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Solar Fuel From The Sky

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Solar Fuel From The Sky ( solar-fuel-from-the-sky )

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FUEL FROM THE SKY: SOLAR POWER’S POTENTIAL FOR WESTERN ENERGY SUPPLY The Dampening Effect of High Prices We might expect that higher energy prices would result in lower electricity demand. History, how- ever, may not provide as much insight as required to determine the impact of retail prices on electricity demand. This is primarily because retail customers do not in general get price signals at or near the time that they consume electricity. Their signal is the bills they receive for electric- ity consumed in the previous month. Thus, price elasticity for electricity is relatively hard to determine. We can, however, use observed rates of conservation as a proxy. Not since the 1970s have consumers experienced rapid price increases of the magnitude expe- rienced over the past year. Substantial reductions in demand are indicated from data from California, because price increases were allowed to be passed through in the retail electricity rates, as well as from anecdotal evidence of companies and private consumers, whose actions will continue to cause substantial drops in electricity demand. Some of these drops may reflect the “crisis mentality” that was spurred by the California energy crisis, but some changes are des- tined to be long term. For example, hotels that replaced incandescent light bulbs with capital cost-intensive low-energy light bulbs are unlikely to switch back. Procedures that companies developed in California during 2000 and 2001 to save energy and that turned out to be little more than a change in routine are also likely to stay. This is because even with normal electricity prices, these energy savings translate into improvements in the bot- tom line of businesses. If the economy should slow more than expected, companies will continue seeking to cut their costs, and conserving electricity is one way to accomplish this. However, not enough data are available to know what the long-term impact of the California energy crisis will be. Computers, the Internet Not Driving Demand RDI and its sister organization E SOURCE, which specializes in end user demand, can garner no evidence that computers and the Internet have spurred, or will spur, demand growth. If anything, the digital economy seems to have resulted in higher energy efficiency as measured by the rela- tion of energy consumption to GDP. That is, fewer kilowatt-hours (kWh) today are consumed for every dollar earned than ever before. Previous analyses performed on the subject, suggesting that, in 1998, 13% of total U.S. electricity consumed went to powering Internet-related activities,10 are no longer considered to reflect actual experiences. Researchers at the Lawrence Berkeley National Laboratory (LBNL) in California have shown that computers and the Internet consume at most 3% of U.S. electricity demand.11 Statistics by the Department of Energy’s Energy Information Administration (EIA) support the conclusion by LBNL. A large portion of the energy consumption by the Internet in previous analyses was based on the power demand of server farms—also known as Internet hotels. Research, however, shows that 13

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