What Does Energy Economics Teach Us About a Zero Carbon Electricity Grid by the year 2050?

Energy engineers are having an interesting fight over whether the US electricity grid can “easily” be 100% renewables (and thus create 0 GHG emissions) in the next 30 years.  A prominent Stanford Engineer and his team says “yes”  while some important critics say no.   In Today’s NY Times (“Economics Scene) Eduardo Porter sides with the critics.  The interesting thing here is that no empirical microeconomists who study energy are part of either research team or are quoted in the NY Times.  Yet, at the end of the day — this is a microeconomics issue.

Here are some of the key issues that both the original study and the critique ignore;

1.  It would be terrific if wind and solar and hydro are so low cost by the year 2050 that we can generate all of our power using them.  Assuming constant returns to scale, how much land would need to be allocated to each of these to generate our expected power demand in 2050?  In a world where land is very valuable close to cities, what land would be set aside for this?  Would current property owners be compensated for this land? Or would this be “roof top solar”?  I do not believe there is any discussion of land markets in the original 2015 PNAS paper or the new critique.

2.  Assuming the renewables generation is far from cities, where will the transmission lines be built to bring the power to the cities? How will NIMBY issues be solved? How will potential veto power be bought out here?  Or will engineers make a breakthrough such that power can be “emailed” without transmission capacity?

3.  How much induced innovation will be needed to make these technologies cheaper than natural gas in the year 2050?

4.  What will be aggregate electricity demand in 2050?  How many consumers in the residential, industrial, commercial sectors will be signed up for dynamic pricing? How elastic will their demands be for power such that if the price of power rises will they in aggregate reduce their consumption by 2% or by 34%  This plays a key role in determining the feasibility of the green grid!  If demand is highly responsive to higher prices then the green grid is much more viable!  So, now we are back to fundamental issues of the microeconomic determinants of the aggregate demand for electricity

5.  Building on #4;  what will be the aggregate demand of the transportation sector for electricity in 2050? What % of the fleet will be EVs and how many miles will they drive and how many miles per kwh will they achieve? Some of these are micro-economic questions!

6.  While the engineers want to debate what is feasible, an equally relevant question focuses on which interest groups would seek to veto the Stanford “vision”.  For example, coal miners will not favor Jacobson’s equilibrium.  If Progressives need to buy out West Virginian Senator support for coal, this cost should be added to the full cost of the green economy. Is it included? I doubt it.  Read my 2017 paper with Eyer.