It is straight forward strategic thinking on the part of oil companies to invest heavily in technology that would be the game changer for a threat. For oil companies utilities pushing for plug-in cars and trucks are indeed a very real and palpable threat. To electric utilities the thing that will most threatens their dominance of the home electricity market is personally generated electricity such as the kind generated from solar and wind. Oil companies use their control of the solar panel market as a way to manage the threat that might come from utilities pushing for plug-in vehicles.
Let me explain. If utilities push to support a plug-in electric vehicle, which would move automobiles off of oil company controlled products then the oil companies could retaliate with lowering their prices on solar panels and introducing them in large numbers into the market so that people would more easily switch to solar and leave the utilities with a diminished market. As long as utilities don’t make the push for plug-in vehicles, solar stays only a threat. For a long time this scenario has created a De Taunt of sort between the utilities and the oil companies. Utilities fearing the control that big oil has over solar never pushed to finance electric and plug-in vehicles and oil companies never allowed for solar to be anything other than a curiosity for wealth first adopters to spend too much money on.
We must not be taken in by what the oil companies want us to believe, namely that they are “energy companies.” They are not energy companies. They are oil companies. All of their actions and maneuvering is to maintain the supremacy of oil and to maintain their long developed culture around oil. They do not own solar concerns for any other purpose then to protect their huge investments in oil from the primary threat and that is electric vehicles and the utilities that power them. Utilities produce electric energy without the use of oil. For them to go into producing energy for cars and trucks would be real competition for the oil companies.
BP Solar when it was Solarex was the largest maker and distributor of solar panels in the world and the United States share of the solar power market was 85% around that time. Today the entire US share of the solar market is less than 15% and shrinking and Solarex now BP Solar is only a fraction of that number. What happened? Oil company dominance happened. Shell purchased Siemens Solar and renamed it Shell Solar. Chevron purchased controlling interest in ECD, UniSolar from GM after GM1 crushed the EV1 electric car. ECD also produced the NIMH forever batteries for the EV1 electric car. So when you are wondering why ECD is only making money from its solar business and not from its battery business it’s because solar doesn’t affect the oil business it affects the electric utility businesses which could rob oil of its supremacy in automobile propulsion through the financial backing of electric vehicle production.
Lately, the utilities have been ignoring the solar panel threat coming from oil companies and they have been joining a campaign to make plug-in hybrids a reality. The campaign is called Plug-in Partners (http://www.pluginpartners.org/). This is the scenario that I talked about above. Utilities are reaching into the auto fuels business which at this time is virtually 100% oil company product dependent and controlled. So the punishment would have to be that oil companies are going to reach into the utility business by making solar panels more available. It is a form of retaliation for the utilities actions. ECD is being allowed to increase its distribution precisely at this time to send a message to utilities that their control of the electric market could be destroyed by wide distribution of solar panels. The oil company’s message is simple, get off the plug-in band wagon or we will destroy your market with solar panels.
NIMH batteries are not going to be pushed by the oil companies because they hit the oil companies directly at their product dominance and historic product lines with the subscription benefits going to the utilities. It is subscription benefits that oil and utility companies want. For utility companies it means longevity and stability and in the current climate of deregulation there is a subscription benefit because they can jack up rates with regulators blessings without having to show cost of infrastructure or fuels. For oil companies it means the ability to make huge profits for perceived volatility in supply. For example, if the price of gasoline goes up than oil companies profits go up because they don’t have to pay for an infrastructure change. The same pumps, the same trucks, the same refineries that were making money when gasoline cost less still cost the same only now the price of a gallon of gas is higher. Oil companies make more, subscription benefit to them. This isn’t true when the energy generated is free such as from the sun and the mechanism that produces the energy is hardware and the costs are fixed at the time of its purchase such as with solar panels and home wind mill wind power.
How do I explain this better? Both the utilities and the oil companies want to keep you dependent on their energy product. Why? Because it is a subscription product of a consumable. If utilities sold solar panels for energy subscriber’s homes they would make a one time profit on the panels and then nothing more for maybe 20 to 50 years. Solar panels last a long time and have no moving parts to maintain or ware out. While if they keep you hooked up to an energy source that is paid for as it is consumed, you will be paying them literally forever. The benefit to them is that they can go to regulators and increase your costs and you must pay them. They end up making more money on you without having to change your wiring or anything else, subscription benefit.
Constellation Energy that owns most of the electric lines in Maryland just pushed through and got a 75% increase in rate hikes in a single year through a Republican controlled regulatory board. Energy cost had not climbed by 75% in a year. Rate payers did not see any change in the way that the utilities delivered their energy, there weren’t increases in equipment to reduce pollution, there wasn’t a new plant that had to be built to keep up with the increase in demand. What there was was simply an enormous rate hike, subscription benefit.
Utilities were typically highly regulated entities prior to “deregulation.” Their profit margins were large to reflect their monopoly status but there was no way to increase margins because of regulation. In the era before stupid deregulation of utilities people used to invest in utilities because the risk was very low and they used to pay out steady substantial dividends to attract investors. Utilities paid out better than average dividends because they could not provide the capital gains available in dynamic markets. Utilities that understood this well did very well by trying to reduce their costs to increase profit margin and reduce the need to build new power plants through conservation efforts and increasing the capacity to existing power plants. The number one fear of utilities was that peak power production would go beyond capacity of their generation and they would have to find and pay hundreds of millions of dollars out for a new power plant that would be amortized over a long period of time and would not begin paying for itself until demand grew to utilize a majority of the plants capacity. It was risk because populations use of energy changes and growth rates change a lot over a long period of time. If they build the power plant and energy usage growth stops then they are stuck with the over capacity and the expense of a power plant built but underutilized. Have no pity on utilities. There is no loss in the scenario. If utilities should find themselves in this bind all they had to do was go to the state regulating board and explain their problem and the board would allow them to adjust rates to maintain their margins. The cost would be added to the rate payer’s bills, subscription benefit. In the years before stupid deregulation, rates would go up a percent or two every year for this purpose with out any real pain being felt by anyone party in the process. Neither the utilities, nor the consumers, nor the legislatures had any problems with the process. Then came Enron, a new type of utility, and the era of stupid game like utility deregulation came into being.
Deregulation is not a correct name for what happened, because it did not deregulate the utilities where they would be competing against each other. What it did was put in very stupid rules that allowed utilities to get rate increases without having to show that their particular expenses had changed. They could base their requests for rate hikes based on the cost of energy that others were paying to supply energy to state. This meant and means that utilities that were once very healthy charging 5 cents a kilowatt hour could point to other expensive energy cost and adjust their rates upwards based on those costs as long as those others were supplying energy to the state. Without considering what would happen to the rate payer the board of governors based all rates in the state based on the most expensive energy produce that they were willing to buy. Rate payers in Maryland were willing to pay extra money to have their homes powered by wind energy purchased through a contract with charitable groups and non-profits. The energy cost charged to the utilities from these sources was much higher than the cost of energy from traditional sources. The utilities went to the energy board of Maryland and made the request to have their rates match the cost of this very special energy that was allowed in the state. The Maryland energy board had to approve the request based on the way that the current regulations were written. They passed the 75% increase. Now poor families who had electric bills for a home that was 200 dollars, for which they struggled to pay, now had a $350 electric bill that they had to decide what not to eat in order to pay. Why? Because greed and poor regulation policy required them do it.
I consider this a catastrophic failure on the part of democracy, which is supposed to have politicians that work for the people, are made up of the people and hold their power because the people (or in this case ratepayers) have given them that power. The utilities acted single mindedly towards the greediest end that legislators had put in place.
For the citizen of the Untied States and the consumers of energy, in order to protect ourselves from being conscribed by the oil and utility companies, need to push the scenario described above to its full fruition. We need to push for plug-in vehicles as hard as we possibly can. This I believe will bring the oil companies to fully release their solar technology into the market place as a counter attack on the utilities for trying to take away their market share of the automobile propulsion fuel market. The end result will be that we will more greatly reduce our oil dependence, greatly reduce out production of fossil fuels and the global warming gasses that they produce and bring stability to our costs for energy. We will achieve greater freedom based on the fact that we will no longer be under the subscriber detriment, subscription benefit that we are currently enslaved under by having to pay out at the pump each time we fill up and pay out every month through our utility bills. We will no longer be slaves to oil and utility company’s.
Be free buy solar and drive a plug-in vehicle. Be active join Plug-in America.