Monday, October 29, 2012 - Hurricanes and Clean Energy

Hurricanes and Clean Energy
by Sinclair Noe

The stock and bond markets in New York were closed today; that's the first time that's happened since Hurricane Gloria hit New York in the 80's. The markets will be closed tomorrow; that's the first time the market has been closed for 2 days due to weather since 1888, when a blizzard hit New York; of course it was closed following 9/11. Areas around New York's Financial District were part of a mandatory evacuation zone. The storm surge is already pushing water over seawalls in the southern tip of Manhattan. And the hurricane is just now hitting New York head on. It already flooded Atlantic City. Much of the East Coast was at a standstill as the storm approached. The storm, 900 miles across, shut the federal government in Washington and state offices from Virginia to Massachusetts. Schools were closed, planes and trains tried to get out of the way; delays are affecting transportation around the nation. You can't get there from here.

Economic losses could ultimately reach $20 billion, only half of it insured. Some estimates put the property damage as high as $90 billion; we'll see. Ten states have declared a state of emergency; 60 million people are in the path of the hurricane; there will undoubtedly be some tragedies. Keep those people in your prayers.

It is estimated millions of people will lose electricity for an extended period. Federal inspectors have been dispatched to 11 nuclear power plants from Maryland to Connecticut; trying to avoid a repeat of the Fukushima Reactor meltdown in Japan. Hope the backup generators work.

Last Friday, we opened the phones and for some reason, the conversation centered around global warming. So, I think I'll talk about green energy today.

Clean energy has become a dirty word in presidential politics. In their second debate, Mitt Romney and Barack Obama each tried to outdo the other’s love of fossil fuels: Obama extolling his record on oil and natural gas production, Romney vowing to take “advantage of the oil and coal we have here.” The Republican candidate has ridiculed the administration’s $535 million loan guarantee to Solyndra, the bankrupt California-based solar panel maker, and accused Obama of living “in an imaginary world where government-subsidized windmills and solar panels could power the economy.”

The candidates’ coolness to renewable energy comes at a time when the domestic supply of traditional energy sources, such as oil and natural gas, is at an all-time high. And yet this failure to make the promise of renewables a keynote in the debate is a huge missed opportunity. In particular, it ignores the dramatic reduction in the cost of photovoltaic solar power worldwide and the considerable benefits to consumers and the environment.

The untold story of this campaign is that what killed Solyndra may turn out to be a boon for the nation. Over the past five years the price of photovoltaic panels has plummeted 75 percent, due largely to a glut of Chinese-made panels. The fall in prices rendered technically advanced photovoltaic panels, like those produced by Solyndra and other US companies, too expensive to compete. But cheap panels have been a godsend for consumers.

Nationally, the average cost of residential installations—including hardware, permits, and labor—has plummeted from $9 a watt in 2006 to $5.46. Averaging in commercial industrial installations, the national installed price drops to $3.45 a watt, (says the Solar Energy Industries Association, a Washington-based trade group.) For consumers, the economics are compelling; it's a hedging strategy for energy consumption, something like locking in $1-dollar-per gallon gas for the next 20 years.

The result: almost 52,000 residential rooftop systems were installed in the US last year, up 30 percent from a year earlier. Total rooftop installations, including on commercial buildings, grew 109 percent from 2010 to 2011. Total photovoltaic installations are projected to grow an additional 71 percent this year from 2011 levels. In less than four years we have tripled solar energy to 5,700 megawatts installed.

Worldwide, the picture is even more positive. Australia projects that 10 percent of its 8 million houses will have rooftop systems within the next 12 months; most of that growth coming in the past three years. European rooftop installations continue to outpace those in the U.S., even as some countries begin to pare subsidies that have helped spur a continental rooftop boom. Including residential, commercial, and industrial-scale projects, the world had installed about 67 gigawatts of photovoltaic power at the end of last year—up from just 1.5 gigawatts in 2000.

Despite such breakthroughs, the U.S. economy is harnessing only a fraction of solar’s potential benefits. Based on U.S. Census Bureau data, about 100 million U.S. residential units could physically hold rooftop systems one day, generating by one estimate 3.75 trillion kilowatt hours of electricity a year. In 2011, total U.S. electrical generation from all sources was about 4 trillion kilowatt hours—42 percent of that from coal, according to the U.S. Energy Information Administration. The trouble is, many of the big,investor-owned utilities that provide about 85 percent of America’s electricity see solar as both a technical challenge and a long-term threat to their 100-year-old profit models. And the lack of a national energy policy means regulation of solar is up to states, public service commissions, and a wealth of local governments and bureaucracies—many of whom have a vested interest in maintaining the status quo.

We are starting to see a shift in pricing power and in political clout. Today solar is cost effective without local subsidies for 300 utilities in 30 states representing 21% of electricity solar in the USA.  That is a market opportunity of over $1 Trillion. We now have more than 100,000 solar energy jobs at more than 5,600 companies in the US, double the number from 4 years ago.

In fact, the Department of Defense, the largest single energy consumer in America, is bullish on solar. Whether it is the 1.45-megawatt solar project at the Burlington, Vt., Air National Guard Base or the 14-megawatt project at Nellis Air Force Base, Nev., the military recognizes the value of solar. America is now home to the largest operating solar photovoltaic plant in the world, the 250 megawatt thin-film plant in Yuma. That plant can provide electricity to 100,000 homes.

Photovoltaic technology is not the only significant solar development. In California, construction is underway for the largest concentrated solar thermal plant of its kind in the world, the 392-megawatt Ivanpah project in California that created 2,100 construction jobs. When completed in 2013, this concentrated solar plant will power 140,000 homes. And a 280 megawatt concentrated solar plant in Gila Bend, will be the first in the US with energy storage, providing power even when the sun goes down. That project created 1,600 jobs.

The story is much the same with wind energy. At the end of 2008 we had about 25,000 megawatts of wind energy, but today we have doubled wind energy capacity to over 50,000 megawatts. We have added more new wind energy capacity over the last five years than nuclear and coal combined. We now have 75,000 Americans working in wind and over 470 plants in America manufacturing wind products. The upshot: the cost of wind energy dropped from 8.4 cents per kilowatt hour in 2008 to about 5 to 7 cents per kilowatt hour today. States like Iowa and South Dakota have achieved the milestone of getting 20 percent of their electricity from wind. And the Shepherds Flat wind farm in Oregon, one of the largest in the world at 845 megawatts, created 400 construction jobs and is powering 235,000 homes.

Energy efficiency is the low-hanging fruit. Every day we are paying more for energy than we should due to poor insulation, inefficient lights, appliances, and heating and cooling equipment -- money we could save by investing in energy efficiency. In the past 4 years, more than 1 million homes have been weatherized. Given the fact that over 90 percent of the products used in weatherization are manufactured in the United States, we are creating jobs not only in construction but also in manufacturing. This is a win-win-win situation.

I wish I'd heard more about green energy during this election cycle. I think it is probably the biggest growth story in the economy. I think it's a national security issue.

A hurricane or a earthquake could do serious damage to a nuclear plant. Even if you don't believe the ever-growing mountains of evidence supporting global warming being human caused, there is no doubt that there are dangers from nuclear; there are dangers from oil, nat gas, and coal. There is no question that coal is a pollutant, and can cause serious health issues, same with the pollution from oil products.

If you choose to disregard the scientific evidence that these pollutants are a part of global warming, that is your choice. There is clear evidence that we are seeing warming. The arctic ice caps are melting, glaciers are melting, Iceland isn't all Ice any more, and there are hurricanes in New York at the end of October. What is causing the warming? The vast majority of scientists say we are the cause. You are not compelled to believe in science. However, I'll tell you one reason I believe. If we can clean up the air and water, we'll have a cleaner, healthier planet; that's a good thing; and if the scientists are right, we'll avoid the destruction of the planet and ourselves. It's kind of like believing in God. You live a better healthier life for believing, while if you don't believe and you are wrong – you're just damned.

A report from the European Renewable Energy Council finds the European Union could generate trillions of dollars in fuel savings by looking beyond goals mandated for 2020. Greater investments for things like wind and solar power, coupled with a slow move away from things like coal, could make the region nearly carbon-free by 2050. On the other side of the Atlantic, however, officials have expressed reservations about being forced into a low-carbon economy, highlighting the green divide among western powers.

The European campaign groups, in a report highlighting an "Energy (R)evolution," call on European leaders to move in favor of renewables and energy efficiency instead of fossil fuels or nuclear power. The group states that every time oil prices increase by $1, Europeans wind up paying more than $500 per month. That, they say, could drop by half by 2030 if leaders embrace a comprehensive green energy future. EU member states have agreed to cut their carbon footprint by 20 percent, improve energy efficiency by 20 percent and get 20 percent of their energy from renewable energy resources by 2020. In the U.S., meanwhile, a study on the energy future finds state and federal governments could generate as much as $124 billion by exploiting unconventional oil and gas plays as part of an all-out push for energy independence. 

Opponents of low-carbon measures like Michigan's argue about high consumer bills, while supporters point to the long-term consequences of a carbon-intensive economy. The European argument, at least from the other side of the ocean, seems to be that, while coal, oil and natural gas are bountiful now, in the long run, you get what you pay for. 

Sandy is now coming onshore across New Jersey right about at Cape May. As the hurricane makes landfall our winds will begin to slowly subside. As I write this we are probably at the peak of the storm. Shortly, you may notice that the worst of the worst seems to be over and you will be correct. This is not to say the storm is finished, it's just that we are close to the apex in terms of winds increasing any more. Trees can still come down and power outages will be an issue throughout the night. Power outages will be a big problem. We'll see in the next couple of hours how bad the flooding problem is.

The storm forced the New York Stock Exchange to extend today's closing to Tuesday -- the first unplanned shutdown since the Sept. 11 terrorist attacks. Commodity markets traded electornically, with gold down 1.30 = 1710.80, silver down .33 = 31.86, crude oil down .74 = 85.54. The Port of New York and New Jersey, whose terminals make up the third-busiest container port in the country, also was temporarily shuttered and evacuated. And a Phillips 66 refinery in Linden, N.J. and a Hess refinery in Port Reading, N.J., shut operations, while several others curtailed production. Although oil prices are expected to drop due to less demand.

The potential damage to homes from Hurricane Sandy-driven storm surges is likely to be greater than it was last year for Hurricane Irene. CoreLogic estimates nearly 284,000 residential properties valued at almost $ billion are at risk for potential storm surge damage among the coastal Mid-Atlantic states.

Now is as good a time as any to remind people of who provides all those detailed projections of where Hurricane Sandy is going to hit and how strong it’s going to be: the federal government. No matter how you get your weather news—local TV or radio, The Weather Channel, AccuWeather, whatever—hurricane forecast information originally comes from the National Hurricane Center, which is part of the National Weather Service. The raw data come in part from the Hurricane Hunters, the pilots who fly planes into hurricanes, who are part of the Air Force Reserve and the National Oceanic and Atmospheric Administration. The computer models that predict where hurricanes are going to strike are developed by the NHC. There’s a strong case to be made that hurricane research is one area where a small amount of taxpayer spending has had huge public benefits.

The Labor Department said it hopes to release October's unemployment report on Friday as scheduled, despite the closure of the federal government on Monday, and possibly additional days this week, because of Hurricane Sandy.

The report on October's unemployment rate and the number of new jobs added that month is the last major economic report before next week's presidential election. And a delay in the report until after the election would fuel conspiracy theories. The September jobs report, released Oct. 5, showed the unemployment rate surprisingly dropped to 7.8% from 8.1% the previous month, the lowest level since Obama took office.