On today’s show we’re talking about the real estate required for renewal energy. There are significant narratives about the need to transition from carbon based energy sources to renewable energy source. Renewable energy sources fall into three principal categories

1) Hydro-electric

2) Solar

3) Wind

But we’re also talking about how the increase in the use of solar and wind power will also require an equivalent production capacity of natural gas or other carbon based generation. This may sound counter-intuitive. But when you understand how renewable energy sources work, you will quickly understand how the renewable resources will require a complete duplication of the power generating capacity.

I’m a huge fan of solar energy. I love the idea that you can get energy for free just by sitting there in the sunshine. I have solar power on my boat and I love that I rarely have to plug into shore power. But the problem is that the math doesn’t add up when you try to extend the renewable argument on a national or global scale.

The problem with solar and wind energy is that they only operate on average between 10-30% of the time. They reduce your average fossil fuel consumption, but you have to design the entire electrical system to handle the peak consumption, not just the average. When it’s dark and it’s hot and there’s no wind, your electrical system still has to produce enough power. If it doesn’t, then you have large scale outages which can take days or weeks to recover from. You have to assume that at least part of the time the solar and wind infrastructure are contributing nothing to the network. It’s as if they don’t exist.

So you must have a completely parallel system to produce power that is not relying on renewable forms of energy.

Even assuming that you could cover an area the size of the state of Texas with solar panels, you would need to replace that area with new panels every 25 years. In addition, you would still need to maintain a fossil fuel infrastructure for those times when the sun is out of view and the wind stops blowing. If you replaced an area the size of the state of Texas with solar panels, you can imagine the impact on wildlife and ecosystems by essentially paving over that much wilderness. You can’t relocate that much wildlife successfully.

I believe there is a real estate play in the realm of renewable energy. This is an area that will increase in importance in the coming years. But the projections of replacing a large percentage of fossil fuel consumption with renewables in the next 20 years are wildly optimistic and are simply not supported by the scale of investments that are being contemplated. Too much of the near term narrative is really about arguing over who gets to pay and who gets to keep the carbon credits. Carbon credits don’t help the environment directly. They don’t result in any reduction in carbon consumption. The natural environment is not a party to our financial system. When an environmental argument gets reduced to a fight over money I start to lose sight of how we are going to replace our carbon consumption.