Do you own a printer?
If so, you have probably noticed the unique business model of printers. The machine itself is often extremely cheap. The ink cartridges, on the other hand, are incredibly expensive. Of course, you will need this ink in order to use the device. Bada bing bada boom, the printer manufacturer binds you to a loyal customer.
A similar dynamic is playing out with dirty energy technologies. The mainstream utilities are cleverly focusing on upfront clean tech spending, playing with the meme that air conditioning options are a luxury of the elite. Meanwhile, they are locking consumers up in devices that need their inefficient, volatile fuels forever.
Sticker price, from induction stoves to electric vehicles, is so much in focus that we can't imagine how much the technology will cost over its lifespan.
The high up-front costs of decarbonization compared to the low lifetime costs
Decarbonisation technologies have one thing in common: high initial investments and low fuel and maintenance costs over the entire service life.
Take, for example, a vehicle with a combustion engine (ICE) versus an electric vehicle (EV).
Electric vehicles have far fewer moving parts than ICE vehicles – about 20 versus 2,000 – which reduces maintenance costs, and electricity is cheaper than gas (although the amount varies from state to state). The result is that electric vehicles cost around half the operating price of ICE vehicles – and that doesn't take into account the predictions that electric vehicles will last longer, which makes the price per mile even cheaper over the life of the electric vehicle.
This dynamic happens again and again, also at the generation level.
If done right, innovative, low-cost finance will be the most effective way to provide equity and universal access to cheap, reliable energy in the 21st century.
Traditional fossil fuel power plants are cheaper to build than wind and solar farms, but the operating and fuel costs for fossil fuel power plants make them more expensive throughout their life, a metric known as tiered energy costs. However, as energy markets have been built around traditional fossil fuel generation, the higher up-front costs of expanding renewable generation capacity may discourage grid regulators from considering renewable energy as an overall cheaper option.
The case of building electrification and solar-plus storage
This week the New York Times accepted the narrative that decarbonization technologies are priced too high. In an article titled “California's Plan to Make New Buildings Greener Will Also Increase Costs,” the point of sale focused on a new building code that required new homes to have solar and storage capacity and be ready to be fully electric. The difference in upfront costs for a new home is about $ 20,000, according to The Times.
This perspective uses the same criteria that we use for dirty energy devices without recognizing the multi-dimensional benefits of climate technology solutions.
The use of solar-plus storage creates a new, decentralized energy asset for the grid. From the homeowner's point of view, this can reduce energy consumption during peak loads and shift times for usage charges. It could also function as a virtual power plant on the grid, which provides additional flexibility – something the grid desperately needs as extreme weather conditions compromise our ability to balance energy loads – and potentially create a new source of income for the owners of these assets.
In addition, these technologies have the value of resilience. In California, there are annual public safety power cuts during the fire season – so a power outage in the hottest months is a given. If the houses have solar plus storage, families can go online and stay up to date with evacuation orders. prevent food from rotting in the refrigerator; and operate medical equipment. We can see the effects of energy fragility right now in Louisiana, where more than a million people are without power after Hurricane Ida breaks transmission lines.
The other part of California's new building code – the part that requires buildings to be electrically prepared – makes homes more efficient and cheaper to run. Because heat pumps are more efficient than natural gas or oil and deliver more than three times as much heat or cold per unit of energy as conventional approaches. Where California has missed the mark, all-electric homes are not required, which would save investment in costly new natural gas connections.
Pay for the transition to air conditioning
While electrified and renewable technologies will save money throughout their lifespan, figuring out how to pay for them now is a real challenge. The focus on costs rather than funding obscures the need for transition. Put simply, we cannot afford not to decarbonise quickly.
Saul Griffith, clean energy guru and McArthur genius, outlines this imperative in his handbook “Rewiring America”.
“You don't fight a war because you can afford it – you fight a war because you can't afford not to,” Griffith wrote. “We can't afford not to wage the war on climate change … When people talk about the total cost of solving climate change it sounds huge, often in the trillions of dollars. This is exactly the wrong way to go about it. We should think about how much money we can save by doing this. “
Instead, Griffith argues, the conversation should be about market conditions and interest rates that we need to decarbonize while saving money. The funding model could be similar to a mortgage, which is a source of income for the lender and ultimately saves the homeowner money over the life of the project.
“If done right, innovative, low-cost funding will be the most effective way to get around the 21st century.
In the meantime, reputable publications can help by not giving oxygen to the industry's narrative that we cannot yet afford the transition to clean technologies. First of all, that's not true. Second, it fuels a misconception that we have the luxury of time to decarbonise. With fires raging in the west, hurricanes afflicting the Atlantic coast, flooding in the Midwest, and extreme weather conditions such as heat domes and polar eddies that are becoming a normal part of life, it is frustratingly short-sighted to say that acting is too expensive.