Wired Pulls a Charlie Sheen on Clean Energy: Experts Easily Debunk Absurd Hit-Job on Solar and Wind Power

In 2011, global investment in renewable energy surpassed fossil fuels for the first time. And the U.S. surged back into the lead in clean investment ahead of China by about $8 billion.

So what, other than bad journalism, explains this nonsensical headline and image from the top tech magazine Wired?

Actually, it is just bad journalism, pure and simple. Indeed, the magazine itself clearly wanted a sensationalistic headline — and even more sensationalistic photo — to get eyeballs in this highly competitive media environment.

The story simply doesn’t justify the headline. That’s obvious from the fact that the story itself includes this summary of wind energy prospects:

Outlook: Cheaper prices for turbines should result in lower costs for wind power by 2014. Though growth has slowed since 2008, this sector is still expected to cover about a third of any increased energy consumption in the US between now and 2035.

Huh? An energy industry that barely registered any significant U.S. capacity or generation a decade ago is now expected to provide a third of the increased energy consumption in the next quarter century — and that’s somehow a clean-tech “bust” which warrants an exploding wind-turbine image? Amazing (and I will repost a response to the article by a leading wind expert below).

For the record, I’m not saying the wind industry doesn’t face a near-term challenge in the face of unconventional gas and a GOP Congress unwilling to support a crucial tax credit. Climate Progress has made clear that it does (see “Policy Uncertainty Threatens 1,600 American Wind Jobs at Vestas — and 37,000 Jobs Nationwide”). I’m saying that there has been no bust in the industry yet, there doesn’t need to be one, and, indeed, the prospects for the industry over the next couple of decades remain very strong, as the article itself makes clear.

I asked Eilperin about the headline and images, which I thought were completely unwarranted. She makes clear she had nothing to do with them:

“I stand by the story, which accurately portrays some of the challenges the U.S. clean tech faces in light of the current fiscal and political climate. The piece also highlight some of the industry’s bright spots, including the fact that cheaper conventional PV panels has made the expansion of distributed solar generation and utility-scale solar projects more affordable. As many magazine readers would understand, I had no input into either the display art or the headline that accompanied the piece.”

Readers know that headlines are the most important part of any such story, seen by at least 10 times as many people who read it — and in the internet era, it’s likely that 20 to 100 times as many people see the headline from a respected magazine like Wired.

Wired should retract and change the headline.

I blame the editors for this — but I don’t agree with Eilperin’s assessment of the story itself. I think it is flawed, especially its discussion of solar energy.

The piece uses Solyndra as a stand-in for the entire US solar industry and devotes over one third of the piece to the now-bankrupt company. But Eilperin and Wired seem completely unaware of the fact that Solyndra was always a one-of-a-kind solar play that made sense only if silicon prices stayed high. In that sense, it was obviously part of a “portfolio” investment strategy by DOE, a hedge against their much broader strategy, which was based on silicon prices coming down. As Bloomberg Government made clear in a recent analysis that received virtually no coverage in the media, “the focus on Solyndra is not proportional to its impact.” About 87% of the DOE loan portfolio is low-risk.

You’d never know from the Wired piece that in 2010, America was a net exporter of $1.9 billion in solar products. You’d never know that the U.S. solar industry grew 100% in 2010 and another 100% in 2011, making it perhaps the “fastest growing” industry in America.

How does Wired make the case that the solar industry is a bust when there are “over 100,000 Americans are working in the solar Industry.”

Promise: … In 2010, the solar industry predicted that as many as 500,000 people would be directly or indirectly employed in the US solar sector by 2016.

Reality: As we head into 2012, the number is more like 100,000. Prices for conventional solar cells have fallen 40 percent in the past year, due largely to a flood of panels from Chinese manufacturers, which have benefited from plunging silicon prices and government support. The price drop has eviscerated the US solar manufacturing industry.

Seriously. Apparently because there is one solar study that said we would have 500,000 jobs 4 years from now, the super-fast growing industry with 100,000 jobs is a bust. For the record:

  • It is a 2011 study .
  • The 500,000 number assumes a 5-year extension of the crucial Treasury Grant Program.
  • The 500,000 number is based on direct, indirect and induced jobs. Induced jobs roughly double the total!

Yet Wired still had the chutzpah to use this image as its depiction of this staggeringly successful American industry:

No, the industry isn’t quite yet disemboweled. Again, one part of the U.S. industry — manufacturing of solar cells — certainly faces a great challenge from China.

But the article is quite confused about the impact of shale gas on solar, asserting:

Meanwhile the price of natural gas has fallen by 77 percent since 2008, and the cost of producing electricity in gas plants is down 40 percent since then. Renewables simply can’t compete.

In the case of solar, the article utterly misses the key point that solar photovoltaics generally compete with the retail price of power, not the wholesale price.

I asked one of the leading experts on solar energy, Jigar Shah, for a response. Shah, who founded the pioneering solar company SunEdison, writes me:

Since 2000, commercial electricity prices have gone up by almost 5% per year. Even after the crash in wholesale prices from the financial crisis of 2008, most electricity customers are still paying much higher prices than the historic 0.6% annual rate increases in the 1980s and 90s. The reason for this is that all of the infrastructure in the United States is “old”. Most of the coal plants are over 40 years old and realistically cannot be run for more than another 10 to 20 years. Most of the substations in the United States were built before everyone decided to install air conditioning. When new natural gas plants are built, it isn’t the gas plant that is so expensive, it is the changes in the grid required to accept this new concentrated electricity source that makes up the bulk of the expenses.

With installed solar prices approaching the $2/Wdc mark for commercial rooftop systems, it is now more cost effective than retail electricity prices for over 20% of all US electricity covering 200 utilities in 29 states. The persistence and the excitement fueled by the VC community caused over 5,000 contractors to invest their hard earned money to make solar in the local community a reality. The final step in the solar transformation is about finance, not about technology. In 2008, the solar industry was on the cusp of finally creating ways for common Americans to invest in solar power, to put their money where the poll numbers already suggest their heart is. This last step was postponed by the financial crisis and is finally ready to be started again. There are ten individual initiatives that are being led by entrepreneurs, well-known private equity managers, and large well capitalized companies all headed for the same objective, bring low risk solar assets to the public markets so that pension funds and individual investors can benefit from what Warren Buffet already knows — renewable energy projects have a higher yield and are a safer investment than corporate bonds.

In the oil, electricity, and transportation industries we have annual capital expenditures into infrastructure (not consumer products) of almost $2 Trillion per year. The combined revenues of HP, IBM, Cisco and others that sell hardware for information infrastructure is almost 10 times less than that. Shifting the investment into our core energy infrastructure is a multi-decade struggle that has resulted in 2010 with more money going into new renewables of $187B while only $157B went in to new fossil fuel and nuclear generation. Given that investment banks, law firms, and jobs care about new stuff being built all shifted their loyalties to the renewables side of the ledger. In 2011, Bloomberg New Energy Finance said that since 2000 we have invested over $1 Trillion in clean energy broadly — $243B in 2010 alone. This means that with current growth rates, our next Trillion will take only 4 years and by 2020 we will probably be at $1 Trillion annually — over 50% of the almost $2 Trillion needed by the whole energy industry.

Financial innovation is about building trust. Investors need to believe that these technologies have almost zero technology risk or 100,000 hours of field testing. They need to know that the financial products are structured in a way that clearly takes into account all of the risks. While these steps are easier for clean energy, they are not trivial. The efforts of the VCs and the US Government mean that we now have a set of technologies that meet this profile and have been accepted by the grand masters of finance such that they can reach $1 Trillion of annual investment by 2020. Like the oil and gas industry, more innovation will always be possible, but meeting the final hurdle of acceptance by the finance industry is something that the oil and gas industry knows how to do. And now so do we.

So, no, the US solar industry has not busted yet, and the future is incredibly bright. Would it be even brighter if Congress were willing to extend the tax credits? Of course, but solar is here to stay in any case.

NOTE: Eilperin attempted to interview Shah for the story, and he declined to be interviewed.

As for wind power, Tom Gray of the American Wind Energy Association posted this response [scroll to bottom] on Wired’s website :

1) Wind is close to cost-competitive with new natural gas generation, even at today’s unsustainably low natural gas prices, and has positive offsetting benefits.

Adding wind farms to a power system helps lower fuel prices and electric rates and make them more stable and predictable. For example, the Colorado Public Utility Commission recently approved a 25-year, 200-megawatt (MW) power purchase agreement between Xcel Energy subsidiary Public Service Co. of Colorado and NextEra Energy for power from the Limon Wind 2 project. The Colorado PUC underscored how the contract would be cost effective for consumers, saying, “the contract will save ratepayers $100 million on a net-present-value basis over its 25-year term under a base-case natural gas price scenario.”

As Bloomberg New Energy Finance lead wind analyst Justin Wu recently commented, “The public perception of wind power tends to be that it is environmentally friendly, but expensive and intermittent. That is out of date in the best locations, where generation is already cost‐competitive with fossil fuel electricity, and that will be the case for the majority of new onshore turbines installed worldwide by 2016.”

2) States that rely more on wind power have seen their electricity rates rise more slowly than states with little or no wind.

According to the Energy Information Administration (EIA), the 40 states with least wind installed (and the District of Columbia) saw electric rates rise by just over 34% between 2005 and 2010. By contrast, the top 10 states in wind generation (with wind providing between 5.1% and 15.4% of electricity) saw an increase of less than 11%, or less than one-third as much.

Electricity rates are the result of a number of factors, so wind can’t get all the credit. However, it makes sense that a resource with zero fuel costs, when it is available, is going to push the most expensive (and dirtiest) power plants on a utility system off line and save consumers money.

[See “The 5 States With the Most Installed Wind and Solar Power Saw the Least Increase in Electricity Prices from 2005–2010.”]

3) Rep. Stearns is misinformed. Wind energy is an American manufacturing success story. The wind industry has been a bright spot through the depths of the recession, creating one of the fastest-growing U.S. manufacturing sectors. Wind is actually insourcing a whole new manufacturing sector. Sixty percent of a wind turbine’s value is now produced here in America, compared to 25% prior to 2005. As the nonpartisan Congressional Research Service recently found, American wind manufacturing facilities have grown to almost 400 in 2010, up from as few as 30 in 2004. The key to that expansion has been the federal Production Tax Credit for wind, which has helped the companies that build wind farms to attract investment and create a market for turbines.

A recent study from Navigant Consulting finds that with stable tax policy, the wind industry can grow to nearly 100,000 American jobs in the next four years, including growing the wind manufacturing sector by one third to 46,000 American manufacturing jobs. This will keep the wind sector on track toward supporting the 500,000 jobs by 2030 envisioned in a report by the U.S. Department of Energy during the George W. Bush administration.

The development of clean, renewable energy sources such as wind power is critically important for the future of the country and everyone who uses electricity now and in the future. Wind energy is clean, abundant, and homegrown, and its cost is dropping. The case for continuing to invest in its growth through a reasonable low tax rate remains strong. And to change course now would only shut down a new U.S. manufacturing sector, just as it is starting to deliver on a large scale.

Let wind finish the job. — Tom Gray, American Wind Energy Association

So, no, there hasn’t been a bust in clean tech yet, and the industry is poised to do unbelievably well in the coming decades. Yes, the foes of clean energy in Congress can put a crimp in the near-term growth, but the technological and marketplace reality is very promising for renewables in the medium term. And, of course, the ever accelerating reality of climate change means renewables are the inevitable winner in the longer term, no matter how hard their opponents try to kill the US industry.