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Everyone is on the renewable energy bandwagon.  Supposed visionaries like T. Boone Pickens preached about using wind in the nation’s heartland to provide electricity for the United States’ major population centers.  Here’s the problem:  massively sized projects such as Pickens’ plan means building huge networks of transmission lines that are expensive and would take years to complete.  So while the term “buy local” grates on my nerves as much as “go green” or “10% post-consumer recycled,” perhaps looking locally for renewable or alternative energy sources really is the way to go.

  The New Rules Project, a program of Minnesota-based Institute of Local Self-Reliance (ILSF), recently issued a report outlining why most states can be self-sufficient in electricity from renewable energy sources within its borders.  The editors of the report agree with the hard facts that some states can produce energy from such sources as solar, wind, or geothermal at rates far cheaper than their neighbors.  Nevertheless, any price differential is immediately wiped out when you account for the cost of transmitting electricity across long swaths of transmission lines.

The ILSF report’s executive summary is a good primer for understanding the history of our grid and its inadequacies that have worsened over the past 30 years.  One hundred years ago, most electricity was produced locally, but then power companies consolidated while state utility commissions developed more clout, the latter guaranteeing power providers a certain amount of profit and standards of reliability.  This odd couple worked well for decades, lowering the price of electricity on average year after year.  Then the oil shocks of the 1970s occurred, and this system, well, pretty much has blown up ever since.

In the 1980s, you had legislation that allowed small independent power producers (IPPs) emerge on the scene (remember the ads for Green Mountain Energy in California?), which created new sources of power that could be sold to utilities who desperately sought new capacity.  This seemed to be a great system, but to see how this ended, just read about Enron on Wikipedia and you’ll figure out where that got us.

So over the past decade, you’ve had additional federal legislation encouraging development of new renewable energy sources.  But if you look deep at who’s behind this legislation, you’ll find that the supposed best sources of solar and wind energy are also where . . . large deposits of coal are found.  If you just raised your eyebrows, you are getting the logic!  Meanwhile, the federal government has decided that it knows best where to build new transmission line systems . . . but oddly enough, while the feds can dictate where new high voltage transmission lines should go . . . they cannot evaluate whether these new transmission lines are needed because (ta-daaa!) . . . that would usurp the traditional role of states.

Confused?  I am!

In sum, the ILSF report evaluated each states’ potential for providing energy locally, and 36 states can be self supporting.  And in the end, a local approach makes sense.  Perhaps states like North Dakota and Oklahoma have plenty of wind-based energy . . . but why should Ohio pay for transmission lines carrying this energy when perhaps cost-efficient sources are within its borders?  And if Maryland has plenty of wind energy, shouldn’t it be used there, and not in South Dakota?

California’s one state that needs to import energy across state lines, thanks to its size and location of its population.  But overall, electricity is one commodity that is best produced locally.  Tax incentives, along with a carbon tax or cap-and-trade system, would spur this movement even more quickly.  Of course, streamlined regulations at the state and local level would help, too.  I would tell Obama & Co. that we could use the financial, tax, and regulatory incentives, but the actual decisions over the source and plans for renewable energy should come from a desk in Sacramento or even Diamond Bar—not DC.

Tip O’Neill once said that “all politics is local.”  Until smart grid technology improves, lowering the cost of transmission, energy really should be, too.