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Here’s a very bold idea on how electricity should be priced that I believe could completely change the world in several positive ways.
It would be the first, global, progressive pricing scheme that would give “life-line” like service to all in need of the freedom and convenience of basic electricity. Second, it would, at the same time, provide the incentive for renewable energy to blossom, in an extremely fair and global way.
The idea is this – take the lowest possible electricity price anywhere on the planet, about $0.03 per kilolwatt hour, and offer that rate to everyone on the planet, for their first kilowatt hour (per month, per person). For each doubling of usage, increase the rate $0.01. So if you use 2 kilowatt hours per month, your rate is $0.04. For 4 kilowatt hours per month, per person, your rate is $0.05.
On a blended average basis, rates would not rise for any consumers basic consumption. Only for very large consumption would rates rise slightly. However, the large consumption rise would allow a fast payback on renewable energy installations, and utilities would know a fixed rate that they could earn for expanding usage and demand, and this would allow much greater deployment.
If the entire world could both stabilize and articulate an increasing rate like this, then that knowledge and stability to providers would encourage tremendous innovation and investment to meet the need. Right now, in many places of the world, electricity is subsidized to be so inexpensive (Governments fund this by taking a loss) that it’s impossible for renewable to compete. The intent is to provide affordable power to lower-income, smaller users. But with fixed pricing, renewable competition is eliminated. Logarithmic pricing would fix this and allow both – affordable power and unsubsidized renewable competition.
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I like your logarithmic rate concept for residential power, but it would force higher widget prices coming from large manufacturers. Maybe your idea was not meant for the industrial sector?
As much as I love promoting solar energy, the excess from higher rates in a logarithmic plan might first go to weatherization programs–currently the lowest-hanging energy fruit.
You have to consider that it would probably be implemented in a per house basis which means that big families pay more for the same per member usage. Also sellers would probably try to maximize gains by making the exponential growth faster, while advertising smaller initial costs. I would propose allowing the sellers to mount solar panels (or equivalent) on normal houses in exchange for cheaper electricity and the hot water from the wasted heat.
In my view the key to managing our energy future is renewalbles and the key to making renewables main stream is energy storage. I have written about this in my most recent article. http://theblogspot.com
This is an amazing idea, but how do we put the social structures in place to make it happen and protect it? I completely agree with the idea… just wonder about how to make it actually work in the world.
Slightly different topic… You gave a TED talk in 2003 about an at home self-tracking device that could tie in to the grid for an average user. #1. I thought the talk and the ways you arrived at your design were absolutely fascinating. #2. Are there units that are commercially available or plans to make them available? I’d really be interested in sharing it with and perhaps even selling it to our community at GreenJoyment.
Please let me know at your convenience.
Warm Regards,
Jonathan Kraft
http://www.GreenJoyment.com
I am also interested in the petal and heat engine device you discussed in your 2003 talk. I have looked thorugh your sites and I cannot find any mention of it. Has it been replaced by someting else or dropped?
I would be grateful for any info you have on the device.
The only problem is that not all individuals throughout the world make the same amount of monies. e.g., in China they might make $20. a month whereas in the U.S., that figure may be $1500 a month. Hardly fair using your formula.
Have just built a home and would have loved to make it as low cost as possible. However, could not afford to go solar as the cost was prohibitive. Live in a low wind area so wind power was not feasible.
I remember when there were arguments in Houston with respect to billboards and how unsightly and harmful to the environment they were. Seems the same may be argued with respect to solar panels and wind turbines. Oh well.
One last thought. I wanted to build my own solar panels back in the early 80s. Didn’t and can’t remember why now (getting old & forgetful). Anyway, it’s been almost 30 years now and the solar panels haven’t changed to the degree that the PC has in the same amount of time. Just curious.
Sincerely,
Fred Newtz
I don’t usually comment on this stuff but I gotta say.. nice blog
Nice idea however that is like saying that all people should pay the same price for oranges. So the guy in Florida would pay the same price as the guy in Alaska. Who pays for the transportation costs (vehicle, insurance, driver, fuel, tires etc)? Sounds like a good socialist answer.
In 2002 the US used 3.3 Tera Watts. The GDP follows the energy production curve. Solor power to date is 1560 mega watts online total watts By 2050 they want 300,000 mega watts of Wind which is 30 percent effenent. We want to dump the BTU’s in gasoline on the electric grid. I want to see the math on how this is going to happen? The only one that is going to win is the eviromental lawlyer. Cap and Trade is a twelve trillion dollor tax on everybody. A neclear fuel rod is 100 percent recycleable
Mr. Gross,
Having listened to your presentation at TED a number of times, and sent it off to pretty much every friend I have, one could say I am a big fan of your way of thinking. That is, thinking outside the normal boxes. There is a lot of room for improvement in just about every thing we use, consume, or build and regular thinking does not make for that improvement.
But now you have thought your way into the arena of public policy, or government policy which should also be policy for public good, and I fear that you (like most citizens of your country) are overlooking one thing: America was founded as a democracy but in reality it operates as an oligarchy. So – great, ground-breaking, radical ideas of how one can right the ship from the foolish path America has been on for many years can hardly be brought to fruition when they so obviously are contrary to the interests of that entrenched oligarchy.
Interesting concepts. I don’t agree with most of them. The main problem is what do you do with the existing housing. For instance, I bought a house and was not able get the previous electric bills and was shocked at how inefficient the new house was. After sealing and insulating the ductwork, replacing the can lights with airtight IC rated, replacing the heat pump, and adding insulation I am now at a level that is 35% lower (saving $2000/yr) and due to diminishing returns. no more money is warranted. Where I live is mostly cooling, and you can talk all you want about limiting air conditioning but with 60-70% humidity and 95 degrees in the summer the heat index is aver 100 degrees. There are now enough gas reserves from the new shale plays to last us 100 years at least at today’s prices. I am unconvinced about the global warming data. From what I can see the people involved only make money if there is a conceived problem, so either they confirm the problem or are unemployed. And the purpose of cap in tax is not to lower energy, it’s just to transfer wealth. If you look at all of the renewable energy available today and you recreated it every year, it would take 600 years to meet our energy needs. The main problem is this: Everyone needs to pay the same rate for energy. That way everyone has a vested interest in lowering his or her own use. It’s hard for me to listen to Gore when he has a 12,000 square foot house with every light on in the son of a gun. he is just in it for money he will make on the carbon trade company he owns. It’s the same deal for the GE lobbyists, and for Pelosi. ALWAYS follow the money and you will get the correct answer. I think lowering energy use is a good idea, but the laws that they are putting in place are a mechanism to take away our freedom/liberty/choices! Don’t be fooled. This isn’t about energy. It’s about POWER and control.
One other thing, Indian and China told Hillary “No Thanks!” on curbing carbon dioxide. If we artificially raise our energy prices and our global competition does not, you haven’t even begun to see the coming depression in the US. For the most part our Congressmen are pretty much stupid and ignorant and we continue to reelect them. Imagine passing a trillion dollar bill without reading it…. Just wait until the automotive jobs go away along with all of the appertunant supply jobs. New cars are not a necessity. Why would I pay $35,000 for a new car that gets a combined 25 mpg when my Suburban gets 13 mpg and is paid for? At 15K miles per year and $3/gal gas it would take 40 years to pay out the $30K. Yeah, I can get a new car with all of the deal around, but I would rather have my money invested and just live without one. When unemployment gets to 20+%, we will see how long the statists have the support of the middle class. We need to hit the reset button and go back to a time when economics and the free markets caused decisions to be made. My answer is to be completely out of debt, quit buying stuff, and make less money. I was in the top bracket before, and I choose not to play. The system is broken and I am tired of paying for people that haven’t contributed and don’t ever intend to contribute to the “system”. I will use less because I choose to make the investments so I can lower my bills, not because someone else uses legal coercion to make me do it.