Solar water heaters and adverse incentives

The question of how to cut our production of carbon dioxide grows more urgent every day, and the focus tends to be on new sources of energy. Increased efficiency tends to get lost in the mix, even though it's the easiest and most readily implemented approach.

Improving the carbon efficiency of buildings by 25% would produce one of seven "wedges" of carbon reduction needed to let atmospheric carbon dioxide level off. Doubling fuel efficiency of cars from 30 to 60 miles per gallon would have the same effect.

Carbon efficiency can be boosted many ways, from simple steps like turning off the lights and reducing the heating/cooling when a building is empty (at night for a business, in the middle of the day for a home), or replacing incandescent bulbs with compact fluorescent lightbulbs. More efficient building techniques, adding insulation, using geothermal heat pumps, and solar water heaters can all do additional work to improve the carbon efficiency of a building, not to mention saving money in the long run.

Of course, saving money in the long run tends not to be a great incentive. The human brain tends to discount future benefits more quickly than it ought to. Whether this is a remnant of our days as hunter-gatherers or some other trick of the mind, it is a difficult barrier to overcome. Simple economic analysis of compact fluorescent bulbs shows that they really do save money in the long run, both because of their longevity and their lower power drain. The only thing keeping them from taking over the world is that they cost more up front.

While the difference in cost between a CFL and an incandescent may be small for the average consumer, the difference in the bottom line for power companies would be substantial if everyone switched to more efficient lightbulbs, or if people installed more insulation or timed thermostats. On its own, that wouldn't matter, but most states make utilities responsible for promoting energy conservation and efficiency. Needless to say, this puts the companies in something of a quandary. The more successful they are with that mandate, the less money the company makes.

The problem can be illustrated with a look at power company obstruction of a bill that would give Californians an incentive to install solar water heaters on their roofs:

"It's a noble effort," said Avis Kowalewski, vice president for Western Regulatory Affairs at Calpine Corp., which owns 22 gas-fueled power plants in the state. "But this bill could cost our company alone between $14 million and $18 million over 10 years."

The major objection Calpine and other utilities are raising is that the incentives for building owners would be paid for with a surcharge on natural gas. If your heart, like mine, is bleeding for Calpine Corp, pause for a moment. Residential users would pay an extra 13 cents a month on average. Buildings with solar water heaters cut their gas bills by 25%, far outweighing the surcharge. The 5% reduction in statewide use that bill proponents predict might well reduce gas prices enough to mitigate the surcharge, even for Calpine and other industrial users. But corporations are often less interested in thinking long-term than your average consumer.

The adverse incentive faced by power companies and gas utilities in this case are the same as those we encounter in any efficiency campaign. It is hard to create a market in efficiency. That problem is only made harder when abdicate creation of that market to the people running the market in more power usage – wasteful or not.

The solution is for the government to take the mandate for efficiency upon itself, regulating the market to privilege efficient use and to make a watt used inefficiently more expensive than a watt used efficiently.

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I understand that Australia has outlawed the use of traditional incandescent light bulbs by a certain date.

The light bulb switch seems like a no-brainer to me, and we've implemented it in our household. But I also hear that some of the chemicals used in CFLs might not be landfill friendly. So I guess there's a tradeoff.

Anyway, I think you need to send this post to AlGore. I hear he's a bit of an energy superuser.

CFL's contain mercury. Search on google for CFL mercury. THe first link is from NEMA recommending recycling CFLs, currently only large commercial uesrs are required to recycle fluorescent tubes.

Oh yeah, Kansas City Power and Light will give you a free digital thermostat if you allow them automatically set back the set temp during peak hours (you can override a set back request up to 3 times a month I believe.)

Yakko, CFLs contain a minute amount of mercury. Yes, we should protect ground water and yes we should recycle, but from the arguments against fluorescents based entirely upon mercury content, one gets the impression that they consist entirely of mercury when there is only a single and tiny drop of mercury added to each bulb as it is the emission source. It would be nice if the arguments started to match the facts.

By James Taylor (not verified) on 30 May 2007 #permalink

As I understand it, the amount of mercury in the CFL is probably less than the amount of mercury in the coal that will probably provide the electricity to the bulb over its lifetime.
Another way to look at it: how much coal is being "saved" because the CFL uses less electricity for the same amount of light? And how much mercury is in that coal?
The mercury argument against CFLs is a non-starter because we're comparing mercury contained within a small glass tube to mercury being emitted into the atmosphere.
And don't get me started on the amount of uranium released by our coal power plants!
CFL=good for lots of reasons. We're not concerned about the profitability of power companies (they have accountants, they'll figure it out). We're concerned about having enough power to go around.

Oh, and getting back to the point of the article, it's not a bad thing that the power companies have to sell less power if people start using it efficiently. Demand will still grow, they can always sell power to someone else on the grid.
The solar water heaters are good for the consumers, and that is what is important. Yes, the environment's nice and we should take good care of it, but really it is the people we care about. The solar heaters are good for them!