Two Guys Walk Into a Bar and Talk About Energy

The first guy says, “What’s your favorite kind of energy?”

The second guy: “Hmmm … I don’t like Coal. It’s too dirty and it seems to be a dangerous thing for the miners”

The first guy: “Yeah, I agree, and when I think about Oil, I also think of things like oil spills”

The second guy: “Gas at first seems like it’s okay, but I don’t like all those pipes running all over the place, including into buildings. And every once in a while, there seems to be an explosion.”.

The first guy: “And then there is Nuclear, but I am still so afraid of it because of those accidents in the past”.

The second guy: “I agree. So, what do you really like when it comes to energy”?

The first guy: “You know … I really like electricity”

When I first heard this joke more almost 30 years ago, it was something that made energy and utility people roll in the aisles with laughter.

It’s not as good a joke now, because everyone knows about things like wind and solar, but if those came up in my hypothetical conversation, it might go like this:

First guy: “I also have a problem with solar. I don’t like seeing ugly solar panels suddenly showing up in what was an open field”. 

Second guy: “Agreed, And the same for wind turbines off the coast and elsewhere, not to mention the bird deaths they lead to”. 

Stop for a moment and think about it – Is there any more significant development in the history of mankind than electricity. It has changed the world, and it changed each of our lives from what they otherwise would have been.

And yet is there any facet of the energy world less understood and appreciated than the electricity system.

We need to make and transmit a lot of electricity as we move forward… Why? Let me count the ways:

–     The U.S. economy, society and lifestyle are dependent on electricity. Same for much of the world, with more moving to join that club by getting electricity for the first time.

–     New demands are being put on the electricity system. Artificial Intelligence is one, as I have been talking about via my blurbs. But how about A/C? That demand is only going in one direction, boosted among other reasons by the rest of the world needing it.

–     With few exceptions, electricity is the way we harness renewable energy in ways that do not produce greenhouse gasses.

–     The transportation sector is going to go electric. What we have now is not a flash in the pan. The switch to EVs may take longer than expected and encounter additional bumps in the road.

–     In one study, the conclusion was that the grid needs to double, triple or even quadruple its capacity to deliver electricity by about 2050 to meet growing demand for new data centers, factories and electric vehicles.

It matters tremendously how we go about producing electricity from here on in. If we continue to generate electricity in plants that produce greenhouse gas emissions, we are making the decarbonization that we must achieve that much more difficult.  This is especially the case with power plants and vehicles. In the case of a power plant, the new generating facility itself will be a long-lived asset that stays in service for a long period of time. But that length of time will be nothing compared to the length of time that the plant’s emissions remain in the atmosphere.

If we continue to build new power plants that have GHG emissions we might be said to be surrendering to climate change. At some not-too-distant point in time, the same will be able to be said about vehicles.

And the same thing could be said about failing to invest in the enhancement and expansion of the grid.

Yet new fossil-fueled power plants are not only on the table but getting approved in places around the U.S. This is happening regardless of the fact solar and wind prices have been for some time the lowest cost electricity to add to the grid.

So why aren’t most people, as well as policymakers, more focused on this, and making fossil power plants only a (very) last resort?

There are both macro issues and micro issues.

The biggest macro is that energy industry is one of the largest and long-standing areas of “big business” in America. And it is a natural reaction for a business to do a knee-jerk action and battle against anything that would prevent use of their product.  That is why the gas industry is in hyper-drive when it comes to lobbying, and showing good results for it, i.e. over 20 states have enacted state bans on cities in their state trying to ban new gas hook-ups.

Another macro issue is something I talked about in an Op Ed earlier this year – the role of utilities and regulators. Each of them is supposed to make decisions that meet multiple objectives, but big among them is keeping the lights on, both in producing it and in transmitting it (i.e. the wires) Being a utility leader is further complicated by the responsibility of producing returns for investors.

A micro issue is that we have become a nation of NIMBYs and BANANAs and it has become harder and harder to site solar and wind. And the local opposition is often fueled by fossil companies trying to stem the tide.

Another micro issue is also a macro one. That would be the challenge of reducing electricity demand, either through efficiency or conservation. Yet efficiency still lags in terms of its potential, e.g. many states still using building codes from decades ago.

Yet another is storage, especially long duration energy storage (meaning 8 hours or more, or even days, weeks or seasons long). I have called it the holy grail before, and I will restate that now. It is going to revolutionize the production and use of electricity, and it is coming fast.

As for the cost of electricity, while people like (and depend on) electricity, they don’t like the price of it.

It seems people think that for some reason the price of electricity – or the size of their electricity bill, which are two different things – should not go up. The reason for this one often hears is that their utility is corrupt, incompetent or just practicing plain old price-gouging.

People don’t seem to think electricity should be subject to inflation, even when everything else is. They don’t seem to think that there needs to be any new investment in the electricity system (even as they demand greater reliability)

The fact is, utilities and other companies in the electricity sector are no different than any other sector. They are not in business to give it away, even if they are a local electric cooperative or small municipal utility that is operating for its local customers. They have to make electricity and keep the lights on.

However, even with the introduction of competitive electricity markets (although in only half the states), the majority of a utility’s business is regulated. Sure, a person can say that government is also incompetent, corrupt, etc. but the point is that there is at least some level of cost and price protection due to it.

We are an electrified world, and it’s going to get more electrified.  Everyone knows that, even if it goes against their politics or level of animosity they feel for their utility.

And it needs to get more electrified because that is the major way in which we will solve global warming and climate change.

And we know there are other fossil-free ways to produce electricity in addition to Solar and Wind.

The first is Nuclear, which is in its own lane of sorts. It has no emissions, but it is not renewable. We could afford to avoid nuclear if it wasn’t that the only currency that matters now is GHG emissions. So those against nuclear need to do some recalibration. More and more people are realizing this every day, even to the point of something I never in a million years would have thought I would hear – reopening Three Mile Island.

The next is Hydro, one of the oldest energy producing methods of them all. The amount of hydroelectric power has not increased in the U.S. over the years for various reasons, but most having to do with other demands on the water. But in a world where GHG is the currency, new Hydro power plants need to be in the discussion.

So how do we go forward with regards to electricity?

I am always in favor of consumer education, and it is sorely needed in the case of the present ignorance in electricity. Something tells me that would be hard in this case. But being hard doesn’t mean it isn’t needed.

Even when I think that the education challenge may be achievable with something, I turn towards policy as something that exists to rise above ignorance or misunderstanding. But electricity policy happens in a fragmented world, with some at the Federal level, some at the State level, and when you consider siting and permitting, some is at the local level.

That being as it may, every policy decision on energy anywhere is a climate decision and increasingly every energy decision will be about electricity.

Electricity can’t be taken for granted. The electricity system is not on autopilot for either energy or climate success.

It needs a lot of thought and work. Let’s all get on board with that.