Decentralized Electric Utopias

Historically, electric utilities were vertically integrated, owning electric generation facilities, transmission lines, and distribution networks. They were granted “natural monopolies” for specific regions early in the twentieth century all for the price of regulatory oversight by state public utility commissions.

With such control over critical infrastructure, however, came corruption. And it wasn’t just a problem a century ago; in just the latest example, utilities behemoth FirstEnergy bribed Ohio state legislators for a massive bailout.

But the centralized nature of utilities has also tended to inhibit decarbonization, owing to the inertia of their investments in big, often fossil-powered plants. Because these plants have always been so expensive to build, they have to run for decades in order to justify the investment.

Unfortunately, this problem affects not just investor-owned but publicly owned utilities as well, which exist at local, state, and federal levels. Even thornier is the question of what happens to workforces should plants close before recovering their costs.

Many activists have embraced an alternative — a radically different vision based on decentralized or “distributed” renewable energy. In this vision, households and communities will own, control, and produce energy and, consequently, challenge the entrenched monopoly power of the centralized utilities. And this would start with breaking up those monopolies into competitive markets.

Activists have embraced this vision as a new form of democracy. As described in a recent report by the Energy Democracy Project, “energy democracy forces are fighting for a decentralized energy model — a restructuring of the energy system that prioritizes the development of local, community-based energy resources to advance the environmental, economic, and social justice needs of our communities.”

With the hardening of this stance has come a new illusory target of reaching 100 percent renewable electricity. No less than prominent environmentalist Bill McKibben has declared, “It’s important news that the environmental movement seems to be rallying round a new flag . . . the rapid conversion of energy systems around the country to 100 percent renewable power.” It’s a subtle but profound shift in priorities in which activists are now advocating for a very specific system of production and distribution instead of a climate outcome. And it comes with immense real-world consequences.

The science behind the “100 percent renewables” demand is sketchy — it’s largely based on the models of one researcher, Mark Z. Jacobson, who notoriously resorted to defamation lawsuits after facing extensive criticism. His modeled “100 percent renewable” energy system would require a fantastical infrastructure deployment on top of the profusion of wind turbines and solar panels: hundreds of thousands of miles of new transmission lines and energy storage technology, which does not exist at commercial scale.

Yet perhaps the most fantastical hurdle to this goal lies in the immensity of its land use. Across the country, heated political battles are already taking place in rural localities over wind and solar installations. In New York, for example, former Governor Andrew Cuomo established the Office of Renewable Energy Siting, which has the power to override local governments. According to environmental scholar Holly Buck, to fully decarbonize our economy primarily with renewables, the projected land for solar panels alone would be the equivalent of the size of West Virginia, and “37 percent of Iowa must have wind or solar deployed.”

This approach is sure to rouse an even greater popular backlash to “green” politics than we see today. But far too many activists simply don’t care. “I want you to love wind turbines,” anthropologist David Hughes sermonizes in his recent book Who Owns the Wind? “If we love these machines well enough to put them everywhere, they will stabilize the climate.” Elsewhere, he even argues households should accept intermittent electricity — that is, recurrent blackouts — to align with the intermittent nature of solar and wind power.

Do more with less — and learn to love it. It’s a sermon, unfortunately, with a long liberal pedigree.

Deregulation Opens Markets for Renewables

In a 1977 New York Times op-ed, Amory Lovins — a young energy analyst whose influence has blossomed in the NGO world over the decades — warned that a reliance on an “ever‐more‐electrified, centralized, large‐scale” energy system made society vulnerable.

Instead Lovins proposed what he elsewhere called the “soft energy path” based on small-scale renewables and conservation, to “do more with less energy.” Solar power in particular, “. . .would give us an energy system essentially invulnerable to cartels, mistakes, oligopolies, unions, saboteurs, bureaucrats, acts of God, and Acts of Congress.” It was central to the neoliberal class offensive to bundle together anything “big” — from government and unions to your electric utility — as inflexible behemoths in need of reform. Or demolition.

These decentralized proposals paved the way for the deregulation of electricity, starting under President Jimmy Carter and then rolled out in states like California, Texas, and New York over the ensuing decades.

To proponents of electricity deregulation, the old monopoly utilities invested too heavily in big, costly coal, hydroelectric, and nuclear power plants. By unleashing market forces, different capitalists would invest in newer, smaller, technologies of natural gas–powered turbines and renewable energy generation like wind, solar, geothermal, and biofuels. A new category of electricity producer was born, called a “merchant generator,” whose only goal was private profit on wholesale markets, not regulated electricity service to consumers. This shift revolutionized electricity generation across the country.

According to federal data, merchant generators now account for 42 percent of electricity generated in the United States, compared to 54 percent from utilities. Among renewables their dominance is clear: 74 percent of all non-hydroelectric renewable generation today is undertaken by these merchant generators, compared to 13 percent from utilities, a dominance made possible by deregulation.

While utilities resisted restructuring, other capitalists clamored for it. Large industrial corporations wanted to buy cheaper electricity for their own production, and energy traders like Enron sought new financialized markets to conquer.

But restructuring also won over less powerful groups, like consumer advocates and environmental NGOs, with a core neoliberal idea: more competition means more consumer choice, more incentives for conservation, and more green energy.

As California’s state agency for energy policy put it in 1998: “The choice afforded by increasing competition in the industry provides consumers an opportunity to vote their environmental values with their electricity dollars.”

Naturally, labor unions — who had successfully organized high levels of union density in the centralized utility system — resisted deregulation.

In the 1990s, the president of the International Brotherhood of Electrical Workers (IBEW) issued an organizing binder to implore all locals to organize against deregulation. “We cannot afford to sit on the sidelines and watch a few greedy leaders of business dismantle the laws enacted to ensure a fair proper balance of interests within the electric power industry.”

Beyond their jobs, unions argued deregulation would jeopardize reliable electricity service for everyone. The late industrial electrician and labor activist Mike Parker told Labor Notes that “getting lean has meant getting rid of power-generating capacity that in the past would have been on standby for abnormal demands.” This year, the New York Times dismissed “the reliability and resilience of the electricity grid” as “a top concern for climate change deniers.”

When it comes to environmental NGOs, those fears of blackouts and energy shortages — to say nothing of the loss of union jobs — play second fiddle to blanket demands for more renewable energy, if they’re raised at all.

Renewables as Financialized Greenwashing

In 1999, Governor George W. Bush’s Texas became the first restructured state to take the renewable mandates to the next, financialized level with the use of renewable energy certificates (RECs). Initially invented by Enron in 1997, RECs constitute a new financial commodity for owners of renewables to sell on top of the electricity. Why only sell the wind turbine’s electricity on the electricity market when you can also sell its greenness on the green market? To satisfy renewables mandates, utilities everywhere now generate or purchase RECs and then submit them to the state for accounting.

Aside from the mandates, REC trading became a crucial part of corporate procurement of renewable energy, starting in Bush’s Environmental Protection Agency (EPA) and flowering in the Barack Obama administration. In 2010, the EPA declared it “the simplest way for organizations and institutions to affect the United States’ electricity generation mix at a national scale.”

Through REC trading, massive corporations can project a green image while merchant generators reap the profits. Microsoft, for example, claimed in 2019 that their operations consume “100 percent renewables” despite the vast majority of that claim coming from REC purchases.

But the renewable claims driven by RECs obscure a dirtier reality. Recent research from Columbia University reveals that “companies that contract for 100 percent renewables . . . in fact draw between 20 percent and 50 percent of their annual electricity from the regional electric grid [partially fueled by fossil fuels].” Such claims therefore rest not on the technical realities of electricity production, but on the accounting fictions of financial consumption.

In addition to REC trading, restructuring opened another avenue for giant corporations to direct renewables investment. In 2019, corporations procured, via direct power purchase contracts, a whopping two-thirds of all renewable capacity installed that year, and in 2020, Amazon alone contracted almost 10 percent. Such contracts also have a financial purpose for the corporations — to hedge against fluctuating market prices for electricity.

Worse still, renewable development has always provided a tax shelter for some of the wealthiest corporations imaginable. Since the dawn of the neoliberal era, state and federal governments have attempted to grease the wheels of renewable investments with lucrative tax credits. Much of the celebratory declarations of ultracheap renewable energy still hinges upon these tax credits.

Geographer Sarah Knuth detailed the forty-year history of renewable tax credits as a core part of “the neoliberal toolkit.” As a result of this tax regime, the renewables industry is dominated by massive financial institutions, like JPMorgan and Bank of America, who not only shield their immense wealth from public coffers, but also get to decide on which projects to finance through so-called tax equity, despite the fact that considerable amounts of this development takes place on public land and waters.

One insidious outcome has been the slow undermining of public power systems: if you don’t have to pay federal taxes, like the TVA or a municipal utility, then you get zero benefit from the tax credits for renewables. For these public entities, satisfying popular demands for more wind and solar necessitates a choice: either public ownership and pricier energy, or private ownership and cheaper energy.

Indeed only about 0.02 percent of TVA’s renewable energy capacity is owned by TVA itself. The largest solar farm in the TVA system — built for Facebook’s “100 percent renewable” claim for a new data center, despite 24-7 operations that depend on the whole TVA grid — generates tax credits that flow to owner-investor Wells Fargo. And for a landmark new solar project TVA is planning, it “will not (and cannot) directly take advantage of any tax incentives,” forcing it to partner with private investors who will actually own the project, to keep ratepayer costs down.

Similarly, the Nebraska public power system — the only state entirely served by publicly owned utilities, for which it is rightly praised on the Left — survived deregulation only to open the doors to merchant generators in the late 2000s as a way to promote wind and solar development. With those lucrative tax credits, it just makes sense to go private. Today a quarter of Nebraska’s electricity generation comes from merchant generators — all of it wind and solar.

“We get a tax credit if we build a lot of wind farms. That’s the only reason to build them,” as Warren Buffett explained in 2014. “They don’t make sense without the tax credit.” Today his company Berkshire Hathaway’s investments in renewables amount to $35 billion.

Renewable Rentiers

Massive corporations aren’t the only beneficiaries from solar and wind development. While centralized generation provides long-term, stable employment, solar and wind provide scant permanent jobs after construction ends. Instead of a workforce, such projects benefit local landowners who lease out their land to solar and wind development.

In other words, decentralized energy replaces a high-wage industrial union economy with a rentier one — with rental income only flowing to the propertied class.

Perhaps the most iconic producer of renewable energy is not a company at all, but an affluent suburban home plastered with solar panels. According to one recent analysis of California, “half of the state’s solar adopters are in the highest 20 percent of earners, while only 4 percent come from the lowest 20 percent.” Even more regressive is a policy called net metering — beloved by many renewable advocates — which “allows households to reduce their [electricity] bill far more than the market value of the excess solar they produce, effectively shifting the cost of both producing electricity and maintaining the grid onto households without solar. . .”

Through net metered rooftop solar, the homeowners become an energized petty bourgeoisie. And they’re looking to collect rents for their solar property — from less propertied, less virtuous workers — via the common electrical grid.

Increased deployment of renewables will continue to play a role in decarbonizing electricity generation in America. But the costs — both economic and political — will rise dramatically once the private sector develops the lowest-hanging fruit on the easiest (often public) land. To decarbonize more deeply we need to revive a bigger approach.

The Road to (Public) Power

The ideology of decentralized renewable energy assumes that the existing, mostly centralized grid is purely a source of environmental harm or monopoly corruption, and the goal is to build a new system from scratch based on distributed generation.

For socialists, however, a massive technical infrastructure that delivers socially useful functions and requires centralized planning is something to build on, not reject entirely. The problem with our current electricity system is not so much its industrial or centralized nature but the fact that capitalists mostly control it — in particular, investment in it — for their own profit. Utilities and merchant generators who have sunk millions into fossil fuel infrastructure would fight like hell to maintain such systems despite the social need to scrap them. Instead, the public sector is the only historically proven vehicle for such large-scale investment in long-term infrastructure.

Rejecting ruling-class dominance of the power system does not mean we must renounce the technological basis of a modernized grid: centralized generation and long-distance transmission. Across the world, the cleanest and most decarbonized grids are mostly powered not by distributed solar and wind, but massive amounts of publicly owned centralized hydropower and nuclear generation.

Current movements for public power perpetually reproduce that small-is-beautiful, localist ideology. Instead of big centralized facilities powered by workforces, they envision municipal owned utilities, microgrids, rural electric co-ops, and community-owned solar farms, all of which fall short of the scale of transformation needed.

We will not decarbonize our entire electric system one community at a time. We need to think bigger. Luckily, there are much more ambitious models of public power to emulate: the TVA and federal power marketing administrations.

The TVA harnessed the public natural resource of the Tennessee River to build hydroelectric dams, prime examples of centralized generation able to power whole regions, as long-lasting public works. And it aimed to supply cheaper electricity to urban residents, and to electrify farms and rural localities seen as unprofitable to invest in by private utilities. Other New Deal programs even helped these localities set up their own distribution utilities to buy that cheap power. Though it had its functional purposes, Roosevelt and chief power administrator David Lilienthal consciously wielded TVA as a political weapon against their primary opponent, the sprawling utilities empire of the day.

The 1930s public power movement saw electricity as a public good to deliver to the masses. In the United States today, roughly a third of individuals struggle to pay their utility bills. A large-scale vision of public power could be a mechanism to deliver mass material gains to working-class people across society. Representatives Jamaal Bowman and Cori Bush recently affirmed that vision with a resolution in Congress to repurpose our electric system toward the social goals of decarbonization and delivering electricity as a “human right.” Unfortunately, their NGO-led effort naturally aims at 100 percent renewable power.

The People’s Policy Project already proposes exactly this type of vision. Rather than a program of community ownership, it proposes expanding the authority of the TVA to build clean energy generation all over the country, powered by wind, solar, and other technologies like nuclear. The TVA is itself a product of the historical legacy of our centralized electric system. The bulk of its generation (97 percent) comes from hydropower, nuclear power, and, yes, fossil fuels natural gas and coal. It is mostly centralized hydropower (12 percent) and nuclear (42 percent) that allows TVA to claim a 57 percent carbon-free generation system, not wind and solar.

To continue decarbonizing its power system, the TVA recently announced an ambitious public sector–led research program with a federal lab to develop zero-carbon technology like small modular nuclear reactors and carbon capture. Because this program does not abide by the ideology of “100 percent renewable” decentralized energy, the climate left just sees it as a distraction. Yet this is “big” public power in action.

The Left Must Look to the Labor Movement

Our large-scale vision of public power might sound great, but the question is always what kind of social force has the capacity to win such a large transformation of our electricity system. For socialists, that answer should be clear: the workers themselves.

What are unions saying about climate change and decarbonization? For one, they see the emerging renewable industry as largely anti-union, lower-paying, and hostile to their interests.

Where building trades unions have political power, they can win project labor agreements that ensure renewable construction jobs are union jobs. Some IBEW locals have successfully unionized utility-scale solar farms in California, for example, although rooftop solar remains staunchly anti-union. But a union-led decarbonization program surely points to technologies beyond decentralized energy. “By building new [nuclear] reactors at old fossil fuel-fired power plants,” the IBEW president suggests in a recent op-ed, “Biden can ensure reliable clean energy and high-paying jobs for working families . . . .”

Unions also support some degree of carbon capture and storage at natural gas plants critical for grid stability — and for retaining good union jobs. While environmentalists recoil at nuclear and decry carbon capture as simply a “techno fix,” it’s also worth pointing out that these technologies are seen as critical in most scientific models of rapid decarbonization, like the Princeton study.

Where climate movements partner with electricity unions — as has happened recently in Maine and Illinois — they get results. Not merely a matter of etiquette and checking in for union approval for climate policies, it is a strategic imperative since these unions remain the most powerful and organized institutions of the working class.

Mass Electrification Over Green Ideology

About a century ago, Lenin famously asserted, “Communism is soviet [i.e. worker] power plus the electrification of the whole country.” In the twenty-first century, we sadly still need electrification of the whole planet: billions lack basic access to the kind of modernity that the New Deal brought to rural America.

Here in the United States, we should fight for a new kind of modernity — a decarbonized, cleaner industrial economy — as a whole new take on “the electrification of the whole country.” This project has two planks: rank-and-file union power and a broad-based vision of large-scale public power. The environmentalist ideology of decentralized generation and “100 percent renewable” energy inhibits both of these goals.

A narrow-minded focus on renewables alone will alienate the hundreds of thousands of unionized workers in the centralized power system at the core of our infrastructure. And, actually existing renewable development has facilitated reckless deregulation and served to further enrich billionaires and provide rents to the propertied classes.

It’s time to rethink our politics of an electrified climate-forward future. And it should look a lot like the big public power of the TVA.