Energy 101 - electricity

Truman National Security Project

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Energy 101

Power Plants


U.S. Power Industry: 3 Step Process

2

Generation

Transmission

Distribution

Natural Gas: 25%

Coal: 42%

Nuclear: 19%

Hydro: 8%

Wind: 3%

Solar: >1%


3 Different Kinds of Providers

3

Investor Owned Utilities (IOUs)

Municipality Owned (Muni’s)

Co-operatives (Co-Ops)


Regulated vs. De-Regulated

4

• Majority of US electric companies are regulated by state-run Public Utility Commissions (PUCs)

• Utilities must get approval from their PUC in order to build power plants, run programs, etc. The PUCs grant the Utility a rate of return on their investment. This regulatory situation is how Utilities operate as monopolies

Regulated

De-Regulated (also referred to as Competitive)• Some states, most notably Texas, have broken up the parts of the

Generation, Transmission, and Distribution process• Independent Power Generators produce power and sell it directly to

consumers• Consumers can select which power provider to get their power• The Utility owning the T&D lines must allow all power to travel

through their systems• Has lead to price increases when tried in the past


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Energy 101

Nuclear Energy


US nuclear plants deliver electricity

The US nuclear fleet is aging, and concentrated largely in the eastern US

Source: Energy Information AdministrationSource: Nuclear Regulatory Commission

, 2011


Complex science… simple concept

7

Fuel rods make steam, steam spins turbines, turbines generate electricity


Nuclear power’s share of the DOE R&D budget: large but shrinking

8Source: Congressional Research Service

DOE Energy Technology Share of R&D Funding, Comparison Over 3 Periods


Nuclear power plants enjoy high subsidies, across the value chain

9

Source: Union of Concerned Scientists, ‘Nuclear Power: Still Not Viable Without Subsidies’, Feb 2011


Unresolved nuclear power issues linger, particularly after Fukushima

Radioactive waste disposal Future of Yucca Mountain facility in

Nevada? Nuclear reactor safety

Pebble bed reactors Nonproliferation New reactor designs

Bill Gates’ TerraPower traveling wave reactors

10


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Energy 101

Natural Gas


Natural Gas vs. Coal The price of natural gas is at a 10 year low

and has recently dropped below the price of coal (EIA 2011)

Natural gas power generation costs have also fallen

For power generation, natural gas has environmental advantages over coal Natural gas produces lower quantities of

nitrogen oxides and carbon dioxide (CO2) than coal

Emissions of sulfur dioxide and mercury compounds are negligible

Despite environmental benefits of natural gas power generation, over 600 coal fired plants producing between 45% of our electricity (vs. 23% for gas)

Natural gas power generation demand outlook is mixed

Demand for natural gas power generation may increase if policies to place a price on CO2 emissions are adopted

But renewable energy generation resources may reduce natural gas demand for electric power generation

Gas cheaper

http://static.seekingalpha.com/uploads/2011/6/19/422282-130849135098597-EconMatters_origin.png


Natural Gas: Conventional vs. Unconventional Sources

CONVENTIONAL SOURCES “Free gas” Easier to produce. Accounts for about 94 percent of

the gas produced in the U.S.

UNCONVENTIONAL SOURCES The increasing availability of

Shale gas (which is natural gas trapped in shale formations) has raised its profile among unconventional sources.

Other sources include Deep Natural Gas, Tight Natural Gas, Coalbed Methane, Geopressurized Zones, and Methane Hydrates.


Natural Gas: Where’s the Gas?

Conventional Sources Shale Gas


Natural Gas: Extraction Technologies

Technologies like hydraulic fracturing (aka “fracking”) has helped produce a shale gas boom…

…BUT, there are also environmental concerns.


Natural Gas Production Expected to Increase Globally

Natural gas production expected to increase

But depends on Environmental concerns, particularly

regarding fracking Climate policy (carbon pricing,

renewable energy requirements for power generation)

Fuel price relationships, which can be altered by technology and policy, affect long term demand trends

Upstream costs


Energy (and Environmental) Security Implications

Development of U.S. shale gas resources has significantly reduced need for the U.S. to import LNG for at least two to three decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy.

Rising shale gas supply has led to lower domestic natural gas prices, which lowers the costs to average Americans of reducing greenhouse gases as the country moves to lower carbon/non-oil based fuels (e.g., electricity, compressed natural gas).

Potential increase in demand for natural gas which can displace high carbon fuels.

Increased production by U.S. and other countries weakens ability of long-term potential monopoly power of a “gas OPEC” or a single producer (such as Russia) to use energy resources as a tool for political gain.


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Energy 101

Coal


Why do we need coal? Coal is largest domestically produced source of

energy in United States. Coal is abundant in United States (WY, WV, KY,

largest producers). 200 years+ available Half US electricity from coal and cheapest.

Separated ingredients used in plastics, tar, synthetic fibers, fertilizers, and medicines.

Coke from coal smelts iron ore. Coal provides jobs in remote areas. Coal companies support entire communities.

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The challenges of coal Highest carbon dioxide emissions linked to

climate change. Sulfur dioxide, nitrogen oxide, and mercury,

linked to acid rain, smog, and health issues. Mountaintop removal in KY/WV linked to land

and water contamination. Cheap coal makes renewables expensive and

efficiency unnecessary. Economic dependence not sustainable. Aging coal fired plants.

20


‘EPA stay off our backs’

Politicians in coal states must promote coal

Coal industry feels itself at war with EPA

KY suing EPA

No new surface mining permits under Obama Administration based on amendment to Clean Water Act.


Can there be ‘clean’ coal?Carbon capture storage

22


What to do about coal? Fund carbon capture and storage projects.

More ‘scrubbers’ on plants to reduce toxic release. Fund ways to re-use waste as byproducts such as cement.

Support EPA air and water regulations for future generations.

Reclaim former coal mine lands for other use.

Assist coal communities in creating a ‘life besides coal’

Assess impact of state subsidies to coal on economy.


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Energy 101

Wind Energy


There is strong bi-partisan support for Wind Energy in the United States.

U.S. Wind Energy


Wind Energy Costs & Productivity

The Wind Energy Industry has evolved tremendously over the past 20 years. Consistent energy policy is needed in order to allow for

continued growth.


Installed Wind Energy Capacity Through 2011

State level Renewable Portfolio Standards (RPS) have served as the primary demand driver for the U.S. wind energy industry.


The wind industry is facing the recurrence of the boom-bust cycle it has seen in previous years when the PTC was allowed to expire.

•60% of a wind turbine’s value is now produced here in America, compared to 25% prior to 2005.

•Over 90% drop in the price of wind power since 1980, benefiting utilities and consumers.

• The industry has made ,ore than $60 billion of investment in the U.S. since 2005.

Wind Production Tax Credit (PTC)

Unlike the previous PTC expirations, over 60% of the wind turbine components are now made in the United States by American workers.


Wind Industry - U.S. ManufacturingWith the threat of the PTC’s expiration, wind project developers are not making plans in the U.S. and American manufacturers are not receiving orders

•Over 400 facilities across 43 states manufacture for the wind energy industry.

•Layoffs have started already

•Historically, in the years following the PTC expiration, installations dropped between 73 and 93%, with the corresponding job losses. If the PTC is not extended, the loss of wind industry

manufacturing jobs will impact Americans across the United States.


U.S. Transmission

•A congested and obsolete power grid limits consumers’ access to low cost power.

•The U.S. Department of Energy has identified transmission limitations as the largest obstacle to realizing the economic, environmental, and energy security benefits of obtaining 20% of our electricity from wind power.

•Currently, around 270,000 megawatts of proposed wind projects, are waiting in line to connect to the grid because there is not enough transmission capacity to carry the electricity.


U.S. Transmission – Planned Expansions

High voltage transmission line expansions are planned throughout the United States. These capital intensive investments, however, require

stable energy policy.


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Energy 101

Solar


Residential1-10 kW

Commercial Rooftop10 kW – 1 MW

Utility Scale1 MW– 250 MW


Solar Growing Rapidly, Averaging 65% Compound Annual Growth Rate for the Past 5 Years

17 nuclear power

plants worth

of solar peak

power

shipped in 2010

Source: PV Industry Growth Data from Paula Mints, Principal Analyst, Solar Services Program, Navigant


Global Solar Industry Growth has Produced Steadily Falling Prices

Sources: 1976 -1985 data from IPCC, Final Plenary, Special Report Renewable Energy Sources (SRREN), May 2011; 1985-2010 data from Paula Mints, Principal Analyst, Solar Services Program, Navigant; 2011 numbers based on current market data

Module Pricing Trends 1985-2011


Solar is Less Expensive Than New Nuclear

Cen

ts p

er K

ilow

att H

our

Average time to permit and build a nuclear 1 GW power plant – 13 years. Average time to permit and build 1 GW solar – 1 year. The last nuclear power plant completed in the US, Watts Bar 1 in Tennessee, took 23 years 7 months to construct.

$0.139

$0.07

$0.129

$0.095

Sources: 2011 nuclear price is the mid-point of the LCOE range given by Lazard, version 5.0. 2020 nuclear price is illustrative, calculated assuming 3.5% annual escalation; 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011, 2020 PV price illustrative, assuming 4% annual cost reduction from 2016

(further validated by prices bid by solar developers into the California markets).


Solar Beats Natural Gas Peak Power TodayC

ents

per

Kilo

wat

t Hou

r

$0.226

$0.139

$0.086

$0.238

250 MW Gas CT

Sources: 2011 gas price is the mid-point of the LCOE range given by Lazard, version 5.0. 2016 gas price is illustrative, calculated assuming 1% annual escalation; 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011 (further validated by prices bid by solar developers into the California markets).

Gas peakers pollute 3 times more than natural gas power plants.


Coal Plant 5%500 MW

New Coal Can’t Deliver Power for 6-8 Years, When Solar Will Be Competitive

Cen

ts p

er K

ilow

att H

our

$0.139

$0.07

$0.109

$0.07

Source: 2011 coal price is the mid-point of the LCOE range given by Lazard, version 5.0. 2020 coal price is illustrative, calculated assuming 5% annual escalation: 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011, 2020 PV price illustrative, assuming 4% annual cost reduction from 2016

(further validated by prices bid by solar developers into the California markets).

$0.08


Solar Meets Critical Peak Power Demand

Sources: For summer peak load shape – California Independent System Operator (CAL-ISO); For time of use rates – Pacific Gas and Electric Company (PG&E); For PV Tracking Output – Solaria Corporation


Germany, with Less Sun than Seattle, is Largest Solar Market in the World

Solar Energy Capacity (2009) in GW

Lazard: Compiled from multiple industry sources, May 2011


Germany, with Less Sun than Seattle, is Largest Solar Market in the World

Solar Energy Capacity (2010) in GW

Lazard: Compiled from multiple industry sources, May 2011

Italy and

Germany added

13 GW in 2010


U.S. Solar Market Is Small but Growing

US Total Installed PV Solar Energy Nameplate Capacity and Generation

DOE, NREL, Renewable Energy Data Book, 2009; Lazard: Compiled from multiple industry sources, May 2011SEIA and GTM Research’s U.S. Solar Market Insight Q2 1011

SEIA and GTM Research’s U.S. Solar Market Insight Year in Review 2010SEIA® and GTM Research’s U.S. Solar Energy Trade Assessment 2011

69% Year-over-year

Domestic

Market Growth

$1.9B Net Global

Exporter$6B Total U.S.

Market Value


California Adding Multiple GW of Solar in the Next 5 Years

California could be 20% solar by 2020

1Of the 8.6 GW under contract, 4.4 GW is below the Market Price Referent (MPR), defined as the 20-year levelized cost of energy from a new natural gas plant in California. Source: Greentech Media, February 2011

2009 Utility RFO submittals: 30 GW2011 Utility RFO submittals: 45 GW (expected)


Utilities Recognize Solar’s Advantages

Completed US PV Projects

Total USA Installed PV 2 GW in 50 States

Global Installed 26 GW

Source: Solar Electric Power Association (http://www.solarelectricpower.org/solar-tools/solar-data-and-mapping-tool.aspx)

http://www.solarelectricpower.org/solar-tools/solar-data-and-mapping-tool.aspx


Equal to 12

nuclear

plants

in 4 years

US Utility Solar Announcements1

Over the next 4 years 12 GW

1Note: Utility purchases only - Does not include residential and commercial marketsSource: Solar Electric Power Association (http://www.solarelectricpower.org/solar-tools/solar-data-and-mapping-tool.aspx)

Utilities Recognize Solar’s Advantages

http://www.solarelectricpower.org/solar-tools/solar-data-and-mapping-tool.aspx


Solar Subsidies Pale in Comparison to Fossil Fuels

Fossil Fuel and Solar

[ELI, SEIA]

[SEIA, Blumenauer, Treasury]

$72.4 billion

$2 billion

$40 billion

$7-10 billion

Estimating U.S. Government Subsidies to Energy Sources: 2002-2008Environmental Law Institute, September 2009SEIA (Solar Energy Industries Association) Federal Energy Subsidies in the United States: A Comparison of Energy Technologies, February 24, 2011“Ending Oil Industry Tax Breaks”Congressman Earl Blumenauer, Third District of Oregon, www.blumenauer.house.gov, April 2011


Solar Creates U.S. Jobs

7x more jobs per MWthan coal

Sources: Kammen, David M et al, 2004, Report of the Renewable and Appropriate Energy Lab, Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy, University of California, Berkeley.Wei, Max et al, 2010, Putting Renewables to Work: How Many Jobs Can

the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy and the Haas School of Business, University of California, Berkeley, in Energy Policy, vol 38, issue 2, February 2010.

Solar Foundation 2011 National Jobs CensusU.S. Bureau of Labor Statistics: May 2010 National Industry-Specific Occupational Employment and Wage Estimates

100,237 Americans work in solar today

Solar employment grew 6.8% while the general economy grew 0.7%

20k

40k

60k

80k

100k


Solar is Ready Now

Solar17 GW

Solar added more than 17 GW worldwide2010

Major combined sources of polluted energy only added 12.2 GW in the US2010

Coal6.7 GW

Natural Gas5.5 GW

Source: Erik Shuster, National Energy Technology Laboratory, Tracking New Coal-Fired Power Plants, January 14, 2011(Natural as includes NGCC at 4GW and NG GT and 1.5 GW.)


Bipartisan Public Support for Clean Energy

91 percent of Americans say developing sources of clean energy should be a priority for the President and Congress

85% of Republicans

89% of Independents

97% of Democrats

Sources: Public Support for Climate & Energy Policies in May 2011, Yale Project on Climate Change.


Solar Less expensive than new nuclear and cost competitive with new coal and gas started today Delivers Gigawatts of power fast – 8 to 20 years faster than coal or nuclear

Delivers strong ROI in the form of American jobs and global economic competitiveness


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Energy 101

Energy Storage


Definitions and Benefits?

• Energy is the ONLY major sector of the economy in which the product MUST be consumed the moment it is created

• Transmission provides energy where it is needed –linking Generation and Consumer in Space

• Energy storage provides energy when it is needed - linking Generation and Consumer in Time

• Energy Storage buffers disruptions on all levels of the Grid• Load and Generation must be balanced on the Grid

• Traditionally, generation was controlled while the load was variable. • With increasing renewable penetration, generation has also become variable.• Penetration of Electric Vehicle use inserts a new and unknown variable

• Each type of energy storage technology has its own capital and operating cost structures

• The 3 characteristics that matter most in storage are:• Discharge Capacity (MW), otherwise referred to as Power Rating. Is a

measurement of how much electricity can be released or absorbed at a given time

• Energy Storage Capacity (MWh). Is a measurement of how long energy can be discharged at 1MW Power

• Energy Density (MW/volume). This is a measure of how much energy can be stored in a given volume of. The higher this is, the more energy can be stored in a smaller battery.


Bulk energy storage• Mitigates intermittency of renewable

energy resources• Balances supply and demand by

providing ancillary services• Responds quickly to system

contingencies, e.g. equipment failure, power plant outages

• Balances load and relieves transmission congestion

• Smooths thermal power plants used for frequency regulation or load following

Size MattersDistributed energy storage• Managing electric grid peak

demands• Improving reliability and outage

mitigation• More effectively using capital

expenditures for new grid infrastructure

• Accommodating distributed renewables and plug in vehicles


What can Storage do for US? Reduce risk of grid failure Defer the need to upgrade power-lines and other

infrastructure Allows better renewable energy integration System applications (e.g. whereby energy storage provides

wholesale market opportunities, energy arbitrage, reduced transmission congestion, lower consumer marginal prices)

Commercial, industrial, and residential uninterruptible power supply

Make power generation more efficient Reduce greenhouse gas emissions Diminish our reliance on fossil fuels through EV applications


Global Storage Today

Total: 125,520 MW

Pumped hydro: 123,390 MW

Total minus pumped hydro: 2,129 MW

Thermal: 1002 MW

Molten Salt: 142 MW

Compressed Air: 440 MW

Batteries: 451 MW

Flywheels: 95 MW

What does “thermal storage” mean? Is this like freezing water at lower power prices to cool buildings during the day when prices are higher?


Storage Tomorrow

“Deployment of storage technologies will make our nation’s electricity grid more reliable while also enabling more efficient use of existing energy sources as well as new ones, such as wind and solar.... These technologies have the potential to cut electricity bills, reduce peak power demand and lower greenhouse gas emissions.” - Senate Energy and Natural Resources Committee Chairman Jeff Bingaman

"If one can get wind and solar and energy storage down to where the whole package is cost competitive with any form of energy, then it takes off and this is what we're very focused on in the Department of Energy… We want these things without subsidies just to take off.” – Secretary Steven Chu

When we learn how to store electricity, we will cease being apes ourselves; until then we are tailless orangutans. You see, we should utilize natural forces and thus get all of our power. Sunshine is a form of energy, and the winds and the tides are manifestations of energy.-Thomas A. Edison, 1910

I’d like to get a picture of one of these guys speaking for

this page, and maybe cut out another quote. I already cut

the quote from the Lux Research guy, as I don’t think

analysts will care.


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Energy 101

Smart GridThe smart grid is a simple upgrade of the 20th century power grids which generally ‘broadcast’ power from a few central power generators to a large number of users to be capable of routing power in more optimal ways to a very wide range of conditions to charge a premium to those who use energy at peak hours or inefficiently.


The U.S. electric power infrastructure (grid) is the largest interconnected machine on earth

•9,200 Generating Units•1M MW of Generating Capacity•300,000 Miles of Transmission Lines•150,000 Miles of Transmission Lines > 230kV•99.97% Reliable

But it is old and has LIMITATIONS:• Inefficient, Antiquated &

Passive• No system-wide intelligence,

Minimal Customer Involvement, Labor Intensive

• Size (Demand is growing)• Security/Reliability is an Issue• Limited Adaptability (as

climate security concerns grow, renewables becoming more attractive)

Electricity Consumption in U.S.


Today’s GridCentralized Command & Control


Enter the Smart Grid

Research & Development and Fundamental Technologies that will

move the Smart Grid forward:Integrated Communications To connect components to open architecture to

drive real-time information and control allowing every part of the grid to both “talk” and “listen” at the same time

Sensing and Measurement Technologies To support faster and more accurate responses

such as remote monitoring, time-of-use pricing, and demand-side management

Advanced Components To apply the latest research in superconductivity,

storage, power electronics, and diagnosticsAdvanced Control Methods To monitor essential components that enable rapid

diagnostics and precise solutions appropriate for any event

Use of digital technology to improve reliability, security, & efficiency of the electric system with applications for dynamic optimization of system operations, maintenance, & planning

“Modernize the grid.” -- Energy Independence and Security Act, 2007


Smart Grid’s Value Streams

CapacityCapacity Power Quality & Power Quality & ReliabilityReliability Energy EfficiencyEnergy Efficiency Operational Operational

EfficiencyEfficiencyClean Clean

TechnologyTechnology

Foundation / InfrastructureFoundation / Infrastructure

visi

bilit

y

cont

rol

2121stst Century Smart GridCentury Smart Grid

Load Curtailment

Demand Management

Grid Self-Optimization

EmergencyPower

Local Power Parks

Highly Differentiated

Reliability

EE Programs

Online Energy Efficiency &

Management

AutomatedEfficiency

Advanced Metering

DistributionAutomation

End-to-EndAutomation

DistributedRenewables

Electric VehicleManagement

Clean ResourceOptimization

CapacityCapacity Power Quality & Power Quality & ReliabilityReliability Energy EfficiencyEnergy Efficiency Operational Operational

EfficiencyEfficiencyClean Clean

TechnologyTechnology

Foundation / InfrastructureFoundation / Infrastructure

visi

bilit

y

cont

rol

2121stst Century Smart GridCentury Smart Grid

Load Curtailment

Demand Management

Grid Self-Optimization

EmergencyPower

Local Power Parks

Highly Differentiated

Reliability

EE Programs

Online Energy Efficiency &

Management

AutomatedEfficiency

Advanced Metering

DistributionAutomation

End-to-EndAutomation

DistributedRenewables

Electric VehicleManagement

Clean ResourceOptimization

Smart Grid Enables Dynamic Optimization of Grid

Resources & Operations

Enables Informed Consumer Participation & Demand Response

Accommodates All Generation & Storage Options

Enables New Products, Services, & Markets

Provides Power Quality for Range of Needs

Optimizes Grid Asset Utilization & Operating Efficiency

Reduces Greenhouse Gas Emissions

Enhances Energy Security

Smart Grid Characteristics and Benefits


• Costs and their Recovery• Interoperability Standards• Technical Challenges

• Demand Response– What incentives will change consumer behavior?

• Network Communications – Requires public & private communication networks, both wired & wireless

• Energy Storage– Smart Grid requires a means of storing energy, directly or indirectly

– New storage capabilities—especially for distributed storage—would benefit the entire grid, from generation to end use

• Distribution Grid Management– Maximize performance of feeders, transformers, & other components of

networked distribution systems – Integrate transmission systems and customer operations

• Integration of Renewable Energy Sources– Again, we need advancements in energy storage technology

• Social/Political Challenges• Consumer Interest and Engagement• Workforce Development

– Lack of power systems engineers• Growing public backlash (several states are now removing smart meters)

– Cybersecurity & privacy concerns– Health related concerns

EfficientBuildingSystems

UtilityCommunications

DynamicSystemsControl

DataManagement

DistributionOperations

DistributedGeneration& Storage

Plug-In Hybrids

SmartEnd-UseDevices

ControlInterface

AdvancedMetering

Consumer Portal& Building EMS

Internet Renewables

PVSmart Grid Challenges


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Energy 101

Carbon Pricing


Electricity comes from many different kinds of fuel. We chose which to use based (largely) on how much each fuel costs to buy.

64

As you can see, coal and natural gas (known as “fossil fuels”) currently dominate. That’s because they are relatively cheap.

Non-fossil sources – such as nuclear, hydro electric and “renewables” – play a smaller role, largely because they are relatively expensive.


But while cheap to buy, fossil fuels come with other kinds of costs ….

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Those costs are not factored into the market. Instead they are bared by society.

For example:

Say a you catch asthma from pollution...

Who pays the medical bills?

You do. The polluter (decision maker) does not.This is called a

“market failure.”


Renewables – such as sun and wind – are more expensive to buy, but using them comes with benefits…

66

But those benefits are not factored into the market either.

For example:

Say your medical bills drop after a local business replaces a coal generator with a windmill.

Who keeps the savings?

You do. The business (the decision maker) does not.This is also called a “market failure”


How do you fix a market failure?

One way is to adjust the price of fuels to reflect the true costs of their use.

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Create A Market.

Require power plants to buy a “permit” for each ton of

pollution emitted.

The price per ton is set by supply and demand of

“pollution permits”

Two ways to do that:

Charge a Tax.

Require power plants to pay a flat fee per ton of pollution emitted.

The price per ton is flat.

Whichever way you chose, power plants that pollute more (or use more fossil fuels) pay more; those that pollute less (or use more renewables)

pay less

Truman National Security Project 68

This encourages the electricity sector to go from….

To….

Coal

Nat-ural Gas Nu-

clear

Hy-dro-elec-tric

Con-ven-

tional

Wind

Solar

2050 U.S Electricity Generation By Source