became a huge electric car fan because they are so much greener, they are so much better in other ways, and I think that cars will be a big part of society indefinitely and need to be much cleaner. [Since writing this, I have actually come to the conclusion that buying EVs makes much more sense than leasing them for most people. But, again, consumers seem to be very attracted to the leasing model, and if I am correct, the majority of EV drivers are leasing their cars. Furthermore, I wouldn’t bet against Elon Musk’s opinion in this sector. Also, aside from the standard “leasing the car” vs “buying the car” options, I do think the “buying the car but leasing the battery” option will grow in popularity, and perhaps even something similar to what Shai Agassi described/recommended in one of those article linked above.]
Also, notably, electric cars are a great support for renewable energy, as they need their electricity to come from clean power plants in order for them to be most effective at reducing pollution and helping to stop global warming. A lot of people get that, and many EV owners also own solar PV systems. Each technology supports the other environmentally, financially, and on the market.
Crowdfunding and crowdsourcing wind and solar projects is an interesting and powerful development that is just getting off the ground. It is hard to know how far these options will go, but if they really take off, the potential for democratizing the electricity sector is huge. Speaking of…
Democratization of energy. Both solar PV and electric cars help the average person to become producers and owners of the energy they use. They help to democratize the entire energy industry. The ramifications are immense. They are probably beyond our imagination. This process, though just beginning, is already having a paradigm-shifting effect in some locations, such as solar-leading Germany and Australia. But we’re just at the beginning. The democratization of the energy system is coming like a slow but very powerful wave, and it is going to change the world.
Image Credit: Solar panel, wind turbine & globe via Shutterstock
Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.