I must admit I was surprised at the beauty of the Berkeley campus. I’ve always imagined it as a huge pavilion of protesting students shouting slogans as sixteen types of studs and rings dangle from their cheeks and ears.
Instead it is a forest of junipers, redwoods and other Western conifers that give it the air of a mountain resort. Even though buildings are chockablock, the winding pathways nestle so gracefully around the mountain stream that you always feel you’re lost somewhere in the woods.
Berkeley, after all, has many identities. Besides being the epicenter of the student protests it is also home to the Lawrence Berkeley Laboratory and eleven Physics Nobel Prize Winners in Physics, including the current Secretary of Energy Steven Chu. Four of the transuranic elements — Californium, Berkelium, Lawrencium, and Seaborgium — are named after accomplishments at Berkeley.
So it wasn’t at all surprising that, in the midst of the hullabaloo about windmills, solar power and the Coming Age of Alternate Energy, the Berkeley Energy and Resource Collective at the Haas School of Business invited me and a few others to sit on a panel, “Advancing Nuclear Energy,” at its annual Energy Symposium last week.
The conference was overbooked by more than 1,000 entrepreneurs, bureaucrats, and business students all eager to exchange business cards. Alternate energy, as you must know, is the Next Big Thing in our economy, with California as its spawning grounds. “I’m on my fourth company,” said one ponytailed, tall-and-tan outdoor type as we chatted over wine and cheese at the rooftop reception. “I sold most of my interests in the 1990s and made out pretty well, but this energy stuff has got me going again. Starting a company is a hard habit to break.”
Indeed, even though the Golden State has a $40 billion budget deficit, 10 percent unemployment, and is driving every major manufacturer into the hinterland, the denizens of Ecotopia believe their moment has finally arrived. The big reason, of course, is the arrival of Obama and The Stimulus.
“We’ve got a much more friendly administration in Washington now,” announced University Chancellor Robert J. Birgeneau, in leading off the conference. “A lot of this Stimulus money is going to be coming right through this campus.”
Mary D. Nichols, chairwoman of the California Air Resources Board, could hardly contain her enthusiasm at the promise of leading the country into the Promised Land. “President Obama has consistently said that California has set the example for the rest of the country in pioneering alternate energy,” the Yale Law School graduate and former Naderite told attendees. Nichols served as CARB’s first chair under Jerry Brown in 1978 but was re-appointed by Governor Arnold Schwarzenegger in 2007 when he found himself under fire for allegedly dragging his feet on AB32, California’s own Global Warming Solutions Act of 2006.
The premise of all this is that we’re on the way to an Alternate Energy Utopia and all we need is a few more subsidies and Renewable Portfolio Mandates to hurry us down the road. Thus it was only fitting that most of the presenters represented companies feeding off these subsidies and mandates to push technologies that wouldn’t stand a chance in a free market.
One panel, entitled “The Great Solar Debate,” was dedicated to deciding which technology — photovoltaics or “thermal solar” — is best for providing huge utility-scale solar installations. Photovoltaic panels convert sunshine directly into electricity while thermal uses huge mirrors to boil water and drive steam turbines the old-fashioned way. Probably neitheris best but that wasn’t an option being considered. California has mandated that utilities get 20 percent of their electricity from “renewables” by next yearand 33 percent by 2020. (It currently gets 12 percent, highest in the country. “Renewables” does not include large-scale hydroelectric dams.) It is also committed to banning out-of-state coal, which now provides 20 percent of its electricity, by next year. Thus anyone generating electricity from rats on a treadmill has a ready market.
“We’re studying a 22,000-acre plot of state-owned land in New Mexico for a 2,500-megwatt thermal facility,” reported Charles Ricker, senior vice president of BrightSource Energy, a thermal solar company. “We’re also ready to go with a 420-MW plant on 3,500 acres just south of Las Vegas but the Bureau of Land Management has been very slow about issuing permits. That’s what’s holding us up right now.”
Those 22,000 acres, in case you’re wondering, add up to 30 square miles. Two standard coal or nuclear plants generating 2,500 MW would occupy only two square miles. BrightSource’s numbers are an improvement over an article in Scientific American last year, which said 48,000 square miles would be required to power the entire country. That’s one-third of New Mexico, the fifth largest state. BrightSource’s numbers would cut the requirements to only 20,000 square miles. Remember, the system only works when the sun shines.
Photovoltaics, on the other hand, are decisively on the defensive these days because they are less efficient. “We’ve just gotten to conversions of about 20 percent,” said Ed Smeloff, senior manager of SunPower Corporation. Thermal plants can do as high as 40 percent. Both are insanely expensive — five times the cost of electricity produced by coal or natural gas — but California is pressing ahead under the illusion that “economies of scale” will somehow bring the price down. In fact, the only way to gather more solar energy is to scale things up. There’s only so much sunlight per square yard of earth.
So I asked the panel a question. “Since solar is good for meeting peak loads but can’t really provide base-load electricity, wouldn’t it be better just to market solar as peaking power instead of trying to pretend it can provide base-load electricity?”
“Well, solar is definitely best for peak loads,” replied Smeloff. “It’s strongest just when you need it, on hot summer days when everybody turns on the air conditioning. The ideal situation would be for people to put panels on their rooftop and sell electricity back to the grid.” Still, he admitted, at $30,000 per rooftop array it’s a pretty hard sell. So as long as the State of California is willing to mandate utility-scale installations, SunPower will go on building them.
The phrase that kept echoing through my mind all day was a comment made recently by Jesse Ausubel, director of the Center for the Human Environment at Rockefeller University: “Alternate energy is going to be the next subprime mortgage meltdown.” Four years from now we’re going to be looking at a landscape littered with useless 50-story windmills and wondering why anybody ever thought they were worth building.
I tried this on a few venture capitalists, expecting a harsh response, and got a surprising answer. “You know, you’re right,” they all said. “It’s already happening with gasohol. Look at those refineries closing in the Midwest. It’ll probably happen here as well. As soon as the government removes those subsidies, the whole industry will collapse.” There’s a book waiting to be written, The Great Solar-and-Wind Meltdown of 2012.
The other thing I discovered is that there’s a whole nuclear underground — people who are convinced nuclear is the answer but are afraid to say it in public. At one point I sat down with a woman in her 50s who turned out to be a physicist. We nattered on cheerfully about alternate energy for a while until she finally asked me what I do. “I just wrote a book about nuclear power,” I said. She immediately turned stone cold sober. “You know I was in nuclear in the 1980s. We thought we had the whole future ahead of us. Then everything fell apart. I think it’s a tragedy this country abandoned nuclear. It would have given us all the clean energy we need.”
Two other quiet enthusiasts were a pair of Haas Business School students, one from Spain, the other from Argentina. “I took a nuclear science course in Spain,” said the young woman, “and the professor showed us there’s nothing to be afraid of. I think it’s ridiculous America isn’t going ahead with nuclear power. Spain is even worse. They’re trying to close reactors down. There’s nothing else that’s going to provide us with enough energy.”
The high point of the afternoon came with the keynote speech by John Hofmeister, former president of Shell Oil and now head of some Washington NGO called Citizens for Affordable Energy. Hofmeister gave one of those speeches that makes you wonder why people ever think businessmen support the free market. “There is no free market in energy!” he thundered. “Look at OPEC! Look at the way the government won’t let us drill offshore. How can you call that a free market?”
So instead of eliminating subsidies and mandates, of course, he wants to do away with markets altogether and let the government run the energy economy. “We need a Federal Energy Resources Board modeled on the Federal Reserve Board,” he concluded. “Financial markets used to go through periodic manias and crashes in the 19th century but in 1913 and since then the peaks and valleys have smoothed out.”
Hofmeister must not have been reading the papers since last August but fortunately there was an economist on hand to re-introduce a little reality. “The Federal Reserve is able to adjust the money supply because it effectively owns the currency of the United States,” said Severin Borenstein, professor of economics at Haas, who served as conference gadfly. “You’re not, I hope, suggesting we turn over ownership of all energy resources to the federal government.”
I won’t elaborate on Hofmeister’s answer except to say that he obviously envisions himself as Chairman of the Federal Energy Resources Board.
The nuclear panel was a quiet little affair held in a small upstairs room with about 30 people in attendance. My fellow panelists, Scott Peterson, of the Nuclear Energy Institute, Cheryl Boggess, of Westinghouse, and John Conway, site vice president of Southern California Edison’s Diablo Canyon, all spoke in favor. The audience, pretty much self-selected, mostly nodded their heads in agreement. (All the Greens were downstairs learning about financing renewables and the future of the U.S. auto industry.)
Boggess took exception when I said the U.S. nuclear industry was pretty much dead. (Westinghouse was bought by Toshiba in 2006.) “We’re hiring right now!” she said. A reporter from the Contra Costa Times asked the obligatory question, “Won’t nuclear power lead to the proliferation of nuclear weapons?” I pointed out that the world is going ahead with nuclear without us and the idea that we still control the technology is delusional. “Does anybody know who’s building the reactor for Venezuela’s Hugo Chavez?” I asked. Nobody did. (The answer is “Russia.”)
Finally somebody got around to mentioning “The Stimulus.” “Since what little money there was for nuclear was eventually cut out of the Stimulus Package,” came the question, “isn’t that bad news for the nuclear industry?”
Peterson of NEI responded. “Frankly, we don’t need any money from The Stimulus. It would have been nice to have it but we don’t need it.”
“We don’t even need the federal loan guarantees,” chimed in Conway, of Southern California Edison. “There are 34 reactors under construction around the world. Nuclear is moving ahead so rapidly and reactors in this country are making so much money — about $2 million a day — all we need is for the federal government to grant us some licenses and let us go ahead and build. We don’t need any government money.”
It was nice to know in the Land of the Stimulus that somebody was still talking about economic value.