To continue reading
Create a free account or sign in to unlock more free articles.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create a Free Account
Unlock your free articles
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here.
Subscribe to get unlimited Access
Hey , you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
Login
To continue reading login to your account.
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
Got a solar panel? Time for a little energy arbitrage.
The new film Dumb Money gives home traders the Hollywood treatment. The movie, based on the GameStop saga of 2021, recounts how amateur stock enthusiasts and trolls united on online platforms like Reddit drove up the stock price of an over-the-hill video game store and caused huge losses for hedge funds that bet against the stock.
The bizarre episode shone a spotlight on just how many armchair stock jockeys are out there. Now, another type of trader is quietly growing in popularity: the garage energy baron.
Online, you can find solar enthusiasts not only celebrating how much energy their panels created but also how much money they made by selling energy back to the electric utility. As more homes can make and store their own energy, more homeowners are trying to get in on “energy arbitrage.” They are buying low and selling high, though this time the product in question is not a share of company stock, but a kilowatt-hour of energy.
Most people have minimal control of their home energy. It is a resource we consume, and the principal way to affect the monthly bill is by turning up the AC or turning off the lights. The roughly 5 percent of Americans with solar panels, along with those who have wind turbines or other ways to generate electricity, have been changing the equation by becoming energy providers rather than passive recipients.
Home solar lowers the amount of energy a home must buy from the grid. Sometimes, when the sun shines high and unobstructed, homeowners with a large solar setup can make more energy than the home requires. In most places, they can turn around and sell the excess energy back to the grid. Net metering, as it is called, helps to recoup the five-figure sum needed to pay for solar panels in the first place.
The revenue can be eye-popping. In the Tesla Solar subreddit, a hive of people with Elon Musk’s solar panels and integrated home energy systems, users recount the details of their system and their savings. A poster from Texas this week uploaded a screenshot showing they made $600 in a month by selling back energy as part of Tesla Electric, the company’s virtual power plant (VPP).
Tesla Electric works because of a new wrinkle in the energy game. With the advent of products such as Tesla’s Powerwall — basically a big, intelligent battery for the house — homeowners can now make their own energy and store it for later, which opens new possibilities. The first is a no-brainer: Stashing excess energy in the battery creates a backup power supply in case of a blackout. However, the ability to charge and discharge the battery at will gives rise to gamesmanship.
Suppose that instead of selling solar energy to the grid right away (in the afternoon when there’s lots of it), a homeowner stashes it and waits. In the evening, when energy demand rises as people get home from work and the price of energy rises, that’s when their system hits the “sell button.”
This is energy arbitrage. It earns the biggest windfalls when prices are volatile, with big gaps between high and low. That’s exactly what happened in Australia in 2022, where wild markets earned record profits for anyone who could use a big battery to buy and sell energy. In Texas, the Tesla Electric VPP automatically sells the energy stored in customers’ home Powerwalls when the price is the highest (and refills the battery when electricity is cheap), which leads to windfall profits during a major “sell event.” One Redditor claimed to be up more than $800 this summer, mostly by using his Powerwall to perform energy arbitrage.
Indeed, homeowners don’t need solar panels or wind turbines to do this, says Jeff Maguire, a researcher at the National Renewable Energy Lab.
“If you're in that scenario and you have a battery, you can charge the battery when energy is cheap and discharge it when energy is expensive,” he says. “You'll make a little bit of profit, and you can do that every day. It’s called energy arbitrage. It's one way to pay [yourself] back for the batteries. It's usually not enough to cover the cost of the battery itself, but it certainly helps, and then you'll have it for resilience when you need it.”
Of course, all this scheming and strategy is reliant upon one basic idea: that a person can sell electricity back to the grid at fair market price. There is no guarantee this will continue indefinitely.
Over the past couple of years, state lawmakers and electric utility operators around the country have proposed cutting off net metering, slashing the rates residents get paid for extra energy. One (disputed) argument from utilities is “cost-shift,” the idea that people with solar panels are subsidized by everybody else who pays for standard electricity, and who pays for the upkeep of the grid as part of every kWh they purchase. Another is technical: America’s aging infrastructure wasn’t built with this “backfeeding” in mind, and may not be able to deal with a very large number of homes sending juice back onto the grid.
The gambit is also about the big utilities’ bottom line. They don’t want to have to “curtail” some of their solar because there’s too much on the grid, thanks to net-metering residents. And they, too, are engaged in the energy arbitrage game.
Many electric utilities are installing their own large energy storage facilities, which is crucial as the country uses more and more renewable energy: If people can’t move their electricity consumption to the times of peak energy supply — say, by charging their EV in the middle of the day when the sun shines — then we need to save lots of our renewable energy for later. When the utility stashes solar energy made from the noontime sun and sells it at 7 p.m. when residential electricity is costlier, it makes a little profit in the process to help pay for the cost of those storage systems.
What all this means for the home energy trader could vary wildly state by state. New Hampshire, in a surprise, just decided against slashing net metering rates. Sunny California, the country’s biggest residential solar market, cut energy payments for new PV installations by 75 percent – in theory because there’s already too much solar – while grandfathering in all the people who already have panels.
It may turn out that if you want to be a solar trader, you should have started yesterday.
Andrew Moseman has covered science, technology, and transportation for publications such as The Atlantic, Inverse, Insider, Outside, and MIT Technology Review. He was previously digital director of Popular Mechanics and now serves as online communications editor at Caltech. He is based in Los Angeles. Read More
Read MoreA conversation with former congressman and political renegade Bob Inglis.
Bob Inglis was snorkeling in Australia’s Great Barrier reef in 2008 when he had what he called “an epiphany.’’
The then-Republican congressman from a very conservative district in South Carolina had scoffed at climate change throughout his two terms in the House, but his certainty had begun to give way four years earlier when his son told him, upon turning 18, that he needed to “clean up his act on the environment.’’
The comment stung. Inglis was still thinking about it in 2008 during a congressional trip to Antarctica, where he saw researchers extract ice cores that showed steadily rising levels of carbon dioxide since the Industrial Age began. His belief that climate change was a hoax began to weaken.
It was on another fact-finding trip that Inglis toured the Great Barrier Reef. Alongside the Australian oceanographer Scott Heron, he saw that the once-colorful reef was being bleached and killed by warmer, more acidic waters. It was visible proof of the destructive power of climate change.
Heron, a fellow Christian, talked about the need to save the reef and the planet with such passion, Inglis said, that “I could see that he was worshipping God in what he was showing me. My metamorphosis was complete. I decided that I was ready to act.’’
The next year, Inglis co-sponsored legislation to impose a tax on carbon emissions. That “heresy’’ did not go over well in his district, and he was crushed in the 2010 primary, 71% to 29%. (The bill, meanwhile, never made it out of committee.) “I knew that I was making the right choice,’’ he said. “It’s a choice that I’d make again.’’
His newfound commitment to addressing climate change led him to launch a nonprofit group, RepublicEn, devoted to bringing conservatives into the climate conversation. Today, Inglis tours the country, doing about 100 events a year at conservative groups such as College Republicans, Rotary Clubs, hunting and fishing clubs, and local GOP organizations.
The following interview has been edited for length and clarity.
You’ve talked about how, as a Republican congressman, you refused to accept climate change because the issue was associated with Al Gore, a Democrat. Do you think that what political scientists call “negative partisanship’’ is a major reason why conservatives still resist action on climate change?
Yes, it is. That’s why we need credible messengers who can speak the language of the tribe and who can make the tribe believe that conservative ideas can add something to this conversation. Conservatives have an undeserved inferiority complex on climate and energy. We understand the concepts of negative externalities and market distortion and accountability. Free enterprise — accountable free enterprise — can fix climate change.
You are referring to the libertarian concept of negative externalities, actions that negatively affect other people. Can you explain how it relates to carbon emissions?
When you burn fossil fuels, you’re basically dumping trash into the sky. You don’t pay a tipping fee for putting carbon waste into the atmosphere and contributing to climate change, so there is an implicit subsidy for burning these fuels and belching carbon — in fact, it’s the granddaddy of all energy subsidies.
Take that subsidy away and everything changes. Virtually all coal would be quickly replaced with natural gas and wind and solar and other methods. If you use a tax to set the real price of carbon, the free market will figure out cheaper and better ways to produce electricity. Things will start happening faster. You’ll see more development of hydrogen and better batteries that don’t use lithium to store the energy created by solar and wind. Climate change is an economic problem. Just fix the economics and innovation will happen. That’s the language of conservatism, and it’s how I talk to conservatives about it.
Why do you believe a carbon tax is the best way to bring Republicans aboard?
It is still the most obvious way to solve climate change, and the most efficient. This is an idea that goes back to Milton Friedman in the 1980s, when he said, instead of trying to regulate polluters, tax pollution. Make them pay for their negative externalities. You tax the trash they dump into the sky, just the way we impose a cost for dumping trash on land. It has to be a substantial tax, and it has to be steadily rising to increase incentives to find other forms of energy that don’t turn the sky into a dump for emissions. If you do that, you don’t need tax incentives for solar and wind — the rising cost of fossil fuels will provide all the incentives they need. But you also need to make this tax apply to other nations and the goods they import into the U.S.
How do you do that?
You can put a tax on the carbon produced in goods imported from China. Sen. Bill Cassidy [R-Louisiana] recently proposed a foreign pollution tax like the carbon border adjustment mechanism the European Union has already adopted. We very much welcome this idea because it’s a way of making the transition away from fossil fuels worldwide. Many Republicans say it’s not fair if the U.S. lowers emissions while China can do what it wants. The beauty of a foreign pollution fee is that it addresses this problem in an efficient way. It creates economic incentives for China to reduce its own emissions.
A carbon tax has been talked about for a long time but has gone nowhere in Congress. Do you see any evidence that it’s more politically palatable today?
I think a carbon tax is like the rescue of the banks after the financial crisis in 2008. Until the banks collapsed, bailing out the U.S. financial system seemed impossible. But when the consequences of not doing it became clear, the bailout went from impossible to inevitable without passing through probable.
Several catalyzing events could propel the carbon tax forward. The most likely is the momentum created by the European border adjustment mechanism, which is really a carbon tariff. Companies in the U.S. who deal with Europe are going to be calling their members of Congress and Senators and saying, wouldn’t you really rather collect that revenue for carbon emissions here at home through a carbon tax rather than sending the money to Europe? At some point, the light will go on at the U.S. Capitol — wow, the Europeans are getting a lot of revenue with a tariff on carbon, and we could do that, too. We could do that to China. We could say, the stuff you are selling here, you have to pay a carbon tariff.
Another momentum-maker is our federal debt. If interest rates stay high, interest will really start eating more and more of the federal budget. I have always said that a carbon tax should be revenue neutral, but given what’s happening to the deficit, it could also provide that revenue. Necessity may force Congress to turn to what used to seem impossible.
Could extreme weather provide another incentive?
Yes, there could be some catalyzing climate event that really focuses the mind. I don’t know what it will be. During the civil rights movement, when Americans saw segregated cities turn the police dogs and fire hoses on protestors, it really turned the tide on Jim Crow. We’ve had so much extreme weather that people are getting desensitized to it, but there still might be a catastrophic event that changes people’s priorities.
This year, we’ve already seen some of the most extreme weather and weather-related disasters in recent human history — massive wildfires that darkened skies across the country, relentless heat waves, fierce storms, and destructive flooding. Do you see evidence that this is registering with conservatives?
A lot of people won’t change their minds because of what a scientist says. But experience is different. Experience is a harsh teacher. You can’t argue with the thermometer. You can’t argue with the yardstick showing that sea is rising. You can’t argue with the water coming into your home. In 2010, when I was getting tossed out of Congress, there was a lot of aggressive disbelief in climate change. People told me, I don’t believe in climate change, and you shouldn’t, either.
Right now, it’s quite different. Conservatives say to me, sure, you can switch to clean energy here, but what difference does it make if you don’t get the rest of the world in on this? Why should we do this alone? That’s when I talk about negative externalities and a carbon tax, and imposing a carbon tariff on China and other countries. That changes their perspective.
Get one great climate story in your inbox every day:
What do you say to The Wall Street Journal conservatives who concede that climate change is occurring but insist that it’s less disruptive and cheaper to invest in adaptation to a hotter, more extreme climate?
Adaptation is a defeatist argument. Good luck building a seawall in Miami-Dade, for example. As sea levels rise, the water there is coming up into streets through the porous bedrock under that area. In South Carolina, go to coastal areas and you’ll see the big stands of pine trees dying because of salt water intrusion. In Montana, the forests are now filled with dead and dying trees because bark beetles that used to die in the winter now survive and go on attacking the trees year-round.
Adaptation won’t work in many places where people are going to lose what they love. It won’t work in New England when maple trees no longer produce maple sap for syrup because the winters are too warm. It won’t work at ski resorts that no longer have snow. When you stop arguing and pay attention to what you’re losing, you start saying, wow, how do we fix this?
Polls show there is still a big partisan divide on climate change. Do you think that can change?
The problem is no longer a lack of information. People can see what is happening. The problem is a lack of validation, and it’s a lack of hope. We need validation from conservative leaders that climate change is obviously real, and that we obviously need to do something about it. And we need to show conservatives that the free enterprise system can provide solutions once we get the true cost of carbon right.
If you keep telling people about all the terrible things happening and that we’re all hosed, it’s depressing. It makes people say, I don’t want to work with you. But if you can come to conservatives and say, we can light the world with new energy sources, and we can have more energy and more freedom and more manufacturing and more jobs — we can have a better world if we act on this. We can have true energy independence, so we don’t need to depend on energy from authoritarian regimes who chop journalists up into pieces. I’d like to be free of those people. I’d like to able to say to the Saudis, we don’t need your oil. Why don’t you see if you can drink that stuff?
The current Republican presidential field is not validating that climate change needs to be addressed.
In the first debate Nikki Haley did say climate change is real, but immediately pivoted to talking about how China and India have to lower their emissions, too. That’s a step forward, but it’s not enough. In 2018, when Republicans lost the House, it dawned on then-Majority Leader Kevin McCarthy and some other Republicans that you can’t win suburban swing districts with a retro position on climate change. So McCarthy convened a special Republican conference on climate, and the takeaway was, we need to get with it.
Polling data shows a majority of young conservatives and young evangelicals want action on climate change, and if you want to win in 2024, 2028, and 2032, you need to have a plan that you can talk about. But then Trump decided to run again, and he’s doubling down on climate disputation, and everyone in the party is afraid of the Death Angel. Trump can’t get anyone elected, but if he comes after you, he can get you killed in a primary.
But even if Trump wins, he will be a lame duck by 2026, and then the party is going to ask, where do we go next? My prediction at that point is that Republicans will be tired of reruns of the Trump show and will want a fresh approach that can win over young voters and suburban voters. And if he loses in 2024, that’s when you’ll have the reevaluation.
You’ve said of climate change, “We’re all in this together.’’ That sounds progressive — maybe even vaguely socialistic. Does that message resonate with conservatives who are suspicious of collective action?
[Laughs.] Maybe I should examine that statement more closely. But as a person of faith, I think it is just obvious we are literally in this fight together.
I think you can summon all Americans to a higher cause. I think if we can assure conservatives, I’m not trying to cancel you, and you have ideas to contribute to this discussion about the power of economic incentives, free enterprise, and innovation. You have to make conservatives feel that they have something important to contribute.
You have to make them feel they have something to gain from the solutions. If you the United States makes a bold move on carbon taxes and tells China and other nations, you have to pay a carbon tariff on the stuff you export to us, then it becomes an international effort to curtail emissions. Then conservatives start saying, we’re really talking about realistic and fair solutions. That’s when you can say, we need to take action because we do not want to lose this amazingly beautiful planet. That’s when you can say to them, we’re really all in this together.
Read more about Republicans and climate change:
Sign up for our free Heatmap Daily newsletter.
