Amory and Hunter Lovins: Spokespersons for a Sustainable-energy Future
(Page 6 of 15)
July/August 1984
By the Mother Earth News editors
So debating what sort of new power plant to build — should it be coal or nuclear or solar? — is like debating the best buy in brandy to burn in your car, or the best buy in Chippenciales to burn in your stove. It's the wrong question. It's asking where to get more of a peculiarly costly form of energy, of which we already have twice as much as we can get our money's worth out of. The real competitors with new power plants today are familiar things like weather stripping, insulation, greenhouses, heat exchangers, window shutters, and shades and coatings.
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These are measures which, done right, cost something like half a cent to one-and-a-half cents per kilowatt-hour, whereas just the running cost for a new nuclear plant is about two cents a kilowatt-hour. So if you just built one, like Diablo Canyon in California, you'll actually save the country money by writing it off and never operating it!
Such figures put electric utilities in a bit of a fix. They've always believed that electricity was a natural monopoly, that they had no competition. But they do have competitors ... after all, your purchases are purely voluntary. Now utilities are facing some of the stiffest competition in the entire economy — at least 80% of the electricity sold now cannot stand up against efficiency improvements. Many of them are still investing in more — and ever more expensive — new power plants. They're liquidating their companies to build power plants that they don't need, can't afford, and won't be able to pay for ... playing "You Bet Your Company" that it'll take 50 years for you to find better buys. By the time they're through, people will be running away from this grid and buying efficiency like it's going out of style.
This is a very serious concern, because utilities — which have net assets of over $300 billion — are the largest single private sector of the U.S. economy. They issue half of all new industrial common stock and undertake a third of all corporate financing. Utility paper is built into the very foundations of America's financial pyramid, including insurance companies, banks, pension funds, and mutual funds. Yet this year we should see the first utility bankruptcy. And some analysts say privately that a collapse in the perceived value of utility paper could crash the entire financial system.
It's serious for another reason, as well. Lack of access to capital is arguably the most entrenched and important institutional barrier slowing the transition to efficiency and renewables. The opportunities to use these energy sources are dispersed in hundreds of millions of buildings, vehicles, and machines. However, today's energy financing machinery is attuned to energy companies, not to their customers. There is no mechanism to get energy investment capital quickly enough into the millions of hands that can spend it most efficiently. Our nation is falling about $25 billion per year short of the investment in least-cost energy options needed to make the U.S. energy system sustainable and secure. And each year, electric utilities are spending some $25 billion — the same sum — to build ever more giant power stations. They're spending twice as much as we're investing in the car, truck, and steel industries.
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