New smart appliances from GE will do great things. They will save
energy, reduce greenhouse gases, curb demand for power on the utility
grid, generate “green jobs” in America and -- oh, I almost forgot -- clean
your clothes, wash your dishes and keep your ice cream from melting.
They will also be financed, in part, with your tax dollars, if, as
seems likely, the company has its way. Incentives for manufacturers
like GE that make super-efficient appliances are already part of the
Waxman-Markey climate-change bill awaiting action in the U.S. Senate.
As GE explained it, the government would provide "awards" to
best-in-class appliances of $75 per dishwasher, $200 per refrigerator
and $300 per water heater, paid directly to the manufacturers. As I
read
Section 214 of the bill (and I could be wrong, since it’s not easy reading), the government would also pay retailers who sell best-in-class appliances.
Did you know that the government was going to subsidize appliance manufacturers? Me neither.
Last week, GE executives came to Washington to talk with government
officials and reporters about their smart appliances. When combined
with a smart electricity meter, a smart grid and distributed renewable
energy, GE’s water heaters, washers, dryers, dishwashers, refrigerators
and stoves would help enable the company to provide zero net energy
homes by 2015. That’s very cool. (Here are
details from GE.)
While appliances are not the most exciting or profitable of GE’s
businesses -- the company tried, without success, to sell off its
appliance business a couple of years ago -- GE does have a history of
innovation in the business. GE gave us the first self-cleaning oven,
the first fully automatic clothes washer and the first refrigerator
that dispensed ice and water through the door (which saves energy along
with wear and tear on the biceps muscle).
At a D.C. newsmaker event, Jim Campbell, the president and CEO of
GE’s Consumer & Industrial division and a 30-year veteran of the
appliance business, said:
"I think Smart Grid-enabled appliances will usher in
another revolution ... a revolution in which these appliances will enable
us to use energy more wisely ... and help reduce greenhouse emissions.
And, in the process ... GE and other manufacturers will lead the way to a
new era of U.S. technological leadership ... and the thousands of jobs
that go with it."
How would the smart appliances work? Aside from being more
efficient, they would talk to the utility grid and use less electricity
when prices are highest -- assuming, that is, that utilities adopt
time-of-day pricing so that the amount they charge for electricity
better reflects their actual costs. As a practical matter, this would
mean that smart appliances would power down or delay operations to
avoid using power during the daytime in summer when air conditioners
operate and utility companies bring on their most expensive generation
units to meet peak demand.
For example, a dishwasher could hold off running until late at night
when rates go down. The defrost cycle of a refrigerator, which uses
lots of energy, could also be automatically postponed until evening.
Dryers could operate with less power, as could a new GE product, a
Hybrid Heat Pump Water Heater that will be available later this year.
(If you want to know more about the water heater,
see this. Or watch
these videos of GE appliances.)
Of this new water heater, Campbell said:
"Currently there are about 60 million homes in the United
States with an electric tank water heater. If even ten percent of
those water heaters were replaced with this new Hybrid Heat Pump Water
Heater… we could save as much energy as generated by 40 coal-fired
power plants annually."
The water heaters will cost about $1,500 apiece (compared to $500 or
more for a basic water heater today) but they are expected to generate
average energy savings of about $250 a year. Since they have a 10-year
lifespan, that’s not a bad deal.
So there’s no doubt that these appliances deliver substantial
benefits. Let’s hope millions are sold. The question remains, does GE
need a subsidy from your tax dollars to bring them to market? A couple
of observations to put that question in context:
First, the state of Kentucky and the city of Louisville are already
providing subsidies to GE to manufacture the water heaters. As a GE
news release said this spring:
"Up to $17 million in incentives from the state and metro
government will be made available for the design and construction of
the new energy-efficient hybrid electric water heater and for several
other investments that the Company will make at Appliance Park over the
next several years, which will total over $69 million ... Kentucky also
will provide funds to train employees for the new jobs and will exempt
from sales tax certain materials purchased to construct new facilities."
GE’s unions also chipped in, approving a temporary wage freeze to
make the Louisville facility “more competitive and attractive than
other manufacturing locations that were under consideration.”
Second, this is one of a plethora of targeted subsidies aimed at
getting us closer to a clean-energy economy. GE is well-positioned to
capture its share. GE makes wind turbines and solar panels, which get
federal tax credits and are helped by state-mandated renewable energy
requirements. (Of course, GE is in the heavily-subsidized low-carbon
nuclear business and it wants to get into the business of “clean coal,”
for which massive subsidies await.) GE also makes smart utility meters,
a key part of the smart grid, which has been allocated $11 billion
under the 2009 federal stimulus package.
So every step of the way, taxpayer dollars come into play.
I asked Jim Campbell why GE needs the incentives to make smart
appliances. He told me the company has been developing smart appliances
on its own but that the Waxman-Markey incentives would accelerate their
deployment. And, as we all know, there’s no time to waste when it comes
to curbing greenhouse gas emissions. What’s more, GE’s Louisville-based
appliance business is getting squeezed by weak demand and low-cost
foreign competition.
“We’re in a very tough market right now,” Campbell said. “The appliance industry is down double digits.”
Fair enough. But I thought the appeal of a cap-and-trade scheme is
that it would set a price on carbon and then let the market decide
which are the most efficient ways to reduce emissions. Obviously,
there’s a lot more deciding going on than we were led to expect.
