Power to the People or Power to the Corporations?

by on August 20, 2012 · 14 comments

in Business, Editor's Picks, Government, Politics

In the quest for renewable sources of energy a battle is looming that most people are not even aware of.  We need to replace electric power generated by coal and gas fired plants with power generated by solar and wind to be sure, but who owns the means of such production is a vital and crucial issue.  Let’s take solar, for instance.  There are two models basically to choose from.  The first is the large solar installation in the desert owned and operated by the large power generating corporations like SEMPRA Energy.

That’s logical, you might say.  There are acres and acres, square miles and square miles of desert real estate that is not much good for anything else.  Why not build solar arrays there and truck the electrons so created via transmission lines to the urban areas where electricity is needed?  The problem with this model is that transmission lines are inherently wasteful.  Energy is lost for each mile the electricity has to flow to its destination just as water whose source is far away is evaporated and hence lost by canals as it traverses the route from source to destination.

A far better model is distributed generation.  Why not site the solar arrays close to where the energy is to be consumed? That way there is little or no energy lost in transmission.  Instead of putting solar panels in the Anza Borrego desert and trucking them to San Diego, a better solution is to put the solar panels on the rooftops of San Diego.  Large warehouses are a pretty good place, but suburban homes are pretty good too.

But this brings up another conumdrum:  If I put solar panels on my house and feed the excess electricity so generated back into the grid, who makes the profit from this operation – myself or the energy corporation like SEMPRA parent of San Diego Gas and Electric?  This is at the heart of solar energy policy in the US at this time.  The energy companies are fighting battles to maintain control of energy generation.

It’s all right to have a distributed network so long as they own that network.  What they are dead set against is distributed ownership.  If I own the solar panels on my roof and sell excess energy back into the grid, not only does SEMPRA lose money from not being able to collect a monthly bill from me for energy consumed, but it loses money if it has to buy excess energy from me at market rates and redistribute it to others.  In effect it is providing a service for free.

Germany solved this problem by incentivizing the average homeowner or entrepreneur to produce as much PV (photovoltaic) energy as possible by paying people to sell excess energy back onto the grid.  At the heart of the debate is the Renewable Energy Sources Act.  It requires power companies to buy all the alternative energy produced by these systems, at a fixed above-market price, for 20 years.  The mechanism they used, known as a feed-in tariff, gives entrepreneurs and home owners a powerful incentive to install solar panels on their roof tops.   They can earn a reliable return on their investment.

Homeowners have rushed to clamp solar panels on their roofs and farmers planted them in fields where sheep once grazed. The amount of energy generated by this measure has skyrocketed making Germany one of the most solarized countries on the planet despite the fact that Germany has relatively few days of sunlight compared to the American southwest or the Iberian peninsula.  In Germany the excess energy put back onto the grid must be bought by utility companies at above market rates and resold to other customers at those same rates.

So actually the utility companies are losing money.  Ahh, there’s the rub.  American energy companies will lobby their hearts out (corporations are people, remember) to not let that happen here. Whereas the average German can actually make money selling PV energy, in the good old US of A only corporations will profit; that is if campaign contributions and lobbyists have anything to say about it.

By its very nature, since solar is decentralized, it is a threat to the energy companies both here and in Germany.  Utilities would much rather build wind farms because most home owners cannot put a windmill on their roofs.

In San Diego there has been much ado about the Powerlink transmission line.  According to the San Diego Smart Energy Solutions Campaign sponsored by the Sierra Club, Powerlink is SEMPRA Energy’s dirty little secret.  It has been sold as a way to bring renewable energy from the desert to San Diego.  But that’s not what it’s really about at all.  It Is about completing SEMPRA/SDG&E’s “fossil fuel corridor,” connecting dirty power plants on the Mexican border to markets in Los Angeles.

It turns out that Sempra has a dirty electricity generating plant just over the border in Mexico–where environmental standards are lower–which burns Liquified Natural Gas (LNG).  The electricity so generated will be sent north via Powerlink not necessarily to San Diego because Powerlink is the missing piece in a network connecting up with Los Angeles as well.

LNG is imported from Russia and Indonesia to Mexico’s Costa Azul terminal near Ensenada.  From there the LNG is sent by SEMPRA pipelines to its Mexicali export terminal where it generates electricity which is then sent north to San Diego and LA.  The energy is generated by fossil fuels, not renewables, and pollutes the border area. Furthermore, it dumps carbon dioxide into the atmosphere and contributes to global warming.  And this whole set-up does nothing to lower rates for consumers.  After all, Sempra is a profit making company, not a consumer serving company.

An alternative energy plan, ”San Diego Smart Energy 2020: The 21st Century Alternative,” has been developed by professional engineer Bill Powers.  It not only saves consumers money.  It also reduces San Diego’s greenhouse gas emissions by 4.5 million tons of carbon dioxide compared to SDG&E’s plan.

The Global Warming Solutions Act (AB32, September 2006) commits California to reduce greenhouse gases by 25 percent to 1990 levels by 2020, and by 80 percent by 2050. SEMPRA pulls a fast one on this by using imported LNG with power plants in Mexico which violates the spirit if not the letter of the law.  The Smart Energy plan emphasizes distributed generation which requires much less electricity since none is lost in long transmission line hauls and PV panels which don’t spew carbon dioxide into the atmosphere.  Hence much efficiency is gained.

The Coalition for Reliable Power reports that rooftop solar systems are on the cutting edge of solar power overtaking the efforts of the large centralized power corporations such as SEMPRA.  The big utility companies are losing their grip on power generation and are fighting back to protect their profits.

In some cases, utilities are actually taking direct steps to thwart rooftop solar.  Two weeks ago in Colorado, the state’s biggest utility, Xcel, tried passing a surcharge on homes and businesses using rooftop solar power.  The public went ballistic, and with pressure from Democratic Gov. Bill Ritter, the proposal was eventually shelved.  In early July, New Mexico’s biggest utility, PNM, filed an official request to dramatically reduce incentives for businesses and homeowners to install solar panels, and is now fighting with state lawmakers over whether it has the right to exclusively own solar panels systems hooked up to its grid.

One additional thing to consider is the environmental impact of large centralized solar systems in the desert.  According to Mother Jones:  Charitable institutions are arising to put decentralized solar power in the hands of average home owners for a fraction of the cost of manufactured turnkey systems.  This is a threat to the centralized profit making power generating corporations:

The Mojave, where the sun shines more than 300 days a year, would seem like a perfect home for the solar hub—unless you happen to be a threatened desert tortoise, in which case you can kiss your burrow goodbye. Across the country, environmentalists are finding themselves in the awkward position of having to choose between clean energy and wildlife: In the Midwest, wind farms ensnare bats and migrating birds, and hydropower dams in the Northwest decimate salmon spawning grounds. “We’ve been supportive of efforts to accelerate clean-energy projects,” says Jim Lyons, who studies renewable energy at the conservation nonprofit Defenders of Wildlife. “But the scale of these new projects is massive, and they could be enormously destructive to plants and animals.”

However, just off the desert are many big box stores and warehouses where solar panels could be placed. But the large utility corporations don’t want to place them there because they’d lose money. According to Bill Powers, a solar energy expert in San Diego, “Utilities make money off power plants; they’d lose money if big-box stores started making their power on the roof.”

Finally, Bill McKibben of 350.org, perhaps the leading expert on global warming, says in his book, Eaarth:

In one sense, though, constructing a large national green energy system is sort of like buying organic food at the supermarket; it’s an improvement, in that the fields where it’s grown aren’t soaked in pesticides, but that produce is still traveling an enormous distance along vulnerable supply lines. And instead of building stronger local communities, the money you spend buying it just builds the bank accounts of a few huge firms.

With food, people are starting to understand the virtues of going not just green but local - and the same thing might be happening with energy. For two decades some farmers have built CSAs, or community-supported agriculture operations, where members pay an annual fee for a share of the produce. Now advocates like Greg Pahl are talking about CSE, or community-supported energy, and pointing at examples like the wind power associations and cooperatives that have built thriving facilities across Germany, Denmark, Holland, Sweden and Canada.

By the summer of 2009, in fact, the main force holding back distributed power – the microgrid – was the simple reluctance of the big utilities to surrender their monopolies. With their political sway, they were backing congressional bills that, in the words of business journalist Anya Kamenetz, would “subsidize constuction of multi-billion-dollar far-flung supersize solar and wind farms covering millions of acres, all connected via outside transmission lines.”

An array of research demonstrated that the faster, cheaper way to build renewables was to find a few rooftops on every block and put up panels, but the “utilities have been so adamant about thwarting these programs,” says Jim Harvey, the founder of the Alliance for Responsible Energy. But don’t take his word for it – ask the industry itself. Here’s Ed Legge of the Edison Electric Institute, the chief lobbyists of the nation’s utilities: “We’re probably not going to be in favor of anything that shrinks our business. All investor-owned utilities are built on the central-generation model that Thomas Edison came up with. You have a big power plant…. Distributed generation is taking that out of the picture – it’s local.”

So there you have it.  The model which the large corporations are fighting to preserve is one in which they continue to make high profits off of centralized power generation.  The much ballyhooed SDG&E Powerlink will not only transport energy that was created by renewables, but will in fact be carrying over its transmission lines energy generated by Liquified Natural Gas imported from Russia and Indonesia.  How much of which will be determined by corporate maximization of profits in accordance with state laws.

The alternative is not government owned Soviet style power generation but distributed, decentralized power generation which would result in a dispersion of profit making over a large swath of the public, and result in less carbon dioxide being transmitted into the atmosphere.  It would be better for the general public and better for the environment. Meanwhile, less than a month ago with officials from San Diego Gas and Electric standing by, Governor Jerry Brown dedicated the Powerlink Transmission Line.



John Lawrence

John Lawrence graduated from Georgia Tech, Stanford and University of California at San Diego. While at UCSD, he was one of the original writer/workers on the San Diego Free Press in the late 1960s. He founded the San Diego Jazz Society in 1984 which had grants from the San Diego Commission for Arts and Culture and presented both local and nationally known jazz artists. His website is Social Choice and Beyond which exemplifies his interest in Economic Democracy. His book is East West Synthesis. He also blogs at Will Blog For Food. He can be reached at j.c.lawrence@cox.net.

{ 11 comments… read them below or add one }

avatar Chris August 21, 2012 at 2:31 am

Yes electricity is lost over long distances but the losses are very little, this reasoning is flawed. Utilities may be introducing charges because distribution generation may require upgrades to the grid which is costly. The grid will always be required, how will these dsitributed solar pv systems work at night or during stormy days? exactly they wont. Even if storage was installed which is very costly, that wouldnt be reliable enough to replace grid power.


avatar Matt August 21, 2012 at 2:19 pm

You say Sempra is importing LNG to generate power in Mexico for ultimate consumption by the Southern California market.. What percentage of this thermal generation is in fact derived from LNG imports? I would argue very little given the economics ivolved of supplying this out of the San Juan or Permian basins in the U.S. In theory it would be great to have homes/businesses be self sustaining in their energy needs, but there will always be a need for local utilities to ensure overall reliability through more reliable forms of generation (natural gas, nuclear, and even coal). To call Power Link a dirty little secret is a bit overly skepticle given the mandates California has set forth in terms of reducing overall carbon emissions by 2020 and 2050. Serious changes will need to take place over the next several decades to meet these goals and the infrastructure needs to be in place to make this happen. Power Link is a neccessary piece of this infrastructure plain and simple, regardless of the type of generation it is transmitting or the markets it may be connecting in 2012.


avatar John Lawrence August 21, 2012 at 3:36 pm

Distributed power generation would spread the profits around, and, therefore, provide a boost to the local economy. Leaving it all to SEMPRA means that all the profits will go to their centralized headquarters. In order for the economy to improve, more money needs to go into the hands of locals who will then create greater demand in the loal economy than will SEMPRA’s investors.

And significant energy is wasted in transmission lines. That’s not to mention the tremendous capital investment that those transmission lines and towers demand. And they do place a scar on the environment. The grid needs to be upgraded in any event.


avatar Chris c August 21, 2012 at 4:12 pm

The profits would be spread to other large companies who run the solar Pv program’s, net metering will only work where the grid is present which requires centralised generation meaning the grid is required regardless. Depending on the country, transmission loss may be very low, developing countries with poor grids have higher losses. HVDC lines can transport electricity over 1000′s of km with very low losses. This reasoning is flawed!


avatar John Lawrence August 23, 2012 at 8:44 am

Of course you need a grid. That does not mean you need centralized generation.


avatar Chris August 23, 2012 at 4:04 pm

Yes exactly, the grid will also need centralised generation to function. Solar isn’t exactly a big threat to distribution companies, peak on the electrical grid occurs around either 8am but mostly 6pm when people are coming home from work/school. Around those times solar is declining in its output and would not be able to support demand, also what about stormy dark days?


avatar John Lawrence August 24, 2012 at 8:47 am

If there is widespread PV and wind distributed generation, there will be little or no need for centralized generation. Because of the variability of solar and wind, there will be a need for a battery backup and or some fossil fuel generated electrical power. This could be handled in various ways. In Denmark where there is widespread use of electric cars, the grid has been enabled to tap into those cars’ batteries at night when they are hooked up to the grid and use their energy if necessary. Then they are replenished during the day when they are parked in parking lots. Battery technology for smoothing out supply and demand is developing rapidly. At present there is some need for coal or gas fired plants until a smart grid with distributed generation gets up to speed. In Germany distributed solar and wind will be supplying 50% of the nation’s energy needs by 2050. This will eliminate the need for fossil fuel energy to create electrical power even though Germany only receives a fraction of the sunlight that San Diego does.


avatar John Lawrence August 24, 2012 at 9:55 am

Comment from Deb Severson via email:

Hello John,

I just read your article “Power to the People or Power to the Corporations” and I wanted to thank you and say “well done.”

I interned at the Renewable (then Solar) Energy Research Institute in 1981 when > 60% of the Institute’s funding was cut (including my project and boss). I spent my summer instead reviewing what projects would get funded and, in a talk I called “The Setting of the Sun,” I discussed the implications of centralized versus local generation getting the money. Flash forward…I’m in Wisconsin and working with a growing number of individuals and organizations trying to facilitate greater focus on distributed generation and energy efficiency while challenging the expansion of high-voltage transmission.

Inspired by the events in India, I wrote the attached. Given how it is in-line and complimentary to your article, I am sending it on to you. Perhaps you have thoughts on how this piece can be used either as a stand-alone piece or as fodder for follow-up comments.

I look forward to hearing and reading more from you.

All the best, Deb Severson


avatar Chris August 24, 2012 at 5:11 pm

Isnt wind power a type of centralised generation since its usually a large wind farm located away from a load centre? I highly doubt someone would want their own wind tower in their backyard and also most metro areas don’t usually receive much wind on average. You seem to have a vision of completely replacing centralised generation with distributed generation, I don’t think it’s entirely possible. Also it would be uneconomical to install solar, wind turbine, battery storage or electric car + all the electrical work needed at your own premises. Who will pay for all this? This idea is expensive and it will
only fix a portion of the problem since there will be many situations where solar nor wind will work. Also the electric car will need energy to charge during the day. Where will millions of electric cars get their energy from on a dark windless day? This idea may create a bigger problem than its solving!


avatar John Lawrence August 25, 2012 at 1:33 pm

We need all forms and formats of renewable electrical energy generation in order to phase out fossil fuel energy generation as quickly as possible. You are right that wind power generation is not likely to be a distributed means of doing this.


avatar David Secor August 26, 2012 at 12:21 am

Thank you, John. I will be Duncan Hunter’s opponent in the new U.S. House District 50 on Nov. 6th. I have been fighting against the proposed Natural gas peaker plant at the head of Mission Trails Park and the Tule Wind Turbine project in Ocotillo (both not needed, and dangerous to health and environment). Another Large Wind project is coming to McCain Valley and I believe 50 projects are set for our back country and desert.
The people of San Diego County need to understand that SDG&E, Sempra and their corporate and bankster co-conspirators have been, ala FoxNews, playing us for suckers. They can be pretty convincing to some. As Richard Pryor said, “Are you going to believe ME or your lyin’ eyes?!”
First create a problem. Then make it critical. Then portray yourself the people’s only possible savior. Then, out of your kind heart, offer to save the people from the problem that doesn’t exist, but you’ll only be able to do it if the people allow you to break laws, violate codes, and basically rape the back country and living desert with impunity, and then have the ratepayers pay for it. Be sure to convince the people you are their ONLY viable savior, so they had better not upset you, or question your motives.
High levels of anxiety, fear, panic, “imminent threat.” That’s what the people must feel before you can be assured they will do whatever you, the answer man, Big Daddy, the Protector, tell them must be done. And if a guy gets really upset and tries to expose the Lincoln (the car, not the human being) Club or whoever is really calling the shots around here, some more sensible friend will put his arm around the guy’s shoulder and say quietly, “Let’s go, Jake. This is Chinatown.”


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