by Stephen Lacey
March 20, 2017

Photo: IIHS

Stephen Lacey: This is The Energy Gang, a weekly digest on energy, cleantech and the environment. I'm Stephen Lacey. This week, is the future of electric cars in doubt here in America? States are rolling back their support for EVs. The federal government is revisiting fuel standards designed to support EVs, and consumers, well, they're still not buying like many people assumed.

Then, the official Trump budget. Yes, we said last week that we'll have to wait and see what Congress does before making judgments, but the new numbers are really dramatic. Plus, we'll talk about Trump's business advisory council, which is filled with some of the biggest renewable energy investors in the world. Finally, can Elon Musk fix South Australia's energy crisis? From Boston, welcome to you all, and in Washington, D.C. and New York are my two co-hosts, Katherine Hamilton and Jigar Shah. Hello, Katherine.

Katherine Hamilton: Hello.

Stephen Lacey: Hey, Jigar.

Jigar Shah: Hey.

Stephen Lacey: The topic du jour here in the United States is electric cars. That's because, yes, there's yet more news on the matter from the Trump White House. Trump himself this week said he plans to revisit fuel economy standards set by the Obama administration, but the future of electric cars goes way beyond Trump. The New York Times had a piece last Saturday looking at falling support for EVs in states across the country, so not long ago, 25 states had policies explicitly supporting electric cars. They had rebates and tax incentives and now it's down to 16 according to the New York Times tally. That number is likely to keep dropping.

Why is this happening, and will diminished state support combined with changing federal policy and low gas prices further marginalize EVs? I think this New York Times piece is probably a good jumping off point to discuss all these factors. Jigar, why are states dismantling their rebates and their tax support for electrified transport?

Jigar Shah: Well, I think in general, a lot of states like Colorado and others had these very rich incentives, some of which were obviously abused. I remember when they had no cap on their tax credit, and then Tesla, people were getting $12,000 tax credits from their Teslas. Some of that's being right sized. I feel like, with 30 new car models coming out that are plug-in hybrids, we're thinking about buying a plug-in hybrid, I just think that there's actually a tremendous amount of consumer choice, which is only happening now.

I would say by the end of 2017 we're finally going to have something on the order of six major car models for SUVs that can be electric only for 20 miles or so, which I think is a big deal, right? There's a lot of folks who want SUVs and not Nissan Leafs, and so I'm not willing to write off the electric vehicle movement, and I also think, given the conversations we've had with Proterra and others, there's a tremendous amount of interest from 30 cities around electric vehicle procurement. They just announced this week that they're going to buy $10 billion worth of electric vehicles over the next five years, which is like 100,000 vehicles. That's not a small number.

Katherine Hamilton: If the California Zero Emission Vehicle Program holds, that's nine states, and that's a third of the EV market right there.

Stephen Lacey: Well, that brings us to the national politics. Trump has hinted in the past that he would revisit the EPA waiver that allows California to set its own very aggressive target above what the federal government is calling for, and of course, a bunch of other states have followed California, but if that waiver is taken away, then you disrupt all the ambitious zero emissions car mandates around the country.

Jigar Shah: But that waiver's been around for decades. It was contemplated in the first EPA Clean Air Act legislation, so it's not like there's no precedent here. They can't just wave their magic wand and rescind the waiver. California will take them to court and probably win.

Katherine Hamilton: Yes. There's no legal precedent for it, because a waiver that has been granted has never been revoked, and Trump does seem focused instead on Corporate Average Fuel Economy (CAFE) rather than the waiver at this point, but we'll see because those nine states being a third of the car market is a pretty big deal, and that could drive EVs and drive the manufacturers, and that brings me to a question for you guys. Why would the car companies want to pull back on CAFE when it seems to me that it would be in their, not in their best interest globally?

Stephen Lacey: Well, consumer demand has changed so much since those standards were put into place. The auto manufacturer argument is that in 2012, gas prices were rising. They were, what, I don't know what the exact price was, but nearly double what they are today. The projection for new models, new fuel efficient models and EV adoption was much higher than what it is, given consumer behavior because of low gas prices. I think the fundamental dynamics of consumer behavior and fuel prices have changed how supportive the auto makers are. That's the core reason here.

Katherine Hamilton: That happens all the time, though. Gas prices go up and down all the time, and it's much harder to retool a factory. It seems to me that you're going to want to stay on a trajectory or else somebody's going to eat your lunch, just the way Toyota did on hybrid vehicles when the big three decided to pull back on their hybrid vehicle programs.

Jigar Shah: Well, that is the big change in the last 15 years or so, basically I would say since the end of the Clinton administration, every sort of time the auto makers are forced to deploy innovation, they push back when gas prices go down. I think there's a lot of data. I was talking to the folks at Cambridge Energy Research Associates. Their data through McKinsey shows that for less than $3,000 a car, they can basically hit the 2025 CAFE standards, just by light weighting the vehicles, by doing simple things that they've known about for years that have come out of their research programs that they already do to meet the standards in Europe and in China who have much stronger standards than we have here in the US.

I don't actually think that this is really about that as much as it is about the auto companies basically saying, "We have the ability to reduce regulation on ourselves and basically hand a blow to Tesla and some of these other folks." I think that what's changed today is that the European auto makers now all manufacture cars in the U.S. There's really no monopoly here by the big three auto makers. I think that the Europeans are going to steal market share from their plants in Kentucky and South Carolina and Mississippi and these other states, and so I agree with you, Katherine. I think this is a bad move by the auto makers.

Stephen Lacey: Going to that cost issue, that's also a major piece, the cost per unit. The auto manufacturers are claiming that it's $6,000 per automobile to meet the 2025 standards, the 54.5 miles per gallon standards, and the White House claimed it was $1,500.

Jigar Shah: Yes, that's been refuted.

Stephen Lacey: Right, the White House claimed it was $1,500 per car, and you were saying the other number is $3,000, which probably seems like the more realistic number.

Jigar Shah: McKinsey and CERA say $3,000, so for whatever it's worth, but I think the bigger thing is that in electric vehicles, the auto makers are rightfully saying that they're losing $10,000 a car.

Stephen Lacey: Yes. GM says it's losing $10,000 for every Bolt.

Jigar Shah: Right, and I think that's probably true. My sense is that this is where, I've said this a number of times in the podcast, which is, I think there's a lot of people in our punditry who are saying that electric vehicles will eventually get to the same cost as internal combustion engines because the cost of batteries are dropping. I think that is patently false. That is never going to happen.

My sense is that electric vehicles will always have some premium over gasoline-powered vehicles, which is why we need to pursue the same kind of business model innovation in electric vehicles that we did in the solar industry. People need to start being able to buy cars on a cost per mile basis as opposed to buying them as a capital expense up front.

Stephen Lacey: Ok. That's a really excellent point, and which brings us to the initial premise, which is, states are dropping support. If you think about electric vehicles as a capital expenditure, that necessarily dictates policy, and most policy in the states is tax support or up front rebates.

Naturally, when legislatures change, when the political winds change, lawmakers are likely to reverse those incentives, and we've seen that in a number of states. At least 10 state's incentives have dropped off the map, so then, unpack what that looks like. If you're thinking about mobility and investing in electric cars on a cost per mile basis, what does that do to the way we structure incentives?

Jigar Shah: I'll give you a real example. I've been lobbying NYSERDA pretty hard. The governor has an electric vehicle goal that they set out in 2013 which still hasn't been met. What I said to NYSERDA was, "Look. Why don't we target the people in New York who drive for a living, right?" Home health care workers, salespeople, so anyone who basically uses an app to get paid back by their employer on a cost per mile basis, right? The federal reimbursement rate is, I think, 52 cents a mile now. You go to them and say, "NYSERDA will pay an additional 52 cents a mile if you use an electric vehicle for your sales work. You prove that you got reimbursed by your company and NYSERDA will match it with another 52 cents a mile."

Not only are electric vehicles cheaper than the internal combustion engine car that you buy today on a cost per mile basis for people who are driving 50 plus miles a day, but you can also then make it even more lucrative by matching the cost per mile to some sort of cap, right? Let's say $10,000 per consumer, and then that could be a reducing program, right? You say, "We'll match it at 52 cents. Once $5 million goes out the door from NYSERDA, then the number can go down to 42 cents, and then it just keeps going down to zero, just like the block program for solar."

Then that does two things. One is it supports people who actually drive 20,000 miles a year, of which there are many, and two is it actually gets it into the hands of people who are working hard every day, right? Most people who get reimbursed for mileage are not people who are in the 0.1 percent.

Stephen Lacey: The other part of this debate revolves around how to pay for roads and other infrastructure to support automobiles. If EV drivers are not paying a gas tax, should they then pay a fee for their automobile? Now more states are adopting these fees, which obviously deters investment in electric vehicles. If you're thinking about incentives in the way that you just described them Jigar, how then do you factor in paying for the infrastructure used by automobiles?

Katherine Hamilton: I reached out to the Union Of Concerned Scientists to ask them that question, and Joshua Goldman, who had been on our show before, said that they definitely take the position that EVs should pay their fair share of road taxes, but right now, it's out of proportion to the wear and tear that they put on the roads, so in some cases, pickup trucks are paying less than EVs and arguably would be doing more harm to the roads. Keep in mind that EVs already pay taxes on electricity, so they're paying for their electricity. They pay registration fees, and so they're paying into the system on some level, but certainly there could be some way to recoup their share of road taxes that would normally be paid through gasoline.

Jigar Shah: I think the answer is similar to the answer for solar PV, which is, the first job is to get these industries to scale. Once these industries get to scale, then we have to deal with the ramifications, like figuring out how we actually deal with the ramifications before these industries get to scale insures that the industries never get to scale, which of course, is the exact thing that the Koch brothers want by feeding all this misinformation with $10 million of their capital.

Stephen Lacey: That's a key piece of that New York Times story. The Koch brothers have shifted their attention and poured money into groups that are fighting rebates and tax support for electric vehicles. Then, what's your take, given the political attacks from the Koch brothers and the decline in state incentives? Are electric vehicles on the ropes? Are they in a more vulnerable place than they were before?

Jigar Shah: No. I think that in general, there's a certain percentage of the population, whatever you want to call it, let's call it 5 percent, who want electric vehicles, people like myself, but second, I think that there are a tremendous number of people who should want electric vehicles who are coming to the realization that they should, like people who get reimbursed for mileage, because electric vehicles have a much lower cost per mile than internal combustion engines do, and fleets, like the 30 cities who have announced a $10 billion purchase program.

My sense is that if these 30 cities follow through with their $10 billion EV purchase program, you are going to see an additional 30 cities follow suit for no other reason than healthcare impacts. The healthcare impacts of city vehicles is gargantuan, and these mayors have a responsibility to reduce that cost.

Katherine Hamilton: Yes, and don't forget the disruptors out there, too. The Ubers and Lyfts and the autonomous vehicles, and the car companies need to start thinking about that, about what are people really going to be buying? There are still going to be people who buy the F150 religiously, but on the other hand, there are also going to be fewer people buying cars. They better figure out what they're selling.

Stephen Lacey: That's the factor that is different from 2012 when these auto standards were put into place. We were thinking about electric vehicles on their own. Today, we're thinking about mobility, and electric vehicles, regardless of fuel economy standards, fit nicely into the vision of mobility that even the biggest auto makers are embracing. I think that's why we find ourselves in a much different place, so even if these standards are revisited and a number of states start rolling back their incentives for individual car owners, there is a broader move to changing the way that consumers are using automobiles, and also paying for them, and electric vehicles, again, are a really important piece of that vision.

Let's shift gears–we vowed after last week's Trump heavy episode that we'd limit talk about budgets until the real work begins in Congress, but Trump's official budget, called the "skinny budget," that's a real term, was released this week, and the cuts are even deeper than expected. This budget is truly skinny. We're going to talk briefly about those numbers, and then we'll shift focus to Trump's business council.

I reported a story this week with my colleague Colin Smith about the investments that executives on Trump's council are making in renewables and climate change mitigation, and the numbers are staggering. First to the budget numbers. Katherine, what's the latest that's causing everyone to light their hair on fire?

Katherine Hamilton: It isn't even so much that there's specific programs that we knew, like EPA and DOE programs that were going to get cut. It's the number of programs that were just completely eliminated. This is really the, as Steve Bannon says, the deconstruction of the administrative state. This is really just having, not just a million tiny cuts, but a million really big cuts. This is like, they're calling this draining the swamp. I call it draining the brain.

It's the shock and awe budget, like what is going to be cut? Things that everybody agrees are good ideas, like Public Broadcasting and National Endowment for the Arts, things like that, but on the energy side, I was just going through the entire budget on, like what are all those programs that we really care about? In Department of Commerce, the Economic Development Administration, or the Manufacturing Extension Partnerships, a lot of programs that really help communities. In NOAA, the coastal and marine programs. LIHEAP, which is Low Income Home Energy Assistance Program that helps people who can't pay their bills to pay their heating bills. Community Development Block Grants.

It eliminates, in State Department, certainly the Global Climate Change Initiative, all UN Climate payments, it cuts back on bank funding, multilateral banks like the World Bank. Under Transportation, it eliminates TIGER grants, so those are some of those grants that go to cities for all those great programs we've been talking about. NASA, it eliminates their Office of Education, to get the word out.

Then, for Department of Energy, it completely eliminates ARPA-E, which has historically had really strong bipartisan support. It was created under the Bush administration. It eliminates the Weatherization Assistance Program, which helps the poorest of people get more energy efficiency in their homes. It cuts state energy offices down to zero and says it will only support limited early-stage R&D, that basically the private sector can do everything else.

Stephen Lacey: What I found really striking is that the Trump administration is proposing completely eliminating things like the Appalachian Regional Commission, the Economic Development Administration, programs that are designed to help communities in need, communities like those in Appalachia that are suffering because of the decline in coal jobs.

Katherine Hamilton: Yes, absolutely. The Appalachian Regional Commission is in 13 states, and it does specifically workforce training. This is going to hurt the people who voted for this President.

Jigar Shah: I just don't, I don't love talking about this stuff, just because I feel like normally a President's budget is mostly ignored, but a lot of President's budgets actually come with white papers and they discuss why they did this, did that. Trump doesn't even know how to write a white paper, so I don't see any of those things happening. I don't understand what advocacy will happen on the Hill for these programs, given that they haven't actually filled any appointed positions, and so I just, it feels like this is a document written by the Heritage Foundation, submitted by the Trump administration, to the Congress, which is going to be summarily forgotten.

Katherine Hamilton: Well, here's the thing. This is what I think we need to watch out for. You're right that this is not the budget that will pass eventually. The problem is that Trump does have a lot of leverage here because Congress wants to deal with the Affordable Care Act. Paul Ryan is desperate to get tax reform done and lower the corporate tax rate, and so Trump wants to get some of his stuff done, too. A lot of this, this is so much noise in this budget.

There's so many bits and pieces that are cut that aren't going to be stood up for by some constituency. A lot of these constituents are the poorest of the poor. How are they going to lobby for these line items? Trump has a lot of leverage in getting a lot of what he wants done done, because he, in the end, has to sign all these bills. He's not going to sign something, that they give it to him, that's fully loaded back up.

Jigar Shah: I doubt it. I just think that you guys should think this through. Obviously, Katherine does this on a daily basis, but if you think about how this works, basically all of the red states except for maybe one or two are net takers from the federal government, right? They basically submit $1 to the federal government, and they get $1.75 back. All the blue states basically are net givers to the government, so they give the government $1 and get back 82 cents or something, right?

The way this'll work is if they cut the budget, and then they cut taxes, which is probably part and parcel of this. Then the tax rates will go up in the blue states, and they'll actually have more money and more discretion on how to feed, do all these programs better for poor people, and all the red states are going to be crying about how they have no money because they can't raise taxes because they refuse to. This doesn't seem like it makes any sense whatsoever to the Trump voters, and they're basically voting against their own self interest.

Katherine Hamilton: Yes, however, you think about this. Who gets punished when a budget like this gets passed? It's not the President that gets punished. It's the members of Congress.

Jigar Shah: And the governors, and the Republican governors.

Katherine Hamilton: Yes, and Trump would just as soon shut down the government. He is not going to feel it if the government shuts down. It will be the members of Congress that feel it, and so they're the ones that are going to have to go, pay the piper when they get back to their districts or their states. I think they do, yes, have an incentive to not pass what he does because of all these constituents. At the same time, their leverage is a lot less strong than his right now.

Stephen Lacey: I think we've fallen down this rabbit hole far enough and we probably don't need to talk about this anymore, but there is one thing I want to take issue with, Jigar, that you said last week. You said you believe that there is no real intellect behind the decisions that the President is making, and you said that in the context of the budget.

I think we have enough data points now to at least show, maybe the President himself is not thinking about this in a big way, but he is listening to the select few people around him, the Director of OMB, people like Steven Miller and Steven Bannon, people who want to completely decimate government and eat it from the inside out. He has taken a cut and paste version of the Heritage Foundation's budget and handed it over to Congress, and added even more deep cuts to EPA budgets and DOE, and what we've seen is that there is a very calculated effort here. There is intellect behind this. There's a very specific way of seeing the world, and that is what they're pushing, and it's become very clear.

Jigar Shah: That's different, but that's different from what I'm saying. This President basically lives in Mar-a-Lago and commutes to D.C. It's not the other way around, right? He literally has outsourced the entire presidency to these people that you're mentioning. The way things work, right, when you look at political scientists and you say, like, "How do people vote in state legislatures? How do people vote in Congress?" No one knows who their legislative official is. They don't even know who they're voting for.

This is a referendum on the President. This President, I guarantee you, when he goes to his next stadium full of people is not going to defend this healthcare act. He's also not going to defend the fact that he cut programs for poor people. He's going to say, "Oh, that happened? No, it didn't. We're going to make low income housing assistance programs better. We're going to make affordable housing better." He's going to lie to people.

Fine, but what that does is reduce his favorability ratings, and if his favorability ratings go to 35%, which is what I think is going to happen, you are going to see blood in the streets in the 2018 elections, and I am fine with that. I am saying great. Let it keep coming. Let the President not know what he's signing. Let him go vacation in Mar-a-Lago. Let Steve Miller go rampant. He didn't get elected. He has no idea what the constituents that voted for Trump actually want. None of this stuff polls well. I think that the Republicans are setting themselves up for historical defeat in 2018 and I'm fine with it.

Stephen Lacey: I don't know that I'm totally convinced it's going to be a historical defeat, but that's a conversation for another day, and I wish that we could consider a win actually helping poor people and not the President setting it up so he decimates poor people and that there is a potential blow back and therefore a political win for Democrats. It sucks that we're having that conversation.

Jigar Shah: Well, that's what people voted for. That's what people voted for. It's not like he actually campaigned on actually helping people. He campaigned on basically decimating government, and now that he's doing it, people are like, "Oh, we didn't think you were serious." Well, he was.

Stephen Lacey: Well, before we finish this segment, let's turn to another Trump story we published this week. The President's business council is made up of nearly 20 of the most powerful executives in the world, from companies like Walmart, GM, Pepsi, and GE. As it turns out, many of them are some of the top supporters of renewables in the world. Many of our listeners will know this. I documented those investments together with my colleague Colin Smith, who's a solar analyst on our research team.

First, a shout out to Colin. I wrote the story, but it was actually his idea, and after the first business council meeting, it was right around the time that Travis Kalanick of Uber and Elon Musk were catching a bunch of flack for sitting on the council. Colin looked at some of the data and realized how much these corporate players were doing in clean energy because we track a lot of that activity ourselves. We started working our way through the investment numbers, the sustainability reports, internal targets and public statements made by executives on the council and tried to paint a portrait of their activity.

It's really stark. Billions of dollars are invested in projects. There are really strong internal goals to cut carbon emissions and strong calls for action. My favorite quote came from Doug McMillan, the CEO of Walmart, at the World Economic Forum where you were, Katherine, in January. He said, quote, "To make America great again, climate action is very logical. This is a very convincing story for job creation and economic growth." Do you think that these executives who are doing so much in this area will actually give advice on energy or climate or have any sort of influence?

Jigar Shah: I had a lot of great conversations from CEOs in the clean energy sector over the last couple weeks, and we've been brainstorming this exact point, which is, we keep referencing Goldman Sachs or Blackstone or Walmart or others, but this is one of 40 issues that they care about, right? This is not really their main issue.

What we were talking about was we really need to shift this to the mayors and county commissioners we work with, the supply chain, all the electricians and plumbers and others, and get them to say that 30 percent of their revenue is coming from clean energy or their property taxes have gone way up. I honestly think these stories about how the council has put billions of dollars to work doesn't mean that this is one of their top five issues when they go to the council meetings.

Katherine Hamilton: Yes, I agree. Those are corporations that are, they have corporate responsibility and they're doing things that are in their best business interest. That does not mean that that translates into public policy for the federal government or in any way lobbying Trump for any of this.

Jigar Shah: I really think we have to make a huge shift.

Stephen Lacey: Will we ever make that shift, though, until it's too late? Until we're staring in the face of such a serious climate crisis that we're forced to talk about this as the number one issue? Arguably, we're already there.

Jigar Shah: No. I think we can make that shift now. We have, according to the Advanced Energy Economy report, we have six million people working in the clean energy economy, right? Energy efficiency, EVs, LED lighting, solar, wind, et cetera. If all of those people start giving talking points to their employees about how to talk about clean energy and force all of their suppliers to put out press releases about projects that they worked on and are proud of, I think you'd be shocked at how much of a difference we'd make.

Honestly, we are not resonating like we should be in these places. There was a great article out of West Texas about how land owners in West Texas are making way more on wind now than they are on traditional oil industry, royalty payments from the oil industry. Several of the counties there are now getting hundreds of millions of dollars of additional revenue from the wind industry, so they now have the money to be able to pay for platinum plated schools.

Stephen Lacey: Who's job is it, then, to say to the corporate players on this advisory board, "You need to walk into that meeting with the President and make climate and energy the top issue that you discuss in one of those meetings," who puts the pressure on these folks? Is it an organization like Ceres or the Rocky Mountain Institute or someone else?

Jigar Shah: No. I think we shift away from that strategy. That has exactly been the strategy of the enviros for the last eight years and it's failed. We need to stop going to Ceres events and saying, "$17.2 trillion of money in this room and they want a price on carbon." Who cares, right?

That's not what New York State Common Retirement Fund actually cares about on a daily basis, or CalPERS or CalSTRS. It's about now going to the small businesses, like businesses that we employ. Last year sPower employed 3,000 people to install its solar projects. We should've gone to every one of those electricians and plumbers and excavators and said, "You need to put out a press release saying you worked on this project and you're proud of it."

Stephen Lacey: Right, but I think you're being purposefully inflammatory there. We might need a shift in strategy today, but it has worked for the last five or six years.

Jigar Shah: No, it has not worked. It has not worked. No one gives a crap.

Stephen Lacey: How has it not worked? All of a sudden, you have the biggest media organizations and journalists are all telling that story. Corporations themselves are feeling emboldened to step up and use that as a talking point to talk to consumers.

Jigar Shah: They're not.

Stephen Lacey: It is a major narrative talking point.

Jigar Shah: They are not. Outside of Unilever, Wal-Mart never tells people they're the largest user of rooftop solar in the country. Nobody-

Stephen Lacey: I see it all the time! Are you kidding me? I see it every day.

Jigar Shah: Ask your parents who go to Wal-Mart whether they actually know that Wal-Mart has solar on the roof of the store that they go to. They don't. Wal-Mart has no signage in the store whatsoever. Neither does Target or Kohl's or Walgreens or any of those companies. I think, and Nike is the biggest company that keeps talking about clean energy. Who cares? Nike is not the company that, actually, people go to to hear about clean energy, right? This is what I'm saying. We keep trying to get these big brands to do this stuff and they are the wrong messenger.

Katherine Hamilton: Well, and I think the question that was originally posed is, if all of these corporates are in a room with Donald Trump, will that make a difference? That, and even if they were all talking about how important this is, and he tweeted about it, I don't know that that would make a difference, because you look at the budget, and you look who wrote the budget. It was the Heritage Foundation and Steve Bannon and his folks. I still don't know that it would make a difference.

Jigar Shah: Right. It's about these people in West Virginia and Kentucky and other places being told by small businesses in their community that, yeah, 30 percent of my sheet metal bending business now comes from clean energy. We are going to hire you because we have so much business and, oh, by the way, it's because of the clean energy community. If enough of that happens, which is happening, we just don't ever tell the narrative, then people are going to be like, "Oh. There's a lot of jobs being created in this clean energy economy." It's amazing that we're the number one employer of incremental, new blue collar workers in the country and have been for five years and no one knows about it.

Stephen Lacey: Those are both really fair points, but I don't think that takes away from the impact of large corporations talking about what they're doing. I generally agree that we're assuming in this conversation that the administration and Trump himself operates within the parameters of reality that we're used to, so even if these executives started talking to him about it and putting pressure on energy and climate issues, I doubt that it would make a huge impact. Nevertheless, I thought it was really interesting to see how many billions of dollars and how many projects and renewable energy funds and sustainability targets every single one of these companies has developed.

Katherine Hamilton: That was great reporting, Stephen. It was a really interesting piece, and I think everybody should read it because it does show how much corporates are investing, and even just that small slice of corporates.

Stephen Lacey: All right. Let's move on. I feel like our third segment is often devoted to some energy crisis in a particular region. Last week it was Ontario. Today, for I think the third time, it's South Australia. After multiple problems with rolling blackouts due to grid management and supply problems, South Australia's electricity's crisis is capturing international attention.

This week, the state released a new plan to fix the crisis which depends heavily on building a new natural gas plant and a large battery storage plant. It's a $550 million plan, and Elon Musk recently took to Twitter to say that he could fix the South Australian grid reliability crisis with batteries in 100 days or he would do it for free. Musk also met with Australian Prime Minister Malcolm Turnbull, who tweeted out his appreciation for the meeting.

Interestingly, Turnbull has pushed for more fracking as a fix to the crisis since that meeting, not batteries, and meanwhile Audrey Zibelman, the regulator who helped architect New York's bold grid reformation plan, is headed to Australia's grid operator, where's she's going to run that. She has got her work cut out for her indeed. Katherine, if storage is the bacon of the electric grid, is South Australia getting a hearty enough helping?

Katherine Hamilton: I don't know, but I did hear that in Adelaide, the biggest residential virtual power plan is coming online. Right now, they have over 60 homes of solar-plus-storage. Eventually, in 18 months, they're going to have five megawatts of peak capacity. This is about peaks, not just about power, so cool that they're doing that in South Australia.

I do think Audrey has the background to do this. She was Chief Operating Officer at PJM and Vice President at Xcel, but she also ran Viridity Energy, which did virtual storage. I think that storage is going to be a big piece, not just big battery plants, but also just being able to manage flexible resources at the edge of the grid to help them deal with some of their demand issues.

Stephen Lacey: Right. We've reached this point where, all of a sudden, for every single one of these local crises, distributed resources are being touted as a very serious option to fill in the gap. California was the first mover here with both the local capacity requirement to fill in nuclear and the Aliso Canyon crisis. Musk is basically saying, "Hey, look how fast we deployed storage in California and look how happy the utilities are. We can do this on a much greater scale, and if we don't do it to satisfaction, then we'll give it to you for free." A fantastic publicity stunt, but also indicative of how the framework has changed for seeing how we deal with these crises.

Jigar Shah: Can I take a step back here for a second? I feel like we're getting wonky about something that's not wonky. This is really about politics, right? Basically, Malcolm Turnbull said to everyone when the blackouts occurred that the wind energy and renewable energy policies in Australia caused the blackout, right? This is the official representative of the government of Australia who basically said, "It's renewable energy that's causing this," right, because he's in the pocket of the fossil fuel industry.

Then, when the people responsible for the electricity and reliability in Australia said, "No, that's not true, Prime Minister. We actually need more resiliency on the grid, and battery storage is one way to do it," because battery storage is not about backing up renewable energy. It's about actually providing more tools to the grid to provide better reliability, then Elon Musk had to actually get a reach out from Jay Weatherill in the province, and then Malcolm Turnbull then got so embarrassed and jealous of the fact that Elon Musk was talking directly to a state instead of the federal head of the government, he was like, "Well, I'll talk to him."

Then they arranged a hastily put-together call on Sunday, and Elon Musk said, "Hey. I get the fact that you're using all these talking points, but if you actually want to solve what's wrong with the grid, here's how you do it," and he did have to resort to a little bit of showmanship to actually break through all of the crazy climate denial stuff that's going on there, right? This is not about wonkiness. To me, this is about pure, unadulterated politics and Elon Musk played it beautifully.

Stephen Lacey: He does like theatrics. I don't know that we can characterize that Turnbull was embarrassed, but he certainly did come out and say, "This has been a state-specific problem. Why, the federal government needs to take care of this. Why is the state trying to seek solutions for itself?" There was a little bit of political backlash against South Australia for attempting to come up with this plan on its own. I don't know that we can characterize it as embarrassment, but the politics between the federal authority and local authority is certainly palpable.

Katherine Hamilton: Didn't Mike Cannon-Brookes from Atlassian just connect the dots there and make that?

Jigar Shah: Oh, yeah.

Stephen Lacey: He's the famous software engineer.

Jigar Shah: The interchange is on Twitter.

Katherine Hamilton: Yeah.

Jigar Shah: The interchange is on Twitter. He was like, he basically said on Twitter, "Elon, if you're really serious, I know the right people in Australia. I can get you a call immediately."

Stephen Lacey: Which he did.

Jigar Shah: It was fascinating theater, right, but the whole thing started from the fact that Turnbull basically was using some BS talking points around badmouthing renewable energy, and Turnbull basically had to backtrack from that to be able to accommodate the call with Elon Musk.

Stephen Lacey: Turnbull did say later on, "This is not an issue about the virtues of fossil fuel, one type or another, or wind energy or renewable energy. This is an issue about competence." I know a lot of folks have criticized the market operator there in South Australia for mistiming the ramp up in generation, for emphasizing certain types of generation at the wrong time, for the problems with this interconnection with Victoria. There certainly are a lot of grid management problems here, but significant that Turnbull then, after this exchange with Elon Musk and after this issue went international, he changed his tune a bit.

Jigar Shah: A lot of bit. I just think that this is exactly how you fight climate denial, is at the time at which these people, who have real jobs to actually create real reliability, get themselves out of trouble. You create a theatrical moment and you punch them in the gut and you make them walk back from it.

Katherine Hamilton: Yeah, he got goosed instead of hogtied.

Jigar Shah: I love it.

Stephen Lacey: I'm really interested in this energy security target as part of the $550 million plan, which is going to ask retailers to source more than a third of their energy from localized generation, and as that plan comes together, it could include a pretty diverse portfolio of distributed resources. I'd love to see how that compares to, say, a California.

All right. Listeners, we're going to tell you something you do not know, and Jigar has the first word on this one. What's your story?

Jigar Shah: I love the writing of Jess Shankleman from Bloomberg, and she wrote a piece which was titled "U.K. Green Energy Policies Not Raising Prices, Watchdog Says," which is basically a complete slap in the face to Theresa May's government, who's been blaming everything on green energy. Basically, there's a report, new report from the Committee on Climate Change, which basically said that policies to deliver clean energy added about £9 a month in 2016, but reduced demand because of the deployment of green energy, saved £20 a month. Net, green energy actually saved consumers money, and so it's just, it was just a great report. Everyone should check out her reporting. It was fantastic, and it really backs up the work you see in California and many other places where green energy really does pay for itself by reducing wholesale prices.

Stephen Lacey: Katherine, what's your story?

Katherine Hamilton: Yeah, so since we're talking about the budget and the hits to, or proposed hits to DOE and EPA, I wanted to, this is also a hat tip to Praveen Kathpal of AES who sent this to me. California Public Utilities Commission President Mike Picker has been standing in front of those agencies at Metro stops, handing out fliers and encouraging anybody to come to California. He says, "CPUC President to federal government scientists, climate experts, come west. California is hiring," so he is trying to take all of the brains that are being drained and recruit them, recruiting this top federal talent to come to California. He's evidently had some luck with this, but I thought it was pretty interesting that he was standing there, handing out fliers.

Jigar Shah: There's no small irony that Rick Perry did the same thing to California.

Stephen Lacey: He did?

Jigar Shah: Rick Perry absolutely had press release after press release.

Stephen Lacey: For oil and gas jobs?

Jigar Shah: No, just saying, "California's energy policy is raising the cost of doing business in California. Come to Texas. We're far more friendly to business," right? He was trolling California and Jerry Brown for years.

Katherine Hamilton: He was probably not standing outside of a BART station.

Jigar Shah: No. I get that he didn't do that, but there's no irony that turnabout is fair play.

Stephen Lacey: The trolling continues, and I'm sure that those fired NOAA and EPA employees will move westward and find jobs in California. That's what Picker's hoping, at least. I wanted to quickly mention Google's Project Sunroof, which was launched, I think, last year. They've been building 3-D models of rooftops around the country and assessing solar potential. They just released new data about solar's technical potential in the U.S., and it seems really high to me, and I actually wanted to get your thoughts really quickly, Jigar.

According to Google, which they reported this morning, 79 percent of all rooftops analyzed by the company are technically viable for solar. They said, technically viable meaning that there is enough unshaded area for solar panels, and that 90 percent of homes in Hawaii, Arizona, Nevada and New Mexico are technically viable. I know that NREL, a while back, released a new analysis of technical potential. They once said that a quarter of rooftops could potentially offer solar, but then they upped that. They doubled that actually. I don't know. The numbers are definitely higher than we previously thought, but that 79 percent of all rooftops analyzed seems pretty high to me. Do you have any thoughts on that one, Jigar?

Jigar Shah: I think Google got it wrong. I think they're just, they're early days and they just need a little bit of help. The NREL numbers basically are the fourth report, I think, in the series which was led initially by Lisa Frantzis of Navigant, and has gone through a lot more rigor, and Google I think was basically, just did a first blush with their technology without actually taking on additional haircuts that are fairly obvious around minimum system size.

I think they counted systems that were only 1 kilowatt, which I don't think very many people are going to put in 1-kilowatt systems. Just to do this, put this in perspective, the total amount of electricity produced in the state of Texas is 36,000 gigawatt-hours, and Google is predicting that Houston, San Antonio, and Dallas rooftops can produce 36,000 gigawatt-hours.

Stephen Lacey: Yes, the number just jumped out at me. It does seem high. Anyway, a lot of solar potential. Regardless of what the actual number is, we can get a lot of solar on rooftops that don't have it today. That's the show, folks. Thanks for listening. Every single back episode is on iTunes, SoundCloud, Stitcher, NPR One, whatever you use for your podcast app.

Send us feedback. We are on Twitter all the time. @TheEnergyGang is our handle, and you'll find all of our individual handles on that page and you can tweet at us. We try to interact as much as possible. If you prefer email, it's [email protected]. With Katherine Hamilton and Jigar Shah, I am Stephen Lacey, and we are The Energy Gang, a production of greentechmedia.com. We'll catch you next time.