EV Dreams & The Canary Out of a Coal Mine
Uruguay is, in a sense, a canary out of a fossil fuel danger zone. This small country in 2011 was 100% dependent on fossil fuel for electric power generation. They faced supply and price fluctuations and frequent electric power disruptions. But today they are typically 95% renewable energy, often 98%, mostly wind power. Poverty rates decline from 60% to 10%, they now have the highest GDP per capita in South America. In part because new business was willing to create new jobs because electric power is dependable.
This small country of 3.5 million people made the leap to renewable energy and now enjoys increased prosperity.
The US is moving to renewable energy but at a slower pace. Part of this is because America is much larger. Of course, an American Eagle is bigger than a South American Canary.
However, China is moving to renewables at a faster pace than the EU and the EU is moving faster than the US. The US is picking up the pace due to the Inflation Reduction Act, inspired by President Biden. Trump wants to stop this progress. Worldwide renewable energy growth was 50% rate from 2022 to 2023.
The world added 50% more renewable capacity last year than in 2022
Why is this important? The country with the lowest cost and most stable electric power grid will win more job creation and higher per capital income. Wind, solar and grid storage costs have declined by 90% over the last 13 years and continue to decline. The renewable cost of fuel is zero (sun light and wind) and including capital cost and maintenance electric power cost is as low as $0.01 per kWh.
The capital improvements in the grid, in some cases replacing 100 year old infrastructure, will need to be paid for as well. So electric power cost will be lower but more like 10% decline in the short term. However, the US will experience a more stable grid and over time lower electric power cost.
In Texas, new grid battery storage was added in just prior to 2023 to make the grid more reliable during a cold snap. Wind and solar electric power is saving Texas citizens $20 million per day.
In the state of Washington, 70% of power is generated with renewable energy. The electric power rates are some of the lowest in the country, $0.11 per kWh. In Hawaii, electric power generation cost was the highest in the country at $0.38 / kWh with 100% fossil fuel used for electric production. They are moving to renewable energy. Recently they installed one of the largest grid battery systems in the US and that enabled shutting down their last coal power electric plant.
EVs are part of the economic benefits of the Inflation Reduction Act as well. What are the benefits of moving from gasoline and diesel to electric power?
1. About 70% lower fuel cost. Once most vehicle transportation uses electric power, the US will save $540 Billion a year.
2. Electric power is not subject to oil price and supply fluctuations, especially from Middle East wars or Middle East price fixing.
3. The US will be more secure because there will be less oil demand and therefore less oil profit for Russian and Middle East Terrorists.
4. Local pollution, especially from diesel exhaust, will be lower and that reduces lung and heart disease.
5. US transportation of goods by semi-trucks and last mile delivery vehicles will be lower in cost, reducing inflation. The risk of fuel supply shortages is also lowered, removing disruptions of business logistics.
6. EVs are more fun to drive
7. EVs are safer (better crash ratings)
8. The EV market growth has encouraged a growing investment in R&D, resulting in continuous product improvements and lower prices. When I purchase an EV, I know it encourages more product development and that is my contribution to future generations.
Today, EVs are cheaper than gasoline and diesel vehicles in China. The entry price is $12,000, the $100,000 plus vehicle complete with all the high end vehicles in the world. In the US, the entry level EV will likely be $21,000 by 2026. Battery cost in 2025 drops below $50 /kWh. The higher end EVs will exceed 500 mile range.
Pay attention to the Canary’s flying away from the fossil fuel tar pit. They know where they are going. Do you? Probably a good idea to continue the progress on renewable energy and EVs and vote for continued progress and vote against slowing the progress to date.