Wednesday, September 30, 2009

Energy Issues in the News

The Senate will now take up Carbon legislation and it is interesting that Senator Boxer's opening bill proposes more aggressive 2020 carbon cuts than the House Waxman/Markey bill. This surprises me.

But, let's move on.

The NY Times had a nice piece on the water requirements of new solar panel installations. This Nevada solar panel set would need 20% of the area's water supply in order for it to run. That is pretty serious.

So, the clear issue here is that we need serious water pricing. There would be no misallocation if water prices reflected marginal cost rather than being set by a public regulatory agency.

"Conflicts over water could shape the future of many energy technologies. The most water-efficient renewable technologies are not necessarily the most economical, but water shortages could give them a competitive edge." An economist would question why we have to have water shortages?

Take a look at slide 4 here . True water pricing would push RPS portfolio to wind over solar.

Switching subjects but staying on the energy theme, if you need some humor in your life read this experiment about a small Danish island that has achieved energy "self sufficiency" through some big government subsidies.

Note that this article does not calculate the per-capita energy subsidy to make this "dream" come true. So, if a nation wants to scale up this dream --- how much will taxes have to go up by to finance it? The beauty of a small project is that the media can celebrate its "success" and the deadweight loss of the subsidy is hidden because it is small (because the scale of the project was small). I do not mean to be cynical but honesty counts.

1 comment :

Josh said...

I haven't read your links yet, but I will. I did want to say that the political economy problem here is that we have a very effective centralized lobbying industry, but distributed generation of electricity would be better for California's system as a first step.

Big companies don't want de-centralized generation, just as our Governor doesn't want to put his name on a solar panel, but a dam and a giant solar power plant.

If you added a true price for the land they are proposing to use, that RPS would go even higher for solar, and would make drought-stricken lands in the Central Valley look more promising for solar. Over time, the air quality improvements in the Valley would increase solar's efficiency there, too.

Good post, prof.