Sun and Wind Alter Global Landscape, Leaving Utilities Behind
Source Joseph Green
Date 14/09/20/23:48

I THINK that Gar's comment is quite valuable and raises some important points
that deserve careful consideration. It is essential to continue to fight
against the belief that market mechanisms will solve the environmental

Gar Lipow writes:
> I'm going to top reply because in essence I'm addressing the whole article.
> Problems with renewable energy illustrate the need for socialist style
> planning.

Government planning and general "command and control" should not be equated
with socialist or socialist-style planning. Government planning can be and is
done by capitalist governments, for capitalist purposes, and against working
class resistance. The environmental movement needs to fight for a form of
regulation, control, and planning of the economy that

- is as transparent as possible under capitalist conditions,

- reverses the privatization of government functions,

- brings in working class participation in enforcing regulations in

- integrates planning for social welfare of the population with environmental
planning, etc.

Only a limited amount of this can be achieved under capitalist conditions,
but the fight for this is essential. To faciliate the fight for this, one
needs to distinguish between government planning in general, and socialist
planning. True, the reformist parties won't make this distinction; the
bourgeois economists won't make this distinction; and the general bourgeois
discussion won't make this distinction. But it is important that as many
activists as possible make this distinction, and that the working class
gradually comes to make this distinction.

>The problems of integrating sun and wind into a grid are not
> technically difficult in the narrow sense, as the article itself
> acknowledges. What needs to be done physically is well known.

Physical or material planning must increasingly come to the fore! Readjusting
prices and using other market measures simply cannot substitute for this!

> But the
> problem is if you want to reply on price signals and market means to drive
> that integration, you have to go through all sorts of hoops to coax markets
> to respond minute by minute. and sometimes second by second to constantly
> changing supply and demand.

This is a very important passage from Gar Lipow!

> The problem is much more easily solvable though
> top down so-called "command and control" planning.

It's good not to be intimidated by the bourgeois rhetoric about "command and
control", but at the same time, what we need to fight for is not the same
thing as the bourgeois caricature of social planning. Bourgeois governmental
"command and control" is not the same as the planning we need to demand. In
various political fights, it might be pedantic to insist on a distinction,
but in careful articles the distinction should be made.

> Further, though
> Germany's feed in tariffs (which require utilities to buy renewable energy
> at a specified price) have encourage development of renewable energy, the
> lack of planning also leads to problems. For a given grid, there is an
> ideal ratio of solar to wind energy. Further, wind varies a great deal
> from location to location, and the ideal wind location is not necessarily
> where the wind is strongest, but where wind patterns come closest to
> matching demand patterns. Again, though Germany has done better on
> implementing renewable energy than any place else, lack of a real planning
> mechanism has meant placement of renewable sources and ratio of solar to
> wind is much further from optimum than it needs to be.

Gar points out the need for "a real planning mechanism". This is very

> Public utilities used to be an area where even capitalist economists
> acknowledged the need for planning and inappropriate area for relying
> primarily on market mechanism. But as power relations shifted, one
> intellectual reflection of changed material circumstances was increase
> market fetishism and utility deregulation which swept most of the rich
> world.


NY Times, Sept. 14 2014
Sun and Wind Alter Global Landscape, Leaving Utilities Behind

HELIGOLAND, Germany - Of all the developed nations, few have pushed
harder than Germany to find a solution to global warming. And towering
symbols of that drive are appearing in the middle of the North Sea.

They are wind turbines, standing as far as 60 miles from the mainland,
stretching as high as 60-story buildings and costing up to $30 million
apiece. On some of these giant machines, a single blade roughly equals
the wingspan of the largest airliner in the sky, the Airbus A380. By
year´s end, scores of new turbines will be sending low-emission
electricity to German cities hundreds of miles to the south.

It will be another milestone in Germany´s costly attempt to remake its
electricity system, an ambitious project that has already produced
striking results: Germans will soon be getting 30 percent of their power
from renewable energy sources. Many smaller countries are beating that,
but Germany is by far the largest industrial power to reach that level
in the modern era. It is more than twice the percentage in the United

New wind turbines off Germany, where renewable energy is soaring and
driving down prices. Credit Djamila Grossman for The New York Times
Germany´s relentless push into renewable energy has implications far
beyond its shores. By creating huge demand for wind turbines and
especially for solar panels, it has helped lure big Chinese
manufacturers into the market, and that combination is driving down
costs faster than almost anyone thought possible just a few years ago.

Electric utility executives all over the world are watching nervously as
technologies they once dismissed as irrelevant begin to threaten their
long-established business plans. Fights are erupting across the United
States over the future rules for renewable power. Many poor countries,
once intent on building coal-fired power plants to bring electricity to
their people, are discussing whether they might leapfrog the fossil age
and build clean grids from the outset.

A reckoning is at hand, and nowhere is that clearer than in Germany.
Even as the country sets records nearly every month for renewable power
production, the changes have devastated its utility companies, whose
profits from power generation have collapsed.

A similar pattern may well play out in other countries that are pursuing
ambitious plans for renewable energy. Some American states, impatient
with legislative gridlock in Washington, have set aggressive goals of
their own, aiming for 20 or 30 percent renewable energy as soon as 2020.

The word the Germans use for their plan is starting to make its way into
conversations elsewhere: energiewende, the energy transition. Worldwide,
Germany is being held up as a model, cited by environmental activists as
proof that a transformation of the global energy system is possible.

But it is becoming clear that the transformation, if plausible, will be
wrenching. Some experts say the electricity business is entering a
period of turmoil beyond anything in its 130-year history, a disruption
potentially as great as those that have remade the airlines, the music
industry and the telephone business.

Taking full advantage of the possibilities may require scrapping the old
rules of electricity markets and starting over, industry observers say -
perhaps with techniques like paying utilities extra to keep conventional
power plants on standby for times when the wind is not blowing and the
sun is not shining. The German government has acknowledged the need for
new rules, though it has yet to figure out what they should be. A
handful of American states are beginning a similar reconsideration of
how their electric systems operate.

"It´s pretty amazing what´s happening, really," said Gerard Reid, an
Irish financier working in Berlin on German energy projects. "The
Germans call it a transformation, but to me it´s a revolution."

The potential payoff for getting the new rules right is enormous: a far
greener electricity system that does not pump as much greenhouse gas and
other pollution into the atmosphere. Yet as the German experience shows,
the difficulties of the transition are likely to be enormous, too, and
it is still far from clear whether the system can be transformed fast
enough to head off dangerous levels of global warming.

"I am convinced that wind and sun will be the central sources of energy,
not only in Germany but worldwide," said Patrick Graichen, who heads a
think tank in Berlin, Agora Energiewende, devoted to studying the shift.
"The question is: How can we turn the energy transition into a success

Plummeting Prices

One recent day, under a brilliant California sun, saws buzzed as workers
put the finishing touches on spacious new homes. They looked like many
others going up in Orange County, south of Los Angeles, but with an
extra feature: Lennar Corporation was putting solar panels on every
house it built.

The prices of the panels have plunged 70 percent in the past five years.
That huge decline means solar power is starting to make more economic
sense, especially in parts of the United States with high electricity

At about 100 Lennar subdivisions in California, buyers who move into a
new home automatically get solar panels on the roof. Lennar, the
nation´s second-largest homebuilder, recently decided to expand that
policy to several more states, starting with Colorado. The company
typically retains ownership of the panels and signs 20-year deals to
sell homeowners the power from their own roofs, at a 20 percent discount
from the local utility´s prices.

"It´s so simple when we tell a customer, `You´re guaranteed to save
money,´ " said David J. Kaiserman, president of Lennar Ventures, the
division overseeing the solar plan.

The shifting economics can largely be traced to China, by way of
Germany. Over the past decade, the Germans set out to lower the cost of
going green by creating rapid growth in the once-tiny market for
renewable power.

Germany has spent more than $140 billion on its program, dangling
guaranteed returns for farmers, homeowners, businesses and local
cooperatives willing to install solar panels, wind turbines, biogas
plants and other sources of renewable energy. The plan is paid for
through surcharges on electricity bills that cost the typical German
family roughly $280 a year, though some of that has been offset as
renewables have pushed down wholesale electricity prices.

The program has expanded the renewables market and created huge
economies of scale, with worldwide sales of solar panels doubling about
every 21 months over the past decade, and prices falling roughly 20
percent with each doubling. "The Germans were not really buying power -
they were buying price decline," said Hal Harvey, who heads an energy
think tank in San Francisco.

The ripple effects drove some American panel manufacturers out of
business, prompting complaints about Chinese government subsidies to the
manufacturers who seized much of the market. But the decline also
created an opportunity for American homeowners and for companies like

Wind power, too, has come down sharply in price in recent years, and it
is now competitive with the cost of new coal-burning power plants in
parts of the United States.

A Threat to Business

The decline in the cost of renewable power spells potential trouble for
companies that generate electricity. They make a lot of their money at
times of day when demand for power, and therefore power prices, are
high. Solar power, even a small amount, could be especially disruptive,
shaving wholesale prices during those peak periods.

Though growing rapidly, solar power still accounts for less than 1
percent of American power generation, so the disruption has not yet been
seen on a large scale in the United States. But some utilities, fearful
of losing out as the power mix changes, have started attacking rules
that encourage solar panels. Others are taking the opposite tack,
jumping into the solar market themselves.

Nipping at the heels of those utilities are fast-growing start-up
companies that are putting tens of thousands of panels on rooftops and
leasing them to homeowners for no money down, with Wall Street banks
providing the financing. The hot spot is California, which is aiming for
33 percent renewable power by 2020 and seems increasingly likely to get

In Germany, where solar panels supply 7 percent of power and wind
turbines about 10 percent, wholesale power prices have crashed during
what were once the most profitable times of day. "We were late entering
into the renewables market - possibly too late," Peter Terium, chief
executive of the giant utility RWE, admitted this spring as he announced
a $3.8 billion annual loss.

The big German utilities are warning - or pleading, perhaps - that the
revolution cannot be allowed to go forward without them. And outside
experts say they may have a point.

The Achilles´ heel of renewable power is that it is intermittent, so
German utilities have had to dial their conventional power plants up and
down rapidly to compensate. The plants are not necessarily profitable
when operated this way, and the utilities have been threatening to shut
down facilities that some analysts say the country needs as backup.

The situation is further complicated by the government´s determination
to get rid of Germany´s nuclear power stations over the next decade, the
culmination of a long battle that reached its peak after the 2011
Fukushima disaster in Japan. As that plan unfolds, shutting down a
source of low-emission power, Germany´s notable success in cutting
greenhouse gases has stalled.

In fact, the problems with the energiewende (pronounced
in-ur-GEE-vend-uh) have multiplied so rapidly in the past couple of
years that the government is now trying to slow down the transition. "I
think we need a little bit of time," said Jochen Flasbarth, a deputy
minister of the environment.

But the German public is not taking that well. Marching down a Berlin
street with thousands of other protesters one recent day, Reinhard
Christiansen, the head of a small company focused on renewable energy in
the town of Ellhöft, said, "We are afraid they are trying to put the
brakes on the energy transformation."

The chanting demonstrators demanded that the government, far from
slowing the transition, find a way to speed it up.

Technological Innovation

As renewable energy sources start to cause gyrations in power supplies
and prices, experts contend that clever new market rules could keep the
costs reasonable.

Some of the innovations they recommend are already in use to some extent
- pioneered in the United States, with Germany avidly studying them.
They include regular payments to persuade utilities to keep some
fossil-fuel power plants on standby for times when renewable sources lag.

"It´s like a retainer you pay your lawyer to keep her around in case you
need her," said Jay Apt, an electricity expert at Carnegie Mellon

But the larger innovations are likely to focus on how people use
electricity, rather than on how it is supplied.

Techniques to manage demand have been in limited use for decades, but
new technologies are enabling a far more ambitious approach. Apple and
Google, for instance, are investing billions in businesses designed to
capitalize on the new opportunities, such as by helping homeowners
manage their power use with devices like digital thermostats.

Electricity prices, instead of being averaged over a month, could
theoretically vary in real time, at least for willing customers. Price
spikes would encourage conservation. Conversely, smart chips built into
appliances like dishwashers or water heaters could switch the devices on
when power was plentiful and prices low. American tests of this approach
have been promising.

Other methods could help, too. More high-voltage power lines could link
wind farms and solar panels in disparate locations, smoothing out the
variations. This is politically difficult, but some such lines are being
built in both the United States and Germany.

For Germans, the unpredictability of onshore renewable power explains
the appeal of offshore wind. The stiff, steady breezes in the North Sea
and the Baltic Sea mean that turbines built there will produce far more
power than land turbines.

That is why three utilities have virtually seized control of the tiny
resort island of Heligoland, renting out one hotel for 10 years
straight. It is the most convenient body of land to use as an operations
base for the huge wind farms they are installing, with long-range plans
to go as far as 125 miles offshore.

The streets of the island are thronged with well-paid workers. "Really,
all areas on Heligoland are profiting," declared Eike Walenda, the
manager of a local outfitter and fueling station.

The costs of building in the sea are far higher than on land, of course.
The price tag of up to $30 million per turbine is not just for the
machine itself, but also for power cables, installation and many other
items. To induce utilities to go forward, the government has had to
guarantee them power prices of several times the market rate.

But, just as with earlier forms of renewable technology, the Germans
expect the costs of harnessing offshore wind to drop sharply as the
market grows over the coming decade. If that happens, the United States
could be a big beneficiary. Studies have shown that offshore wind could
supply as much as 15 to 20 percent of the power needed by East Coast
cities, and construction is about to start on a handful of American

For now, the German offshore farms are adding billions to the costs
consumers are already bearing for solar panels, onshore wind turbines,
biogas plants and the rest of the transition to renewable energy. Polls
suggest it is a burden they are willing to carry.

"Indeed, the German people are paying significant money," said Markus
Steigenberger, an analyst at Agora, the think tank. "But in Germany, we
can afford this - we are a rich country. It´s a gift to the world."

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