MA energy policy: Cutting CO2 emissions vs reducing electricity costs

I have some initial thoughts after initial reading of Paul Levy’s piece on solar in MA, “Has the Mass. solar gamble paid off?  Like other energy bets, costs high, hidden.”   Levy’s introductory paragraph:

How much should we pay to promote solar energy in Massachusetts? Recent state government programs have resulted in the commitment of at least $10 billion of consumer funds—well over $1,500 for every man, woman, and child in the state. Is there a need for more government-directed subsidization, or have we reached a point of diminishing returns? Let’s look at the big picture.

and his conclusion:

What’s next on the list of well-intentioned financial mandates that will help reduce the risk for the developers of new energy technologies by passing along costs to the rest of us? Rest assured, the government will be asked to gamble with our money. And investors and advocates will do their best to keep things hidden so the rest of us don’t understand the costs they are asking us to bear. Some advocates now want unwarranted energy storage incentives. Some even argue for a return to expanded solar incentives. Let’s keep an eye on things and demand cost-effectiveness and transparency with regard to the amounts promised on our behalf.

There’s a lot in between.  Unfortunately, he missed the big picture.  The purpose of the “solar gamble” is to help transition us to using carbon-free (or at least carbon-neutral) energy not to save consumers money.  The latter is a fringe benefit not the primary motivation.  Levy misses the big picture because his focus is on financials.  Money matters and how the costs of transition are shared – that they’re shared equitably – is important but leading with financials sets the wrong tone.

My work is math-heavy. I work on a lot of optimization problems. The math involves defining a function of multiple variables to represent value (or cost) and then determining the values of independent variables which maximize value (or minimize cost).  You can solve a lot of science and engineering problems using that approach. That noted, the solution you obtain depends upon the function you’re optimizing. Choose a different cost function and the values of the variables which minimize it probably change. Hold that thought…

When the goal of energy policy is to maximize the rate of transition and there are people who can’t do so because they can’t afford too, then the cost is too high. Conventional energy sources may have lower out-of-pocket cost but that’s beside the point. The objective to minimize the cost of electricity but to transition to CO2-free energy sources subject to the constraints of finite financial resources. Levy’s analysis doesn’t view the issue in those terms. That, I think, is the real problem with his analysis.

Back to the subject of transitioning to CO2-free energy: It’s a problem that more people can’t afford to go solar. To Levy’s point about the cost of SRECs, how could we make it affordable to transition by changing how the money spent on SRECs is allocated? Well, MA has 0% interest HEAT loans to cover costs of making your home more energy efficient, e.g., buying an air-source heat pump to replace an oil or gas furnace. How about creating a similar loan program so people can go solar? Provide 0% loans with payback times comparable to the expected lifetime of the system. Eliminate upfront cost AND enable savings on electricity costs. Without SRECs the savings on electricity costs would (presumably) be less to those who went solar but if more people went solar then that would be a good thing, no? Anyhow, those are my thoughts after a first read of Levy’s post. I’ll reread and reevaluate later this week.