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Here Comes the Sun: The Government Discovers Solar Energy
by Frank Bove
On “Sun Day”, May 3 1978, nationwide rallies celebrated the vast potential of solar energy. Millions of Americans were exposed to a media barrage on solar power, and for the first time many were able to see equipment ranging from solar cookers to windmills capable of producing electricity. While solar enthusiasts proclaimed the “Solar Age”, energy monopolies and utilities attempted to downplay the significance of Sun Day. Mobile Oil, on the day after Sun Day, launched an expensive publicity campaign with ads in every major newspaper, spending more than the entire Sun Day budget, in order to get the message across that solar energy’s potential lay in the distant future. But Sun Day, and the public education efforts that preceded and followed it, have succeeded in convincing many of the feasibility of solar energy to supply our present energy needs. With the nuclear industry facing skyrocketing construction costs, few new orders, and an inability to find a safe permanent way to dispose of radioactive wastes, recent studies have pointed to a potentially bright future for solar energy. The technical and political question remains: What needs to be done to make the transition to a solar-powered economy?
The Solar Potential
The President’s Council on Environmental Quality (CEQ) released a study in April 1978 which indicated that with an all-out effort, solar technology could supply a quarter of all US energy requirements by the year 2000 and “significantly more than half” by 2020. Of course, this conclusion depends on the level of these requirements. By comparison, nuclear power, after 30 years of massive government subsidies ($17 billion), produces less than 3% of our energy needs at present. More recently, President Carter’s Domestic Policy Review Group (DPR), consisting of policy analysts from 30 federal agencies, has estimated that solar energy can provide about 10% to 25% of a total US demand of 95 to 132 quadrillion BTU (Quads) in the year 2000.
A particular potential of solar energy is its usefulness in “on-site” energy production. Unlike nuclear power, which requires a large central facility, smaller scale solar devices can be used to generate heat and electricity on-site, at the point where it is to be used. On-site solar devices thus allow for: 1) gradual expansion of the energy facilities with shorter lead-time to meet changing energy needs; 2) reduction of transmission losses; and 3) reduction of energy loss in the form of waste heat at the power plant.
The Congressional Office of Technology Assessment (OTA) reported in June 1978 that “on-site solar devices could be made competitive in markets representing over 40% of US energy demand by the mid-1980’s”. These markets include residential and commercial heating, hot water, air conditioning, and electricity, as well as heat for industrial processes at temperatures up to 550 degrees fahrenheit. The technologies OTA considered included photovoltaic cells (which produce electricity directly from sunlight), solar collectors, and other devices powered directly by the sun. The estimate does not include other renewable sources usually considered as “solar”, for example, wind, hydroelectric, and biomass (plant-matter fuels, such as wood and methane gas, which now supply 1.7% of the nation’s energy).
OTA states that on-site solar applications are technologically feasible today. But, they will probably penetrate only a small fraction of the potential markets by the mid-80’s, because of inadequate government economic support. According to OTA, the present 10% of the energy R&D budget spent for solar research and commercialization is hardly enough. “Existing federal programs controlling fuel prices and subsidizing nonsolar energy sources have created a situation where, without compensating subsidies, solar energy is uniquely disadvantaged. Federal support of solar energy has concentrated disproportionate attention on central electric generating systems instead of exploiting the special opportunities provided by on-site equipment.”
The Solar Budget
Even though the potential of solar energy is immense, it has been developed very slowly with none of the fervor and huge financial outlays which spawned nuclear development. For example, as recently as 1974 the solar budget was $14.8 million while the nuclear budget was $1.63 billion, 110 times that of solar. In fiscal year 1978, $1.36 billion was spent on nukes while solar received $385 million and conservation received $254 million. For fiscal year ’79, the solar budget was to be reduced, but Carter, bending to pressure, proposed on Sun Day to expand the budget to $500.5 million, still only about 1/2 the amount nuclear will receive.
Not only is the solar budget woefully low, but the money is spent according to priorities that are clearly different from that of maximizing the potential contribution of the various solar technologies. The bulk of the budgets for solar electricity have been spent for applications which imitate the large central power stations of today (e.g., coal and nuclear) rather than for smaller, on-site applications. This “power tower” is the largest single item in the solar budget, receiving 25% of the total funds. This highly centralized technology is not nearly as efficient, cost-effective, or as close to the commercialization stage as solar electric technologies such as wind and photovoltaic cells. Yet wind power receives only 10% of the budget and photovoltaics only 19%. However, the “power tower” will aid the energy corporations in maintaining centralized control over the energy system.
Finally, only 9% of the budget will be spent on demonstrations of solar heating and cooling in commercial and residential buildings. This is hardly enough for the widespread demonstration projects which are needed to influence the building construction industry which is traditionally extremely slow in adopting new technologies, especially when they entail a high initial cost.
Part 1 of the National Energy Plan, after over a year and a half of Congressional tinkering and “compromise” brought on by the energy monopolies’ and utilities’ pressure, was finally passed as the National Energy Act (NEA) on October 10, 1978. In early December, the US Dept. of Energy held a series of public meetings on Part 2 of the National Energy Plan (NEP2). The government’s strategy,1 embodied in the NEA and the preliminary plans for the NEP2, can be outlined as follows: 1) The deregulation and decontrol of natural gas, crude oil and gasoline in order to: a) increase the supply of these fuels by allowing energy conglomerates their “fair return” on investment so that they will search more diligently for new sources of energy, and b) encourage conservation by removing “artificial” constraints and allowing the price of energy to rise to cover the cost of replacing the energy consumed (“replacement cost pricing”). 2) Some form of financial assistance is recommended in order to cushion the blow of rising energy prices to low-income families. 3) Economic incentives and regulatory reforms are recommended to hasten the development of conservation and alternative energy sources; BUT, 4) Strong reliance continues to be placed on nuclear power and coal to reduce US dependency on foreign oil and to act as transitional energy sources until solar, breeder or fusion technology is ready to become the major source of energy.
The price of conventional fuels has a strong impact on the development of solar. CEQ and OTA have claimed that the most crucial obstacle to solar development has been the artificially “low” prices of conventional fuels. According to CEQ, “In the past, consumers of oil, coal, and gas have been subsidized through systems of price controls and through unpaid environmental and national security costs.” Price controls have kept fuel prices below replacement costs, and massive federal subsidies have speeded the development of conventional energy sources. In the past 60 years, federal support from various kinds of incentives reached $133.4 billion (1976 $): $6.8 billion for coal, $17.1 billion for nuclear, $17.2 billion for large-scale hydroelectric facilities, $15.1 billion for natural gas, and $77.2 billion for oil.
As mentioned above, in order to make solar energy and conservation more attractive economically, OTA, CEQ, and the Government’s strategy calls for replacement cost pricing — charging consumers for all energy the cost (including the energy corporations’ “fair rate of return” on their investments) of producing new fossil fuels and electricity by removing price controls. In this way, solar energy would not compete at a disadvantage with other conventional sources in the marketplace. The rise in the price of fossil fuels and electricity would more quickly make certain solar technologies more economically competitive. Another consequence of raising fuel prices is that it makes nuclear power and other energy inefficient, dangerous, and costly sources (e.g. solar satellites) economically competitive with energy-efficient and safer solar and conservation technologies.
One major problem with this approach is that it relies on the profit mechanisms of the market to bring about the solar future. The criterion for selecting solar technologies is the amount of profit returned on investment rather than on the suitability of the technology for meeting our energy needs. It also leaves most investment decisions in the hands of the energy conglomerates which not only dominate the “free marketplace” but also dominate the development of all energy sources including solar. For example, the oil companies not only control oil and natural gas production and supply, they also are responsible for 25% of US coal production and own more than 30% of the US coal reserves. Mobil, Exxon and Gulf are heavily involved in nuclear technology and the oil companies own more than half of the US uranium reserves. Mobil and Exxon have both become prominent in solar photovoltaic cell development. General Atomic, a joint venture of Gulf and Shell. and Boeing Aircraft, are among the prime developers of the highly centralized solar “power tower” technology. Exxon, Standard Oil of Indiana, and Grumman Aircraft are involved in the development of solar heating and cooling technologies. General Electric, Lockheed, and other aerospace giants are involved in developing wind energy technology. Leaving the decision to the “free marketplace” insures that the kinds of technologies developed and the pace of development will be decided by these corporations.
The Impact of Price Increases
Deregulation of natural gas, and the proposals in the NEP2 for the deregulation of gasoline and crude oil, as one element of a return to “market forces”, will force low and middle income families who already spend about 25% of their income to “conserve” energy. But, low and middle income families already consume the least amount of energy. Unfortunately, their limited access to capital makes it difficult for them to purchase insulation materials or newer, more energy-efficient appliances even with large tax credits. Of course, conservation, in the sense of efficiency improvements, is vital to human survival. But forced “conservation” is really an attack on the already decreasing living standard of lower income families, if they cannot afford to “purchase” efficiency improvements sufficient to maintain a constant level of energy services. Deregulation will also increase the costs of all goods and services, fueling inflation, which makes it extremely difficult for low and middle income families to afford other basic necessities.
A Rational Energy Plan
Instead of attempting to promote solar and conservation through deregulation and decontrol of energy prices, a transition program should strongly regulate and stabilize the price of energy at a low price so that low and middle income families can afford it. This all-out campaign could be coupled with increased energy efficiency standards and should come at the expense of the profits of the energy industry. It should insure that every family can afford a certain necessary level of energy consumption pegged to a decent living standard. However, key to a transition program would be the constant political struggle towards the eventual control by the people over energy policy so that only safe and suitable technologies are developed. Only when this happens can we expect energy decisions based on people’s needs rather than decisions based on the corporate balance sheet. A rational energy plan means that the energy industry, the banks, the utilities, and the government agencies which serve them, no longer decide our energy future.
Among other financial assistance mechanisms, a transitional program under capitalism should utilize the following: lifeline rates, flat rates, large grants and subsidies, low interest loans (e.g., 3%), no shutoffs during the winter season because of inability to pay, and elimination of the fuel adjustment clause which allows utilities to automatically pass fuel cost increases onto consumers. The fuel adjustment clause has been a major source of rising utility prices and encourages the utility to inefficiently buy and use fuel since the consumer absorbs the cost. Construction work in progress (“CWIP”) should also be prohibited because it encourages utility mismanagement (building unneeded, costly and inefficient large centralized plants, while the consumer picks up the tab.
In addition, energy industry profits and practices should be strongly regulated. Conventional energy sources which are highly capital-intensive and environmentally dangerous (e.g., nuclear power and liquified natural gas) should be quickly phased out of energy production, since they also compete with solar for investment funds. Coal, even though plentiful, should be utilized only under the condition that it is burned and mined safely. Technology does exist to reduce some of the dangers of coal, but more effort is needed to make coal safer.
A rational energy plan would also include tax credits, low interest loans, refunds, grants, and large federal purchases to encourage solar technology commercialization. To achieve substantial market penetration for solar and energy efficiency measures, OTA advocates their purchase on the basis of total “lifecycle” costs, that is, capital plus operating costs over the device lifetime. Solar operating costs are, of course, extremely low. The problem is that most people cannot afford the initial investment which is often substantial compared with other kinds of energy technologies.
Fortunately, the National Energy Act does provide tax credits of up to $2200 for homeowners who install solar-heating equipment, windmills or geothermal energy devices, and up to $400 for homeowners who weatherize their homes or install more efficient furnaces. But, these tax credits do not explicitly cover investments in passive solar systems, nor do they address the needs of tenants or low and middle income homeowners who have little capital.
The National Energy Act also authorizes the purchase by the federal government of photovoltaic cells and solar heating and cooling equipment for federal buildings. However OTA has called for further incentives to spur solar development which should be supported. The incentives include: 1) additional incentives for solar heating beyond the tax credits proposed, 2) requiring all new buildings to be structurally compatible with, and properly oriented for, the later installation of solar equipment, 3) requiring consideration of solar technology in federal and state building programs, and 4) developing a more detailed program for equipment certification and installation. The Congressional Solar Coalition (comprised of about 70 representatives and senators) has called for the establishment of a “Solar Energy Bank” with a $5 billion revolving fund which would provide long-term, low-interest loans for the purchase and installation of solar energy systems in commercial and residential buildings. Proposals by environmentalists include requiring utilities to provide low-interest loans to consumers for the purchase and installation of solar systems. However, the NEA has prohibited utilities from providing loans for solar and most conservation measures.
Obstacles to Solar Development
A major obstacle to the development of solar electric systems (photovoltaic cells, wind systems, and low-head hydro) as well as cogeneration2 systems is not only their high initial cost but also electric utility practices which affect their economic attractiveness. In the past, utilities have: 1) refused to hook up the solar or cogeneration system to the utility’s power grid (transmission lines), 2) refused to buy excess power generated by these systems, and, 3) penalized the owners of these systems with higher electric rates because they use less utility-generated electricity. The National Energy Act has provisions which: 1) explicitly prohibits discrimination in the selling price of electricity to owners of solar and cogeneration systems, and 2) requires that utilities purchase any excess generation at “equitable” rates, (although “equitable” remains to be defined precisely).
Another major obstacle to the development of solar electric systems is that they tend to be technologically and economically incompatible with nuclear power. However, many utilities have already heavily invested in nuclear power plants to provide “base-load” power. Utilities point to the intermittent quality of solar systems (e.g., when the sun goes down or the wind stops blowing) as the reason for relying on nuclear power for base-load power instead. They claim that solar may be used only for peak or intermediate load, which means that these systems would be operated only during periods of high demand. This would make the solar systems much less economical. These systems are the most economical when they are allowed to operate as much as possible (providing “base-load” power), because they are capital-intensive, (requiring a large initial investment), but have a relatively low operating cost. A rational energy plan would utilize solar for “base-load”, intermediate and peak power by carefully balancing and mixing the different solar technologies so that they run as long as possible and fill in for each other when one is inoperative. A utility which relies on small solar units will need between 20% and 35% less reserve capacity than a utility which relies on large nuclear units.
The government’s reliance on nuclear power as a major energy source in the transition period will therefore tend to stifle the development of solar energy. The alternative in the short run is to utilize natural gas and oil in the most efficient manner. There is enough natural gas and oil, according to a U.N. report, to last another hundred years. In the transition to a solar economy, supporting fossil fuel systems should be relatively low in capital intensity, safe and easily replaceable by solar at a later date. Natural gas is probably the best transition fuel, since a large number of homes are already heated by gas and it requires less capital investment to develop. Gas could be used as a backup system for solar heating and could be replaced easily by methane made from biomass. Of course, oil for solar back-up is even easier to store.
The Job Impacts of Solar and Conservation
The most important technical step in the transition to a solar economy is to install energy-efficiency (“conservation”) measures in homes, commercial buildings and in industry. Weatherization of residential buildings in urban areas should be given first priority, and programs utilizing grants, subsidies, and low-interest loans should attempt to meet the needs of tenants as well as middle income homeowners. Not only do energy-efficiency measures reduce waste and reduce our dependence on imported oil, but they also provide direct employment. These measures result in fuel cost savings which can be invested in a region to stimulate the economy and increase employment further (“indirect employment”).
According to the Massachusetts Energy Office, “a 20% reduction in energy consumption by the residential sector alone could inject $1 billion into the region’s economy by 1985. In addition, conservation in the residential sector could mean the creation of 35,000 new jobs”. Other studies done in California and Long Island, comparing the regional impact of solar/conservation versus nuclear power have found that dollar for dollar, the solar/conservation option provides more energy and more jobs than nuclear, especially for the locality. On Long Island, an investment in solar/conservation would generate nearly 3 times as many jobs and save or produce twice as much energy as an equivalent investment in a twin 1150 MW nuclear plant (the same capacity as the proposed Seabrook nuclear plant). In California, the solar power “equivalent” of the proposed Sundesert nuclear plant would generate 6.6 times as many jobs. Conservation alone was found to save the same amount of energy that a new nuclear plant would produce, at one-tenth the cost.
This indicates that in deciding how a region is to develop its energy resources, consideration of the job impacts of competing technologies must be taken into account. (Neither the Department of Energy nor the Department of Labor has done a labor-impact study of energy development.) Solar energy and conservation can provide union wage scale jobs spread more evenly throughout each region so that construction workers do not have to relocate in some remote area, such as where a nuclear power plant is being constructed, in order to find work. There would be many jobs in urban areas where unemployment is highest. Jobs in almost every category of skilled and “unskilled” labor would be created by the intensive implementation of conservation and solar. In the words of Edward Carlough, President of the Sheetmetal Workers International: “Even figured conservatively, energy-saving modification work and an expanded use of solar energy could put all unemployed sheet-metal workers back to work.”
Thus, a rational energy plan should establish a “worker bill of rights” to help ease some of the current union opposition to a nuclear moratorium or to a slower construction schedule for large-scale energy projects. This would include a one year occupational retraining program, family relocation payments, income maintenance, health insurance, mortgage insurance, and low interest loans for those workers displaced by the shift in technologies. A rational plan would also insure that all safety precautions are taken to protect workers involved in energy production. Even solar energy technologies can be dangerous. Under capitalism, we can not expect the energy industry to develop even solar technology safely.
The Future Begins Today
We have seen that even the government and its advisory committees have begun to realize that the promise of solar energy is vast. When and whether its potential is realized, however, will depend in large measure on whether our energy future is decided by the energy industry or by people who realize that solar energy is the only long term solution to our “energy crisis.” One thing is clear — the longer the commitment to solar is delayed, the harder it will be to make the transition.
Frank Bove is the energy coordinator for Mass. PIRG, a student-run statewide organization. He formerly was on the staff of SftP and Boston Clamshell. He is a founding member of the Boston chapter of Environmentalists for Full Employment and is a member of NAM (New American Movement).
- This strategy is basically echoed by the New England Energy Congress, a group of 120 representatives from consumer, low-income, labor, and environmental groups, and utilities, banks, industry, and government, who met for 6 months to develop a regional energy strategy.
- Cogeneration is the simultaneous generation of useful heat and electricity.