December 10, 2018
Dear Citizens and Elected Officials:
Let this serve as a brief “Preface” to the Introduction. Early in September of this year, I tried to interest a major national developer of utility scale solar projects in the US, who has also done the largest solar farms in Maryland so far, into considering a project for the Western part of the state, near Cumberland and Frostburg. It being a gubernatorial election year, I thought that some traction, a “tour” even, might get things rolling. As we talked, he was on the Internet searching for the nearest high voltage lines, which cross state Route 36 just south of Frostburg, at the northern end of the famous coal fields of the Georges Creek Valley. He wasn’t interested in community solar, but instead of feeding solar power into the wholesale electricity markets, run by PJM in our area. He hadn’t heard about all the impaired coal mining lands out here, running to the thousands of acres. He did ask about subsidies/incentives, who owned such lands, and who else backed such projects. And aside from some green stalwarts in Allegany and Garrett County, citizens, that is, that’s about as far as the discussion went. Feelers to some of the largest coal mine land owners fizzled out, as did hints to local government officials. Allegany County Economic Development officials just held two public hearings early this December, and no mention was made of solar plans — or even just dreams. Climate disruption’s implications for economic development, good or bad, weren’t on the radar, even though clean water and its attractions for tourists were. Barely.
I though Daily Kos readers ought to know about this overture...so you can savor the thought, the irony of the largest solar project “east of the Rockies” being proposed for Virginia, not Maryland. We shall see...how that might have come about...
Introduction:
On Saturday, October 6th, I came across an article in the Email version of the Clean Economy Weekly that caught my attention: “Huge Virginia Solar Farm Chugs Forward,” by Dan Gearino. And ever since then, I’ve been digging, sorting and weighing, trying to understand not just the outlines of the largest solar “utility scale” project east of the Mississippi, in Spotsylvania County, Virginia, some 60 miles southwest of DC, but also the details, the why and how of what will be the fifth largest solar photo voltaic facility in the country, if and when it actually gets built.
If Spotsylvania County does not ring any bells for you, it was the alleged home of the literary and TV series character of Roots, Kunta Kinte, aka Toby Waller, who was sold from Maryland into Virginia slavery in the 18th century. The county was also home to some of the Civil War’s worst killing fields: Fredricksburg, Chancellorsville, Wilderness and Spotsylvania. I don’t know if the project’s sponsors or the builder welcome those associations, but my readers shouldn’t be wandering about, disoriented, in a geographical “wilderness.”
The project is being proposed by sPower, which is owned by the AES (Applied Energy Services) firm and the AIM Company - Alberta Investment Management Corporation. But they’re not putting up the money, some $650 million dollars: that’s being supplied from some other major investment players. But more on that later.
Let’s start with the major outlines of the project, which gained a “Certificate of Public Convenience and Necessity” from Virginia’s powerful, but contested, State Corporation Commission, in August of this year. However, Spotsylvania County appears to be getting its back up over “who is dictating to whom,” and the timeline to begin construction is being pushed back well into 2019. Yet I doubt the project will be blocked: the forces behind it, environmental forces and those of internationally famous corporations, are just too powerful to resist. And that’s despite the area’s Richmond and Congressional delegation being all Republican, no surprise for rural Virginia: not exactly the renewables crowd. They’ll take the growth though, even if it has to be solar.
Here’s a sketch of it: at full build out, anticipated to take just a year once the county green light is given, there could be as many as 1.8 million solar panels on 3500 hundred acres, with 2,850 acres preserved, out of the total project area of 6350 acres, which is about ten square miles. Much of this land has been recently timber-harvested, and from pictures I’ve seen, it looks to have been clear-cut. In two months of reading, I’ve haven’t heard of an environmental stopper, only some uncertainty about the source of water and whether there will be herbicide spraying to keep the panels clear. In a conversation with the project manager, though, it sounded like they were going for native plants for pollinators under 2 feet in height; I said that was a great idea, good for all sides. Some press accounts have described the current landscape as a “desert.” That would be a “biological desert by my reading of it. But perhaps that’s a self-serving spin to head-off opposition. Maybe some of the field honchos from the Maryland Biodiversity Project could take a little side trip and poke around for us, just to make sure.
The projected 500 MWs of power, which makes this project more than double the size of the largest utility-scale projects in Maryland, will be divided into “Special Purpose Entities,” a legal and financial preference of the funders, apparently, with some practical implications as well, like serving as firewalls for financial or technical stumbles. The largest solar consumer will be Microsoft at 315 MWs; then an Apple Consortium for 165 (the other members are Akamai, Etsy and Swiss Re) and finally, for the smallest slice of power, just 20 MWs (which is a lot, compared to many utility level and “community solar” projects in the region; the equivalent, on an annual basis, of the power used by 49,099 homes), for the University of Richmond. The words used here don’t accurately describe the way the solar PV generated electricity will flow, which is into a substation and not directly to the individual corporate buyers. Once again, “more on that later.”
And now, a warning for the reader. This essay is like any good investigation in the legal world; it started out with a big pending event, a surprising one, especially the “where” of it which was not very well explained in casual press accounts. My early hope was that by focusing intensely on a curious project, broader truths about renewable energy, and energy politics, would be uncovered.
Well, that was supposed to be the general direction, but the further I ploughed into the project, and Virginia energy matters, and with Maryland’s troubled renewable year in the winter of 2018 also on my mind for a frame of reference, the more I felt I was going down a bleak and dusty road in rural Texas, one from the set of True Detectives. And like any good detective, I’ve let what I found, and found to be shaky, or murky or just plain opaque, guide my questions, and pathway, which is far from the straight and narrow, but hopefully still guided as much by reason as political intuition.
Oh yes, one more thing: this work was shadowed by the fall weather, meteorological and political, that we all lived through, where the nation’s attention seemed to be jerked, as on a tether, from topic to topic, from disaster to disaster, from dire climate report to dire long term economic report, from drowning to burning to legal Supreme Court detective series where “who do you believe, and “who are your corroborating witnesses” became the questions of the day for nearly two weeks.
“We hold these truths to be self-evident” is a phrase which will not be found in the proceedings of our electricity markets. Very little I came across was “self-evident.” I tried to put myself in the position of the average citizen looking at what I found, the language of the financial world come to the world of electrical and systems engineers, to trading markets in timed layers with a very strange bidding system. In 2007-2010 I plunged into the exotic universe of financial derivatives to understand what happened in the Great Financial Crisis. That helped here a little, but the electricity markets I looked at are perhaps even more magical – and dangerous even. What does “free market” mean today in energy markets? Who gets “punished” with market “discipline” and who gets rewarded by state interventions, forgiven like the Bankers? Which subsidies are fair, and which distort market outcomes, since it looks to me as if every major interest sports one form of subsidy or another, open or hidden.
And the broader question, raised by Karl Polanyi in his magisterial work of 1944, The Great Transformation: can anyone live with the pain and disruptions of “pure free markets,” if they exist; doesn’t every interest scramble to avoid the bleak dichotomy of “winners and losers?” Well, losers, surely. And what happens in politics when there are more economic losers than winners? What if it turned out that markets were no longer our servants, but the instruments of powerful elites and economic oligopolies which bent them as far as they could to first deliver benefits to themselves, first helpings, while society got the leftovers? That sounds pretty harsh, but there’s considerable research built up in academe to show how easy it is to game, if not “rig” electricity markets. Rigged is a “fighting word,” isn’t it, but two very different portions of the political spectrum use it, and therefore proceed very differently from the same diagnosis. The issue of just who is doing the rigging is crucial: “government,” or government “captured by powerful private interests” is not quite the same, is it, to understate what is at stake from that point on.
Polanyi saw with great foresight that it was not just human arrangements that are deranged by market fundamentalism; nature is threatened as well, and if he saw that clearly already in 1944, what would he say today? That’s one of few questions at hand here with a resoundingly clear answer: we have to prevent the destruction of Nature, of as much of it as possible.
This all needed to be pondered, weighed, and in the end, painfully sifted, with forensic anthropologists and cadaver dogs sniffing through the ashes, as if it were the next to last episode of True Detective.
Let’s get started.
PART ONE:
Renewable Politics
I began to take a more than obligatory green glance towards solar energy last winter, when a good conservation friend sent me one of the annual documents required by Maryland law, called the Renewable Energy Portfolio Standard Report, compiled by the Public Service Commission. Maryland set up a RPS system, with trading of credits in various markets, in 2004. The credits measure a standard amount of electricity produced in a defined time and represent the “commodification” of renewable electricity. The state has been bragging about its renewable energy achievements ever since, elected officials along with most of the mainstream environmental camp, with the degree of solar “penetration” placing it between 11th and 14th nationally in terms of percentage of electricity generated by solar. Take that ranking for what it is worth: even a casual probe into the stats show Maryland at a miniscule 2.9% solar “penetration,” a small fraction of total electricity generation in the state.
Reading these reports set off a “What the Hell?” reaction because of their confusing tables, and the opaque language which obscured more than clarified the character of “renewable energy”: exactly where it was generated to produce both power and the tradeable commodity called a Renewable Energy Credit, the RECs, including the solar portion, sRECs, whose fluctuating prices also serve as a subsidy to the renewable producers – or, to be more accurate, once did.
These reports have a built-in, two year time lag, so that the data for 2016 doesn’t appear in public until January of 2018. They’re about 30 pages long and attempt to describe a very complex system meant to create a space for renewable energy in hostile markets dominated by nuclear, coal and gas sources, still generating 90% of Maryland’s in-state electricity. And that percentage is in the ballpark range for the broader multi-state region covered by PJM, the nation’s first utility “power pool” arrangement, begun in 1927, predating the New Deal. And the nation’s largest in terms of power usage.
Maryland is one of the largest net importers of power in the nation, so, whether we like that or not, and most environmental reformers don’t, we are in part captive to the make-up of the energy sources outside the state, which are part of that PJM grid. And California, the nation’s leader is solar penetration, also has an import dependency, from the American northwest and southwest (which is actually to the southeast of the Golden State). That dependency harkens back to the huge hydro-dam projects begun in the New Deal. You know: the kind that Woodie Guthrie sang about.
Maryland’s RPS system requires electricity generators and retailers in the state, for environmental and health reasons, to either produce a small percentage of their power by solar and other renewables, or buy a Renewable Energy Credit from someone who does. For solar, it has to be generated in Maryland; for other renewable sources, it’s all over the geographical map of the PJM region, which includes 13 states in the East and Midwest, and there are exceptions which extend the renewable sources even further away, especially for wind, as long as the power source is adjacent to and feeds its electricity into the PJM grid. After reading and re-reading several of these reports, I felt like I had entered a maze of meanings that had an Alice in Wonderland quality, looping back upon one another, twisting this way and that, churning up a lot of smoke, but not very much renewable energy in the end.
Now, this being the age of markets, market worshipping even, and also the age of “financialization,” this system just had to create that fictional commodity called a Renewable Energy Credit (REC) and a subset called Solar Renewable Energy Credits, SRECS, that can be purchased and traded in various markets run by subsidiaries of PJM. That means, in reality, that a coal burning operation doesn’t have to cease burning coal and go renewable, it can buy SRECS from a solar generator in Maryland to meets its legal obligation. That was good for the solar pioneer firms, especially when the price of a SREC was $345 in 2008. Since then, because of the solar capacity pouring into the market, mostly from utility scale projects since 2016, the price in 2018 has plunged to between $6 and $15 per SREC. At least this is the purported “causality”: a regulated system of market trading has got the pricing incentives all wrong – because it worked to generate too much solar capacity, outstripping demand. Scratch your head as we go back to the drawing board. It sounds like a partial victory, until you recall again that Maryland still only generates 2.9% of its total electricity from solar, but that is good enough to rank it 14th in the nation at the end of 2017.
The system I saw before me, and before the citizens of Maryland, in these annual RPS reports, was complex, confusing and in many ways misleading as to where and how the renewable energy was being generated, some of it coming from sources which were more greenhouse gas and conventional pollutant generating than the fossil fuel sources they were supposed to displace. And this led to very critical reports about how the system wasn’t working, which appeared in the summer of 2018: https://www.foodandwaterwatch.org/news/clean-energy-maryland-isnt-so-clean In the Food and Water Watch “grading” system, Maryland was given an “F” for their RPS system.
And this one from the Chesapeake Physicians for Social Responsibility, entitled Unbundled: How Renewable Energy Credits Undermine Maryland’s Transition to Clean, Renewable Energy. Here at
https://static1.squarespace.com/static/54949381e4b05fcc6a96c5c6/t/5b6b37b72b6a28534427bea3/1533753565236/Chesapeake%2BPSR_report2018_72018+%28revised%29.pdf
This disappointing dynamic has caused a lot of turmoil among solar and wind developers, legislators, and renewable energy advocates, and has led to competing bills among environmental groups. Some want to just boost up the percentages and timelines but keep most of the existing REC trading system, and its very loose definitions of what qualifies as a renewable energy source, and where the energy can come from (Virginia, Pennsylvania, West Virginia, Ohio, Illinois – and even further). Other groups want to not only push the renewable requirement to 100% by 2035, (versus 50% by 2030 in the competing bill) but do away entirely with the REC system of trading, saying it’s no longer needed because the plunging costs to build solar and wind are now powerful enough to stand on their own, driven only by legislatively mandated procurement requirements, and subsidies which decline as the targets are met, for specified amounts of residential, utility and community categories of solar power. For those who want to explore the tensions among competing visions of the means, ends and how some of the implementation tools will be paid for, here are the links to the two competing bills from 2018, which legislative leaders had decided in advance, well in advance of the session, were not going to move, part of the perennial insider/citizen outsider game of American politics:
http://mgaleg.maryland.gov/2018RS/fnotes/bil_0003/hb1453.pdf ; http://mgaleg.maryland.gov/2018RS/fnotes/bil_0008/hb0878.pdf
Let’s step back for a broader view of what’s going on here. The environmental left is driven by a ticking time clock, which was close enough already to midnight, and was shoved even closer throughout the fall of 2018 by these events: Hurricane Florence hitting North Carolina with almost 36” of rain in mid-September; by the October 8th release of the bad news IPCC report, the UN’s Intergovernmental Panel on Climate Change, which says the climate impacts are already worse than we thought even at a one degree rise, and it doesn’t look like we can contain the increase even at 1.5 or 2 degrees without “ …transforming the world economy at a speed and scale that has ‘no documented precedent.’”; Hurricane Michael killed 43, destroyed thousands of homes and businesses along the Florida Panhandle when it came ashore as a Category Four hurricane just east of Panama City on October 10, and also destroyed $6 billion dollars of fighter jets at nearby Tyndall Air Force Base; with the outbreak of the Camp Fire conflagration in California on the morning of November 8, which incinerated the city of Paradise, capping off the worst wildfire year in California history; and then the release of the Congressionally mandated U.S. Climate Assessment on the Friday after Thanksgiving, November 23rd, warning of a “Damaged Environment and Shrinking Economy” as the headline in the New York Times put it.
The science writer Elizabeth Kolbert added to the mood in October, wondering how to write about it, and when to tell the children the bad news of ecological catastrophe already baked into the warming curve for the Artic, releasing new feed-back loops of freed-up Green House gases “liberated” by the ice melting. Here at https://www.newyorker.com/magazine/2018/10/15/how-to-write-about-a-vanishing-world
Let’s keep this drumbeat of pending calamity in mind, coming sooner than we had feared, as I take you on a detective’s journey into contemporary electricity market dynamics, focused on renewables, but also considering how the world looks to the old energy regime, their embrace of market dynamics and solutions, pretty much still encompassing, with the grand exceptions we know so well, President Obama’s strategy of “all of the above” energy sources, coal having been added back in by President Trump.
This is a “context” section, I noted, so here it is: the costs of solar and wind are falling dramatically, and the rate of their deployment is increasing dramatically, year by year (yet from a very small baseline), with some recent stumbles, but even the national leader, California, flashing 5.2 million homes with solar panels, gets only 15.1 percent of its electricity from solar; Nevada, 10.6%; Hawaii, with a proportionately large number of solar homes compared to population, 201,441, still gets only 10.1 percent from solar. Maryland, much hyped by the home state green forces and their political allies, has 83,062 residences on solar, but still got only 2.9% of its electricity from all solar sources at the end of 2017.
And Virginia? It ranked just 20th nationally, with 29, 423 homes but only .4% of its electricity coming from solar. (Data from the Solar Energy Industry Association).
Maryland’s RPS system, based in good part on a form of negative carbon RECs credit trading, an illusion in some cases, seems to have run into to the same problem as similar trading systems such as the RGGI market for the Mid-Atlantic and New England region and the European system of carbon trading: prices fall too low and have to be adjusted by the regulatory side of the program; the market is not self-adjusting. These market trading structures may cut the slow adjusters in the fossil fuel world a lot of slack, but the global warming temperature dynamics are not cutting our “civilization” any: we’re way behind the curve, as the weather and rapid melting patterns in the Arctic and Greenland are showing us.
Now perhaps you are wondering why we’re spending so much time on Maryland. Well, besides being an adjacent and competitor state to Virginia, especially in the great chase for corporate rateables, and Virginia being the place where wealthy Marylanders might flee if taxes are raised on them, Maryland wears the perception crown of the “Queen of Green.” Virginia has, to be polite, hardly ever been spoken of as an environmental leader in any phase of policy, going back to my days in the 1990’s trying to protect Mid-Atlantic fisheries resources, like Horseshoe Crabs and Menhaden, during my environmental career in New Jersey. Protective environmental zoning or any type of progressive land-use features, like TDR (Transfer of Development Rights) or low density zoning – Virginia is not interested - including in the milder Neoliberal forms which Maryland cheerfully promoted to no great effect: Governor Paris Glendenning’s “Smart Growth,” which has had, even in its supporters eyes, little effect on state geographical building patterns, and thus vehicle miles travelled and accompanying emissions.
OK, enough of the cruel cross-comparisons. Of course, why wouldn’t we all be interested in the how’s and why’s, the surprise of why the largest proposed solar photovoltaic project east of the Mississippi/Rockies was going not to Maryland, which has its collapsing RPS system on its hands, as well as a rising chorus of NIMBYs who don’t want big utility scale solar on farmland near the population centers and congested power lines close to the I-95 corridor…but instead to the counter-intuitive choice of the state of Virginia, where successful Democrats tend to be very pro-business oriented, keeping whatever green demands that bubble up from “the base” well in check? I’ll have more to say about the power dynamics inside Virginia later, political and electrical, but first I want to recommend a book which supplies additional needed context, nationally, and for the two states we have talked the most about. This book was part of my reading program to educate myself last winter on the mysteries of why, despite the falling prices, renewables are everywhere still, in terms of percentage of electricity they generate, far from where we need to be to beat back the modern “grim reaper”: Global Warming and its climate – and inevitably - human disruptions.
The Grid
Therefore, let me introduce a book which was published in 2016 called The Grid: The Fraying Wires Between Americans and Our Energy Future. It was recommended by a former environmental colleague of mine from New Jersey, Bill Wolfe. It was written by Gretchen Bakke, who holds a Ph.D. in cultural anthropology from the citadel of conservative, Austrian economics, the University of Chicago, but at least in her writings on The Grid, I don’t detect many, if any, signs of that influence. But they are there, in another sense: in the specifics of the laws and policies that were grafted upon the New Deal’s public utility-regulated monopoly/rural co-operative “model” by the Center-Right’s embrace of “free markets, competitive markets.” The trend started under Democratic President Jimmy Carter in the late 1970’s and transformed, or so it is said, energy markets in the late 1990’s.
That Center-Right, market oriented outlook - now financialized like other markets, with a complex derivative world of virtual electricity abstractions -products, like RECS, layers of electricity for sale in variously “timed” markets and whose actors include pure economic speculators, not just the old electricity generators or conveyors - forms the dominant outlook within which the grid system and energy world has evolved since the Carter Presidency. And that is the intellectual and legal framework which still shapes, for better or worse, the dominant paradigms of our conversation about the shape of the broader political economy, the fundamental conversation which has been muted, veiled and missing-in-action for most of the decades of the Neoliberal ascendancy, from 1980, at least.
It is only since the challenge of Senator Bernie Sanders to Hillary Clinton on economic policy and Donald Trump’s challenges on trade deals and China’s trading terms that this conversation has finally surfaced prominently, despite prior attempts by Ross Perot and Pat Buchanan. Neoliberalism was challenged first by Right Populism, and then by Left Populism, with due respect to Ralph Nader and dare I say, the Green Party platform. Right now, though, it’s Right Populism in the driver’s seat, and resident on Pennsylvania Avenue.
Fortunately, there was a resistant cultural heritage left over from the 1960’s. It is not unfair to think of it as E.F. Schumacher’s “Small is Beautiful” legacy (of course there were many others, not the least of which was “The Whole Earth Catalog” and Stewart Brand), which embraced and nurtured renewable energy forms, solar and wind and small scale hydro, and fought valiant rear-guard legislative/regulatory actions to keep these options alive as a different energy paradigm emerged under the major new laws: The National Energy Act of 1978, and its Section 10, the Public Utilities Regulatory Policies Act (PURPA); the Energy Policy Act of 1992; and the various policies emanating from the Federal Energy Regulatory Commission, FERC.
Although most commentators see these energy laws as part of a great economic era of deregulation and market affirming advance, Bakke has a more catholic perspective. A better way to describe the process, she feels, is as a complex and often contradictory pattern of new regulations, with federal and state directions meshing or sometimes not, with FERC and the courts sorting out the conflicts. The stress on markets, competition and greater access to “The Grid” for small independent power producers, especially wind and solar ones, has been applauded by progressive green forces, but at the same time it has threatened the whole world view of the pre- existing power generating and transmission system, with aging infrastructure accompanying “aging white males” at the uncertain helm.
Let me give you a sense how Bakke’s anthropological approach works in her favor to explain what she calls the greatest machine, in scale, cost and complexity, ever invented by humans. Most of us have probably not thought of it in those terms, because for much of the 20th Century, which is when it emerged, it has been in the background of our cultural landscape, its core electricity generators, based on coal, then oil, then nuclear, then natural gas, hidden usually in remote places, except when necessarily closer in our urban reaches, and then often placed right up against communities lacking in socio-economic clout, historically immigrants and racial minorities.
Photographers and landscape romantics like me notice the ubiquity of the wires, and the big tower lines, the “Godzilla” towers which no one wants next to them, but the whole system is largely background white noise and subsumed into the daily routine of acceptance – until the power goes out: major blackouts in the East in 1965, in NY City in 1977, which quickly turned into an ugly racial and culture war event, the East Coast blackout of 2003 which lasted two days and covered eight states and 50 million people, and the more recent intense weather events which have left hundreds of thousands without power for weeks, months, and worse, as in Puerto Rico. And let’s not forget the ultimate in negative fallout from a Utopian view of Free Market “trading” in electricity markets: the Enron Experience in California, which led to widespread rolling blackouts and brownouts in 2000 and 2001, attributed to Enron purposefully manipulating supply and transmission, thanks to what Bakke called very poorly drafted state laws and regulations. Enron was one of the first firms to see the openings for exploitation via “killer apps” (Bakke’s term) as it was way ahead of the competition, and the regulators, in understanding how growing IT sophistication would drive the new energy trading markets.
Is it fair to think of what happened there, and then, in California, at the dawn of a new millennium, as the electricity world’s localized version of the 2008-2009 financial crash?
For an example of the complexity of current energy trading markets, consider our “own” regional PJM guidance outline for just two of them, the “Day Ahead” and “Real Time Market” (prices every five minutes) here in a 62 page PDF: https://www.pjm.com/-/media/committees-groups/committees/mrc/20160824/20160824-item-01-day-ahead-overview.ashx
Part of the rationale for this push to price markets every five minutes in real time comes from the two-century old arguments, since the early days of the 19th century, that markets are the most efficient users and pricers of scarce resources. It was buoyed up by the “marginalists” of the late 19th century, and then, in our era, since the fall of Keynesianism, by the rise and triumph of micro economics over macro. But there is locational and variable energy price arbitrage going on too, and pure speculation, and, in my understanding, at least, active encouragement for that.
Are the regulators well paid and savvy enough to prevent abuse? I don’t know but I witnessed solar and wind industry “experts” tell a conference call for greens in Maryland in August of this year, August of 2018, meant to rally environmentalists around the latest version of the Clean Energy Jobs Act (the old HB1453), that the critics of the existing RPS system, specifically the national group Food and Water Watch and the regional Chesapeake Physicians for Social Responsibility, didn’t understand the current RPS trading system, only the experienced solar and wind industry players did.
For me, that had echoes of Brooksley Born being told she was going to disrupt financial markets by trying to reign in the exploding use of derivatives, as the new leader of the Commodity Futures Trading Commission (CFTC) between 1996-1999. She was lectured, if not bullied, by Alan Greenspan, Larry Summers and Robert Rubin to drop her push for tougher regulations and transparent exchanges for public trading. The struggle came to a climax in 1998 and the financial establishment went to Congress to block her, and generically, the authority of the CFTC to regulate derivatives. The struggle was brought to the public’s attention by an October, 2009 Frontline documentary called “The Warning.”
Back to our energy markets under PJM. And then there is the three year look ahead, capacity planning market, https://learn.pjm.com/three-priorities/buying-and-selling-energy/capacity-markets.aspx and the PJM “Learning Page,” which lists additional complexities like the “Ancillary Services Market” and Locational Marginal Pricing…
I was led to these resources, and complexity maps, by the worries of Greens who don’t like PJM’s response to a FERC proposed rule for that capacity market planning, which threatens to deprive solar and wind generators access at fair prices because PJM claims they are receiving unfair subsidies compared to their competing sources of energy. That’s a cry, and a charge, I’ve heard from conservatives before, that they are all for solar and wind and renewables more broadly – as long as they are not subsidized: “prove themselves in the free market.” (how many times have you heard the word market preceded by “hostile” as opposed to the theologically correct “free” market? Yet hostile markets are often what greets the “innovators.”) Yet the topic of subsidies could be a book in itself, just for energy. A fair and broad evaluation would be needed to harvest and weigh all the energy competitors’ subsidies, including the “definitional” subsidies conveyed by that terrible 2005 federal intervention by then Vice President Dick Chaney under President George W. Bush to favor the oil and fracked gas industry: what is and isn’t a toxic waste. Then there are the subsidies bestowed upon the energy industry by the lax enforcement regimes in West Virginia, Pennsylvania, Virginia and Ohio, especially in regard to fossil fuels. Or the value of eminent domain rights granted to the gas industry to speed their pipelines over the countryside.
I’ve always wondered: just how neutral the grid powers like PJM have been in their genuinely difficult task of running our terribly complex and aging grid system? A system where the power generated must match, at all times, the power demanded in the homes, businesses and storage systems of The Cloud.
At least in this instance, here is an answer, running against my earlier impressions of even-handedness towards renewables, from The Natural Resources Defense Council: https://www.nrdc.org/experts/miles-farmer/customer-bills-and-clean-energy-stake-pjm-market
Grid Week in DC: September of 2009, Stephen Chu Presiding
What is admirable about Bakke’s book “The Grid,” is her overall even-handedness towards all the competing players, a nearly ecumenical approach. Yes, she has a tilt toward decentralized green renewable producers, and to curbing Global Warming, but she doesn’t let that narrow her broad horizon. She also takes great pains to present the tribulations of those locked into the old system, and their valid worries about the dangers of “variable/intermittent renewables” which will only be magnified as the renewable percentages reach up into the 20’s and 30’s of electricity generation. And of course, today, in 2018, the call of the ecological left is for 100% renewables ASAP: in a decade, by 2035, by 2050…some futurist visionaries, such as Tony Seba, as we will see, say the declining cost curves will deliver clean “disruptions” much sooner, more like five years.
Bakke is a modernizer who doesn’t think most citizens will give up their electronic appliances/devices, and thus she supports a flexible grid rippling with smart meters and controls built into our household wares, to manage peak load demands, and to allow individual households and small businesses to take advantage of time of day/demand price fluctuations. This promises two main things: to reduce the need for expensive peak demand energy production, and to hold down prices for the consumers, if they can run their appliances at the cheapest time of the 24 hour day of electricity prices. For that to happen, though, the old utilities have to win a greater measure of public trust for people to let these devices into their home appliances, into their household meters. Bakke has a deft ear, and eye, for the public relations clumsiness of the none-too-popular dinosaur utilities. This is the practical side of energy de-regulation and part of its promise. We will see later that what markets and de-regulation are actually producing may be something far different. It’s a foggy horizon though, and one filled with ideological mirages.
Thus she writes with equal drama and clarity about the giant “Grid Week” conference held in September of 2009, with 4,000 attendees, mostly aging white males, electrical and mechanical engineers, grid managers, crowded into the Ronald Reagan auditorium to hear Dr. Stephen Chu, the Secretary of Energy during President Obama’s first term. Chu is pushing the personnel of the old system towards greater acceptance of renewables, but he shares the horror stories from real world experience to demonstrate his head only spends part of its time in The Cloud and in the university laboratories which won him a Nobel Prize - he’s got field notes from the uncertainties, and the traumas as well.
He tells of the time a sudden turn towards leaden, stormy skies cut the power output of a solar farm in Alamosa County, Colorado, by 81% at five o’clock in the afternoon, as evening electric demands were heading up in a steep spike towards peak load, a human, anthropological problem, in good part, but one which makes huge technical and financial demands. Or the time in early 2009 when the wind died for three weeks – the continental land equivalent of the fabled, nautical Atlantic doldrums so feared in the days of sail – for the massive wind farms based in the Columbia River Gorge area, farms that today can generate 6000 MW of power, more than ten times the output of our little, but still largest east of the Mississippi, solar PV project in Spotsylvania, Virginia.
And the reverse incident, in May of 2010, when the wind turbines went into a maniacal frenzy of output as a storm moved in from the east; since this was also a time of year when hydro-power is at full throttle due to mountain snow melt, this “largest hourly spike in wind power the Northwest has ever experienced” wasn’t captured by any storage system for future use; the capacity to do that doesn’t yet exist. Instead the grid manager’s choice was either shut down the sluice ways on the Columbia River or the turbines, and that was no choice at all: the wind turbines had to be shut down, their potential electrical burst wasted for a higher common good – and because technical capacity for storage lags far behind renewable generation capacity, even at this early stage of its rising curve of generation.
Of Batteries and Storage Times
FERC, the regional grid managers, the renewable energy industry, and investors know this renewable push is not going to work without a tremendous amount of accommodation and new flexibility, and most of the optimism is resting upon the steady drop in battery storage prices. In February and April of 2018, FERC issued Orders 841 and 845, which address new storage rules for “bulk system operators” and “interconnections.” Yet the battery storage duration times are not climbing as much as the prices are dropping: the longest storage time is still around four hours. That means it is easier for battery systems to help solar generators cope with the diurnal realities: that solar production peaks at noon, and then falls off when the demand for electricity soars as citizens come home from work and turn on their appliances, with the seasonal peak consumption in the high summer and deepest winter. So four hour storage addresses some of that, but not all. But as yet there is no storage answer to the type of September we experienced in Western Maryland and a good portion of the Mid-Atlantic in the late summer and early fall of 2018: a two to three week stretch of cloudy and rainy weather. And, as best as I can judge from contemporary energy journalism, most of the battery power being deployed is being done for frequency modulation and voltage adjustments, like the AES (one of the parent companies of sPower, the solar owner in Virginia) system installed at the Warrior Run coal plant near Cumberland, Maryland, the largest battery storage system in the state. It’s a multi-purpose system:
The Advancion 4 control system at the Warrior Run installation measures and records nearly 80,000 separate data points. That degree of granular operation allows for stacking services, including regulation, reserves, renewable ramping, energy delivery, and voltage control to increase the battery system’s economic viability.
(Here at https://www.utilitydive.com/news/aes-deploys-new-10-mw-battery-it-touts-as-marylands-largest/409205/ )
That’s a great name, don’t you think, “The Advancion 4” – it could be a new household robot, future leaning, with a touch of the Centurion from ancient Roman Empire days; and don’t you love the rest of the description too…enthralling… and mystifying to outsiders.
Or, as in California, to replace gas turbine “peaking” generators, here at https://www.utilitydive.com/news/storage-will-replace-3-california-gas-plants-as-pge-nabs-approval-for-worl/541870/ This is an encouraging story, beginning to cut into the gas turbine “cornered market,” but with the storage time still at just 4 hours.
And here’s one estimate of the distance we have to go yet at the high end of renewable achievement, storage requirements we can’t yet meet: 12 hours and then three weeks at 80% and 100% renewables, wind and solar generated. https://pv-magazine-usa.com/2018/03/01/12-hours-energy-storage-80-percent-wind-solar/
Storage as yet can’t help as much with wind turbines’ variability. In that type of generation it is the ability to wheel the power through new high voltage lines over long distances to close the gap between the best wind generation fields and the physical areas of highest demand: usually distant population centers. It may be that chemical batteries never close this gap, and instead pumped hydro-storage or heat exchange systems fill it when timed wheeling doesn’t mesh generation with peak demand needs.
For readers who would like a “high” science driven projection of the latest trends in renewables, storage, and a very informative tour of the overall efficiency and cost curves of the major means of generation, centered on the world of Maryland, please refer to Arjun Makhijani’s November 2016 treatise called Prosperous, Renewable Maryland: Roadmap for a Healthy, Economical and Equitable Energy Future. Here at: https://ieer.org/wp/wp-content/uploads/2016/11/RenewableMD-Roadmap-2016.pdf
Renewable Disputes and Dissents, and Scientist suing Scientist
Unfortunately, Dr. Makhijani’s timing didn’t quite get to cover the work of Mark Jacobson, a Stanford professor, and his two ambitious studies from 2015 which optimistically claimed 100% renewables are doable both technologically and financially without nuclear, carbon capture storage or any other fossil fuel hangover, and achievable by 2050, here at https://news.stanford.edu/2015/06/08/50states-renewable-energy-060815/
His findings were in turn challenged by 20 or so scientists, engineers and energy policy honchos, headed by Christopher Clack, in the summer of 2017. Here’s an overview article on the disputes: https://www.citylab.com/solutions/2017/06/the-heated-politics-of-renewable-energy/530766/
This dynamic got ugly, legally, with Jacobson suing for defamation, an almost unheard of tactic from scientists; he eventually withdrew his lawsuit with the other side asking him to pay for their legal bills. Yes, citizens, that’s how large the stakes are in these brave new energy future matters, for everyone: reputations, scientists, corporations, we the citizens, and need I say it: the climate, nature, and our civilization itself. How far and fast can we de-carbonize, go full renewable, and what will the cost be? If it’s a true Climate Mobilization situation, then perhaps we don’t worry about the costs until the war is won, as in World War II’s domestic mobilization, 1939-1942. But if we are to get “there” democratically, it means persuading a good many citizens, including some Republicans, who have never heard of “Modern Monetary Theory,” that there is safe precedent for large national debts for the sake of national survival. How about Green Bonds in small denominations in lieu of WWII’s War Bonds? I’m a realist about this: the means of persuasion don’t look like they can work it time, but there is new momentum in the call for a Standing Select Committee for a Green New Deal in the House, in December of this year.
Editor’s Note: I was of two minds as to whether to include an assessment of the situation in Germany as part of this dynamic; the inclusion side won out. Germany is perceived in the West as one of the pioneer leaders of renewable energy, of wind and solar especially, along with Denmark. But the issues raised above in the U.S disputes don’t go away in Germany; their renewable percentages are way up, but the problems of variability, intermittency and cost don’t go away, and the degree of de-carbonization is stalled as Germany has moved away from nuclear and therefore retains a sizeable baseline and back-up dependency on coal and gas. For those who want to go deeper into the German progress and future troubles, here is an exchange from Dissent magazine in 2013 between Will Boisvert, a nuclear advocate who claims the German “Energiewende” program is in trouble on reliability and cost grounds as well as failure to decarbonize - https://www.dissentmagazine.org/article/green-energy-bust-in-germany - and a rebuttal from an American based green writer, Osha Gray Davidson – here https://www.dissentmagazine.org/article/green-energy-bust-response-to-will-boisvert and then Boisvert’s reply to conclude the exchange: https://www.dissentmagazine.org/article/green-energy-bust-boisvert-replies
Some things I noticed about this debate: there is no mention of battery storage as one of the answers, perhaps the leading answer to the renewable intermittency problem here in the U.S. In Davidson’s rebuttal, he pointed out that the German renewable program had broken up the oligarchy of the old fossil fuel cartels, and farmers and other small businesses have benefitted from local solar and wind turbine generation. In reply, Boisvert says these new beneficiaries are a subset oligarchy themselves of the whole population, and because of reaping their subsidies via the Feed-In-Tariffs, they are driving up prices for the bulk of the retail public. Please also note on costs, as we will see immediately below, that in the dynamics of falling costs for wind and solar energy productions, five years – between these articles appearance, and today, late 2018 - is a long time.
My conclusion: in a vibrant democracy, the most passionate of advocates for even the best moral causes have an obligation to grapple with the objections of the opposing views. In Germany, the science of Global Warming is not disputed by the broad public, so the dissent from “Energiewende” doesn’t turn upon those near theological grounds – it’s over the physical limitations and costs – and best means.
Tony Seba to the Rescue? Clean Disruptions
And then, just as I was in the seeming homestretch of this paper (but actually, far from it), Rick Sullivan, on the board of 350.org in Montgomery County Maryland, a big, wealthy, green leaning county if ever there was one, in the DC Metro area, sent me and a dozen others an hour long talk by another Stanford university science dynamo, “futurist” Tony Seba. It’s well done, on the coming energy and transportation “disruptions.” His is a very optimistic take on solar, electric vehicles, and on the most accelerated time frame I’ve yet heard: by 2020-2025…five years or so…here at https://www.youtube.com/watch?v=2b3ttqYDwF0
The heart of Seba’s sparkling presentation is based on a century’s long history of prior technology disruptions and convergences. Today it is IT/AI and battery storage, and a magical moment when cost curves improve to 10X less than the competing technologies; then the adoption curve stops being linear, becomes an S-curve…as with cell phones, computing power (Moore’s Law) from main frames to laptops to iPhones…and so forth. In Seba’s view the cost curves for wind, solar and battery storage are falling so fast that businesses will adapt to the “no brainier” numbers, and do so surprisingly quickly. Perhaps it is better said: adapt/adopt – or perish. Market Utopianism? Yes, a good strong dose of it.
To balance this out a bit, here’s a hard-headed investor’s take on the time frames and a very much Bakke-like anthropological take on the possible resistance to self-driving cars (but not electrical ones) here at… https://seekingalpha.com/article/4130828-tony-seba-evs-solar-25-oil
And alongside of that, read this much more pessimistic version of the seasonal solar and wind dilemmas, focused on California, and the skepticism that the amount of battery storage needed to seasonally balance the fall off of wind and solar can ever be economically met. Seba says it can, and rapidly. Here from MIT Technology review: https://www.technologyreview.com/s/611683/the-25-trillion-reason-we-cant-rely-on-batteries-to-clean-up-the-grid/
The tensions just outlined serve to remind us of major stalls and conflicts in our way-too-slow transition away from fossil fuels. Renewable visionaries, prophetic scientists and dedicated activists have had the proper sense of urgency; American politics, however, has not been able to keep up. That’s part of the context, a tragic context so far.
The environmental writer Bill McKibben shares the angst of ecology writer Elizabeth Kolbert, noting the alarming science and that major climate disasters are already baked into the effects of our limited warming, but he agrees that we must fight the good fight and that “‘it’s not an entirely impossible task.’’” Writing in the November 22 print edition of the New York Review of Books,” in an article entitled “A Very Grim Forecast,” he lays out the best of the new landscape:
…the percentage of voters who acknowledge that global warming is a threat is higher than ever before, and the support for solutions is remarkably nonpartisan: 93 percent of Democrats want more solar farms; so do 84 percent of Republicans. The next Democratic primary season might allow a real climate champion to emerge who would back what the rising progressive star Alexandria Ocasio-Cortez called a ‘Green New Deal’; in turn a revitalized America could theoretically help lead the planet back to sanity. But for any of that to happen, we need a major shift in our thinking, strong enough to make the climate crisis a center of our political life rather than a peripheral question easily avoided. (There were no questions at all about climate change in the 2016 presidential debates.)
But we, even in supposedly Green Maryland, have not been able to turn that support for solar into more rapid progress. Not yet. That could change as the state legislature in Annapolis now has veto proof majorities in both houses to override an objecting, re-elected Governor Larry Hogan. Hogan surprised everyone by backing a ban on fracked gas very late in the 2017 legislative session; since then, he has been “all in” for supporting the natural gas industry for whatever it needs, especially its pipeline approvals. A close read of those annual reports on the RPS “achievements” also reveals the “hedges” built in to protect the fossil fuel generators: if consumer electricity prices go up the shaky system will automatically call “time out”; and the rationale for Republican Governor Hogan’s veto of increasing the renewable shares and advancing the deadlines was also consumer price increases, fears which the numbers I read in the non-partisan legislative analyses did not bear out.
As we will see in Virginia, Dominion Energy, which one sharp observer there called a “gas-bloated giant,” the builder of major pipelines and the LNG export facility owner at Cove Point in Maryland, has won Goldman Sachs’ blessings for supposedly keeping electricity prices low and, prior to the last two years, pushing solar off onto other’s out-of-state political plates. And national and state green hopes for a carbon tax have failed under the same anti-tax, low-consumer prices stances that are standard Republican fare.
As environmental activists push for more home grown and more honest “renewables” in Maryland, the Maryland Association of Counties has lobbied to limit the siting powers of the Public Service Commission, to increase “home rule” to block big projects, especially under the banner of saving farmland. The latest legal decision has left neither side, the state Public Service Commission, nor local County land use laws, with absolute power: siting will be determined case by case, disputes still going to court. (Here at https://conduitstreet.mdcounties.org/2018/11/16/solar-siting-preemption-case-now-precedent/)
Ecology, Energy and Economics: All part of the Political Economy
That brings us to a broader point, suggested by the quote above from Bill McKibben. The Democrats have failed to turn the major axis of politics from the Center-Right’s Neoliberalism – anti-tax, anti-government, anti-spending (for anything other than tax breaks and defense), anti-regulatory, and, it almost goes without saying in this ideological stew, anti-planning. This Neoliberal axis has not been directly challenged until 2016, even as more and more left leaning Democratic candidates have started pushing policies which defy the reigning doctrine’s assumptions.
That reckoning can’t be escaped, because it is the roadblock to the type of massive commitment of resources that must take place to slow and then stop Global Warming, the type of “mobilization” that only occurs rarely in American politics: partially during the New Deal’s response to the Great Depression, and then the all-out build-up in 1939-1942 to win World War II on two fronts.
It would be a good question to pose to futurist and optimist Seba whether he thinks, in light of his projections, such a mobilization will still be necessary, or whether the dramatic financial barometer changes he sees arriving soon will accomplish them, and a follow up: will transformation of the transportation and electricity sectors be enough, with their combined contribution of Green House Gases standing at 46.9% of the total economy, with 22% remaining in industry, 11% in commercial and residential uses and 9% from agricultural?
I think for progressive populists – to use the term of Robert Kuttner in his “shift to the left” book – Can Democracy Survive Global Capitalism – to succeed in 2020, and beyond, the axis of American politics must reorient along a merged environmental and economic axis. That is still a highly contentious shift, even after the Democrats picked up 39 seats (and still counting as of 11/29) and won back the House of Representatives. The contending forces swirl around the likely Speaker of the House, Nancy Pelosi: centrist Democrats fearful of the leftward shift vs the Young Turks coming in for “orientation,” but refusing to play the usual deferential freshman role. Michael Hirsh’s pre-election article in the New York Review of Books – “Who Will Speak for the Democrats?” captures the unavoidable terrain very well:
Win or lose on November 6, Pelosi will have a pack of progressives at her back – and so will the eventual Democratic presidential nominee in 2020. For the Democrats this reckoning is ultimately about whether their leadership can finally acknowledge that since the Reagan era they’ve too often been a party of counter-punchers. They’ve sought merely to temper free-market ideology without offering an alternative vision of their own. Judging from her 2017 memoir, What Happened, and various postmortems, Hillary Clinton still doesn’t seem to fully grasp – or at least admit – that the seeds of the (largely white) working-class distress that sank her campaign were planted during her husband’s presidency, with its embrace of Wall Street deregulation and GOP-driven deficit-cutting that left a pittance for job retraining and adjustment programs. (Editor: My emphasis.)
That’s basically right, but there is much more being proposed as a corrective than “retraining and adjustment programs.” Led by the Justice Democrats, one of the groups fissioning off from the Sanders’ campaign and behind the election of Alexandria Ocasio-Cortez, and the Sunrise movement, hundreds of young people protested in the halls of Congress outside speaker Pelosi’s office on November 13, 2018. Ms. Ocasio-Cortez once again moved to center stage in the national spotlight, and, supporting the protesters’ call for the establishment of a Select Standing Committee for a Green New Deal, to develop a plan over the coming year, which the Climate Mobilization organization has also been pushing for. I wrote about it here, with links to their platform: https://www.dailykos.com/stories/2018/11/18/1813860/-Long-Overdue-A-Select-House-Committee-for-a-Green-New-Deal-to-Fight-Climate-Change
This activism, and the framing around the issue – a Climate Emergency and Mobilization with a national plan to be formulated in public…is alarming cautious Democrats, who want the issues to be handled by existing committees. The best argument for the Select Standing Committee for a Green New Deal is to remember how quickly the party forgot its own platform planks won by the Climate Mobilization movement at the Democratic National Convention in August of 2016, which played no role in the national drama – or tragedy - in that traumatic fall of 2016. Here at https://www.theclimatemobilization.org/blog/2018/9/4/dnc-passes-climate-emergency-mobilization-resolution
The climate events of this fall of 2018, Hurricanes Florence and Michael, and the horrifying wildfires in California, are helping make the case for the language being used by environmental left; now what about the economic side of that needed shift away from the Neoliberal axis?
Green New Dealers should take heart; the Trump economic numbers are coming in at the end of the long upside of the business cycle and “recovery” from 2008-2009, and like the Roaring Twenties under Republican Presidents, and the roaring 1990’s under “Neoliberal” Democrat Bill Clinton, they will not last, and the foundation under the arguably good times, is, in my judgement, the shakiest of all the comparable periods: with equal or greater inequality and an older and more frayed infrastructure. And, arguably, in comparison with the 1920’s, with a lot more hatred to go around.
Markets: servants, dictators or gridlock facilitators? The work of Karl Polanyi
Yet the ground to be recovered from the collapse of the old New Deal order and subsequent dominant reign of Neoliberalism since at least 1980 is enormous. At its most fundamental level it becomes a question as to whether economic markets – and what hasn’t been marketized? – serve the broader public good as determined by democratically elected governments, or whether both politics and civil society are now the servants –or worse - of market forces, and the unleashed power of money in politics? There is a stalemate in between, as well, as in Congress in the US, 2010-2016. And the slow degradation of democratic norms. That’s the way Karl Polanyi posed the issue in his incomparable 1944 work, The Great Transformation, and Polanyi’s work has been gaining ground in the center-left journals like Dissent and the more centrist New York Review of Books.
It will be useful for readers to keep some of his intellectual framework in mind as we look more closely at electricity markets and how they have, or haven’t, evolved since the great wave of de-regulation in the late 1990’s. After the founding impulse – and impulse doesn’t do justice to what Polanyi calls the near “religious” intensity of the founders (Adam Smith, Joseph Townsend, David Ricard, Thomas Malthus…to name some of the most prominent). As Free markets and free trade became a secular religion by the mid-19the century, Polanyi noticed a dynamic surfacing in the Parliamentary response to the stark realities of the first full blown market system in human history, one which, he repeatedly reminds us, was created by governmental action, deeply framed to achieve a total labor market and thus drive surplus agricultural labor to the new manufacturing centers. The stark reality was that no one could live with the brutalities of the “pure” free markets, neither the manufacturers nor the laborers nor the landed gentry being threatened by the rising political influence of the manufacturing barons. Here, in one of the most powerful and famous passages in the history of political economy, is how Polanyi put it in Chapter Six: “The Self-Regulating Market and the Fictitious Commodities: Land, Labor, and Money”:
To allow the market mechanism to be sole director of the fate of human beings and their natural environment indeed, even of the amount and use of purchasing power, would result in the demolition of society…Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized…Undoubtedly, labor, land, and money markets are essential to a market economy. But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill.
To avoid this fate, then, all the elements of society, sometimes even the ones who seemed to be prospering the most, seek protective legislation, setting off another of Polanyi’s notable characterizations, the “double movement.” That movement results in stalemates between contesting forces, the Parliamentary paralysis, for example, of the final phase of the long 19th century, the 1920’s and 1930’s; stalemate in democracy and between ideas left and right, even in the face of economic catastrophe from the First World War and the Great Depression, which enables the rise of fascism, especially in Italy and Germany. It is these insights’ resonance with the fate of Democracies in the West in the wake of Globalization, today, in the second decade of the 21st Century, which has led to a re-discovery of Polanyi’s work, and there is no better illustration of this stalemate than the dynamic between the Republican Right and the modest centrism of President Obama.
And who can fail to hear echoes of Polanyi’s words in the fate of nature at the hands of the market’s heat here in the fall of 2018? Or in the “deaths of despair” of the white working class and the Opioid crisis (“…would die as the victims of acute social dislocation…”), the starkly different fates between the prosperous coasts and rural Red State America. The respected medical writer Marcia Angell put it this way in her article “Opioid Nation” in the December 6, 2018 print edition of the NY Review of Books:
As long as this country tolerates the chasm between the rich and the poor, and fails even to pretend to provide for the most basic needs of our citizens, such as health care, education, and child care, some people will want to use drugs to escape. This increasingly seems to me not a legal or medical problem, nor even a public health problem. It’s a political problem...To end the epidemic of deaths of despair, we need to target the sources of the despair.
Thus fates in seemingly unrelated parts of our society and world intertwine: the fate of nature pushed under by the cross-class alliance of conservative business and the white working class, where as a matter of political theology, with no exaggeration, Global Warming does not exist, and thus cannot be part of the Republican world view in 2018. That’s because, for the reasons Naomi Klein has so lucidly outlined in her works, the premises of the entire Republican political economy collapse if forced to face environmental reality – and the means needed to slow and then reverse global warming. Abolishing the old New Deal has been the Republican and Libertarian’s Right’s dream since at least Goldwater in 1964; the specter of a Green New Deal is that dream turned into a conservative nightmare.
However, there is a need to balance the political equation here: the failure of the Democratic Party, a centrist party, also enthralled with market models of climate change mitigation, too slow and too late to deal with the reality, has fumbled away, ideologically fumbled away, opportunity after opportunity, as Ms. Klein makes clear in her critique of them, and support for a Select Standing Committee on a Green New Deal to actually draft a plan of action: https://theintercept.com/2018/11/27/green-new-deal-congress-climate-change/
Economic Transformation: “‘…at a scale and speed that has no documented precedent.’” (IPCC Report: October, 2018)
This is an enormous order, to construct a new political economy, a Green New Deal and it probably can’t be won without addressing, within the Mobilization and Climate Emergency plans, two points raised by the cautious political commentator, Michael Tomasky, who’s take on the Mid-term elections places him to the right of Michael Hirsh’s view which I quoted above. Writing in the December 20, 2018 print edition of the NY Review of Books, here https://www.nybooks.com/articles/2018/12/20/the-midterms-so-close-so-far-apart/ ) Tomasky stresses how close the system is still to complete political stalemate (in unconscious echo of Polanyi’s outcome in the 1930’s for the “double movement”) in the tiny margins of so many races for national and statewide office; but he worries the most about how little progress Democrats have made in persuading Red Rural America that Right Populism won’t deliver the goods for them (aside from emotional goods) : “The Democratic Party clearly needs a program for rural America…the urban-rural divide is the central economic fact of our time…”
I would add, with no less emphasis but a different focus, that the ecological left must include robust economic aid, investment and public jobs (a CCC/WPA), in their Green New Deal/Climate Mobilization plans, and will have to strive mightily to overcome the class/cultural divisions that have kept the upper-middle class dominated environmental movement always struggling to communicate and win over the white working class. It’s time the cross-class alliances that Polanyi wrote about, in 19th century Victorian Britain, begin to work for a Populist Left, not a Populist Right hoping that a great business “genius” will finally do right by them, the virtuous white working class.
Keeping this broad framing in mind, it is not difficult for me to see the continuation of Polanyi’s double movement, and indeed, stalemate, in the politics of electric markets. What I have found is that the market Utopianism that marks the triumph of Neoliberalism, especially in the attempted de-regulation of electricity markets starting in the late 1990’s, has run into the same realization which Polanyi said greeted the economic “liberals” in Great Britain as the 19th century entered the 1840’s: no one could live with complete de-regulation, most assuredly, today, in the 21st Century, not the coal or nuclear industries, pressed by the falling cost curves of renewables and the declining price of fracked gas. And if markets were truly set free as the demand side advocates of increased prices want(ed) – to send the signal to invest in more capacity (especially to meet peak load periods) – and the advocates of a carbon tax “price signal” also wanted for different reasons, why hasn’t either happened? Because it was the political wariness of politicians of both parties - who were leery of these “market driven” directions – higher prices for consumers - that led to the confusing mix of de-regulation and lingering regulation that we find today. And of course, in these two strands of policy, pricing carbon via a market trading policy or a carbon tax runs afoul of Republican theology: no new taxes, in addition to disbelief in the science of Global Warming.
It’s so confusing that the American Public Power Association places Maryland in the de-regulated state column, and Virginia, in the regulated, among the 35 states that did not go for de-regulation. That would be a surprise to the Virginia legislature and the State Corporation Commission, who have, with quite mixed feelings on the SCC’s part, allowed a near monopoly power to handle “regulatory issues” and “planning” in a matter mostly comfortable for its own power, priding itself on keeping prices low for its retail and business customers. And keeping the competition out – or under Dominion’s control.
In keeping with this confusing landscape and Polanyi’s “double movement” characterization, the early champions of wind turbines and solar panels had an individualist, anti-politics orientation, very much a sixties, Whole Earth Catalog, back-to-the-land world view, an orientation where one small sub-stream went the Bernie Sander’s root, but the larger sub-current went Libertarian market friendly. Yet they kept that early renewable “market” space alive, a clear government sanctioned intervention, aided in the statehouses and Congress by major green advocacy groups. In recent years, though, it has been national policies in Germany and China (and Scandinavia) that brought the cost of wind and solar down, especially the Chinese ability to rapidly “scale up” the manufacturing of solar panels.
The necessary planning and regional focus has been left not to a “Green New Deal’s” yet to be realized institutions, but to mild federal guidance and suggestions emanating from the “research labs.” The real implementation powers have been shifted into the hard for citizens’ to reach processes of FERC and the regional grid managers, the RTO’s (Regional Transmission Authorities), such as PJM. Home rooftop solar and backyard windmills, small business by small business and now even “community solar,” project by project, haven’t been able to drive the necessary scale of adoption in time, whatever their good theoretical arguments for security and safety, captured in the buzz about de-centralized micro-grids.
As I look over the contests between states and ersatz renewables under the 13 state jurisdictional roof of PJM, I wonder if there shouldn’t be public regional planning about where the best locations for wind and solar are, irrespective of state-by-state RPS dynamics. Rooftop by rooftop also drives the societal price up because of all the additional wires and transformers and converters…although “decentralizers” have their rebuttals ready. Right now, there is more friction in the various initiatives than spatial sense as powerful private players advance their renewable projects based on corporate needs and existing grid patterns of wholesale market power lines and the potential for profitable price arbitrage, from those entrance and exit “nodes.”
Hiding from Neoliberalism’s “Iron Cage”
Before I turn again to the specifics of the largest solar project east of the Mississippi, and put these “Background and Context” observations to use in understanding why that project happened in Virginia, and not Maryland, let me offer one last critical note about Bakke’s “The Grid” which was conveyed to her last winter at McGill University via Email. The concern still stands. It’s about the lack of attention to the broader world of the political economy, and the historical context which led to the push for de-regulation of markets of all sorts - transportation, finance, energy - undoing much, but not all of the work of the New Deal of the 1930’s. Bakke is clear that the push has had mixed results, and state by state, elected officials have been torn between “pure” free markets and regulated ones, and the courts settle the disputes between all parties and especially between FERC and the state utility commissions: like the Public Service Commission in Maryland, established in 1910, and the State Corporation Commission in Virginia, which dates back to 1903 – both being founded near the peak of the “Progressive Era” and built upon the public’s fear of too much power in the hands of railroads and other utilities.
{Editorial commentary: “Pure free markets” don’t exist and never have; Karl Polanyi was right: markets were, and are, a conscious human construction,not part of nature…as in system analysis, when something goes wrong in markets ,it’s maintained that’s because they weren’t designed properly, not because they don’t always fit human complexities…or are inappropriate for some areas of economic life. One good answer to Market Utopians is that when they “attained”a good approximation of their fantasies, the farm commodities markets of the late 19th century, with millions of small farmers competing with each other all around the world, a truly globalized market for grain, it was a world that self-destructed at its most successful productive years as prices plunged and the smallest farmers were driven under. A great abundance for society turned into plunging prices for individual farmers. It led to all sorts of “hedging” instruments in financial markets to buffer the farmer from wild commodity crop prices wings. And farmers today in the US and Western Europe are some of the most market sheltered entrepreneurs around. But try this out sometime with a speech at your local Farm Bureau meeting…an organization where the contradictions between free market fantasies and subsidized reality requires more than a bit of stage magic to hide…
Now my worry is this: although Bakke is good at naming the specific abuses of power, and lack of creativity and flexibility of the old electricity grid dinosaurs, the fossil fuel industry and later nuclear (she goes way too easy on natural gas) she probably underestimates the Utopian dangers of the Conservative-Libertarian push to financialize and marketize all of human society. My concern centers upon on how political all major economic decisions are, and just how neutral the grid referees can be, whether it is FERC, the state Public Service Commissions, or the private entities like PJM which are responsible for most of the planning. The RTO’s give thumbs up or down signals on which electricity sources get retired, tempered by the legislatures rescue of the stranded costs of the fossil fuel and nuclear generators. That’s two arenas rife with conflicts right off the bat. I worry about the opaqueness of all these energy trading markets and whether citizen watchdogs can monitor them successfully, whether they are Maryland’s RPS/REC system or PJM’s triple tiered bidding markets. One prominent dissenter, David Cay Johnston, is very critical of “current” electricity markets, and PJM in particular, for keeping certain bid prices from the general public.
Often ideological regimes, like Neoliberalism, become so dominant in the realm of ideas and political practice that they tend to purge the memory of what went before, become like intellectual prisons. Thus, as we will see, when things go wrong in electricity markets, the cause is often attributed to poor market design, as in California in 2001-2002, which has considerable truth, and the answer to problems becomes more fine-tuned trading instruments, not a reconsideration of the fundamental question of whether markets and trading should apply to the high voltage lines connecting distant points, the wholesale energy trading markets.
Therefore, to gage how far Ms. Bakke might have been drawn into this intellectual cage, I did a little “Index Measuring,” compared to Daniel T. Rogers book about the drift of our era, across many disciplines, winner of the Bancroft Prize for History in 2012, called “The Age of Fracture.” Fittingly, his second chapter is called “The Rediscovery of the Market,” and the next, “The Search for Power,” which is not about energy markets, but how the analysis of where power lies in our world has “evaporated” into meaningless categories – perhaps ending in “The Cloud,” far removed from the old left’s centering it in the physical facts of capitalism: factories and financial centers: Manchester, Detroit, the Ruhr, Zhengzhou; New York, London, Frankfurt…Tokyo, Shanghai, Hong Kong.
Thus in Bakke’s Index I found no reference to Neoliberalism, the guiding descriptive term for the synthesis of ideas about economic power in our age, no mention of Friedrich von Hayek and Ludwig von Mises, the founding fathers of the Austrian school of political economy, no mention of Keynesianism, the New Deal or FDR, and just one lone one to “The Public Utility Holding Company Act of 1935.” In other words, an explicit handling of the schools of thought, across the political economy spectrum of views, is missing, although sometimes implied. And thus the Libertarian positive side – all those little independent power producers with windmills and solar panels coming out of the 1960’s Hippie culture/Back-to-the-Land movement, get their due credit as courageous forerunners, but the Libertarians of the Koch and James M. Buchanan mold, nurtured in good part by the very conservative world of Virginia businesses starting in the 1950’s, in the state’s colleges, as portrayed by Nancy Maclean in her book Democracy in Chains (2017) is also missing. I later found part of that missing world in the history of the vast political power wielded by Dominion Energy, which up until very recently, has been a major opponent of renewables in Virginia, but looks like the company is now having some regrets, is making some minor concessions as solar is being demanded by corporate players too powerful for them to ignore, echoes of the predictions of Tony Seba, but too early to tell if his forecast of irresistible price drops turns that Virginia market towards a more rapid adoption of renewables .
In contrast, The Age of Fracture, a mind-boggling intellectual tour across many disciplines and fields, including anthropology, sociology and economics, gives us 50 references to “conservatives,” 16 to Libertarianism, 21 to Liberals, 11 to socialism and 20 to government in all the relevant contexts of political economy. There are also nine references to the energy crisis of the 1970’s, but none to Global Warming, yet the sum of the fragmented forces of the Age of Fracture do explain why the concentrated focus necessary to meet and turn back Global Warming has yet to be marshalled: under Neoliberalism, government cannot plan, cannot regulate, and cannot spend, and the vast accumulation of wealth in the corporate world and within the top 30% is still mostly caught up in Neoliberal’s protective austerity, the stance towards public spending. Central Banks’ electronic money creations for select financial bailout is ok, but don’t look too closely or you’ll uncover the Pandora’s Box of Modern Monetary Theory. Better not let a Populist Left Green New Deal open that lid either. Neoliberal austerity means “no Climate Mobilization,” no left populism, no Social Democracy or Democratic Socialism has found its solid footing beyond the Sanders bid, although there are hopeful signs that is beginning to change.
Stay tuned for PART TWO: The Illusions of Electricity Markets.
best,
billofrights,
Frostburg, MD