How real are the renewables?

There is so much buzz with renewable energy that it is almost choking. My goal is to be realistic. But even at the risk of sounding a cynic amidst all the hoopla, I would draw myself to look at many aspects of this issue. The foremost task is to scope out the problem in its multiple dimensions and then to attack it one at a time.

Let’s look at the American markets. Why PVs are not taking off as it should be? What are the major barriers? How dow we overcome this?

The answer is simple in a way. It is all about the money. As we speak, the price of electricity from PV is pretty high compared to buying it from the utility which typically generates from a mix of coal, gas, and nuclear resources. In US, the costs from PV are prohibitively high compared with the conventional generation. According to EIA data published by US DOE, the average cost of electricity in US is around 8 to 10 cents per kWh. This is way lower compared with cost of electricity produced by PV which is around 31 cents per kWh even with all subsidies and incentives are taken into account. This make is 3 to 4 times more expensive. Remove the subsdies, you are looking at a much higher number.

So where do we go from here. There are two ways to look at. First, the cost of PV has to come down. Second, account for the costs of externalities into cost of conventional electricity. Meaning, we need to make a cost estimate of the degradation of the environment, the long wires that simply destroy the aesthetics, the opportunity costs of right of way, and other subtle impacts of conventional generation. So what is realistic? Costing of externalities is certaintly not - at least in the near term. Therefore, main focus should be on how to bring the costs down.

Another way to look at these issues – which will be rather un-populist, is to increase the cost of energy in US and make it float according to what the rest of the world pay. Take gas or oil, we pay lesser than rest of the world and if we are brought to par, we will be paying more from “potatoes” to the electrons we consume. But no party can run for office with that in their agenda.

Well, these are the options. Let’s track down as we get along the issues and emergence of something innovative. Who knows - with the Democrats in congress and activist environmentalist getting more attention, regulations can change. Maybe, a better deal with renewables is in the offing.