At first glance, it doesn’t look like good news. In the most recent elections, Republicans gained control of the House and narrowed the gap in the Senate. Considering that Congress couldn’t get an energy bill passed when the Democrats had a larger majority, the running fear is that the chances are now even more remote that one will pass.
Actually, the opposite will happen -- for three reasons,
First, presumptive Speaker of the House John Boehner (R.-Ohio) knows he has to accomplish something other than yammer about creeping socialism. Incessant complaining and a failure to follow through helped undo the last Republican revolution. Whether his allies like it or not, statesman-like compromise is on the agenda.
Clean energy, luckily, remains one of the few issues that enjoys bipartisan support. It also plays well in most regions of the country. Forget the rejection of Prop 23, an anti-greenhouse gas regulation initiative proposed in California, for a moment. Voters in Missouri -- the heart of coal country -- in 2008 voted for an initiative that required utilities in the state to get 15 percent of their power from renewable sources, according to Rosalind Jackson at Vote Solar. The initiative came about after the legislature failed to act. Voters in Colorado and Washington have both passed renewable standards.
Many now understand the connections between renewable energy and national security and job growth. Two years ago, green jobs were synonymous with Van Jones. Now, they are synonymous with under-employed contractors getting licenses to perform energy retrofits andsolarinstallations. Manufacturing is also experiencing a revival with clean technology. In one of globalism’s stranger twists, Chinese companies like Suntech Power Holdings and A-Power Technologies are building factories in America to curb shipping costs and qualify for the “made in America” provisions in government contracts. Suntech has even developed machinery to reduce the cost of hiring American factory workers.
Orders for electric car components have perked up manufacturing in Michigan, Indiana and Ohio. Boehner will not walk away from the table.
Neither will Obama, which brings us to reason number two. The Republicans will demand subsidies and other perks for the nuclear and offshore oil drilling. Obama will give it to them. In fact, Obama offered these concessions earlier this year for free and lost his leverage. At the time, the President was channeling his inner Jimmy Carter, i.e., taking the noble route and shunning resorting to political horse trading. Now, he will channel the Lyndon Johnson From Within, and make his opposition pay for it. The Republicans will claim victory. The Democrats will assume a pose of pretend restraint, and a bill will pass.
A compromise on those terms, then, holds the seeds for the third cause for rejoicing: conventional energy facilities can take years to build and consume gargantuan amounts of money. Constellation Energy recently dropped plans to build Calvert Cliffs 3, a 1.6-gigawatt nuclear plant planned in Maryland, after the federal government wanted a $880 million fee for issuing a $7.6 billion loan guarantee. The entire project was budgeted at $9.6 billion, or $6,000 a kilowatt. The “overnight” costs of a nuclear plant -- or the cost minus fuel, waste disposal and years of interest payments -- are estimated at $4,000 to $8,000 a kilowatt.
Compare that to solar. The U.S. installed 1.3 gigawatts of solar panels in 2009 and 2010 and will install 1.4 gigawatts of solar in 2011, according to Shyam Mehta, Senioa Analyst at GTM Research (the number counting group in my company). Solar will continue to grow 15 percent to 19 percent a year in the U.S. Solar costs $4,000 a kilowatt before incentives and is dropping.
In other words, the solar panel industry will install the equivalent of a reactor annually, and that doesn’t even include the 19 gigawatts' worth of solar thermal projects proposed for the Southwest or even the activities of the wind industry. Solar panels can only generate power in the daytime and nuclear plants produce power 90 percent of the time. Still, daytime power is what is in demand.
Constellation and its partners formally began the licensing process for Calvert Cliffs 3 in 2007. It wasn’t expected to go live until 2015 or 2017. By then, the solar industry alone will have installed the equivalent of eight Calverts. (Disclosure: but for the onerous costs and construction time, nuclear makes a lot of sense to me.)
Four years after the grand compromise, it will be tough to find green detractors.