Why Not Just Make More?

by Greg Decker

We all know that living on a limited budget means making difficult choices. It means, when the fridge is empty you buy more food... or you eat less. It means when your car is on empty you buy more gas... or you drive less.  And, when the house is cold you turn up the heat... or you put on more clothes. Economic history teaches us that most people choose to turn up the heat, fill up the tank, and go for a drive to get more food. So why is it that we, Vermonters collectively, are spending so much money trying to use less energy instead of just making more?

The disingenuously named Smart Grid will produce exactly ZERO net increase in electricity yet we're about to spend $138,000,000 on it anyway. Why not make more electricity instead? Efficiency Vermont spends about $30,000,000 a year yet produces nothing. Why so much effort and expense to help us eat less? When you're hungry buying an expensive diet plan is just plain dumb.

We're told the new grid will be done by 2012 and will cost $138MM. In these same three years we will probably spend about $100MM on state funded efficiency programs, and an untold sum on extravagant luxury green electricity that we can't really afford.  All done and said Vermont is looking at approximately $250MM in government extorted funds going towards our new diet plan. Sure could feed a lot of people with that kind of money.

For instance, Hyperion Power has a small scale 25MW reactor that cost around $25MM each. For the $250MM efficiency expense we could increase our power generation capacity by 250 Mega Watts. That sure is a lot of salsa.  So, for the same investment of around $400 for every man, woman, and child in the state you could produce ~ 0.8 Mega Watts of power for each and every house in the state.

Or, you could go on a diet. I like steak, how about you?

Comments

[GreggB]

I like pork chops and think everyone else should eat less steak and everyone else should use more public transportation. Then again with cow farts being a significant source of greenhouse gas maybe we should eat more steaks. Oh I'm so conflicted. It's so confusing being green and saving the world. Let's just build a smart grid and a monorail.

[Vermont Woodchuck]

If you cut down trees to put up a shopping center, that creates a carbon footprint.

Cut down those same trees, burn them in a "biomess" plant and the carbon footprint is neutral (don't count S&H).

It depends on who is spending and making the money.

Now do you understand?

[Chris Campion]

Apparently we're not interested in increasing our capacities, we're interested in reducing them, and reducing the standard of living for current and future generations. A SmartGrid grant is just our tax dollars being returned to us, full of sound and fury, signifying an economic nothing. Reducing some demand based on increased awareness of electrical costs does not substantively increase supply - it does not increase the base load. Why is it that struggling 3rd world countries look to expand their electrical supply and transmission? So their economies can grow. Do they know something we do not?

[Gregory J. Decker]

So, Mr. Woodchuck, would a fair characterization of you point be that its all about eating somebody else's lunch?

I should add to my post that I like eating MY OWN steak. Grain fed, not the gamy tasting pastured beef you find in VT either. Rare, with no vegetables. Cooked one piece at a time on my 8 foot grill using enough hickory to heat the house for a week. When your cooking your own steak you can do ridiculous things like that.

[Dennis Lukas]

How many years has it been since a new power plant or oil refinery was built in the US, 30 or more years? It won't be capitalist that kill America it will be the environmentalists and their lawyers.Stock up on candles!

[Tom Evslin]

Gregory:

The Smart Grid is NOT about using less electricity; it is about using electricity more efficently AND reducing the cost of adding supply. It's also about using electricity to displace imported oil used for transportation and home heating. That doesn't mean driving less (unless you choose to), it means driving more cheaply. It doesn't mean turning down the thermostat (unless you choose to); it's about not importing your heat from the Middle East.

These new applications for electricity will require adding more supply. As you can see in my comment on my smart grid post, I'd like not only to relicense Yankee but replace it with a bigger and more modern plant. I'd like to buy more from HQ as well. And I'd like to add to the mix of source.

Now here's why the efficiency is important:

1. Today we greatly overbuild to allow for peaks.If we add a mw to base load supply and demand, we have to add many 100s of thousands of kws in aditional supply to allow for both peaks and outages. This inflates the cost of adding baseload capacity.

2. our transmission lines have to be built for peaks. Even if we add new generating capacity (which we will), we would also have to build new transmission capacity. It's cheaper to add smarts to the network to use the existing capacity better (or even new capacity when we eventually build it)

3. today the cost of using very expensive peak power is socialized; it's paid by all customers. With a smart grid the costs can be billed to those who incur them. This is how markets can work when there is enough informtion.

4. the smarts in the grid and the substations use existing supply more effectively. More kws delivered per kw generated.

Demand side management is neither new nor socialistic nor government control. We've had offpeak rates forever (should've used them more). Utilities have dynamic peak contracts with big industrial users. Cheap electronics and cheap (relatively) data communication make it possible for small businesses and individuals to benefit themselves (and the total system) in the same way if they want to.

[vermont-traveler]

All of the above sounds good, so why do we need a government handout to fund this thing? If we are going to get greater electrical efficiency and some cost saving, why not run up a business plan and attract investors?

There is a lot of untapped hydro sites throughout the state, which would serve to cover base load needs very well, IF the state natural resource people let go of the reins and give people the opportunity to develop these sites.

[Gregory J. Decker]

Tom,

1. "We" do not over build for peaks. The power companies might. If the Smart Grid was truly a good investment the power companies would be building it themselves. But you don't see that because for them its easier, hence a better use of their capital, to simply make more electricity.

2. If its cheaper to build the smart grid than to build capacity then why aren't the folks who are in the business of selling us electricity building it?

3. We all understand the merits of a Smart Grid. The question is, why are we socializing the cost of building it.

4. Agreed, the Smart Grid is not per se socialism. In fact as you point out it will bring new information to the market making pricing more competitive. Tax payers paying for the new grid is however an entirely different matter.

[Vermont Woodchuck]

Mr. Decker, you have that right.

Sustainability is bunkum; people will do what is best for themselves. And they should.

Whether that 32 oz. steak (bone in) is or isn't good for you is not the government's business and certainly not PETA's.

If someone is going to make money from this boondoggle, it is going to be me, not the government or some eco-nazi group!

[Tom Evslin]

Good discussion.

I should have made clear that Vermont utilities WERE already building the Smart Grid prior to stimulus for all of these good business reasons. Vermont Electric Coop already has smart meters at most of its customers, for example, and has found that the savings just in avoided meter reading and outage management will surpass expectation.

Without the stimulus money and given the limited ability of the utilities to raise capital, it would've taken eight years to do what should now take three - but it would've been done. The benefits would have been deferred and the full cost would've been born by thir investors and us ratepayers - but more than offset by the benefits.

So, you ask, why the taxpayer money?

Well, there was this stimulus bill and it took our tax dollars (or money borrowed in our name) and allocated a relatively small portion of it to smart grid. A better use, in my view, than bailing out banks or even than fiscal bandaids - but perhaps shouldn't have happened at all (I won't argue that one way or the other in this discussion).

Vermont utilities (encouraged by the state including me) applied for a chunk of this to lower their costs and speed the benefits of the smart grid they were already planning. We could have let our money go to some other state; IMHO that would've been dumb. So we did the best we could to get it here and we succeeded.

If we execute well, it'll be a good project.

[Dennis Lukas]

Considering the vast amount of financial liabilities Vermont has,pensions,health care,bridges, roads,and generally poor infrustructure totally close to a billion dollars all of which have no future funding and wil soon fail leaving the state bankrupt.Is it not the right time to build a very large neuclear power plant? We have the technology, business tallent, Rich Tarant,Tom Evslin and many other business savvy people who could form the business plan and sell it.Why do we keep giving US dollars to Canada for electric when we need them here? Vermont could sell the power and make a profit. It could cut Vermoters electric bills,It could reduce the cost of operations to the ski industry and make it less expensive to ski, bringing more people to ski here, thus generating income for the state.Vermonters could heat their homes as they did in the sixties with cheap clean electric.Upgrading and expanding electrical infrastructure" with enough profit put the cables underground" would create jobs.
Vermont would be a truely green state with a income to build on for the future.It is doable and easily financed.Todays technology makes it safe and efficient.This would be bold move to save all those people that will not have a job or whose retirement benifits will not be there in a few years as the state declairs bankruptcy.