Monday, July 29, 2013

Electrical utilities lobby against solar energy instead of developing their own solar capabilities

By Marc Jampole
The New York Times article on electrical utilities lobbying against government support of solar powered electricity didn’t surprise me. It did disappoint me, though.

You would think that given what electrical utility executives know about shortages of fossil fuels and global warming, instead of trying to scuttle solar they would develop products and services for the solar market. It doesn’t have to just be a central power plant using solar energy to generate electricity and then sending it to homes and businesses along the grid. The utilities could also lease solar panels to houses and provide all maintenance, servicing, repair and insurance. There all kinds of ways the utilities can continue to line the pockets of the executives and shareholders in a solar and wind world. 

Didn’t any of these guys go to business school?  One of the first things that business students everywhere have to read is the classic Harvard Business Review article on the railroad industry. The thesis of the article is that the railroads declined because they forgot that they were really in the transportation business and they didn’t adapt to the changing conditions.

Did Microsoft or Apple roll up their tents when tablets and portable devices became big? No, they adapted. What did that typewriter and mainframe computer company IBM do when personal computers came on the market?

Electrical industry spokespersons complain that government assistance to people who convert to solar helps to shrink the market for their way of delivering electricity to homes, and that they will eventually have to raise prices. So what? The country has been paying too little for energy for too long, which is why we waste so much. (Of course it’s an illusion to think we have relatively low energy costs, because so much of what we pay for our oversized military is to protect the oil supply chain.) The rising price of fossil fuel generated electricity helps to make solar and wind more attractive. Isn’t that the point of the government support of solar?

Keep in mind that for many years into the future there will still be a market for electricity generated by fossil fuels.

For decades, government gave generous subsidies and tax breaks to electrical utilities, and they still do in the form of the annual rate approval systems and tax exempt bonds to back construction of new capacity.

It once made sense to provide government support for fossil fuels. But those days are long gone.  Now we as a society have a pressing need for government investment into developing and commercializing sources of electricity that depend on renewable resources. Biofuels seem less possible since the ethanol fiasco in which more energy has been consumed to convert corn to fuel than resulted from the conversion while food prices skyrocketed. Our best options are solar and wind.  

If utilities don’t invest in these alternatives, they will end up like makers of buggy whips. But that’s their problem, not the government’s or yours. Our problem is to secure a source of electricity in a world of resource shortages and extreme warming caused by carbon emission.