Hey friends, it’s me, clean energy journalist Julian Spector, and it’s my pleasure to welcome you back for my first newsletter of 2021. If my sources are correct, this is going to be a major year for clean energy, so buckle up.
The new year is a time to reflect, and for me, it’s a reminder that a year ago I was sitting in the high desert of Joshua Tree and resolving to start a newsletter about the surprising success of clean energy. I did it! The challenge now is how to follow up—“keep doing that same resolution” doesn’t have quite the same ring to it, but hey, this doesn’t spontaneously compose itself.
My first newsletter subscribers. They shared Bright ideas with all their friends.
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I’ll be keeping things quick and breezy today because, let’s face it, this is a tough Monday for the old work ethic. But there were a few big updates in the weeks I was resting my mind and body. And they all have to do with setting and achieving goals, so it’s on theme for the inaugural week of the year. Let’s go!
Congress did a thing for energy
If you were paying attention to Congress for the last decade or so, you might have gotten the impression that the legislature wasn’t much interested in crafting policy around clean energy. The most exciting thing Congress could muster was the occasional extension of clean energy tax credits it created during the days of President George W. Bush.
Then, in the last few weeks, the spending bill became a COVID stimulus bill and suddenly Congress was whipping up its most significant energy policy in years. President Trump signed it, eventually, and now it’s official.
The energy package will phase out hydrofluorocarbons, a refrigerant that supercharges the greenhouse effect. That alone appears to have among the biggest bang-for-buck payoffs of any single climate policy. But Congress also renewed the tax credits for wind and solar (and batteries, if paired with wind or solar), that had begun phasing out. And the law budgets $35 billion for research and development of cutting edge technologies to make a clean energy economy happen.
This deal singlehandedly disproves the notion that there’s no appetite for bipartisan clean energy action in Congress. In fact, that was already disproven, in a narrow sense, by bills passed and signed by Trump to incubate a new generation of nuclear reactors, but the impacts of that are many years off. This new stuff will get more projects built this year, presumably putting more people back to work, with compounding benefits over time from the far-out technology investment.
That said, this is pretty modest stuff, in the same way that the stimulus came later and smaller than pretty much anyone outside of the Beltway would have liked. A few more years of tax credits don’t address structural barriers that keep clean energy out of swaths of the country. They don’t address entrenched monopoly power, or market rules written by incumbent coal and gas plant owners to limit the opening for new competitors.
Incentivizing public goods through tax credits is circuitous in any case, as it requires an elaborate form of laundering clean energy projects through banks that have the tax appetite to benefit from the credits. Ultimately, the winner is the law firms that get to structure those deals.
Still, we could have gotten a late night compromise with no energy content whatsoever. This is much better than that. The lingering question is whether Senate Majority Leader Mitch McConnell will allow any further energy legislation to pass his chamber. It appears that part of his motivation in unblocking this compromise was to help the Republican contenders in today’s Georgia Senate runoffs. That driver of compromise is gone now. Will some other motivation replace it?
Tesla hits 500,000 cars in a year
Speaking of New Year’s Resolutions, Tesla promised to make 500,000 electric cars this year, something it had never done before and which seemed to be the latest in Elon Musk’s many outrageous promises. But we learned days ago that the carmaker did, in fact, hit that target.
I’ve written about the good, the bad and the ugly of how Tesla operates. The company definitely merits some healthy skepticism due to its tendency to blur its sense of reality with visions of what could be. But when it focuses on making those visions come true, wild things happen.
In this case, while most automakers took a beating from the recession and general lack of interest for buying new cars in a pandemic, Tesla had its best year ever. It’s actually profitable now for its longest streak ever. Its stock price is through the moon roof. And it’s building out new factories in Shanghai, Berlin and Austin, which means that the 500,000 cars per year figure will soon look primitive.
After years of denial and delay from incumbent automakers, electric cars are on the up and up. Tesla survived the ramp to mass market production, when many laughed at what would surely be its untimely demise. Now the older cohort is trying to catch up, but they’re facing a structural challenge.
When you can pump out pickup trucks and make good profits, it’s hard to muster the energy for a complicated conversion to battery-powered car production, and all the explaining you have to do about how those things work. When you only make electric cars, your survival as a company depends solely on making the best electric cars and selling as many as you can. All else held equal, who wins in this competition?
Never too late for a nuclear renaissance
Rounding out the New Years theme, we got a cheerful tweet from the Department of Energy setting a bold goal for the year: for America to finish its first brand-new nuclear plant in many decades!
The joke is that the consortium of utilities building Vogtle have been making this resolution for many years running. Vogtle’s like the friend you keep around so you can feel thrifty and punctual by comparison (we all do that, right?). The project is about five years late and many billions more over budget. But if you’re going to do business that way, it sure is nice to be a monopoly utility.
New carbon-free power for the U.S. is a step toward a cleaner world and a more stable climate (my early Bright Ideas dispatch on nuclear is here). But this particular step has already scared most sentient observers away from trying something similar. Not that the difficulty is the nuclear bits—it’s actually more banal stuff like pouring concrete right and managing large and multifaceted projects.
Maybe this is the year. If so, best to savor the sweet smell of new carbon-free energy produced around the clock. We won’t be smelling that again for years.
Home Alone is all about the grid
I must confess, I had never watched Home Alone. My family never considered it part of our holiday viewing canon, perhaps because my mother found the notion of accidentally leaving a small child behind too distasteful for an enjoyable movie night.
But I didn’t go home for this holiday season, and in the scramble to generate local festivity, Sam and I gave it a watch. Turns out it holds up quite well. I respect a tightly constructed plot: kid’s home alone, thieves want to break in, Action!
But I was also pleased to discover, as I did rewatching Jurassic Park, that the fragility of the electrical grid is the oft-overlooked subject of this film. The proximate cause of the titular predicament is that a power outage knocks out the family’s alarm clocks. In the ensuing rush to catch a flight to Paris, the parents forget that their youngest child is asleep up in the attic as punishment for acting up.
Imagine this happened now, but the family had a solar roof and two Tesla Powerwalls in the garage. Power goes out, automatic transfer switch isolates the house as a microgrid, the clocks still work. Undergrounding the power lines could achieve the same outcome, at greater cost to utility customers. The plight of Macaulay Culkin stranded in the wintry mansion reflects societal anxieties of inadequate grid resilience.
Since solar and wind energy "fuel" costs are zero while fossil fuel for energy plants have to be paid every year, the key to driving down renewable costs is the costs of capital If renewables paid 4% instead of 8% for capital, their Levelized Costs of Energy would be cut almost in half. Lets hope 2021 results in lower cost of capital for renewable projects, and less subsidies for fossil fuels.