[ENT 601 Week 4] Reflections: Enlightened Self Interest

This is Part Three in a series of six blog posts reflecting on The Third Industrial Revolution: How Lateral Power is Transforming  Energy, the Economy, and the World, by Jeremy Rifkin (2011) as it relates to the topic of Entrepreneurial Innovation.

Jeremy Rifkin refers to “five pillars” holding up the infrastructure of the Third Industrial Revolution at length and I think it’s worth a trip down the rabbit hole to examine his pillars and how this relates to entrepreneurial innovation and more specifically, what concerns us here at Abundance Solutions, innovation in the way we do business together moving forward into Rifkin’s Third Industrial Revolution.  First, we make the switch from carbon based fossil fuel energy to green energy.  Second, we change the way we construct buildings in the future so that any and every structure can also serve as a power generating station.  Third, we install the capability to store energy in every structure because the sun’s not always shining and the wind isn’t always blowing.  Fourth, we use the internet’s model of distributed energy to create a smart grid that can cope with an ever changing and flexible power grid.  And fifth, we transition our transportation infrastructure to run on our new global green power system.  This sounds expensive to me.  So how do we actually get there?

When Rifkin was writing this book back in 2011, much of this sounded more like science fiction, but a short seven years hence, we see solar power thriving in a cold northern nation like Germany, surpassing all expectations even as financial experts decry their progress toward cutting carbon emissions to 40% below 1990 levels by 2020 as too expensive.   As in any revolutions, we find winners and losers.  In the wake of the Fukushima disaster in Japan during March of 2011, Germany decided not only to cut carbon emissions but to also close down all of its nuclear reactors as well.  Forbes points out that the average German has seen his power bill double–at least every German who failed to cover his roof with solar panels in order to take advantage of very generous subsidies–and conventional energy companies are watching their market share and value plummet.  For example German mega energy company RWE spun off its renewables properties into a new company….that’s now doubled RWE’s capitalization.  (Don’t cry for RWE.  They still own 77% of the new company).  Their CEO famously told a solar conference in 2012 that solar power in Germany “makes as much sense as growing pineapples in Alaska.”

Incentives are everything.  Many Germans joined the revolution out of a need to do something about our ever weakening environment.  But most joined because the government paid them generous subsidies which last into the 2030s.  Similarly, as solar building materials drop in price more in line with conventional materials, more people will build with them.  And as electric cars and trucks become more available at prices more in line with fossil fuel powered vehicles, more people will drive them.  Elon Musk’s Tesla Motor Company recently rolled out its self driving electric powered heavy truck and was swamped with orders from trucking companies all over the world because the electric powered trucks will be cheaper to operate over time when issues like depreciation come into play in ways only a long planning industry like trucking thinks about resources and cost.

Never discount the powerful force of human nature.  Most of us will take the path of least resistance, especially if it also turns out to be something we can feel good about doing.  So when considering an innovation, always consider what will make people want your new gizmo or way of doing things that appeals to enlightened self interest.  Because solar power is awesome and many of us will pay more to have it.  But everyone will use it if it’s also the cheapest….or even better.  Someone pays us to use it.

 

 

1 Comment

  1. Christian Witt

    Arjay,

    The RWE CEO’s comment speaks volumes about the lengths to which Second Industrial Revolution giants will go to misinform and misconstrue. As you mentioned in your previous post, they will also do everything they can to maintain the status quo to the detriment of our environment and society. For example, North Carolina let its tax credits for solar power expire in 2015 (http://www.newsobserver.com/news/business/article148243849.html). The article states that at the time, “North Carolina vaulted to second place nationally for total solar energy capacity, behind just one state: California.” I’m not sure where we fall now that it has expired. However, I have read that Duke Energy is offering rebates for those who take out loans through them in order to install solar panels. I can only imagine that their motive is to gain more power/control over solar energy rather than having tons of individual people doing it themselves. I would be very suspicious of any offer coming from Duke. Either way, the bottom line is that we can do much more to make green energy available at lower costs. The continuation of the Third Industrial Revolution will be interesting to witness!

    Thanks again for your insights.

    Christian

Leave Comment

Your email address will not be published. Required fields are marked *