Sunday, March 14, 2010

Slippery slopes

In a recent article, Monbiot writes that two environmentalists support him in his campaign against FITs for solar. I took a look at those two sites, and the three men share the following:

  1. they all stress the importance of reducing carbon emissions and
  2. they all argue that photovoltaics is one of the most expensive ways of reaching that goal.

There actually isn't much to talk about here -- they are completely right on point 2 and, in all likelihood, on point 1. I just don't start with point 1, so I reach different conclusions.

This blogger correctly writes, for instance:

Without the huge subsidy provided by the feed-in tariff, the annual electricity output comes nowhere close to covering the costs of the installation over its thirty year life.

Which is exactly right. He could also have said that British feed-in tariffs are therefore properly designed. Were they not, they would not provide investors with a slight return. Clearly, the problem for these three gentlemen is not feed-in tariffs, but the cost of photovoltaics.

The blogger then adds:

... a subsidy system that may be good for recipients may be damaging for the rest of society.

Which is also correct, though he does not demonstrate that society is detrimentally affected at all -- he merely suggests that it seems likely. To demonstrate damage to society, however, he not only needs to prove that resources could be used more efficiently elsewhere, but also how he wants to get his electricity.

For instance, Monbiot seems to be a big fan of insulation -- who isn't? But if I am going to use a laptop to write about how solar power costs too much, I am going to need to get electricity from somewhere. (Note that I do not need to reduce carbon emissions to write about the high cost of solar.) I cannot power my laptop with insulation.

When the other blogger writes:

The question then arises - shouldn't we spend the money on other technologies which can have the same impact on reducing carbon emissions but more cost-effectively?

The answer is: maybe. It depends on whether you want to lower carbon emissions or have electricity. If your prime objective is to prevent a shortfall of electricity, the options to reduce carbon emissions (such as insulating homes) may not help regardless of how little they cost. If you reduce carbon emissions, but leave people in the dark, you may have some explaining to do.

So when one of Monbiot's commenters (tellingly, with the alias TheNuclearOption) writes:

I thought the point of renewables was to reduce CO2e emmissions. If solar simply displaces nuclear rather than fossil fuels then we are paying lots of money to stand still.

The answer can only be: no! Renewables are a source of energy, not a carbon sink. Stop stressing carbon.

Though Monbiot, apparently a proponent of nuclear power, does not mention it, one of the bloggers who has supported him seems to oppose nuclear. In fact, the subtitle of his blog is: "Fighting climate change without supporting nuclear power." I think you two should work that out first before saying you agree that solar is too expensive. It is hard for me to argue against two contrary positions at once.

Leaving aside the nuclear question, all three gentlemen want to have some kind of renewables, but which? They mainly want to be careful about cost. As one of the bloggers puts it:

A moderately sized wind turbine suitable for a farm – such as the Aeolus Power 50 kW model in a good location – will produce 100 times the electricity of a 2kw solar installation for about 25 times the cost.

Ok, that's a fine argument and perfectly irrefutable, if his figures are accurate, but not many people own a farm. If I don't, tell me what I can do. And be prepared for me to respond to that I know of something cheaper.

You see, anyone who argues in this fashion is on a slippery slope. Why stop at the comparison between small wind turbines and small solar arrays? Why not also point out that small wind turbines actually entail very high maintenance and are nowhere near competitive with the giant wind turbines becoming common today. And why stop there, when we could also say that offshore wind in parts of Britain promises to be even less expensive than onshore wind? And why stop there? Why don't we just say we will wait until the price of something has gotten down so low that the market takes care of things itself?

Three reasons:

  • The people who actually bring down these costs are going to own the patents and the manufacturing base; those who wait until the costs come down will not.
  • It is a myth that research brings down costs more than deployment, at least in the field of renewables (and every other field I can think of, though I am willing to learn on the "everything" part). I realize that this claim does not sound convincing on its own, so I will be following up with a post on this matter as soon as possible.
  • We would be leaving power production up to large corporations.

The argument that we should wait for renewables to get cheap has always simply been an excuse for inaction. All feed-in tariffs have always been below the retail electricity rate in Germany. An exception was made for photovoltaics for two reasons:

  1. It was believed that large-scale manufacturing would bring prices down. For instance, the automatic reductions (degression) specified in the German rates for 2004 forecast a 40 percent drop in prices by 2013. We now know that this forecast was too conservative, and prices have fallen far, far faster -- simply because the market grew. I have been covering the photovoltaics market as a journalist nearly 8 years now, and I can tell you there has been no major technological breakthrough as a result of research. It's all deployment.
  2. It was believed that photovoltaics would inevitably become a global market, so the countries with the patents, the manufacturing base, and the expertise would have a head start.
Does anyone doubt #2 now?


  1. Dear Craig

    Thanks for your detailed comments. I'd like to offer some further clarification briefly now in the sense of laying some groundwork for discussion.

    The issue is the cost-effectiveness of various measures to reduce the carbon impact of energy and particularly electricity generation.

    Saving energy is important and more cost-effective than generation in general but of course we need both.

    It's not necessary for George Monbiot and I to agree on whether nuclear power is a source we need to deploy for this issue to be explored. The nuclear argument is not only about cost.

    The rest of my response is here:

  2. Hello Craig

    I figure you've seen this:

    Do you happen to have a PV system? I ran into a fellow not long ago that had not one but two systems. I would have quizzed him but there was beer involved and live music on and you have to have priorities.

    I have a few questions I was hoping you could point me in the right direction on. My understanding is that the profit from the FiT is taxable - can you suggest a standard tax rate (25%, 30%)? I'm curious as to how the purchase of a PV system is treated on the tax side? Is buying a PV system just like any other purchase with a 19% VAT or are there some income tax write-offs on the back end? Are there any reoccurring grid-access fees associated with the FiT or is it, as the above article says, relatively "bureaucracy free"? If you happen to know of some PV economic case studies could you post them? Is there one particular source of German PV statistics that you've found to be the best? I appreciate any help.