The following question was recently posted on Quora:
“In the U.S. energy system, what can the government do to best enable the use of new clean energy technologies?”
Read the variety of responses below:
The US government has had one of the most successful incentive programs for solar power in the world – the investment tax credit (ITC). This provides a 30% tax credit (30% of the total system cost) to owners of solar electric systems, as well as accelerated depreciation benefits to businesses that own solar. It is a similar type of tax credit as ones provided to developers of traditional power plants – coal, natural gas, nuclear, etc. Except, in this case, even ordinary homeowners can participate – you don’t need to be a big company. With some hiccups, this incentive has been in place for 8 years and has resulted in the massive growth of the US solar power industry, making it one of the top three markets for solar energy in the world (in 2014), one of the fastest growing industries in terms of job growth, and the major new source of electricity generation over the past year.
For the US, tax credits are one of the few methods of incentivizing things that is acceptable to both the conservatives and liberals in the government.
The current version of the ITC is set to phase out after 2016.
The other very successful policy the US has implemented is Net Metering. This allows an owner of solar energy to sell back power to the grid at retail rates, and has enabled solar to thrive without requiring expensive battery backup.
Net Metering is currently under fire from all sorts of powerful entities – utilities, traditional energy companies, Koch Brothers, ALEC, etc.
These two policies (ITC + Net Metering) are all that is needed to keep the US solar industry on a rapid growth curve. The solar industry is doing the rest – lowering prices significantly on equipment and installation, and building sustainable companies to serve customers.
Compare this to various Feed-in-Tariff schemes across the globe, where the government paid high prices for solar energy generated from consumers and businesses, in Europe, Australia, Japan, etc. These have resulted in boom/bust cycles that make it very unattractive for companies to invest in those regions.
The US has got it right for the past decade across both Republican and Democratic administrations. Let’s hope we keep it up.
Interesting question, many viewpoints and avenues of approach. To start off with, it is imperative to understand some approaches will work, some won’t (despite being a hand-in-glove fit). Rigidity is not an option, flexibility is. Having said that, you still need to give it time before results start pouring in.
Here are some suggestions (in no particular order):
Clearly the government needs to define what it deems new clean energy technologies are. Most people can only guess.
Secondly, the government needs to prioritize it objectives (read: goals):
- 6-12 months objectives
- 1-3 years objectives
- 3-5+ years objectives
Once size fits all (for time-frame) would most likely not be the correct approach.
Regardless of what technologies are chosen to promote, etc. awareness is the key. This is what I firmly believe should be the Government’s only involvement in the entire equation (add to that, remove all bureaucratic and political hurdles). However, it is inevitable that this (awareness only) alone cannot be the only approach.
Awareness is Education. Education is Awareness.
Not everyone is heading on to the Depart of Energy website to seek out what is and not available. Some businesses are just oblivious to it all, when it comes to the source of what the Government is offering as far as renewable / alternative / new energy incentives and programs are.
If a picture is worth a thousand words, then a short video, in my opinion is worth ten thousand words. A pragmatic approach would be to make mini 2-5 minute videos. Each specific video (think YouTube) highlighting a very specific area and highlighting how businesses can benefit by adapting it. Some examples are:
- Carbon credits for dummies (the 2 minute guide on how to get started on it)
- LEED Rating system.
- Solar Power and its tax benefits or tax credits.
- Solar power buy-back options as provided by utility companies.
- Conversion of old boiler plants to more efficient boiler plants – how the Government (or Sate) can help.
- How municipalities or large commercial organizations can benefit by switching to LED lighting.
- For example the 2011 Strategic Plans (as laid out by the Department of Energy – had a very fascinating video, but I doubt many outside the field would spend an hour watching through the strategic plans video – the video can be seen at: ). If this video can be broken down to key components and objectives and re-presented to businesses – you have a more captive and interested audience.
- Environmental problems and how the Department of Energy can see businesses across the US pitch in and help out (a video plea if you will for solutions)
- Understanding Wind Energy for Small Home Owners
- Community Solar Arrays
- Did You Know X “Data/Tools/Resource” Is Available For Free? (the Government is a huge repository for all sorts of data, tools, resources, making people aware of it – should be a priority as well)
One of the most important aspect about new clean energy technologies is who is going to use it first? Large businesses and corporations or small/medium businesses and individuals? More and more stress is to the former than the latter – supposedly the Pareto 80/20 values apply here, but until and unless the individuals and small and medium businesses don’t find the confidence and the economic benefits of using new clean energy – – – the waiting game gets longer. The government should see what it can do to foster an environment where the solutions for clean energy can become more affordable.
Certainly, no one expects the government to do micromanagement, but then again, without reaching out to the smaller players in the global energy equation, the mission is only half solved.
Government’s key role should be of an enabler. To enable businesses to get on board, with the least amount of paperwork and bureaucracy. Incentivizing is not an option Too many tax dollars have been wasted on ill-conceived projects whose yields are questionable.
The government can channelize the right players – make it easier for them to understand of the options available to them, via State funded, Private or Semi-Private funded ventures towards the usage of new clean energy usage.
It would be a mistake of epic proportions for the Government to put all its weight behind a certain kind of technology and shun everything else. Let the market dynamics decide which clean energy technologies will prevail. Some will take time to play out – simple economics.
There is plenty happening in the field of renewable / green / clean energy. Adaptation is slow, but it is happening. The search for the right catalyst for a higher adaptation rate is always money/finance. Government based subsidies can have disastrous results – you only need to look at Solyndra to understand why.
The Department of Energy can as always have a significant effect when it rolls out projects. Such roll-outs do not necessarily have to translate to investment in the actual clean energy technologies themselves, but Government’s aid in advertising, publication, promotion, exports can help businesses in the clean energy field immensely. Alternatively, the Government can become an anchor clients for a few selected projects.
For example, the US Government can set a 5-year goal to replace all the lighting fixtures in all US Government office to LED in this five-year time frame. Such projects get the wheels rolling (in my opinion).
The one area where the government can spend money is (funding) financial grants for research and development. R&D is the core of the clean energy industry and it is not cheap to get started in their field. Easier access to grants is still not in play.
Facilitate market forces that will encourage adoption of better technology. Choose the points of highest leverage that satisfy the constraints of maximizing benefit, minimizing taxpayer cost, and minimizing added regulation.
Here is an example that I hope will prove illustrative.
Proposal: Mandate disclosure of estimated total cost to rent apartments inclusive of all utility expenses.
Rationale: Choice of energy efficient design and equipment in apartments suffers from an agency problem. The party incurring the cost for higher efficiency equipment (apartment owners) does not receive the benefit, therefore owners will tend to use only the cheapest equipment, which also tends to be the least efficient.
Consumers make decisions based on the information available. In most (all?) areas, it is difficult or impossible to find out what the expected utility costs are for a given address. If this information were available to all consumers at the point of purchase, decisions would inherently include the efficiency of the structure and equipment. All else being equal, apartments with higher energy efficiency should be able to charge higher rent. This should resolve the agency problem by allowing some of the benefit of better equipment to accrue to the owners. In turn, this will drive higher rates of adoption of more efficient building design and more efficient appliances and HVAC equipment without any additional regulation of the construction industry, the HVAC industry, or the appliance industry, and without any financial outlays in the form of incentives, grants, or subsidies by the Federal government.
How much savings are we talking about? Apartment complexes of 5 units or larger (I assume here that a real-world law will exempt the smallest complexes) represent about 14% of all the housing units in the US. Residential buildings consume about 21 Quads of energy per year. If apartment owners implemented changes that eventually cut energy use by 10%, that comes to savings of 60 Trillion BTUs per year.
The primary barrier to progression in the energy efficiency marketplace is the current incentive system. Requiring people to reach into their wallet during tough economic times and wait while rebates are processed will not fill the market to capacity. In theory, rebates are meant to incentivize people to invest in energy efficiency, but in reality, customers are turned off by the process because it significantly lacks connectivity.
Homeowners are eligible for a variety of different energy efficiency rebates at the local, regional and national level (all from different funding sources), but none of the rebates connect or tie together. This creates confusion for all parties involved (with excessive data redundancy) – from the program administrators, to contractors and finally down to the customers.
The current energy efficiency program performance level is simply not cutting it in an energy industry that is already built to scale. Energy efficiency program administrators are using an age-old system that lacks integration between technologies, communication and synchronization between the rebate lenders. The whole process is riddled with unnecessary time, paperwork, resources and stress.
Integrate a stronger industry-standard financial model with protocols accompanied by a combination of long-term planning and better legislation within our government agencies. We need to transfer from publicly financed energy efficiency solutions to privately funded energy efficiency deals that are tied to the payback of the energy efficiency dollar savings themselves.
The industry is in desperate need of digitization and a streamlined path for energy efficiency programs to be put in place. Designed with quality assurance in mind, we must build connectivity through a software platform that engages user feedback and encourages the collaboration of best practices. We need a central hub explaining how the information is administered and easy access to compare hundreds of rebates at a single point, in a comprehensive, yet inherently simple display.
As we better connect the communication and the effectiveness of the energy efficiency retrofit industry, we are improving our overall ability to meet global energy demands with sustainable resources.
As a small energy business owner, I am most interested in the outcome of your inquiry. There are a significant number of problems with the current paradigm. I assume the two questions asked were posed Sec. Chu. They are seemingly simple questions but I can assure you they are both very complicated and have extremely risky solutions. Enacting true solutions to these problems will require making hard choices and angering some of the most powerful Americans in the country.
No one answer here is sufficient. There are many primary barriers that all contribute to the problem. Each has an effect on the others and all must be solved in order to permit advancement of these technologies.
The first thing the leaders of our country must do is really decide we are going to move forward. Not halfheartedly with political aspiration as a basis of decision making but with swift and decisive action selecting a direction that will personally benefit all Americans. We must recognize that all the posturing and gamesmanship has to be set aside before we can truly plan our energy future and move forward. Regardless of party affiliation, those that choose to continue the crap going on in Washington DC must be voted out of public office in favor of those that wish to move forward toward a sustainable future in this and many other areas.
I have organized my points to include an explanation of a barrier followed by a possible solution.
Primary Barrier – The fox is in the Hen house!
The most looming problem is that those that sell energy are the ones that manage the development of the resources. The most illustrative example I can think of is the Automotive industry. In 1961, my mother drove a 1956 Chevrolet Belaire 4-door sedan. It had a V-8 engine and was a tank compared to today’s cars. This car got about 20 miles per gallon on the highway if driven sensibly. Today I drive a 1999 Chevrolet S-10 pickup truck with a V-6 engine and I get about the same gas mileage as my mom got with her Belaire. No one can convince me that during the 38 years between my mom’s Belaire and my S-10 that the American Automotive manufacturing industry, in cahoots with the Oil industry, did not have something to do with the lack of improvement in achieving improved efficiency of vehicles. Even through the Carter years, vehicle mileage did not change much even though there was a lot of R&D done during that time. I would submit that allowing the suppliers of fuel and the builders of devices that convert the fuel to energy has allowed the sellers of these products to sequester technological advancement to maximize their sales to the public thereby maximizing their profits. Through these most recent bad economic times, the oil companies are the ones that have done the best. Why is that?
Proposed Solution – Redesign Policies and Federal funding related to public funding of R&D
Those in the business of providing the resource must not be in control of the development or distribution of technology. We must learn from our past mistakes with the Automotive industry and not make the same mistakes with our energy future. Of course, public policy cannot eliminate or even limit a company’s ability to perform R&D nor should it. But, if even $1.00 of public funds is used for the research, the public must benefit from the information. Regardless of whether the information is to be offered up in the public domain, or kept secret for purposes of national security, the public should receive at least a small amount of profit on every unit sold to replenish the funding for R&D.
In addition, ALL public R&D money should be granted through our Public Colleges and Universities, even money currently being granted to National Laboratories. National Laboratories should hold specific contracts and affiliations with geographically local colleges and universities through which they receive their federal funding and provide training for our nation’s future scientists. Private Colleges and Universities should receive zero federal money and be required to stand on their own! This is the people’s tax money being spent and should support only public institutions. This solution provides additional funding to Colleges and Universities and should help defray some of the cost to Americans for attending college. It would also assure unbiased R&D and offer into the public domain energy solutions that could be produced in this country. It would provide a funding mechanism for helping to sustain our colleges and universities. It would also promote the pairing of America’s most brilliant scientific minds with the fresh young minds of college students who have new ideas, perspectives, and enthusiasm.
Primary Barrier – Publicly Traded Monopolies
Today’s utilities throughout the country are legal monopolies most of which have been given the right to be publicly traded. The Securities and Exchange Commission has granted them corporate status which allows them to focus on their bottom line and their shareholders rather than the welfare of their rate payers or the cleanliness of the resource they are exploiting. I do not believe the administrators of the Utilities are interested in developing clean energy technologies. They are interested in developing existing, known technologies so they can sell more product which in turn qualifies them for massive bonuses divvied out by their boards of directors.
Proposed Solution – Reorganize Oversight and Administration of Energy Related Issues
To limit the potential of these organizations taking advantage of the American public, we must make some changes in the way decisions are made with regard to our Energy industry. Those that harvest and distribute energy to the public must be removed from making decisions regarding deployment of clean energy technology and energy efficiency programming. They should be allowed to do the job they were hired to do which is make as large a profit for their shareholders and not be tasked to conserve existing resources and develop more expensive clean energy resources. Since these are monopolies that almost all Americans are required by law to support, there must be a change in policy that takes the bosses of these businesses out of the decision
making role. The people’s regulatory bodies such as BPA and TVA should be given new duties that include deployment of programs that promote energy efficiency and resource development across the entire energy spectrum. Their regulatory umbrella should be expanded to encompass all energy resources in this country, not just electricity. The host of regulatory agencies currently doing the work in other areas should be placed under these organizations all situated under the Department of Energy. We need an organization that promotes local growth from our smallest towns and villages to our largest most metropolitan cities while maintaining fuel neutrality. Giving these groups this expanded authority makes use of an existing bureaucratic infrastructure that is regionally based and already includes a host of energy geeks. Energy Efficiency programs for buildings must be fuel neutral if we are ever going to solve our energy and pollution control problems. Allowing transportation fuel companies to continue controlling deployment of transportation efficiency severely restricts the options for fuels development and advancement for existing and newly discovered resources. Likewise, allowing utilities to control the development of new clean resources severely limits their advancement. We have to get the fox out of the hen house!
Primary Barrier – PURPA Contracts are Cumbersome and Costly and create risk due to resource delivery problems
Through PURPA contracts, public utilities are required to pay for privately generated power. I can’t believe utilities are interested in purchasing power from generators they do not own. Power purchased from these contracts is typically more expensive than that either generated by the utility or purchased on the open market and the resources being tapped to harvest energy are typically not dependable for base load generation. These conditions reduce profit because of the increased cost of the power thus they are much less desirable.
Proposed Solution – Deploy Smart Grid Technologies across all sectors to balance supply and demand issues
PURPA agreements are a good first step toward diversifying America’s energy portfolio. Here again however, Utility companies are very reluctant to step up to the plate when it comes to agreements to purchase power from independent producers. This is new ground for these companies. Most produce their own power from known, consistent resources such as coal, natural gas, and oil. The idea of integrating renewable, clean energy resources into their existing supply mix is definitely a challenging proposition given the risk of service interruption due to supply problems. Fluctuating supply issues should be addressed in these contracts. These issues could be at least partially solved with Smart Grid technology. Utilities companies should be encouraged to deploy technologies that will help balance supply and demand. They should also be encouraged to accept more of these agreements so our energy production portfolio in this country can be further diversified as it must be for national security reasons.
Primary Barrier – Tariffs for Energy Efficiency being given to Utilities
It has been said that the most efficient, clean energy resource is the but that does not need to be harvested. That means the cleanest energy we can produce is improving energy efficiency across the board in all sectors of the energy market. Local Public Utilities Commissions and federal oversight organizations such as the Tennessee Valley Authority and the Bonneville Power Administration have allowed utilities to establish tariffs on units of energy sold to fund what is referred to as “energy efficiency.” This incestuous policy permits utilities, the sellers of energy, to be the leaders in deciding what is and is not incentivized for energy efficiency. As a result, the focus has been on advancement of new residential construction but our existing building stock in residential, commercial and industrial facilities in this country continues to operate inefficiently thus stressing supplies and massively contributing to air pollution problems. Giving this money to the Utilities is really a bad idea. Their focus is on sales of product not on conserving resources or developing new technologies.
Proposed Solution – Provide Tariffs collected from utilities and fuel providers to regional Energy Oversight Organizations to fund themselves and their programs
With regard to Energy Efficiency, we need to get those responsible for selling energy out of the business of administrating energy efficiency programs. Our regional energy oversight organizations such as BPA and TVA should be the hub for development and deployment of these programs none of which should be run through the utilities. Local and state organizations should then be tapped to perform local program administration. They could enter into private contracts with local businesses that employ certified inspectors to inspect and assure work is being done appropriately. The training infrastructure for training energy inspectors is already in place and there are many unemployed construction workers that could be quickly trained to do the work (Including Veterans.) Here again, if our oversight is not comprehensive and complete across the entire energy resources industry, we will never get unbiased, logical development and promotion of our energy resources. We need programs that are fuel neutral regardless of where the money comes from. Funds collected for programs in this way can be regionally designed to accommodate local resources and resources can be pooled to provide funding that benefits the public without regard to profit impact on any energy provider. Tariff collections are a great way to gather money for these programs. Having the public pay for the programs through the purchase of the resource provides a self-funding mechanism that most can afford and all should be able to benefit from the largest user of fuel in manufacturing to the least consumptive vehicle driven.
Primary Barrier – Loss of Institutional Knowledge in America
Research and Development in these technologies is being done all over the world. If we are going to compete with other countries in this most primal need area, we need to find ways to fund massive R&D while solving some of the other issues facing the rank and file American. Americans, the mutts of the world, have proven themselves to be the most creative and innovative humans on the planet. Foreign investors have recognized this and are enticing our most brilliant college graduates to go overseas and help them develop technologies being sold back to the US. WE need to find ways to keep our institutional knowledge in the US. That means coming up with jobs for our college graduates here in this country. The problems will be finding the money to invest and then finding companies that are willing to build products from the technologies discovered.
Proposed Solution – Expand Energy related Business Incubators for Small Business
During the past three years, our Americans have bailed out Automobile manufacturers, Banks and Lending institutions. We were told these businesses were “Too big to fail” so they needed our help. It is time for paybacks. The American public stepped up to the plate with over $700 billion mortgaging our children’s children’s future to bail out a collapsed economy brought on by a business environment that was “Too big to fail.” Aside from “Too big to fail” being a huge antitrust issue, the money only served to protect the big corporations while doing very little to help small business and put people back to work. The time has come for these businesses to now step up. Every profitable business in America should be contributing to the development of Small Business incubators and prove small business grants and loans for Energy related businesses especially those in manufacturing. If corporate America refuses to contribute to these centers and offer funding for grants, the people’s governing body should impose taxes on these businesses specifically to be used for small business development. We have to be able to build what we discover. There should be more that benefit than just companies like GE and Seimens.
Primary Barrier – Public Awareness and Program Marketing
Dissemination of knowledge to the American public is critical to this effort. The average American does not know squat about energy harvesting and use. They only know what their Utilities and car manufacturers tell them or what energy companies tell them on TV. Governmental focus has been on the development of technology and transportation of resources without helping the American public to understand the issues and needs. Consequently, the public does not fully understand the benefits of energy efficiency and the need to develop new sources of renewable, clean energy technologies. They do not understand how they can personally benefit from improvements made to their homes and businesses.
Proposed Solution – Establish a Public Awareness Campaign
We need to get the word out and not just through our schools. We must do a better job of educating the public through our most common media such as television and radio as to where we are and what America and Americans must do to allow us to move forward. We must market energy efficiency in the short term and promote the development of clean technology for the long term if we are to make any significant advances in this area. The American public will respond if they understand the need and the benefit to themselves and our national security. Regional Oversight Organizations should be tasked with the marketing effort to assure resource neutral marketing.
Primary Barrier – Infrastructure Degradation and hub style generation and refining
Our traditional technologies rely on massive hub style energy harvesting and refining operations. These huge power plants and refineries and their associated aging transmission and transportation infrastructure place our country at great risk. Taking out just a few of these facilities cripples our economy and could devastate our ability to function. Most emerging technologies rely on a smaller scale facilities commensurate with the resource being tapped. This makes them much more suited to distributed generation. Marketing and developing this concept would not be good for massive utilities and suppliers but is where we need to focus if we are to move forward with these technologies.
Proposed Solution – Promote local ownership of utilities and generating facilities
Helping small towns and counties to develop resources that can tap into the grid provides a place for these new technologies to thrive. The resources are located where the resources are located. A town situated in a forest might tap the forest waste as a generating source where a town with radioactive soil might be willing to look at small scale nuclear technology to generate power for their local population. If we are to develop these technologies, we need to empower cities and counties to build their own generating and distribution facilities where local resources can be tapped and used. If there were more distributed generation, our energy infrastructure would be diversified, our risk of catastrophic failure would be reduced and there would be more actual boots on the ground jobs created. Of course, the utilities would not be happy about any of this.
Primary Barrier – Corporate Greed
Corporate greed has all but eliminated national pride at the top most level of corporate America. Many CEO’s and boards of directors of America’s major corporations have prostituted themselves for immediate profit over long term sustainable growth. This is evidenced by the lack of manufacturing in this country. During the Bush era, our corporate moguls sent our jobs overseas to tap cheap labor. Along with our labor, we also sent out our technology, eliminated the taxes we would otherwise have collected from manufacturing, and hurt the very people to whom business anticipated selling their cheap products. This situation has resulted in the depletion of American ingenuity because those that were being innovators are no longer employed. They sit idle losing their homes and contributing to the national unemployment problem or they are working for foreign corporations.
Proposed Solution – Reward Businesses that stay in America
We currently purchase most of our energy related devices from other countries. If we were to focus on rewarding energy related businesses that build American goods sold in America, we might be able to promote more manufacturing and establish more jobs. I believe we should be offering a tax cut to US energy businesses, particularly in manufacturing, that choose to keep their business in the US. The amount of benefit should be determined based on an equivalent amount that would otherwise be experienced by a company that chooses to send jobs off shore. Those businesses that choose to send their manufacturing off shore could be charged a fee to help those businesses who choose to manufacture their products at home.
Primary Barrier – Politicians Conflict of Interest
My final point is that Public Utilities are permitted to make political contributions to candidates running for public office. Elected officials are tasked with appointing
commissioners to the Public Utilities Commissions. These commissioners then make decisions on program development and rate changes that affect all rate payers. The utilities own strong lobbies because of the amount of money being given to political campaigns. This is huge. Promoting real energy efficiency and new technology development by politicians in this country is a true conflict of interest under the current paradigm. Why would elected officials choose to promote real energy efficiency and technological development if such promotion could have a detrimental impact on their campaign fundraising? Not a smart political decision?
Proposed Solution – Outlaw Utilities from contributing to political campaigns
Any publically sanctioned monopoly should be specifically denied the ability to contribute to political campaigns of any type or size. Publicly sanctioned monopolies such as utilities, should be held to a higher standard than any other corporation in the US. Since the public has no choice but to support them through purchase of their product without competition, they should have absolutely no tie to those that regulate their businesses. Allowing political contributions to specific candidates or political parties is definitely a conflict of interest for all concerned and does not serve the people of this great nation.
Thank you for asking.
I am going to focus this answer on the electricity system, as that is the industry segment in which I participate.
I believe a crucial missing link for rapid and sustained energy system transformation, and one that would greatly benefit from US Government support, is the need for the creation of a multi-scale modeling & simulation platform. This platform would inject needed analytical rigor into the energy transformation dialog, and act as a catalyst to bring together stakeholders to jointly inform policy, regulation, and economic decisions throughout the energy value chain in a more accurate and consistent way.
This is a non-trivial undertaking, and models and assumptions would have to be continuously updated. There are so many inconsistent viewpoints, opinions, and suggested solutions to the commonly perceived problem; moving to an energy system that meets our goals for de-carbonization, while maintaining energy security, affordable electricity, and infrastructure reliability. Given that common goals can be more or less defined, the problem comes down to efficient and fair implementation.
Differences in viewpoints between stakeholders could potentially be identified by such a platform. Once points of conflict are identified, innovation and compromise can be used to optimize the result for all parties. As long as we continue to make blanket statements, like “fossil fuels are our biggest energy security issue”, which I hear often (oil may well be, but coal is not), then we continue to make it difficult to devise clear, testable policy, regulation, and incentives that will efficiently move us towards our shared goals. This lack of a common language and set of assumptions to underpin long-reaching decisions is a big issue that we see, not just in the United States, but also throughout the world.
The energy system has substantial inertia, temporally, economically, and physically. Policies must be in place consistently for years to be effective, with multi-billion dollar investments that amortize over 20-30 years, and with the need to sustain investment against a backdrop of financial, natural resource, and even public perception volatility. A platform like this could assist us to rationalize the cause and effect relationships between the long term policy and short term economic decisions made by millions of individuals and thousands of companies every day.
This platform could underpin an integrative approach to the development and implementation of policy and incentives. Unless all key stakeholders in the energy system are able to understand and monetize the transformed energy system, it will be difficult to smoothly and consistently move the transformation forward. This will set us up for crisis-based decision making, which is, of course, more costly and less efficient than orderly transformation.
The real problem from a policy and regulatory perspective comes down to this: how can we effectively model the effects of different policy schemes and philosophies so that both the macro and the micro effects, both in time and geography are considered? Without understanding the effects at the point that economic and behavioral decisions are made, we are really just guessing as to the efficacy of the given policy.
We all know that there are unintended consequences of long-term decisions and this modeling & simulation platform would not eliminate these. The idea is to add as much analytical rigor as possible to the process so that policy trade-offs can be evaluated against “most likely” effects, and we can increase our ratio of intended to unintended consequences.
So what do I mean by a multi-scale modeling & simulation system? There are many well-defined and accurate models – commercial, academic, open source – for many different “scales” of the electricity system. By scales I mean both time and geography. So, for example, good models exist that can determine the state of the grid at the sub-second time scale – most models do not solve the problem for the entire US electricity grid at one time, but this scaling-in-geography problem can and is being solved.
At the other extreme, there are commercial entities that make their living implementing multi-year capital expense models, which look at the long term economics and risk associated with making certain large investments in, say, nuclear plants, wind farms, smart grid upgrades, and the like.
In between these two extremes, there exist capabilities to model aspects of the electricity system for specific purposes.
So the capability exists in the marketplace for modeling and simulating aspects of the problem and, based on discussions with many stakeholders, so does the interest to be involved in a bigger initiative that would add value to their offerings. The key missing links, as I see it, are not with the modeling capabilities themselves, but with:
- the interfaces between them, and
- access to the results in a form suitable to the problem being solved
The lack of interfaces is not a new problem in the modeling/simulation world. It occurs in many complex systems. Companies and academia have developed capabilities to link models from different scales together in a way that maintains the integrity of each “scale” of model, while allowing the whole system to be consistent.
One quick example of this is in nuclear power plant life extension. Here, it is necessary to run simulations from the atomic scale, where crack propagation starts, up to long term thermal and neutronics simulations, the history of which drives the behavior at the atomic level. Chaining and coupling these models, which operate at vastly different time and geography scales, is a formidable problem, but one that has been addressed in this area and others.
The lack of utilizable results also can benefit from commercially available capabilities in data mining, analytics, and visualization techniques, which is a booming area in the marketplace. Companies in all businesses, be it health care, transportation, manufacturing and retail, and government (see the sharp rise in interest in “Smarter Cities”) are all suffering a deluge of data, knowing that there must be great value that can be unlocked by modeling and visualizing inherent relationships.
The idea is to use simulation not just to understand problems, but to aid in decision making through portfolio analysis. This can be accomplished by running many simulations across a wide range of conditions to develop a risk-adjusted view of the likely outcomes of given policies, and to help determine the coupling between policies, regulations, and incentives, which may operate at different scales in the system.
This is a high performance computing problem. A problem that could be solved by leveraging the United State’s prodigious capabilities in this area as another tool to help us break the political and economic deadlocks that are preventing decisive, efficient action to transform our energy infrastructure and lead the world towards a sustainable future.
Today we have many stakeholders arguing with each other in such different contexts that some of them don’t even realize they agree with each other. For example, a solar power proponent may be at loggerheads with both utility companies and natural gas aficionados, when there is in fact a set of solutions, like hybrid solar power plants, that provide benefits to all of them (increased solar power in the energy mix, natural gas usage, and “firm” renewable power). This particular combination is being investigated in the market today, and may become a viable part of the energy system transformation, but is it intentional? Do we understand the value of it and build policy to encourage it? Should we?
How many other combinations of value are we missing across the energy ecosystem because we don’t have a consistent way to evaluate the benefits and costs?
Read more answers here.