Noah Ginsberg 10/24/13
Yesterday the Information Technology & Innovation Foundation (ITIF) released a new study titled “Challenging the Clean Energy Deployment Consensus” and hosted a discussion on the topic. The study and panelists rightfully support more investment in energy innovation, but claim that proponents of renewable energy deployment policies, which they call “The Deployment Consensus,” are missing the boat on how to create competitive energy markets and combat global climate change.
There are many problems with the study and claims several panelists made at yesterday's event. As Alan Nogee, former Director of the Clean Energy Program at Union of Concerned Scientists, points out on Twitter, the “whole premise [of the study] lumps very different studies together…and mischaracterizes scenarios as forecasts and prescriptions.” Here is a list of a few more problems with the study:
- The study dubiously disregards the projected and current price declines of renewable energy due to current market drivers and deployment policies at the federal and state levels. Further, the study fails to shed adequate light on the fact that renewable energy was the fastest growing source of electrical generation capacity last year due to recent and steep price declines.
- The ITIF study fails to mention that around the globe, and especially around the United States, renewable technologies are currently delivering cost competitive electricity and in some cases, cheaper electricity than fossil fuel technologies. Utilities across the country cite wind- and solar-generated electricity as cheaper than natural gas-generated electricity. Just look at two recent stories about Xcel Energy. The company is purchasing of 750MW of wind power that will save $225 million for ratepayers and buying utility-scale solar at prices competitive with natural gas. (Green Tech Media, http://bit.ly/1ceq5UO). Or the fact that the Electric Reliability Council of Texas’s (ERCOT) Long Term System Assessment from December 2012 found that real-world wind and solar power data – as opposed to previously used modeled data from 2006 – forecasts wind and solar to be more competitive than natural gas over the next 20 years. (Source: Electric Reliability Council of Texas, http://bit.ly/UIPtnW)
- The report fails to mention that gaining more access to lower cost capital for renewable energy would have a significant impact on the price of renewable energy.
- Or the fact that reducing soft costs for solar permitting would have a significant impact on the price of rooftop solar.
Many of the people ITIF lumps into the “Deployment Consensus” are in fact supporters of many energy innovation policy recommendations made by the ITIF and their guest panelists.
The ITIF report fails to highlight the fact the fossil fuels are globally mispriced to the tune of $1 trillion dollars a year according to the International Monetary Fund, creating a clear market disadvantage that renewables need to compete on. The ITIF panel dismissed mispriced fossil fuels as a reality people should just accept even though Americans overwhelmingly support getting rid of fossil fuel subsidies.
The study fails to report that innovation in the clean energy industry is far outpacing innovation in the fossil fuel industry. As USA TODAY recently reported “In the United States alone, the number of renewable-energy patents exceeded 1,000 annually by 2009 — up from fewer than 200 per year in the 1975-2000 period. In contrast, patents for coal, oil or gas technologies rose to about 300 in 2009, up from 100 annually in earlier decades.”
One panelist at the ITIF event claimed only rich people could afford solar panels. A recent study by Center for American Progress shows that rooftop solar is growing significantly faster among middle class Americans than other income range.
- And it’s important to mention that Brightsource Energy’s new Ivanpah plant and Abengoa’s Solana plant are true gems of renewable energy innovation that just came online and will deliver cost-competitive power to hundreds of thousands of Americans. These projects were driven by market forces and benefited from strong policy framework aimed at deploying renewable energy.
As Bryan Walsh from TIME puts it "Yet if the alternative energy movement is to ever make a true mark, Ivanpah may provide exactly what it needs: scale. As Stillings’ images illustrate, Ivanpah is nothing if not big, a dream of a different way of powering society that is suddenly, radically here. We may look back upon the Ivanpah Solar Electric Generating System as the beginning of a new era, one where industrial projects that rival the Hoover Dam for scale are integrated with the Earth, not a blight on it."
Perhaps most frustrating about the report is that ITIF calls for emphasizing the “five phases of the innovation ecosystem” that include research, development, demonstration, market formation, and deployment, while ignoring that many renewable energy technologies are already in the 4th and 5th steps of that process. And perhaps more importantly, it’s very important to ask, does the innovation process they describe always have to occur in this sequence? Can’t energy companies innovate and create new technologies as they deploy current technologies? Isn’t that how the private sector drives innovation? As Hal Harvey, CEO of Energy Innovation LLC puts it, “The authors of this report have created an artificial distinction between research and deployment when experience shows that they are inextricably bound together.”
There is no doubt, as ITIF's report echos, that there needs to be more emphasis on strengthening America's energy innovation programs. As Joshua Freed of Third Way point out,
“The much-admired Advanced Research Projects Agency-Energy (ARPA-E), which funds fundamental research in emerging energy technologies, is struggling to maintain its very modest budget. For 2011, the entire budget was $180 million, $341 million less than requested by the president, and a decline from its 2009 and 2010 budgets. ARPA-E is now roughly the equivalent of one medium-size venture capital fund.”
And ARPA-E's current budget has been cut even further since then. ACORE agrees that current funding levels for energy innovation programs are unacceptable and there needs to be more emphasis on creating new innovative energy sources. But to claim that deployment policies are not an effective way at creating significant cost declines, carbon reduction, and technology innovation is flat out wrong.