The False Choice of Grid Parity
One of the things I've learned the most from business school is the power of false choices. By that, I mean the idea that there is a fixed set of options to choose from. While some professors like to force MBA students into choosing one option out of three, in the real world there is usually a much larger set of possibilities and the most successful of us will be able to ask the right questions to ascertain the full set of options and choose our option with a full understanding and value of the possibilities.
I attended the ARPA-E energy innovations summit last week. ARPA-E is under the DOE and funds early stage research and companies in clean tech. There were over 100 "companies" (some were universities/one person/etc) that exhibited and many of the solar companies had banners that said something to the effect of "we can do this at 10 cents a kWh". I didn't get into what if they had compromised their tech or their supply chain or if it simply wasn't true but I imagine it was at least one of the three.
The problem is that everyone is racing to the 10 cent solution. But what this recent Harvard study shows us is that coal is likely not even the cheapest form of electricity that we have, it's just that we are willing to pay for it with negative externalities like childhood asthma. http://inhabitat.com/harvard-study-reveals-coal-energy-to-be-one-of-the-most-expensive-forms-of-power/
I would argue that grid parity is also somewhat of a false choice. By that I mean it's not just either we have solar at 10 cents or coal/nat gas at 10 cents and no other reality is possible. What if we relied on true cost accounting to determine the price of our electricity? If we factored in the negative externalities of fossil fuels, most renewables would likely be at grid parity right now.
At the same time I understand the argument that increasing the cost of electricity affects the poor in a greater proportion than the wealthy, much like a sales tax. However, the negative health and environmental impacts of fossil fuels also have a greater financial and social impact on the world's poor.
In the end, the best thing we can do is tax what we don't want. While incentives and subsidies are a compromise until the true cost of fossil fuels is clear to the consumer it will continue to be difficult for clean tech to grow to the size we need it.

6 Mar 2011
