So, why can’t those breakthroughs in modern alternative energy be sold directly to the energy consumer, bypassing those pesky regulated utility companies? Well the answer is basically the same. Money. The almighty dollar is precious to the consumer. We don’t like spending money, and unfortunately breakthroughs in technology often cost a lot of money. Take for instance the awesomely useful, efficient, and cost saving ground based heat pump. It can cut electricity costs in your home by almost 30% by using ground heat to heat and cool your house. Why isn’t everyone using one? Well the sucker costs roughly $10,000 to install in a new home and potentially a whole lot more in an old home. If your average electricity bill is $300.00 a month then 30% of that is $90.00. You’d save $90.00 a month on your electricity bill. Which, if we’ve done the math correctly, takes a little over nine years to pay for itself. And this isn’t the only technology like that. Personal solar panels and wind mills will save you even less on your bill and cost you more.
But what if the breakthrough is that the technology is made cheaper? The problem there is two fold. 1) It has to make things a lot cheaper (Solar Panels for instance would need to be roughly 100 time cheaper and ten times smaller before they would do you any real good sitting on your roof…and remember that’s only when the sun is out). The cheaper the initial cost the quicker it pays for itself. Now this is a really hard thing to do because electricity is already pretty cheap, because we force it to be cheap by law. 2) It would still need to be mass produced. Someone would have to build a factory, set up a distribution chain, and market these breakthroughs to the consumers. All of those things cost money, and while the product might be cheap, someone still has to shell out the cash get the product on the shelves.
Well what’s so hard about that, it would be a million dollar idea right? Try convincing a bank of that right now. Back in the wild and crazy days of the late 90’s and mid 2000’s it wouldn’t have been that hard. Credit was flying around like mashed potatoes in a food fight. Getting a loan to build the factory and market the product would have been no big deal. Now though, banks are a little more tight fisted with their money. Not only that but the state of the economy doesn’t just mean that banks aren’t forking their money over, it means the consumers aren’t either. Sure we all know the economics of buying something now that’s expensive that will save us money in the long run, but if you don’t have any money right now then it really doesn’t matter now does it?
Marry the poor economy with the dismal housing market and you get a dreary outlook for these breakthroughs making it off the shelves and into homes. Most of the research item’s we’re talking about here are similar to the following items: Improved home solar panels, improved home wind turbines, improved heat pumps, flywheel batteries, compressed natural gas, hydrogen, and ethanol (Not corn but pine tree) fuel cells, and similar things. To integrate these things into a home cheaply it will usually have to be a new home. The most recent statistics show us not building very many homes these days, with still fewer people buying new homes. So not only do we not have the right economic conditions to make the products in the first place, we also don’t have the right economic conditions to install the new breakthroughs into the homes.
That means that until the economy picks up we, the consumer, won’t be able to really change the grid substantially by doing our own power generation at the home because we can’t afford to.
So to reiterate from Part 1. Not enough research is going on to count of affordable breakthroughs. 2. Even if we have a breakthrough it will be damn tough to sell it to the electricity companies. 3. It will also be damn hard to start up a new company to make any breakthrough meant for the consumer market because of the lack of credit. 4. Even if we get the product on the shelves few people are going to be able to afford it because of the conditions of the job and house markets. 5. Until the economy turns around we’re stuck.
So then what happens if the economy turns around? Well I’ll get to that tomorrow.
