By William L. Holahan and Charles O. Kroncke
Special to the Tampa Bay Times
The Green New Deal (GND) is a resolution put forward to address climate change and income inequality. Seemingly, endorsement of this document is a “progressive” litmus test for Democratic Party presidential candidates, even though many of its ideas have been met with blistering criticism for their impracticality.
In the face of this criticism, Rep. Alexandria Ocasio-Cortez, D-N.Y., tweeted that the intent of the GND is simply a “request for proposals” to draw ideas from the country’s scientists, engineers and economists at think tanks, universities, and government and private labs as well as from “garage tinkerers.” One of the line items in the GND with great promise for reducing fossil fuel usage and substituting renewable energy is the “smart electricity grid.” We will likely hear a great deal more about this, but what in the world is a smart grid ?
FIRST, THE GRID. The first electric companies were simply one-plant operations, generating power with river water pressure or coal-fired boilers. As the demand for electricity expanded, they added more generating plants, and their connections became known as “grids.” Over time rural electrification was added, and electric companies merged with one another, producing larger grids. These larger grids permitted lower operating costs, fewer power outages, energy savings per unit of electricity and higher profits.
Now supporters of the GND recognize an additional advantage of larger grids: the connection and transmission of electricity generated from renewable sources, such as wind and solar, reduces reliance on fossil fuels. Such a national grid would enable companies at various locations to buy and sell electricity to each other across long distances to take advantage of different weather patterns across the country. So, when electricity is produced in a wind alley, such as the one that exists from North Dakota to West Texas, it could get sold through the grid to such disparate sites as the Ohio Valley or Southern California. Electricity produced in a solar farm in Nevada could be sold to the rainy Northwest.
A larger grid brings another advantage: competition among companies and even allowing customers to sell to the grid. Modern technology enables customers to install solar and wind generation equipment on their property, use that electricity to supplement the power from the grid, and when the sun and wind produce a surplus, sell the extra power back to the grid. This capability creates a market for new inventions by creative companies, since every user of electricity can now be a customer for new ways to compete with the grid. Everyone on the supply side and the demand side have a steady incentive to innovate to save both money and fuel.
SMART PRICING. Smart pricing can save even more fuel by smoothing the fluctuations in demand. By charging customers higher prices during high demand periods and lower prices when demand is less, then the total capacity and energy needed to serve demand is less. For example, smart pricing would give people opportunities to save money by washing their clothes and dishes in non-peak demand periods and charging their electric cars at night for the next day of driving.
With robotics, the adjustment to changing electricity rates can be pre-programmed. A customer could say, “Alexa, when the price of electricity hits 20 cents per kilowatt/hour, dim the lights, turn off the major appliances and the car charger. Send the kids outside to play.”
IN THE END. The science is real. The response must be realistic. Ocasio-Cortez’s description of the GND as a request for proposals was probably a quick-witted tactical retreat in the face of the negative reaction to the resolution deal. But it’s a good idea, nonetheless. The urgency of the problem requires the nation to harness the best minds to bring ideas to the forefront of the discussion and to bring to the implementation stage ideas like the smart grid. The ensuing competition in the marketplace of ideas should be the fastest way to get control of this long-ignored threat.
William L. Holahan is emeritus professor of economics at the University of Wisconsin-Milwaukee. Charles O. Kroncke, retired dean of the College of Business at UW-M, is also retired from the University of South Florida. They are co-authors of “Economics for Voters.’’