Aftershock: An energy wake-up call

Let’s wake up! Once and for all, let’s break out of this vicious cycle of awareness followed by denial.

Today, 70% of our power supply comes from fossil fuels and 20% from nuclear. Approximately 6% comes from hydro-electric plants and only about 4% comes from other renewable sources.  Over the next quarter-century, the total demand for electric power in the United States is expected to increase by roughly 25%. This will create a unique opportunity to re-balance and diversify our power supply.

Greater diversification can insulate us from commodity price instability, supply disruptions, and inevitable accidents. And diversity can help us clean our air, conserve our water and foster technological innovation. 

 Increasing the contribution from renewable resources is the key to our diversification strategy. Here’s why:

 * Renewable energy is cost-competitive.

Costs to build renewable power plants, such as wind farms, sit in between lower-cost natural gas plants and higher-cost coal and nuclear plants. Yet operating costs of renewable power are very low because the fuel is free, 365 days a year. And while natural gas looks pretty attractive at current rock-bottom prices, what would happen if the cost of natural gas were to approach levels at which they were just a few years ago?

Despite what we might predict today, the undeniable fact is that commodity prices are by nature unpredictable, while renewable energy costs are fixed up front. A balanced long-term view of power supply options renders renewable power competitive with natural gas and significantly less expensive than new nuclear or “clean coal” plants.  

* Renewable energy can be added to our utility grid easily and quickly.

Renewable generation equipment, such as wind turbines and solar panels, is modular – that means it can be built to fit our power needs, and can be easily expanded. The development and construction period is typically about half that of natural gas, and a fraction of the time it takes for coal or nuclear. 

And because many renewable technologies distribute their power generation across multiple production units, they’re not subject to whole-plant failures and maintenance outages, as are large fossil or nuclear plants. In fact, the reliability of the electrical system will be improved by having a larger percentage of distributed resources.  

Because the sun doesn’t always shine, and the wind doesn’t always blow, critics claim that this “intermittency” is a major drawback for renewable energy. No one, though, is suggesting that our entire electricity supply come from renewables. Most electrical grids can easily support about 20-30% of their supply coming from intermittent renewable sources, by balancing those with other on-demand electricity sources like gas-fired or hydro plants.

* Renewable energy creates jobs and technological innovation.

Renewable energy is a nascent business in America, and so we’re only beginning to see its job creation potential. As demand for renewable energy grows, new investment will increase as well. New jobs will be created in industries ranging from component manufacturing and assembly to construction and operations. The economic rewards from lower costs and better performance will spur technological innovation, and create even more jobs.

* Renewable energy is environmentally benign.

Renewables produce no harmful emissions. And many forms of renewable energy, like wind and solar panels, consume none of our scarce water resources. Whether you embrace or deny climate change arguments, would you rather have electricity from a clean source or from a source that pollutes? 

So let’s be realistic about the aftershocks that are sure to follow a wrong-headed approach to our energy supply. Let’s reduce our risks by diversifying our supply. And let’s tap the power of renewable resources to help get us there. It’s simply common sense.

Michael Polsky is founder and CEO of Chicago-based Invenergy LLC.