The case for and against renewables, at the Platts Global Energy Forum

As the discussion/debate between thinker and author Robert Bryce and entrepreneur Jigar Shah at the Platts Global Energy Forum was drawing to a close, Shah spoke from the perspective of an entrepreneur who has devoted much of his career to renewable energy development. (Note: Mr. Shah commented on this blog entry below.)

After Bryce reviewed ways in which renewables are now distorting the generation of electricity by conventional means — such as Texas-based wind farms bidding negative prices into utilities, figuring they’ll get the money back on the federal wind production tax credit — Shah said that argument only underlined his point.

“We’re going to win,” Shah said. “You are talking the utility 1.0 model, which is where we have to have quadruple backup” to ensure that the utility can supply its customers with continuous power. But “you and I both know that it will raise rates 5% every year,” he said, and that money is needed to build new generating facilities, new lines and other infrastructure. “If that’s the business-as-usual case, then I win every day of the week and twice on Sunday,” he added.

To call the Shah/Bryce discussion at the forum a straightforward debate over renewables versus conventional is probably simplistic. The two had broad areas of agreement. For example, Bryce is largely a renewables skeptic, but had significant praise for localized PV solar power in such applications as roof shingles.

What was notable about Shah’s presentation is that he spoke strongly for the economics of solar, but less so about wind. He referred several times to the “utility 2.0 model,” and without specifically defining it, it’s clearly a model where centrally generated distribution from fossil fuels carried out over a huge grid is like the pre-mobile phone telephone system, which he referred to several times as an analogy.

But he made only a few references to wind being part of that. At one point he even declared: “I don’t care about wind. I care about renewables.” He envisions a solar future, and it’s here now, he said.

“We have gotten to the point where we now have a robust industry. The cost has come down so much that it makes sense in more places,” he said. He rattled off numerous statistics: one-third of California solar installations are being built now without government incentives, a trend that he saw as continuing.

Bryce’s arguments, in his books and various op-ed pieces, has been that renewables simply can’t deliver the scale necessary to provide electricity for a growing economy, such as India. And he took the opportunity to discuss the gigantic footprint that wind energy eats up where it’s installed in the US. But without Shah arguing with any passion in favor of wind, that aspect wasn’t much of a fight.

But the issue of scale and density brought Bryce back to coal. “What’s the story globally? It’s a coal story,” he said. He noted that last year, electricity demand globally rose about 3.9 million barrels of oil equivalent daily; actual oil growth was only a little more than 1 million b/d. “If people can get it from renewables, I’m all for it,” Bryce said. “But where are investors voting today? They are voting for coal.”

To which Shah replied with a resounding no. He conceded that there was growth in electricity output in India and China from coal plants, but much of that was coming from decisions made years ago to build plants that are only now coming online.

He spoke of South Africa’s state utility Eskom, which has built only one coal-fired plant in the last decade, and despite suffering from power shortages is “completely conflicted” as to what to do next. “They say that they get the fact that the country has coal, but also has water shortages, and they are spinning in circles,” Shah said. “But they get the last piece, which is that renewables are now economic.” He cited biomass, hydro and wind as resources, but described them all as “small.”

Maybe the biggest factor that will hinder coal in the future, according to Shah, is the amount of water needed for production and the subsequent generation of electricity. “We’re arguing whether the most water-intensive industry in the entire world is going to expand in an environment where everybody thinks we’re in a water crisis,” Shah said. He did add that nuclear power generation might actually consume more water.

But the sheer size of the challenges that any technology faces is what Bryce views as the ultimate factor favoring fossil fuels.

For example, he said global electrical demand rises on average about 450 terawatts/year, and that’s likely to continue. Citing the annual BP statistical report, Bryce said wind output last year rose by about the same amount, and it’s an amount equal to almost the annual demand in Brazil.

“So that’s just to meet the rise in global demand, not to displace anything,” Bryce said, and renewables need to grow bigger than Brazilian output to make a meaningful dent in market share.

Bryce described solar as an “almost infinitesimal player on the global scale,” while Shah described it as one of the primary growth engines to meet rising electricity demand.

And ultimately, therein lay the debate.

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  1. doug nusbaum at December 5, 2012 1:46 am

    People who speak of todays “cheap energy” forget to mention that it is “cheap” only because we steal it from other countries whose people are poisoned and left impovrished, or we steal it from the future by poisoning the future by dumping toxic chemicals into land, air, and water. Not just CO2, but Mercury (five fold environmental increase since WWII) heavy metals from coal residue that leaches into groundwater, toxic chemicals from refinery that polute the air and water.

    Of course Bryce does not care about that because the people that his energy consumption poisons and kills are not his friends, family, or neighbors. The humans that his methods harm are “them”, funny looking people, far away, and poor, with weird beliefs. Why, they are not really human anyway.

    • John Kingston at December 5, 2012 6:47 am

      Mr. Nusbaum, having met and listened to Mr. Bryce, your argument that he “doesn’t care” if people are poisoned, killed, etc. etc. is utterly ridiculous and hopelessly simplistic, as is your view of the energy choices the world faces today.

  2. Ann Banisher at December 4, 2012 7:39 pm

    While I would mostly agree with Mr. Bryce, I think Mr Shah has a point about the decentralized renewable model. The problem I have with renewable, and specifically wind, energy is that because of the unpredictable, variable nature of the energy source backup power must be available, and planned for, but not accounted for in the cost analysis. This works in a state run system where the state owns all power sources and can determine where to take energy sources from. Some energy sources like coal & nuclear are not variable in nature, they provide a set amount of energy, you can’t just turn them on and off. Gas plants are the peaker types that can be turned on & off and are commonly the backup to wind. The private companies that provide wind power get a sweet deal. Whenever their power is available, they get to sell it for a set price. Somebody else has to pay for the backup power that only runs at 30% capacity.
    As Bryce alluded to, at least localized PV solar needs no infrastructure, does not disturb the local environment, and can be relatively consistent in generating electricity when peak power is needed, thereby potentially eliminating the need for additional seldom used peaker plants.

  3. Jigar Shah at December 3, 2012 11:40 pm

    Good summary. A few additions: I didn’t fight over wind because the technology’s success speaks for itself. Today, wind’s growth numbers are no longer exponential but in fact the industry is so big it is more linear now. Solar on the other hand is growing exponentially and part of what I said is that Germany went from 0 to 50% peak demand from solar in 10 years, the USA will do the same by 2022 — right around the corner. I think that the debate is not scale, everyone including the IEA now admits renewable energy will claim the lion’s share on installations by 2020, now the question is whether all of the Platts readers will profit from Utility 2.0 or just see the success in the rearview mirror.


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