Can the world afford an all-renewable system to provide electricity?
This question was part a talk I was invited to give by NDRC (China's top economic decision authority). I argued that the MAXIMUM we know we would have to pay for an all-renewable electricity system would be 20 cents per kilowatt-hour (kwh),
which works out to $4 trillion per year for the world -- less than $1 trillion per
year for the US share of that. That's a lot of money, but we could afford it, and it would be very risky not to make the shift sooner or later. (The slides, at www.werbos.com/E/ES.pdf, say more.)
BUT: where does that upper limit come from?
The key to that upper limit, the benchmark which says WE CAN DO IT, comes
from the new technology of a single company, Stirling Energy Systems (SES), which
was ready a few months ago for large-scale deployment of a "solar farm"
technology expected to cost 13 cents per kwh initially, falling to 10 cents
in a few years. (My 20 cents was a kind of worst case estimate of the additional transmission and storage costs required to meet the entire US power load.)
But... I received an email this week from one of the investors behind SES
saying that lawyers paid for by the big fossil vested interest groups successfully
stopped construction, and drive the company essentially bankrupt, into the custody of Goldmann Sachs.
We could have done better, and improved on this option in many ways. But without it...
the best guess upper limit grows to 40 cents per kwh with proven technology,
and $8 trillion per year. Chances of that happening are not so good, until and unless
energy prices become so desperate that it could be too late for this species.
This is a serious development indeed. And it wasn't market forces that killed us
(unless you call hiring hit men a kind of market force).
What of wind, which some say could cost only 7 cents per kwh in the best onshore resources? That's just GENERATION cost. I am awaiting better estimates... but the best
guess for now is that the total cost to ratepayers, for wind penetrations above 30%
of the kwh generated, would be at least 40 cents per kwh, with today's technology.
We can hope for more, and do R&D to do more... but today's news is an incredible disaster.
Here are (1) the email conveying the news to me; and (2) my response.
(1): THE NEWS:
Dear Paul : I appreciate your deep, thoughtful response.
I was an early investor in the Stirling engine and Stirling Energy
Systems. A few months ago, they were , through their Solar Pioneers and
Tessera partners, reading to begin producing electricity for their power
purchase contracts with San Diego Gas and Electric and others. Coal
industry interest in the Southwest, activated several native groups and a
lawsuit against the transmission line stopped the whole project, even after
Interior Sec. Salazar had given approval. So start-up, early stage
companies like Stirling ,Solar Pioneers could not withstand these attacks.
They had to sell out ,mostly to Goldman Sachs and early investors like me
were crammed down to zero.
So the incumbent fossil fuel and nuclear industries can still
block progress, and keep their vast subsidies, as long as they control
Congress via their money to political campaigns. Watch the Dylan Ratigan
show on MSNBC, where they are producing legislation that might help take the
money out of politics !! Dylan is a former securities analyst from CNBC and
knows where all Wall Street's bodies are buried ! www.dylanratigan.com
D.Sc.Hon., FRSA, author, futurist, president - Ethical Markets Media, LLC
PO Box 5190, St. Augustine, FL 32085; Phone: 904/829-3140, Fax: 904/826-0325
www.EthicalMarkets.com, www.hazelhenderson.com, www.calvert-henderson.com
Check TV listings for our latest show The Money Fix on PBS affiliates and
new episodes of Ethical Markets TV Series on Transforming Finance at
The content of this correspondence is copyrighted © 2011.
(I added this to the post when I received Hazel's permission
to do so.)
(2) MY RESPONSE:
Hazel's message came as a kind of powerful triple shock to me. Among
other things, it reminded me of the
old idea of frustration-aggression or frustration-adrenaline; I'm not
sure I have my own emotions as far under control
as I want them to be, after this challenging information.
A triple shock because:
(1) OBJECTIVELY, losing what this one company has to offer is a huge
blow to the hopes of humans
getting to sustainable energy before it is too late. Some folks would
immediately say "Hey, it's just one company.
Weren't you pinning more hopes on a competitor anyway? Didn't they
frustrate you at times? Lots of companies get
screwed these days...."
No, no and no. At www.werbos.com/E/ES.pdf (my slides for NDRC, the top
economic folks of China), I give the basic context.
SES.. was in a way our foundation. It was the technology to beat, yes,
and I was actively trying to help people do better.
But it also was the source of the upper bound -- the clear proof that
we COULD afford an all-renewable system of electricity for the world.
I guess you could call it a combination of security blanket, launch
platform, and potential partner. If we lose all three...
it's had to imagine a world economy of present size affording, say, 8
trillion dollars per year for all-wind (with more expensive trough
or PV systems filling in a few holes). If all those numbers are too
cautious (too big, worst case back of the envelope)...
cutting the "with SES" and "without SES" cost numbers in half still
leaves us with a huge loss when we lose SES.
It's not just one company. It's a technology.
And it does lead to an obvious question: how much is retrievable of
that technology, now that Goldmann-Sachs owns it?
On what basis? What of other nations?
(2) WHAT IT SAYS ABOUT US POLITICS.
I would tend to agree with what Hazel says, endorsing new legislation
to try to separate money from politics.
In a way, that gets to the root of the problem.
Prior to ...'s message... I was beginning to think... for ACTIVE,
non reactive deep creative thoughts,
I am now drawn to three priorities emerging in my own mind -- world
economic recovery, esoterica (and esse),
and three related topics in the mathematics of intelligence under
But world economic recovery would depend so heavily on HUMAN factors.
Th level of insanity and corruption and destructive groupthink shown
in his example
makes me wonder what hope there would be for world economic recovery anyway,
even if we did figure it out better and if we restored the SES technology.
There are lots of economist groups out there debating economic recovery,
and I do have a degree or two in economics myself. But I wonder where there
would be a more holistic deep dialogue on this subject. It's hard for any human
to get really deep and deeper in any hard subject without someone to
talk to about it.
(I can claim a whole lot more successful independent thinking than
most folks can, but
it's easy to see my human limitations.)
On a light matter, I imagine a double bumper sticker...
"To return to reality... get out of the box."
But I don't think legislation is the whole story. To some extent, ALL
systems of government are
vulnerable to economic pressures. For example, the sheer VOLUME of oil money
out there, and the size of the scarcity rent in particular, correlated
with the amount
of pressure in breaking the integrity of the system. My slides for NDRC touch
lightly on what this implies.
It also reminds me of Max Weber...
(3) THE ISSUE OF HOPE FOR THE HUMAN SPECIES
Decades ago, we often saw a bumper sticker with a smiling whale, and
the words "Save the whales."
I was really happy when I saw one with the same kind of smiling friendly whale,
with maybe a touch of sadness and compassion in the eyes, and the
words "Save the humans."
I would have bought one immediately... It is a major theme of our
efforts, the basic reality
of a lot of what we do. (Which "we"? You decide.)
But there are times when I do have to confront that old question of
how much hope
there really is for this species anyway. For example, the US has
somehow destroyed its low-cost launch technology
even more thoroughly than it has destroyed its lowest cost solar farm
technology (more precisely,
leaving some but less hope of recovery). And I have seen some
fluctuations in presidential polls
and plans to arrest economic recovery... Just how committed to
collective suicide are these guys,
and where does it really leave us? I can't help wondering sometimes...
All for now.