Conclusion - Energy Policy Analysis: A Conceptual Framework - page 234

HYDROGEN
Stationary power generation and transportation are two areas where use of hydrogen may be
greatly expanded in the short term. Stationary facilities for large cogeneration plants, uninterrupt-
ible power supply systems, and home energy stations are in production or will be soon, providing
opportunities to reduce reliance on the high-voltage transmission grid and displace some fossil-
fueled electricity generation. Emergency diesel generators for hospitals and other critical uses may
also be displaced by hydrogen fuel cells currently available, and the availability of home energy
stations will support expanded use of hydrogen fuel cell vehicles.
Fuel cell vehicles, powered by hydrogen, have the potential to revolutionize our transportation
system, as discussed in Chapter 12. The greatest near-term potential for hydrogen fuel cells is in
fleets of large buses and trucks with predominantly local passenger and freight delivery or service
uses, resulting in displacement of petroleum fuel consumption. As costs come down, wider use by
the public of fuel cell vehicles now being tested by consumers in California will further displace
consumption of petroleum fuels.
Public policy should provide financial incentives to reduce the cost of fuel cells and support
development of a hydrogen distribution system nationwide, based either on multifuel fueling sta-
tions or expansion of existing industrial gas distribution facilities. In the 1960s, American Honda
Motor Corporation established a national network of dealerships to introduce its motorcycles to
U.S. consumers in five years, including vehicle sales, service by factory-trained mechanics, and
local spare parts inventories (Prahalad and Hamel 1990; Hamel and Prahalad 1989). If Honda
could do that, surely the United States can figure out how to build a national distribution system
for hydrogen fuel over five years.
SOLAR
Solar photovoltaics are cost-competitive with central-station generation of electricity today and
are being installed at an increasing rate on commercial, industrial, and residential buildings. They
do not require connection to an electric grid, but may be more affordable if they are connected so
their owners can sell surplus energy. State net-metering laws that require electric utilities to credit
homeowners for any excess power they generate from solar technologies on their homes have
proven particularly useful in encouraging homeowners to purchase photovoltaic equipment. Net
metering has made it possible for electric utilities to offer rebate programs encouraging on-site
consumers of electricity to install significant amounts of solar photovoltaics, which have enabled
utilities to meet electricity demand without construction of new, environmentally disruptive
central-station generating facilities (Black Hills Energy 2011).
Installation of a photovoltaic system immediately adds resale value to a residence. Homes
equipped with solar photovoltaics have lower operating costs in the form of monthly electric bills
than do comparable nonsolar homes, and a photovoltaic system allows homeowners to fix their costs
for electricity at the cost of installation of the system, providing protection against future electric
rate increases. On new homes, these costs can be included in the mortgage, typically providing
a 10 to 20 percent average annual return on the initial investment. Moreover, use of innovative
financial instruments such as long-term power purchase agreements will make photovoltaics
available to more users, as discussed in Chapter 5.
Solar photovoltaic systems or flat-plate thermal collectors can be installed on most of the
14,333 square miles of underutilized roof space scattered across the United States, making it un-
necessary and wasteful to construct solar collectors on undeveloped open land. If only one-third