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Financial crisis puts focus on efficiency, not green power

Given the meltdown on Wall Street, will companies put aside plans for improved …

What the economic crunch means for green power

One thing that became clear from the meeting is that most of the companies that aren't involved in power generation really don't want to get involved. There were a couple of exceptions—Roche runs a cogen facility at one site, for example—but even companies with significant green power commitments (like Kohl's) were counting on other companies to deal with generating it, as we noted above. For the most part, that will mean getting it from the grid.

Here, the economic problems seem likely to have the biggest impact. As the Exelon exec noted, it's not simply a matter of building green power sources—the grid that gets that power to where it's needed has to be built, as well. Her guess was that none of this is going to be happening for at least 10 years. She figured it would take over three years for companies to be willing to invest in major projects, another three to have them approved, and then an equal amount of time to build them. Al Gore would not be amused

Of course, all that assumes that the US will wait for private enterprise to decide to build out the grid and facilities. At least one speaker, who runs investments for Citibank, happily pronounced that the era of laissez faire was dead. If we had come to terms with spending billions of dollars to clean up a financial mess, he reasoned, the barriers to spending billions on national infrastructure would be greatly reduced, as would any hesitancy to intervene in a market.

Although he's probably right in general, it's hard not to be skeptical that this sort of thinking will take hold. The financial bailout has already taken flack from many who oppose market interventions; if it fails to head off serious economic turmoil, laissez faire might only be pining for the fjords.

Even if the bailout works by some objective measures, there are still some significant differences between that and a major intervention in national infrastructure. For one, the bailout was sold as something that simply had to be done; it's hard to imagine getting the US public to accept that infrastructure investments are also necessities. More practically, the combination of a huge expenditure on the bailout and an economic slowdown seems likely to leave little political will for a major public works project, at least assuming the economy doesn't face a catastrophic slowdown.

Looking ahead

So, what to expect over the next couple of years? Unfortunately, I wouldn't expect many new renewable or efficiency technologies to hit the market in the near future; there simply isn't cash available for small companies looking to grow quickly, and the big companies will focus on proven technology. If there's any bright side to this, it may mean that when things pick up, the newer tech will hit the market in a more mature form than it might have otherwise.

The end result is that those companies that have already started efficiency efforts may wind up digging deeper into their list of projects to pursue and wind up getting correspondingly lower returns for their investments. That fact, combined with some belt tightening, might push efficiency measures back a bit. Of course, those companies that have already started efficiency measures are going to be in much better shape to make it through the economic downturn.

The big casualty of the economic crunch looks to be any effort to shift the energy grid, both for companies and the wider public, to a greater reliance on renewable sources. Doing so would require either major investments by private companies (which won't be forthcoming) or a consensus that the government needs to both intervene and invest in the power grid. I simply don't share in the optimism that the precedent set by the financial bailout will be viewed as applicable to the establishment of a green grid.

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