In a ballroom overlooking downtown Dallas, a crowd of entrepreneurs gathered last night to take in the first in the Serious Business series of live debates Inc. is holding this campaign season to take on some of the thorniest issues facing the business community--issues that, as Inc. editor James Ledbetter noted in his introduction, don't exactly get the candidates' full attention. The subject this time: renewable energy subsidies.
Why should entrepreneurs care? Consider that 10 percent of small businesses report energy as their highest cost, and fully 35 percent say it's one of their top three expenses. Given the U.S.'s vast natural gas and crude oil reserves, should the federal government keep subsidizing renewables?
As you might imagine, the two teams of debaters--fossil fuel industry leaders on one side and renewable-energy entrepreneurs on the other--didn't agree on much.
Bud Weinstein, associate director of SMU's Maquire Energy Institute, didn't mince words when he launched his argument for ending subsidies, calling them "egregious" and pointing out that they've cost taxpayers $150 billion. "And the return? About 5 percent of our electricity comes from wind and solar." Meanwhile, he added, cheap and abundant natural gas has helped reduce air pollution. "My question is, when do we subject renewables to the market test?"
At the opposite end of the stage, Charlie Hemmeline, executive director of the Texas Solar Power Association, rejected the notion that there's anything exceptional about government support for his industry. "Energy has always been so critical to civilization that we've always had some support for it," he argued. "No single private company would ever put so much of their own money at risk to build a giant power plant without some public assurance for getting a return on that investment. Fossil fuel industries have always benefited from that support." He cited a recent study that estimated that support being worth $8 billion a year for the past 50 years.
Hemmeline's debate partner, Shalini Ramanathan, a vice-president for the wind and solar project developer RES Americas, took his argument a step further and put it in entrepreneurial terms. "Imagine if you had a new product and your competitor was getting $8 billion a year for the past 50 years," she said. "You can't compete with that without a level playing field. Now, if it were possible to build a time machine and go back and take away all the support, we think we're competitive."
Much of the debate focused on reliability of and cost-stability of the different energy sources. Weinstein and his debate partner, Ed Ireland, executive director of the Barnett Shale Energy Education Council, pointed to the intermittent nature of sunlight and wind as a significant weakness. "Wind and solar can go from providing 20 or 30 percent of power on one day to zero on another," Ireland said. "So you've got to have almost the same amount of backup megawatts capacity as you'd have in place without them."
Weinstein gave a stark example about the hottest day in Texas this century, in August 2011, when there was virtually no wind in West Texas, where wind turbines crowd the horizon. "In the middle of the afternoon that day, wind was only pumping one or two percent of power into the grid," he said. "We just barely missed having brownouts and blackouts."
Hemmeline jumped in with one of the night's better rejoinders: "You know what would have been good that day? More solar." It was a laugh line, but it underscored the biggest takeaway of the evening, and the point on which the debaters came closest to agreeing: that a diverse portfolio of energy sources is the key to energy stability.
"There's a place for everything," said Ireland. "But the bottom line is that the market needs to work. Subsidizing industries disincentives them to innovate."
So who won? An audience poll before the debate found that 64 percent of the audience was in favor of government subsidies for renewables, a sizable majority. Afterwards that number was 62 percent--still a sizable majority but 2 percent smaller.
The fossil fuel guys won this battle--by a hairsbreadth--but the bigger discussion is still up for grabs.