White House Chronicle

News Analysis With a Sense of Humor

The Uber Effect on Electricity

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Leon Trotsky said, “You may not be interested in war, but war is interested in you.” The same thing might be said about disruptive technologies.
The U.S.. electric system, for example, may not be interested in disruptive technology, but disruptive technology is interested in it. What Uber and Lyft have done to the taxi industry worldwide is just beginning to happen to the electricity industry; and it could shock consumers – particularly the less affluent – as surely as though they had stuck their finger in an electrical outlet.
The disruptive revolution is not only happening here, but also in Europe, as Marc Boillot, senior vice president at Electricite de France (EDF), the giant French utility, writes in a new book.
Ironically, here in the United States, disruption of the otherwise peaceful world of electric generation and sale last year was a bumper one for electric stocks because of their tradition of paying dividends at a time when bond yields were low.
The first wave of disruption to electric generation has been a technology as benign as solar power units on rooftops, much favored by governments and by environmentalists as a green source of electricity. For the utilities, these rooftop generators are a threat to the integrity of the electrical grid. To counter this, utilities would like to see the self-generators pay more for the upkeep of the grid and the convenience it affords them.
Think of the grid as a series of spider webs built around utility companies serving particular population centers, and joined to each other so they can share electricity, depending on need and price.
Enter the self-generating homeowner, who by law is entitled to sell excess production back to the grid, or to buy on the grid when it is very cold or the sun isn’t shining, as at night. The system of selling back to the electric company is known as net metering.
Good deal? Yes, for the homeowner who can afford to install a unit or lease one from one of a growing number of companies that provide that service. Lousy deal for the full-time electricity customer who rents or lives in an apartment building.
There’s the rub: Who pays the cost of maintaining the grid while the rooftop entrepreneur uses it at will? Short answer: everyone else.
In reality, the poor get socked. Take Avenue A with big houses at one end and apartments and tenements at the other. The big houses — with their solar panels and owners' morally superior smiles — are being subsidized by the apartments and tenements. They have to pay to keep the grid viable, while the free-standing house – it doesn't have to be a mansion — gets a subsidy.
It's a thorny issue, akin to the person who can't use Uber or Lyft because he doesn't have a credit card or a smartphone, and has to hope that traditional taxi service will survive.
The electric utilities, from the behemoths to the smallest municipal distributor, see the solution in an equity fee for the self-generating customer's right to come on and off the grid, and for an appreciable difference between his selling and buying price. Solar proponents say, not fair: Solve your own problems. We are generating clean electricity and our presence is a national asset.
EDF's Boillot sees the solution in the utilities’ own technological leap forward: the so-called smart grid. This is the computerization of the grid so that it is more finely managed, waste is eliminated, and pricing structures for homes reflect the exact cost at the time of service. His advice was eagerly sought when he was in Washington recently, promoting his book.
While today’s solar may be a problem for the utilities, tomorrow’s may be more so. Homeowners who can afford it may be able to get off the grid altogether by using the battery in an all-electric car to tide them over during the sunless hours.
The industry is not taking this lying down: It's talking to the big solar firms, the regulators and, yes, to Elon Musk, founder of electric-car maker Tesla Motors. He may be the threat and he may be the savior; those all-electric cars will need a lot of charging, and stations for that are cropping up. There’s a ray of sunshine for the utilities, but it's quite a way off. Meanwhile, the rooftop disruption is here and now. — For the Hearst-New York Times Syndicate

Cautious Obama is Hurting Future Oil and Electricity Supply

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From somewhere–inside the White House or the Department of Energy–President Obama is getting some pretty awful advice. It’s bad enough that he’s been persuaded that there’s a Nirvana Land of windmills and sunbeams in the future of electricity. But much more gravely in halting drilling in the Gulf of Mexico, he’s committing a fearsome folly.


If exploration and drilling in the Gulf doesn’t resume and gets caught up in punitive new rules, Obama, or his successor, will find the price of gasoline high (probably more than $5 a gallon) and military action against Iran will be proscribed.


It goes like this: After 18 months the supply of replacement oil from the Gulf dries up, due to the normal decline in production from old wells. Very soon, this loss exceeds 1 million barrels a day and begins to increase the world oil price,


World oil production today is 86.5 million barrels per day; of this, the United States gulps down an amazing 20 million barrels per day. This delicate balance, helped by the global recession, keeps the price bouncing between $70 and $80 per barrel.


Worst case is not only do we lose production in the Gulf, but any global upset–such as military action in Iran–will stress this oil production-demand balance further. Result: price rises. Political solution: none.


The folly of the Obama action is that every new hole drilled in deep water is going to be safer-than-safe.


There’s a well-known pattern: Disasters produce an aftermath of safety. The nuclear industry thought it was safe before the Three Mile Island meltdown, but it went back to the drawing board and produced new institutions for safety monitoring and study, as well as revised the very idea of defense in-depth.


The Obama caution is the danger, not the possibility of another spill.


The second energy disaster in the making is with electricity. The Obama administration has signed on to a vague idea, pushed by environmentalists and post-industrial schemers: It goes by the appropriately loose title of “alternative energy.”


In real-world terms, alternative energy can be narrowed to some solar

and wind. In fact, the only mature technology is wind. It works fine when the wind is blowing. The heat wave in the Eastern states in the past week makes the point: The wind doesn’t blow when it’s most needed.


There’s nothing wrong with wind, except that its most passionate advocates often favor it not for its own sake but for what it is not: nuclear power. Paranoia over nuclear power–always the first choice of the world’s utilities, if all things are equal–is a part of the cultural-political landscape in America.


Faced with this, the Obama administration has saddled up two horses and invited the nuclear industry to ride both as they diverge. It has thrown away the $11 billion spent on the first national nuclear-waste repository at Yucca Mountain in Nevada, even as it has offered loan guarantees for new reactors.


Coming down the pike is a surge, a really huge surge, in electricity demand as plug-in hybrid cars and pure electric cars are deployed.


The plan–if you can call it that–is that the load of new uses will be spread by “smart meters” on the “smart grid,” and this will direct or coerce consumers to charge their cars in the middle of the night.


Fat chance. If consumers were that financially or morally conscious, they’d long since have cut their electric loads and driven smaller cars.


Want to be politically unpopular? Start telling people when they can refuel their cars. That’s known around the Tea Party circuit and elsewhere as government intervention.

Do you take yours with sugar? –For the Hearst-New York Times Syndicate