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.