Efficiency gains, if not properly managed, can quietly take away most of the present market for electricity. But they also offer alert utilities an unprecedented opportunity to control risk,...
Turning Energy Inside Out
Amory Lovins on negawatts, renewables, and neoclassical markets.
The name “Amory Lovins” means different things to different people in the energy industry.
To some executives, the name means “tree hugger.” For about three decades, the co-founder of the Rocky Mountain Institute (RMI) has acted as a champion for green energy development and a critic of Big Oil—and big utilities. Since the energy crisis of 1973, he’s advocated what he calls the “soft” energy path—less reliance on Big Energy with its centralized power plants, landscape-spanning transmission lines, and hard-won fossil fuels, and more reliance on smaller, locally sourced renewables, conservation, and efficiencies driven by competitive market forces. And in the 1970s and ’80s, he argued against nuclear energy, largely on the basis that its development would spur weapons proliferation.
To many outside the industry, however, the name Lovins means “visionary.” In 2009, for example, Time magazine named him one of the world’s most influential people, saying that he “had the solution to the energy problem in 1976,” and that his ideas about conservation and renewable energy “have become accepted wisdom.”
Granted, those words in Time were written by Carl Pope, executive director of the Sierra Club. But as a general matter, many of the facts seem to bear him out. And as it happens, Public Utilities Fortnightly’s archive includes a record of those facts.
In March 1985—28 years ago this month—this magazine published Lovins’s article titled “ Saving Gigabucks with Negawatts .”1 That article represents the earliest known publication of the term “negawatt”—a word that’s entered the industry lexicon. 2 More importantly, it described a future in which both supply and demand-side resources would be bid into competitive electricity markets; buildings would produce as much energy as they consume—or more; and advancing technologies and changing economics would weaken and ultimately break the longstanding correlation between economic growth and energy consumption.
This month we’re re-publishing Lovins’s 1985 article at Fortnightly.com. The article makes remarkable reading today, in part because it was so prescient; much of what Lovins predicted has indeed come to pass. However, what’s even more remarkable is that the article actually still applies today, almost three decades later. With some editing—changing some details—it still presents a solid analysis of industry trends that are playing out right now.
Lovins spoke with Fortnightly in February about those trends. That conversation, in edited form, follows here. And in an accompanying article, Lovins offers his retrospective view on “Saving Gigabucks with Negawatts,” in the context of RMI’s current focus.
Fortnightly: In your 1985 article, you’d proposed a “neoclassical competitive marketplace for energy services,” versus what then was an “imperfect fuel bazaar, satisfying no condition of the ideal free market.” Since then the utility industry has developed competitive electricity markets in fits and starts, and only in some locations, with varying degrees of success. It would seem the imperfect bazaar still prevails. Why are we still here?
Lovins: Where we are is messy but improving. Competitive markets cover about 60 percent of the