The Branding of Micropower

In September, Forbes featured an opinion piece on "Micropower's Quiet Takeover," and since then a number of environmental activists have promoted the concept of "micropower." The problem is that the branding of micropower often does not match up with the reality of these energy sources.

Micropower as a concept was apparently coined back in 2000 by Vijay Vaitheeswaran at The Economist. A review of this article reveals, like so many other futurist pieces, major disconnects between promises and the course of history. Back then, we read the following:

"Siemens Westinghouse, a big power-equipment firm, expects to bring SOFCs [solid-oxide fuel cells] to market in 2004, at a price of $1,500 per kW, dropping quickly to the $1,000 threshold that is currently achieved by coal-fired power stations. And, unlike Ballard [Power Systems, a Canadian firm] with its 1kW units, Siemens is building generators capable of producing between 0.3MW and 10MW. These are aimed at industrial customers."

Conventional coal-fired power stations remain our cheapest source of electricity fifteen years after this prediction was written. The only way to make these advanced technologies cost-competitive with coal is to unnecessarily encumber the coal mining and electricity production processes with all sorts of environmental regulations to increase the cost of doing business. Carbon-capture and sequestration mandates, excessive landscape remediation standards, low emissions allowances for heavy metals, etc., all are aimed at making coal-fired power less economically attractive. The coal companies know the game is rigged against them. The playing field is simply not fair -- but even after all the hurdles placed in its way, coal remains our most reliable, abundant, and lowest cost form of electricity. Other types of fuel cells were promoted in this article from 2000, at costs "below $500 per kW within 18 months." What happened to them? Why is China building coal-fired power plants if the "environmentally friendly" micropower sources are so much cheaper and can be distributed more widely across the landscape closer to user demands -- thereby greatly reducing transmission losses?

---

Well, the same source article tells us why -- because there are many other costly details to consider, such as obtaining and transporting the various "fuels," building and revising new grid systems, needing back-up conventional power plants for some sources (notably wind and solar), and on the list goes. The energy system is very complex, and simplistic utopian visions have a long history of not coming true. Thus, when I read from this article written in 2000 that "much of the world gets its electricity from big, inefficient and dirty power plants situated far from consumers. That will soon change," I must point out that -- in 2000 -- 63.6 percent of global electricity production came from oil, gas and coal sources. As of 2011 (the latest year available), that percentage had increased -- not decreased -- up to 67.0 percent. In the least developed nations, where the old-school fossil fuel sources were predicted to be readily outcompeted by non-fossil fuel technologies as the populace progressed into the modern era, the percentage of electricity from fossil fuels also increased between 2000 and 2011 from 33.3 percent to 37.6 percent. Low income countries increased their fossil fuel contribution from 27.7 to 30.9 percent. Low and middle-income nations went from 69 to over 73 percent fossil fuels. Sub-Saharan Africa's fossil fuel contribution towards electricity production has remained effectively unchanged over this time frame. This wasn't the way it was supposed to happen -- had we been listening to the most committed micropower advocates.

Can sources such as wind, solar, and hydroelectric be made "small, modular, mass-producible, quick-to-deploy, and hence rapidly scalable"? Of course, but so can nuclear and fossil fuels.

Then there was the predicted death of coal -- that supposedly most dirty of all energy sources. The global share of electricity from coal increased (yes, increased) from 38.8 percent in 2000 to 41.2 percent in 2011. The contribution from coal in low and middle income countries skyrocketed from 42.8 percent up to over 53 percent during this time. This wasn't supposed to happen, either. If the predictions had come true, those contributing percentages from fossil fuels should have dropped. They did not, for the simple reasons that fossil fuels remain fundamentally the cheapest and most reliable sources of electricity generation. Compare the numbers above from the World Bank to the claim below from the Forbes article:

"Thus in 2013, nearly half of the world's electricity was produced with little or no carbon release: 8.4 percent by modern renewables, 10.2 percent by nuclear power (set to be overtaken by modern renewables in 2015), 15.5 percent by cogeneration, and 13.5 percent by big hydroelectric dams (excluding the 2.8 percent small hydro classified under modern renewables)."

The World Bank has fossil fuels at 67 percent as of 2011 and rising, while this article has "little or no carbon release" sources at about 50 percent. The two sets of numbers are incompatible. So is micropower taking over? According to the Forbes piece, these are "sources of electricity that are relatively small, modular, mass-producible, quick-to-deploy, and hence rapidly scalable -- the opposite of cathedral-like power plants that cost billions of dollars and take about a decade to license and build." Here is the branding effort. Can sources such as wind, solar, and hydroelectric be made "small, modular, mass-producible, quick-to-deploy, and hence rapidly scalable"? Of course, but so can nuclear and fossil fuels. There is an economic efficiency in building larger plants -- the economies of scale that underpins microeconomic theory -- and this applies to both renewables and non-renewables. Even the renewables advocates concede this point now. A cursory review of the largest power stations by type shows a substantial number of renewable projects which fit the mold of "cathedral-like power plants that cost billions of dollars and take about a decade to license and build." The length of time to license and build nuclear and fossil fuel plants is also part of the regulatory table-tilt to distort the market in favor of renewables. If policy makers want to favor renewables, just put so many regulatory and other barriers in front of the proponent that they will give up. This strategy has been used extensively against the nuclear power industry over the past few decades. Two can play this game, and proponents of renewable energy may find that the tactics they employed against fossil fuels and nuclear can also be used against them. What's sauce for the goose is sauce for the gander. Turnabout is fair play. Revenge is a dish best served cold. All these apply in spades. Renewables -- including geothermal, solar, tides, wind, biomass, and biofuels, but excluding hydroelectric -- are going nowhere in the least developed nations. In 2000, these renewables comprised 0.075 percent of electricity production for the undeveloped countries. By 2011, the number was 0.080 percent. Overall, these energy sources are expanding in low and middle income nations (from 1.0 to 2.6 percent), in Sub-Saharan Africa (from 0.34 to 0.56 percent), and globally (from 1.4 to 4.2 percent), but they still make up an extremely small proportion of electrical generation -- and often a source that needs to be inefficiently backed up by fossil fuel redundancy. That other major pillar of renewables -- hydroelectric generation -- isn't increasing its share of electricity production. In 2000, hydroelectric sources were 16.9 percent of the world's electricity production. As of 2011, the share had dropped to 15.6 percent, echoed by corresponding share declines in the least developed nations (42.5 to 38.3 percent), low income countries (49.0 to 45.5 percent), and the low and middle income nations together (24.6 to 19.8 percent). Micropower has been portrayed as more "democratic" than the large fossil fuel and nuclear power stations. This, too, is misleading. Stand-alone fossil fuel power generators can readily be purchased at the nearby hardware store. Micropower proponents may argue in response that their fuel sources are "free," and don't rely on a long supply chain dependent on multinational corporations, international trade relationships, complex regulatory frameworks, and the like. Of course, because solar panels and wind turbines are do-it-yourself projects made using materials everyone can just mine and process from their backyards -- even if you live in an apartment or condominium within a highly urbanized region, which is where much of the world's population already lives and that share is increasing fast? Democratization gets thrown around a lot by the green energy advocates, but on closer examination the characterization falls apart. The financial and regulatory barriers to entry for even modestly relevant renewable projects are far beyond that of individuals and even small to medium sized groups. Projects still require sizable funding and regulatory favor -- meaning access to capital and government mediated crony capitalism remains a concern. In order to ensure electricity-on-demand at all times, all these micropower projects need to be backstopped by conventional major power plants running on fossil fuels, nuclear, or perhaps large-scale hydroelectric. That increases energy costs, inducing energy poverty and hindering economic growth. If these soures did not have the industrial-scale redundancy network, we would run the risk of even more frequent and destructive power shortages and the resulting socio-economic and political disruptions that would ensue. How is all this democratic improvement? The decentralization movement is a powerful attraction towards many on the left and right of the political spectrum. It has some merits, and if allowed to flourish within a free market environment, some micropower sources may find niche markets. But decentralization moves against all of human history. Over time, we have become more urbanized, have evolved from city-states to nation-states, and have become more specialized in our training and occupations for the basic reason that these evolutions were more efficient and effective, and allowed faster advancements in wealth and well-being. Much of what the micropower supporters are advocating is a reversal of this path, running backwards against the tide of progress. Unnecessary barriers should not be placed in front of micropower, but neither should its path be paved with subsidies and regulatory distortions.