Economics Renewable Energy

The Renewable Energy Singularity

It’s gonna happen. Some day.

Some day, we (as the human race) will reach a point–or a singularity–where it will be more economically viable to create renewable energy than to harvest oil or coal out of the ground; there won’t be any going back. We started toeing that line a few months ago. Oil just about crossed the $150 mark before dropping way back, thanks to the possibility of recession. Now that we’re back into cheap oil land, we will probably suffer a setback on developing newer more efficient energy solutions (not even necessarily renewable ones). But once we cross that threshold where renewable energy is cheaper than hydrocarbon based energy, the world can only change for the better.

Let’s look at things that will accelerate the pace at which we (are forced to) develop new energy technologies:

  1. We run out of oil — Whoops! Can that really happen? You’re darn skippy it can happen. And will happen, if growth continues as it had for the past few years. China and India are waking up as new middle class citizens and they are thirsty for oil. There were only so many dinosaurs and other critters that are now our oil supplies.
  2. The oil that is left is REALLY hard to get to — Recently Cuba found out they have one of the largest oil reserves in the world just off their coast. Too bad it’s a mile or more under the ocean. That’s a lot of water to get through just to get at the oil. It’s even tougher if you have primitive oil companies trying to get at that oil. If the price of oil is high enough there’s likely to be someone crazy enough to go get it, but that might raise the price even more.
  3. The oil and coal the US imports is no longer available — The main reason would be “conflict” a.k.a. War. We make Iran or other friends of OPEC angry enough and they might decide to stop sending us 55 gallon drums of crude (that’s just how they measure it…not ship it, right?).
  4. We can’t afford it anymore — Since we’ve been sending China our money for a long time, they are sitting on some significantly larger piles of cash (in US dollars, thank you very much). If it comes down to an eBay style bidding war, the bigger pile is going to win. Even bidding at the last moment won’t help!

OK, so we’ve decided what might get us into this mess. But what else can get us out of this mess? It’s pretty clear that the next US presidential administration will have some serious sway over how renewable energies are governed and encouraged. If they read, or better yet employ the author of “Hot, Flat and Crowded” — Thomas Friedman, then they will have a level headed economist with some great ideas on their side. More important than one man or even one administration is a multi-point plan of attack for reducing the cost of renewable energy.

Remember, the thing we’re concentrating on is that point where it’s more cost efficient to harvest renewable sources than to dig up carbon based sources. In theory, this makes a lot of sense. Sunshine is definitely free, even if it is harder to come by in the great north. Wind is prevalent just about everywhere, just look at Kansas. But until the infrastructure and the methods are in place, all of these elements won’t contribute to our renewable energy solution, they will just sit useless until everybody jumps on board. Let’s look at a list of hurdles we will have to pass in order to make renewable energy, and more importantly energy independence, a reality:

  1. Efficiently storing energy– From what I’ve seen so far, this will probably be done by splitting H20 into hydrogen and oxygen. While I don’t like the idea of liquid or gaseous hydrogen sitting in my car, basement, etc, I would hope material technologies catch up so catastrophic events aren’t as often as we might think. Unless some game changing technology such as batteries or super capacitors comes and proves it can store energy better than electrolysis, then splitting molecules will be the way to go.
  2. A newer and better power grid — This is one whopper of a problem. You know how you hate going to Best Buy to purchase a 10 ft length of cable because the one coming out of your wall won’t reach your TV? You know how they totally overcharge you because those are their high margin products? Well even if there was NO margin, imagine how expensive it would be to run one wire all the way across the United States. Now imagine criss-crossing those wires across every town and city across the United States. Oh and those really huge amounts of cable? Well, let’s make them out of copper, which is currently at some all time price highs right now. A better routed and controlled power grid is a good first step to increasing the efficiency of power transport. But until we as a country begin to revamp the aging infrastructure of this country, renewable energy will not be a reality for locally generated power sold to the masses or at a central power station system where excess power can be put on the grid at any time it is available.
  3. Bringing in the big boys — Like it or not, the big energy companies need to be a part of it. Until BP or Chevron can continue to make the profits they are making with oil, then there will be problems.  I’m not saying that the king cannot be dethroned (ahem, GM), but I think that if the big boys are in on the action, they will be less likely to lobby the government for oil and maybe even turn their interest towards lobbying for renewables. Who wouldn’t want to get free energy (solar)? All you do is plop down the infrastructure and collect those deliciously free solar rays.  On another note about the big boys, I am happy to say that they have started recognizing some of the potential in renewable energy, although it is unlikely that they will be turning in their oil rigs for solar panels anytime in the next few years. Oil rigs are expensive!
  4. Progressive tax credit reforms — Again, this is likely to hinge on the upcoming election and ensuing presidency but in the event that point 3 does not go through and oil companies continue to lobby for hydrocarbon use, tax credits will be needed so individuals are encouraged to buy their own wind, solar and geothermal systems.  Sure, the lowered costs help, but until there is governmental push, it’ll be slower adoption on the part of big business.
  5. Finding replacements for current solutions — I once visited the GE Aviation facility in Cincinnati and I can tell you, that facility is HUGE. It must be miles of offices and test bays completely dedicated to producing engines that run on jet fuel. Until THEY decide to switch over and try new methods of propulsion, having an abundance of hydrogen might not do them (or us) any good. The end products (in this case engines) require jet fuel and until they require something other than jet fuel (and therefore drive the demand down and the impetus to go find and sell more of it down), then the cost of renewables will remain high by association (because there will be less demand for it).

As much as we wish it was, making cheaper solar panels isn’t the only solution to reducing costs of renewable energy. There are many different aspects that feed into making renewable energy a final solution for the human race. If you can think of more milestones we’ll have to reach before this vision becomes a reality, please post them in the comments.