We are thinking the unthinkable. The current administration has made it clear that they believe renewable energy is trash, they are canceling every possible subsidy, and they are focused on oil, gas and nuclear as the fuels for the next century. Renewables? Could just be disconnected.
The renewables industries have sucked up $10s of billions in subsidies and still are not able to solve problems that we have known about for over 70 years. Every time I go to a conference or convention on the energy grid, I see the same graph from a different ISO (independent system operator). Solar energy floods the middle of the day, excess energy being dumped. The ISO has to maintain enough base capacity in case there’s cloud cover – with a third of the cost of that tied up in maintenance that’s required whether it’s used or not. Meanwhile, the grid is still obligated to buy the renewable energy – for now.
But the requirement to buy renewable energy could arguably be overturned with the stroke of a pen by the Trump Administration. An ISO that is paying for renewable energy they don’t need would be able to switch them off, stranding the asset. Or negotiate down the pricing during the day, reducing the renewable asset value by two thirds. And face it, adding the highly variable renewable asset to the grid is complex, risky and difficult to model, gas generators are easier to control – renewables not connected now, may never be.
I took this leaping conclusion after reading a consultant’s website, talking about advising funds on whether to invest long-term in renewable assets. I chuckled. Not out of humor, but the kind of laugh you give watching someone follow their GPS directions right into a lake. They have no idea what’s coming. The industry hasn’t crashed yet, but those assets could be sidelined in a heartbeat, with zero recourse.
The solution that nobody seems to want to pursue is simple. It is not solar cells, they are dirt cheap, the cheapest in fact. Wind turbines? Borderline.
The problem is storage.
All of the storage that is available on the market right now is too expensive; anyone using it without subsidies will never make enough money to pay the amortized cost, based on current energy prices. Any finance guys out there want to check me on this?
I have a plan to produce storage that is actually cheap enough and efficient enough to turn renewables into stable, 24-hour/day energy sources. This is storage that can actually pay down its own mortgage and generate a sizable profit.
But as I shop this through the investment community, I’m shocked at the apathy and the lack of understanding of how vulnerable this industry is at this moment. And I’m shocked at the billions that have been spent moving to install new capacity without a thought for the economics of profitability or how energy needs to be distributed.
I know I’m not the only guy in the industry who can work a spreadsheet (do they still teach this at Harvard??). Maybe the problem is that I’m a farm boy from Kentucky with ideas on how to squeeze a nickel or two, rather than a whiz kid from the Ivy Leagues with a new chemistry experiment.
Frustrating for me.
But the industry right now is in deep trouble, and without storage it could well be done in America. And have you ever noticed that the rest of the world has a tendency to follow the U.S.?
Personally, I see renewables as the way forward in a world where most wars are caused, at least in part, by energy. And the prosperity derived from a renewables industry based on profit would be vast.
But I don’t see a lot of understanding here. I’ve heard the pitches for over a dozen battery startups – and not a single one used the word “cheap.”
