At RealClearEnergy Josh T. Smith points out something that hadn’t occurred to me. Fossil fuel producers receive substantial subsidies in the form of the very structure of the energy grid:
According to a report by Management Information Services, Inc., a DC consulting firm, the oil and gas industry has received 54 percent of all energy incentives since 1950. Federal energy incentives and favoritism only recently flipped to favor renewables––and flipped big. From 2011 to 2016, renewable energy got more than three times what oil, natural gas, coal, and nuclear received combined.
A huge form of support for the fossil fuel industry is harder to quantify, however. The electrical grid is built with fossil fuel producers in mind. The system is designed to move power in one direction, from producers to consumers. With the emergence of distributed energy sources,, however, electricity now moves from consumers to be used by others–as well as from large power plants. Many current energy policy debates are artifacts of the grid’s design and represent a conflict between the old model and what may eventually become a new way of powering our lives.
My preferred strategy would be, taking a day forward approach, to start eliminating all subsidies for energy and fuel producers, whether fossil fuels, ethanol, solar, wind, or other. These competing technologies should succeed or fail on their own merits.
The single exception to that would be the grid. If we want a resilient, durable power grid suitable for today’s needs it will need to be built by governments, just as roads are built by governments.
Totally agree with your comments regarding subsidy elimination, and strengthening the grid via government involvement.
A government transmission and distribution would allow any type of producer. An electric producer would supply the electric needs of its customers by feeding into the electric grid. It would not be a point-to-point system. The customer would withdraw some amount, and the producer would add that same amount.
For gasoline pipelines, the liquid flow is non-specific. The producers add identical gasoline to the general flow, and at the distribution points, they withdraw from the common flow and mix the additives for their final product.
With a similarly functioning electric grid, a small solar producer in Arizona could have a customer in New York. The customers of solar may need to pay a premium, but if it were more profitable, solar production would increase. It would be possible for a utility to have different productions method co-located at the same facility.
Additionally, a customer could designate a supply preference – solar, wind, nuclear, and the preferences would be supplied by availability – solar on sunny days, wind on cloudy but windy days, and finally nuclear. There could be solar producers supplying the large utilities with the solar generation they lack.
The electric grid can also be used for networking, and the customer’s requirements would be sent back to the utility through the same wires used to provide electricity, allowing the producer to instantly supply that amount into the electric grid.
This is only an unseen subsidy if you aren’t looking at all.
Also, Republicans want to privatize the grids.
I think that’s correct, although durable might be a hope rather than reality given recent FL experience. I can think of arguments for and against public vs private grids and roads, but that’s for another time.
It should be clear, however, that distributed power such as the guy putting solar panels on his roof should not be subsidized. Just feed the grid and let the chips fall.