The major dramatic confrontation of the film was how the Nevada Public Utility Commission cut the rate that home PV owners would be paid for energy fed back into the grid. Obviously this makes installing PV systems less attractive. For those who had already installed systems, their electric bills would be increasing substantially. The damage was quite real.
The film then showed how a year later the Nevada legislature passed bills that reversed the PUC decision. The people had rallied and defeated the big bad corporation. The way the movie portrayed things, the people were in favor of new clean technology, while the corporation was holding on to their old ways that made them big profits.
I was disappointed to see the situation pictured this way. I don’t know about the specifics in Nevada, but I would like to sketch out some general parameters, to propose a more fruitful perspective, one that opens opportunities for greater progress.
At the foundation, there seems to be a widespread notion that being driven by profits is at the core of the capitalist system that is destroying our world. I’m not an economist or political philosopher by any stretch. But I suspect that a lot of these highly trained folks go off into specialized concepts and leave the basics rather unattended. Getting the basics backwards creates real obstacles! I would like to try to tidy up a bit to help us move more effectively in a positive direction.
Profit, meaning that some enterprise provides more benefit than it costs, is not a goal peculiar to capitalism. I would say that profit is the foundation of life. Every organism expends resources in order to gain access to further resources. If the newly acquired resources are not of greater value to the organism than the resources expended to acquire them, the organism is running at a loss. Such losses lead to death. Life requires profit.
What precisely distinguishes capitalism? I expect there are many conflicting definitions. I think a useful criterion would be: ownership by investors. By ownership I mean decision-making authority. Every enterprise is given coherency by some decision making process. There are all sorts of people involved in an enterprise, such as customers, workers, managers, suppliers, neighbors, and investors. In a capitalist system it is the investors who have the final authority in how the enterprise is to be run.
One curious feature of the situation in Nevada regarding net metering for residential PV systems is that the Public Utility Commission is, at least theoretically, not representing the investors in the utility. Generally a PUC is appointed by the government and represents the public interest. Electric power utilities in general are heavily regulated by a variety of government agencies and other non-investor bodies. Electric power is not a very capitalist industry! Of course there are powerful investors with enormous influence and decision making authority, so there is a large capitalist component.
Political power doesn’t really flow through textbook channels. Large investors can certainly cast their votes at shareholder meetings, the classical capitalist channel. But there are many other channels of influence. I don’t doubt that the Nevada PUC is pressured in a variety of ways by big money interests, certainly including utility investors. This kind of corruption, where centers of concentrated power can steer decisions to funnel even more wealth and consequent power back to those same centers, is hardly a distortion particular to capitalism. Still, a capitalist system will manifest such steering in its particular way.
Why did the Nevada PUC resist the growth in residential PV systems? No doubt it was to preserve the utility’s profits. But that answer barely scratches the surface. The folks with residential PV systems wanted to stay connected to the grid. If there is no profit in maintaining the grid, the grid will die. So if folks want to stay connected, it’s in their own interest to help insure the profitability of the utility.
The whole electric power system is enormously complex. Some of this complexity is technological and some of it is social. Technologically, the power system can be divided coarsely into generation, transmission, and distribution. The social structure is governed by regulations which vary from region to region. In general, the electric power system was de-monopolized some decades ago. The ownership of generating plants is typically different than the ownership of transmission and distribution systems. Transmission networks usually cross many state lines. Electric power consumed in one state is very often generated in a different state.
The decision of the PUC very likely was intended to protect corporate profits, but the profits of which corporations? If the clean energy revolution is to succeed, what enterprises need to maintain profitability? How can we structure the power system, socially and technologically, to make clean energy profitable? What structures should we avoid that will put the health of the system at risk?
There are certainly large investments in fossil fuel generation – in coal mines, natural gas wells, in railroads and pipelines, and in generating plants that burn fossil fuels. The investors in these facilities want to continue to receive a good return on their investment. Folks that work in these facilities, the municipalities that receive tax revenues from their operations, etc. – it’s not just the investors who want to see these enterprises continuing to operate and continuing to be profitable. For the clean energy revolution to succeed, these are the people whose projects need to be derailed. To whatever extent there can be established alternate ways for these various groups to survive and even thrive despite this disappointment – the less these folks fight against clean energy, the more the revolution can grow.
It’s hard to say exactly what the clean energy system of the future should look like. Redford’s movie provided admiring portraits of large scale facilities such as wind farms and solar thermal generating plants. It’s hard to foresee a practical future where each home and family manages energy usage independently, off any grid, i.e. where the grid is gone. Of course the grid is barely a century old, i.e. humanity survived through almost all its history without the electric grid. So it is entirely conceivable that the grid could just disappear as quickly as it appeared. Still, in trying to plan out a practical path for a clean energy revolution, it seems most practical to incorporate a grid, where generation and consumption can be more loosely coupled.
Building and maintaining a grid, the transmission and distribution networks, together with large scale generation and large scale storage facilities, is a considerable expense. The consumers of electric power who use the grid will have to provide the funds, one way or another, to keep the grid running. Nowadays the main way that consumers pay for their use of the grid is by paying for their total energy use each month, or, equivalently, for their average power use. But this becomes a problem as more and more consumers are also generators of power. Distributed generation adds new sources of fluctuation of power flow in the grid. Distributed generation makes maintaining the grid more difficult and more expensive, while reducing revenue.
Our modern era has created such huge networks that people often lose track of where things come from. We earn money by working at a job and then spend that money paying bills. By keeping up with our bill payments, we maintain the privilege to acquire the various things we need and want. It’s actually our work that fulfills our needs and wants. But there are so many abstract layers between that the connection is hard to recognize. There is a lot of work required to maintain the electric power grid. The idea that there is a greedy corporation that charges us for electric power and that the smart game is to arrange things to avoid paying that corporation: that idea has lost sight of the fact that we rely on systems that take a lot of work to maintain.
There are many challenges we face in bringing about a clean energy revolution. One fundamental shift that we need to navigate is how we pay for the maintenance of the electric power grid. A consumer that uses zero net power but that sometimes pushes energy into the grid and at other times draws energy from the grid, that consumer is deriving benefit from the grid. If the grid is to survive, the users of the grid need to pay to maintain it. Net energy consumption is not going to work anymore as a way to allocate costs across consumers. The clean energy revolution requires us to find a new way to charge consumers for their use of the grid.
This perspective turns upside-down the picture presented by Redford’s movie. Again, I don’t know the specific details driving the decisions of the Nevada PUC. But it is quite reasonable to guess that the PUC understood that net metering is not a method of cost allocation that is going to enable the survival of the grid. Net metering is not going to move the clean energy revolution forward in the long run.
It’s hard to say what sort of cost allocation system can work well in the new clean energy world. For example, maintenance of the grid could simply be funded through government tax revenue. But this approach tends to insulate consumers from the costs their actions incur. Such a lack of feedback tends to foster inefficiency. Another approach is to use smart meters. The typical consumer’s power meter today just accumulates the total power used. Alternative meters could track various statistics of the fluctuations in power consumption and generation. Part of a consumer’s bill could be proportional e.g. to their 90th percentile peak power consumption. After all, the grid operations need to maintain readiness to supply such peak power usage, so it is reasonable to bill customers for such access to power.
After the showing of the movie yesterday in Salt Lake City, there was a short period of discussion with Jamie Redford who was present in the room. I had the opportunity to ask him, “What about smart meters?” He said he hadn’t heard too much about them but had heard about some resistance from consumers who worried about electromagnetic radiation – generally these meters can be read from the street by way of microwave communications. Redford noted that most of us regularly use cell phones that emit very much the same sort of microwave signals, so the resistance to smart meters seemed a bit misplaced.
If the clean energy revolution requires smart meters rather than net metering, it might just be that the consumers are more of a drag on progress than the Public Utilities Commission!
Redford’s film was a reasonable introduction to the clean energy revolution. I hope I have argued effectively here that we need to take the discussion a few layers deeper if we are really going to fulfill the promise of clean energy!