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Last week I stumbled across this interesting dashboard of renewable energy projects in the PJM queue. Wind projects are by far the biggest category with nearly 42 GW of capacity planned. By comparison just 1.5 GW of PV solar is planned. And nearly 31 GW of nonrenewables are planned.

Separate from these planned capacity additions, PJM already has 165 GW of generation capacity available. Coal, natural gas and nuclear power are the three largest sources, whereas wind is a minuscule 2.3 GW of the current capacity.

The National Academies has developed a nice website entitled: “What You Need to Know About Energy.” It covers Uses, Sources, Costs, and Efficiency. In an earlier post I referenced its visualization of the U.S. Energy System. The other sections are worth exploring too.

The National Academies have posted a nice visualization of the U.S. Energy System, including where the energy comes from, how it is used, and how much is wasted. Bottomline: America consumed about 99 quadrillion BTUs (quads) in 2008. Of that, 42 quads were used by homes, businesses, factories, cars, trains, and planes. The remainder — 57 quads — was spent in generation, refining, transmission, distribution and efficiency losses. In other words, for every 100 BTUs we use, we waste another 135 BTUs. Ouch. Considering that energy is a $6 trillion global sector (and growing), figuring out how to reduce all this shrinkage sounds like a big business opportunity.

Today I found this visual comparison of U.S. federal government subsidies to fossil fuels versus renewable energy. The underlying data came from a study by the Environmental Law Institute and the Woodrow Wilson International Center for Scholars which reviewed fossil fuel and renewable energy subsidies for Fiscal Years 2002-2008. The study concluded that “the lion’s share of energy subsidies supported energy sources that emit high levels of greenhouse gases.” A PDF of the graphic is available here.

The Global Subsidies Initiative recently published a report that looks specifically at The Politics of Fossil Fuel Subsidies, but on a global basis.

With my dissertation on the horizon, over the past few months I’ve been exploring a variety of possible research settings. One idea I have considered involves studying the Pennsylvania Electricity Market as an in vivo cultural-economic-political experiment (ala Michel Callon and colleagues). At the risk of simplifying a relatively complex situation, three major pieces of state legislation have recently collided: deregulation, renewable portfolio standards, and consumption management. At the same time, the EPA is imposing new emissions reporting requirements on utility companies. All of this has generated a number of controversies, many of them entangled with issues related to sustainability, accounting and temporality — all themes I am hoping to explore in my dissertation.

1. Deregulation started in 1996 with the passage of the Electricity Generation Customer Choice and Competition Act. By January 1, 2001 all Pennsylvanians – theoretically – had the freedom to select their electric generation suppliers (“EGSs”). However, at the same time, the Act permitted the electricity distribution companies (“EDCs”) to recover their “stranded costs,” meaning “investments in infrastructure made before the law was passed that may have become uneconomic and unrecoverable in a competitive environment” (source). In exchange for the right to recover these stranded costs, electricity rates were capped. These caps expired in phases, with the last of the caps set to expire on January 1, 2011. Thus, despite some 14 years of “competition,” there is little to no retail competition in most regions of the state. However, PPL’s rate caps expired Jan 1, 2010, with bills expected to rise 30%. Early evidence suggests PPL customers are switching en masse, with 16.9% of residential, 23.3% of commercial and 68.6% of industrial customers having switched by January 16 (source). As one result, there is an unfolding debate over whether or not deregulation works.

2. Although deregulation is an interesting story on its own, the situation is complicated by the Alternative Energy Portfolio Standards Act (“AEPS” or Act 213 of 2004). AEPS requires that an annually increasing percentage of electricity sold to retail customers in Pennsylvania by EDCs and EGSs be derived from alternative energy resources. The level of alternative energy required increases according to a fifteen year schedule, including minimum thresholds that must be met for the use of Tier I (8% by 2020), Tier II (10% by 2020), and solar photovolatic resources. Of note, EDCs were exempted from compliance with AEPS for the duration of their “cost recovery period” as specified under the 1996 Customer Choice Act. In other words, not only are utilities such as PPL faced with new competitors, but at the very same time they are also subject to renewable portfolio standards. As a result utilities must supply a minimum percentage of their electricity from specified sources, even while face price pressures and uncertain overall demand. And while alternative suppliers (EGSs) face the same constraints, the result is an entirely new set of market dynamics.

3. Act 129 of 2008 imposed new requirements on EDCs , with the overall goal of reducing energy consumption and demand. The Public Utility Commission (PUC) will implement the Act in phases. The first phase will deal with the PUC’s obligation to adopt an energy efficiency and conservation program by Jan. 15, 2009. Subsequent phases of the Commission’s Act 129 implementation process will address EDC and default service provider responsibilities; conservation service providers; smart meter technology; time-of-use rates; real-time pricing plans; default service procurement; market misconduct; and cost recovery. The Act also expanded the types of alternative energy sources that qualify as Tier I alternative energy sources under the AEPS Act to include specific categories of low impact hydropower and biomass energy.

Against this backdrop, other events are unfolding. For example, another piece of legislation – Clean Energy and Green Jobs legislation (HB 80 and SB 92) — seeks to extend the AEPS to 2024, while increasing the Tier I requirement from 8% to 15%, including 3% from solar power. Those in favor of such legislation recently published a study by Black & Veatch. The study concludes that the pending legislation “will lead to nearly 130,000 new jobs and save between $1.9 and $4.6 billion for Pennsylvania consumers.”

Update March 26, 2010: It looks as if some others at Penn State think the Pennsylvania Electricity Market is an interesting research setting too.

Yesterday’s New York Times featured a nice visualization of President Obama’s proposed 2011 budget.

Even though such visualizations have become somewhat common, seeing it reminded me of my days at Creative Labs, circa 1996-1998. It was there that my manager first introduced me to Edward Tufte’s work on data visualization, and to Marimekko Charts.

The Mekko Chart has long been used by strategy consultants. It allows data to be depicted along two dimensions simultaneously. For example, market segments are often arrayed along the x-axis, with the width of each column corresponding to the dollar size of a segment. Within each segment/column the market share of individual brands is then displayed with respect to the y-axis. These days companies such as Mekko Graphics and think-cell offer add-ons which make it easy to generate Mekko charts in PowerPoint, or with a bit of effort you can do it yourself. An example of a Mekko Chart is below. (Curiously, as of today there is no entry in Wikipedia related to Marimekko Charts.)

Although Mekko charts are an elegant solution for depicting a handful of market segments and competitors, their usability starts to breakdown when faced with significantly more data, such as the S&P 500. And visualizing the stock market was precisely the problem Martin Wattenberg had in mind when he created the technique that ended up being used in yesterday’s New York Times budget visualization.

Starting with Shneiderman’s treemap technique (which is essentially what drives a Mekko chart) Wattenberg developed an algorithm that 1) employs both vertical and horizontal partitions at each level of hierarchy, resulting in a series of more readable rectangles, and 2) groups these rectangles based on their similarity to one another, enhancing the reader’s ability to make sense of any resulting patterns across rectangles. (For more details see his 1999 paper on Visualizing the Stock Market.)

The result was the 1998 introduction of the SmartMoney Map of the Market as a way of visualizing the S&P 500 at a glance. (Note: Wattenberg credits Marc Frons and Joon Yu as collaborators, and indicates “that several others, including Jarke van Wijk, independently invented similar algorithms around the same time.”)

Back to the budget itself, a couple things standout. First, there is the total: $3.69 trillion. Second, for all the fighting about healthcare, what’s astounding are the four bigger budgetary items that we’re not talking about: #1) national defense, #2) social security, #3) medicare, and #4) income security. These 4 items account for $2.53 trillion of the budget. Worse, if you toggle the “hide mandatory spending” button, what becomes apparent is just how few options there are for cutting the budget. Whereas virtually all of the national defense budget is discretionary, less than a quarter of the income security budget, and virtually none of the social security and medicare budgets are discretionary. In short, healthcare spending is neither the of our budget woes, nor can it possibly be the cure. We could eliminate healthcare entirely, or double our spending on healthcare, and the consequences overall would be modest, if not meaningless. To reduce the healthcare debate to a debate over economics is just that, reductionist. The recourse to economics has to be understood as essentially a smokescreen, evidence of an unwillingness to seriously engage with the issue.

Furthermore, the real problems with the budget are clearly related to national defense and social security. These two programs account for 40% of spending. And these are two programs that no one in Washington — Democrat or Republican — seems to be talking about fixing. So while I agree that we need healthcare reform, even more urgently needed are national defense reform and social security reform. For starters, the budget suggests America can no longer afford to be warmakers and peacekeepers for the world. We need to let the world fight its own battles and make its own peace. I suspect most of the world would be happy with that outcome too. Likewise, it appears that the 20th century concept of retirement and the government’s role in it needs to be entirely reworked for the 21st century. Hitting 65 years of age can no longer been seen as the magical age at which bliss and nirvana are yours by birthright. When exactly did retirement at 65 become part of the American dream, as if it were a Constitutional right? Perhaps linking the retirement age with life expectancy is a first step towards reforming social security.

The third thing that stands out is one thing we are not spending money on. The total energy budget is only $10 billion, or approximately 0.2% of the total budget. Now granted these figures do not include the Department of Energy’s $17.7 billion budget, which is grouped together with the national defense budget. But even adding in the DOE brings total federal spending on energy to just 0.7% of the total budget. Considering the well-known linkage between energy and GDP combined with the growing likelihood of a carbon constrained economy, and it seems clear that energy is vital to any U.S. recovery.

The New York Times has just released another fantastic story in its “Toxic Waters” series. The article highlights some of the complexities involved when attempting to address externalities and the tragedy of the commons. The article also vividly illustrates how solutions to such externalities and commons problems often create new (presumably unintended) spillovers (on externalities and commons see Coase 1960; Hardin 1968; Dietz, Ostrom, Stern 2003, etc). In other words, we see how new framings rather than solving problems can actually set in motion a cascade of overflows (see Callon 1998, 2007, etc).  In this case cleaner air comes at the expense of dirtier water, at least in part because the institutional arrangements (such as the Clean Air Act and the Clean Water Act) have been designed in ways that do not account for the interrelatedness of these dynamic processes.

Source: New York Times

At a more practical level the story is again accompanied by an interactive database of water polluters searchable by location.  For this story the database has been updated with the ability to look specifically at the violation records of coal fired power plants. Of note, Pennsylvania coal plants represent 4 out of the 15 violators of clean water regulations in the United States.  These plants include:

• Reliant Energy Ne Mgt Conemaugh Generating Station
• Eme Homer City Gen Lp
• Horsehead Corp
• Hatfield’s Ferry Power Station

The latest McKinsey Newsletter featured a link to this well-done interactive feature comparing costs and distilling the features, benefits and other aspects of various solar power technologies.  Coverage includes several flavors of photovoltaic technology (PV), including crystalline wafer-based silicon PV, thin film PV, concentrated PV, and various new emerging PV technologies.  Another section deals with concentrated solar thermal technologies, including parabolic trough, dish/Stirling, and power tower.  Worth a quick look.

In today’s New York Times, Thomas L. Friedman’s “Have a Nice Day” column highlights quite nicely the connection between uncertainty and the adoption of renewable technologies — in this case the adoption of solar energy technologies.

In particular, he argues that the solar panel industry is thriving in countries whose governments that have enacted policies aimed at overcoming the triple uncertainty threat:

1. Regulatory uncertainty — “[A]ny business or homeowner can generate solar energy.”
2. Connectivity uncertainty — “[I]f they decide to do so, the power utility has to connect them to the grid.”
3. Price uncertainty — “[T]he utility has to buy the power for a predictable period at a price that is a no-brainer good deal for the family or business.”

Friedman reached these conclusions, in part, after touring the Applied Materials solar panel “war room” in Silicon Valley, from which it maintains “real-time global interaction with all 14 solar panel factories it’s built around the world in the last two years.”  According to Mike Splinter, CEO of Applied Materials, “We are seeing the industrialization of the solar business. In the last 12 months, it has brought us $1.3 billion in revenues. It is hard to build a billion-dollar business.”

And yet because U.S. policies have not adequately addressed regulatory, connectivity and price uncertainties, all 14 factories of these solar panel factories have been built outside the U.S.  As a result “[R]ight now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America.”

Interestingly, Friedman points out that the debate over U.S. energy policies need not depend on competing beliefs about global warming.  ”[S]o, you don’t believe global warming is real. I do, but let’s assume it’s not. Here is what is indisputable: The world is on track to add another 2.5 billion people by 2050, and many will be aspiring to live American-like, high-energy lifestyles. In such a world, renewable energy — where the variable cost of your fuel, sun or wind, is zero — will be in huge demand.”

His point is worth exploring.  To understand the magnitude involved in supplying electricity to 2.5 billion more people AND supplying them with more electricity per person, consider that in 2007 the world consumed 18,187 terawatt hours (TWh; 1 terawatt hour = 1 trillion watt hours) of electricity.  That represented consumption of approximately 2,752 kWh for each of the world’s 6.6 billion people.  However, consumption is far from evenly distributed.  For example, OECD countries consumed an average of 8,477 kWh per capita, while China only consumed 2,346 kWh.  Meanwhile in the U.S., average electricity consumption was 13,616 kWh per capita.

All of this means that electricity demand by 2030 is expected to increase nearly 50%.  Perhaps not surprisingly, some have described energy as “the biggest challenge of the twenty-first century.”  But those challenges also may make energy — already an estimated $6 trillion dollar industry worth about 1/10th of the world’s economic output — the ”largest economic opportunity in the twenty-first century.”