Towards a Political Economy of Renewable Energy

While common sense tells us that we live in an information age, we're still largely in the past century with regards to what underlies our economy. All the sparkling information technology that exists and has changed our lives still largely runs on fuel sources that have remained unchanged for the last century or so. The large centralized power plants, the state-funded infrastructure required for distribution as well as the infrastructure required to obtain the fuel sources to produce power - to extract it, to refine it, to transport it - all require intense economies of scale and the merger of state and private power.

But we have an emerging technology that threatens to do to energy what networked computers did to information. Energy costs are effectively a rent on all productive activity - nothing can be done without it and if you happen to control the supply then you can easily make a steady profit off of it acting as a rentier.

However renewable energy flips this script on it's head. At the time of writing we've only just entered the renewable age, it is only in the last decade that solar reached grid parity with traditional fossil fuels and even then it hasn't happened all at the same time - access to wind and sun or lack thereof, state intervention, fossil fuel subsidies have all complicated progress. However the costs of renewable technologies are ever decreasing while fossil fuels are remaining constant which means that eventually it will be more profitable to make the switch.

The reason why renewables are profitable is that they don't require a constant supply of resources. Unlike fossil fuels which must be extracted and then transported to the point of generation, renewables instead require only initial manufacture, deployment and then maintenance. Furthermore the lifespan of renewables are impressive - solar panels for example lasts 25-30 years before they start seeing noticeable declines in energy output - which means they win out in the long run against fossil fuels which require a constant input of energy to extract energy compared to renewables which require significantly less.

This lack of upkeep costs means you get bizarre situations like in California which [occasionally sees negative prices]. The oversupply of solar means that there is so much energy generated that they instead pay people to take it from them.

Negative costs for energy mean that economic activity that requires energy suddenly can be priced for free. There are ways around it, the most obvious being to either store the energy or use it in an energy intensive process - for example a German aluminum smelter has special electrolysis cells that can take in more or less energy depending on whether there's an oversupply. Having mechanisms that can take advantage of this free electricity obviously means lower prices, but speaking long term where might this take us?

In a world in which everything can be run on electricity and in which there exists negative prices (some of the time) this means that certain services can be provided for free without cost to the provider (or at the very least the cost will be so incrementally small that it wont be worth considering). If we can electrify the provision of the basic necessities of life and then use renewable energy to power them, then we can achieve a world in which nobody would have to work to live. As such communism is renewable energy plus the electrification of everything.

None of this is to say that green technology is definitively good. There are of course upfront costs, environmental impact and potential misuse, not to mention the fact that right now most renewable technology is built in China with appealing environmental and labor practices, from which will emerge a new class of elites much the same way with fossil fuels. However unlike fossil fuels renewable energy does not lend itself to rent seeking. Once renewable energy is set up the companies that built the infrastructure will find it much more difficult to profit off of them (obviously there exists longterm contracts to ensure stable prices and so on but those are far less likely to result in the rent seeking practices that existed beforehand). As such I care less about what type of economy renewable energy will power in the future and more that in such an economy there will be one less class of rent seekers.