Kenny Stein, IER’s Policy Director, joins the show to discuss the recent events in Saudi Arabia that disrupted global oil markets and how growing domestic production has made America energy secure.
The post #33: Kenny Stein on the disruptions in Saudi Arabia and American energy security appeared first on IER.
“In the late 1890s, at the dawn of the automobile era, steam, gasoline, and electric cars all competed to become the dominant automotive technology. By the early 1900s, the battle was over, and internal combustion was poised to become the prime mover of the twentieth century.”
-David Kirsch’s The Electric Vehicle and the Burden of History (2000)
“The credit is in fact working. It just needs a little more time.”
-Genevieve Cullen, Electric Drive Transportation Association (July 2019)
Milton Friedman once remarked: “Nothing is so permanent as a temporary government program.” He also observed that so-called infant industries protected by the government “never grow up.”
Both insights apply to federal policy toward plug-in electric vehicles, specifically the up-to $7,500 per vehicle tax credit introduced in the Energy Improvement and Extension Act of 2008, as modified by the American Recovery and Reinvestment Act of 2009.
The decade-old federal credit is phasing out as each manufacturer records 200,000 in sales. Tesla reached this threshold last year, followed in April by GM (Chevy Bolt and Volt). With other automakers on the brink, the drive is on to—you guessed it—extend the “temporary” tax inducement.
The Driving America Forward Act (H.R. 2256; S. 1094) would raise the sales cap to 600,000 with a slight decrease in the credit to $7,000 per vehicle beyond the first 200,000. The extension is supported by Toyota, Fiat Chrysler, BMW, Ford, Tesla, General Motors, Honda, Volkswagen, as well as environmental groups and electric utilities.
“The credit is in fact working,” stated Genevieve Cullen of the Electric Drive Transportation Association. “It just needs a little more time.”
Why extend the credit? Because, admitted Gil Tal, director of the Plug-in Hybrid and Electric Vehicle Research Center, University of California–Davis: “When we sell a $40,000 car, the sensitivity to the incentive is much higher.” In plain language, EVs are too expensive for many buyers and renters without the subsidy.
Subsidy Squared
The federal tax credit for car buyers is only the most visible subsidy for EVs. Other government favors and requirements include:
A hidden government subsidy is the virtual absence of retail taxes comparable to gasoline and diesel, which account for approximately 18 percent of the total price. It is speculated that EVs will be targeted if and when their numbers grow—a potential risk for buyers.
Familiar Criticisms
With such government largesse, EVs still only accounted for 2 percent of US vehicle sales last year (.36 of 17.3 million sold). Left with a price premium, EV buyers are affluent, an example of an upside-down wealth transfer.
A major scale-up of EVs also brings into question the cost and availability of rare earth minerals essential for the jumbo batteries, as Robert Bryce has calculated.
The relatively limited range of EVs between charges, creating range anxiety compared to conventional vehicles, is exacerbated by seasonal temperatures. The American Automobile Association found that at 20 degrees, the average driving range fell by 41 percent in a heated EV. In 95 degree weather, the loss was 17 percent with air conditioning.
“As long as drivers understand that there are limitations when operating electric vehicles in more extreme climates,” warned AAA, “they are less likely to be caught off guard by an unexpected drop in driving range.” Sure enough, a Polar Vortex earlier this year in parts of the country reduced driving range as much as 30 percent.
Environmental Gains?
All these subsidies produce marginal environmental advantages at best. As Amory Lovins once stated, EVs are really EEVs—“elsewhere-emission vehicles”—given that fossil fuels generated almost two-thirds of electric power in the U.S. last year.
Battery production and disposal is the rest of the story that proponents of “deep decarbonization” (electrifying everything in the quest to shift from fossil fuels to renewables) scarcely consider.
Historical Failure
The limitations of electric batteries as an alternative to the internal combustion engine was recognized at the beginning. Thomas Edison advised a 33-year-old Henry Ford in 1896:
Electric cars must keep near to power stations. The storage battery is too heavy…. Your car is self-contained—carries its own power plant—no fire, no boiler, no smoke and no steam. You have the thing. Keep at it.
Eighteen years later, in what was described as “Mr. Ford’s personal project,” the industrialist gave Edison the opportunity to design an economical battery for a new Ford Electric. The experiment failed. The cost and weight of the alkaline battery could not meet the price and range requirements of the oil-powered internal combustion engine.
The burden of history continued in the 1990s when General Motors unveiled the two-seater “Impact” (EV1). Despite a mandate by the California Air Resources Board to jumpstart a market, GM ended up crushing its vehicles for scrap. Chrysler, Ford, GM, Honda, Nissan, and Toyota also ended their smaller EV experiments.
The rise, fall, and fall of electric vehicles (EVs) in the United States is well documented. “No electric car since 1902, regardless of battery or drive train,” concluded one book, “had been able to compete effectively against its contemporary internal combustion counterpart.” The electrics’ burden of history, 117 years old, hangs on by a federal tax credit and other aforementioned non-market policy preferences.
Conclusion
Consumer verdicts for more than a century offer insight for today. Just as proponents of wind and solar to generate electricity want to believe their world is new and futuristic, electric-vehicle interests pretend theirs is new, just needing a little more subsidy and time.
But far from an infant industry, electric vehicles are a mature, deficient alternative to conventional vehicles as judged by consumers. Extended subsidies will simply prolong the uneconomic and require future extensions. It’s time to level the playing field and let the market decide.
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Texas has the most wind capacity of any state, generating about 16 percent of its electricity from wind. In August, as temperatures rose to over 100 degrees and consumers increased their use of air conditioning, Texas’s grid operators struggled to meet the record demand for electricity. Many of the wind turbines could not operate because the wind was stagnant, a common occurrence on very hot days. As a result, energy costs skyrocketed. In Houston, wholesale power prices spiked 49,000 percent (to $9,000 per megawatt-hour). The Electric Reliability Council of Texas (ERCOT) warned that reserve margins were so low that it might have to institute rolling blackouts. The independent system operator called for the construction of more gas-fired generating plants.
Facing its second consecutive year of strain on its grid, ERCOT mandated all available power plants to run flat-out, called on factories to cut power consumption, and imported electricity from Mexico.
Power reserve margins were so thin that increments of just tens of megawatts were available to meet demand. The state called the first of its three levels of emergency and hit its market price cap of $9,000 per megawatt hour to avoid rolling brown-outs. According to ERCOT, if one of the state’s large natural gas plants had gone offline when reserve margins were thin, rolling blackouts might have been unavoidable.
Texas has a deregulated power market in which competition holds down power costs unless demand is high and then spot prices skyrocket. Texas prepared for the hot weather this summer, allowing generators to request permission to disregard air regulations, ordering all generation assets to be available and importing power from the neighboring Southwest Power Pool market.
August 13 and 15 were the toughest days because most of the state’s 26 gigawatts of wind capacity were becalmed in the mid-afternoon, and a few power plants, that had been running flat-out for days began to fail from the high temperatures that increased demand across the state. As wind power slowed, ERCOT instituted its first level of emergency alerts, calling on small industrial and commercial generators to pour power onto the grid, and requesting power from Mexico from which an additional 60 megawatts were imported on August 15. Installed capacity numbers for electricity from intermittent sources such as wind and solar mean very little when they fail to produce as wind did in the middle of the hot Texas summer.
ERCOT did not need to institute rolling brownouts since the situation did not escalate beyond the second level of emergency alert in which it would call on about 1,100 megawatts of load to drop off the system.
The Texas power market does not include a capacity market that pays generators to keep power plants available. As inexpensive natural gas and subsidized renewable power pushed down power prices, coal’s market share dipped below that of natural gas and wind. Last year alone, the state retired more than 4 gigawatts of coal-fired capacity, or almost 70 times as much power as was purchased from Mexico on August 15.
The situation may get more dire as additional wind farms are being built. Facebook recently announced a deal in Texas to buy power from the largest single-site wind farm in the country. The power purchase agreement will obtain power from the 200-megawatt Aviator Wind East project, which is scheduled to come online in 2020 in Coke County, Texas. The Aviator East initiative is part of a larger 525-megawatt project. While there are larger U.S. wind farms, those have typically been built in phases, not in the single-phase construction planned for Aviator Wind East.
Texas’s 100-Percent Renewable Experiment
Last October, Georgetown, Texas obtained a $1 million grant from former New York City Mayor Michael Bloomberg’s nonprofit, Bloomberg Philanthropies, in which the city planned to obtain 100 percent of its electricity from wind and solar power. The grant’s only real requirement, however, was that the city serve as a public relations platform to convince Americans to abandon fossil fuels and switch to renewable energy. The town’s politicians promised that the renewable energy would be cheaper. But, as more wind and solar power displaced natural gas, electricity bills went up.
The city’s municipal utility now has a $7 million shortfall that has to be made up by the city’s consumers through higher electricity bills. Embarrassed, the City Council voted 5-0 to kill the Bloomberg PR deal. It also raised property taxes.
As part of the Bloomberg agreement, Georgetown was planning to install solar panels on homes and obtain a battery storage farm to store electricity when wind and solar power were not available. For Georgetown to be 100-percent renewable using today’s state-of-the-art batteries from Tesla’s Gigafactory, the city would need a $400 million battery farm weighing some 20,000 tons to avoid a blackout. And, after spending $15,600 for each household for such a battery farm, its backup power would be drained in 12 hours with a single windless night.
Conclusion
The close call in Texas in mid-August should be a lesson for ERCOT to rethink how it is valuing dispatchable, baseload power. The addition of more intermittent capacity to the market will likely make the reliability challenges Texas is facing only more difficult to manage. Further, the 100-percent renewable goal that several states have instituted should be viewed as a farce as the City of Georgetown recently discovered.
The post Texas’s Impending Reliability Issues With Wind Power appeared first on IER.
The $5k prize will go toward a greener educational experience at SEI’s Paonia headquarters
Paonia, CO– Solar Energy International (SEI) was chosen as a recipient of Western Colorado Community Foundation (WCCF)’s 2019 Environment grant, and the $5,000 will be put toward “reduce, reuse and recycle” efforts in their Paonia-based industry-leading lab yard.
SEI is one of the longest running and most widely recognized technical solar training organizations in the industry. Over 70,000 alumni worldwide have been through SEI trainings, and SEI’s alumni network has been involved in approximately 10 percent of global solar systems. New sustainability upgrades on campus will further support SEI’s core mission of sustainability and “a world powered by renewable energy.”
Some of the upgrades students can expect to see are iPads in lieu of paper-bound notebooks, hand dryers in the student lounge and commercial composting systems.
“We’re so grateful for the generous award from the Western Colorado Community Foundation,” Kathy Swartz, SEI Executive Director said. “As a global leader in renewable energy training SEI strives to practice sustainable practices in every aspect of our organization. These upgrades will be a wonderful improvement to the lab training experience.”
SEI is one of the greenest campuses in the world. With around 28 kW of operational PV on campus (with the latest addition of a 10 kW carport not included) SEI generates 125% of their annual consumption, in addition to multiple free electric vehicle chargers on campus. The WCCF grant will help SEI continue to lead the way as an exemplary educational institution in solar energy and sustainability.
About Solar Energy International (SEI)– SEI was founded in 1991 as a nonprofit educational organization with the mission to provide industry-leading technical training and expertise in renewable energy to empower people, communities and businesses worldwide. SEI envisions a world powered by renewable energy.
About Western Colorado Community Foundation – The Western Colorado Community Foundation (WCCF) works with community-minded donors who share a connection with western Colorado, the place where they call home. WCCF is a collection of many different charitable funds – over 250 – each separately accounted for and with its own purpose as described by the donors who establish the funds. Through these funds, WCCF annually awards over $3 million in grants and scholarships throughout the seven counties.
Media contact:
Mary Marshall
Solar Energy International
Marketing and Communications Manager
mary@solarenergy.org | 970-527-7657 x116
www.solarenergy.org
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