We can develop the Electric Economy for NO MONEY DOWN! At the risk of sounding like a real estate commercial, the establishment of the __Electric Economy__ can be completely self-funded; we just need to do things in the right order. But “no money down” doesn’t mean “no money at all.” **Would you be willing to spend $106 per year to save $3300 per year? If so, Read on. If not, make an appointment with your financial advisor NOW. **

As a *disruptive techno-thriller*, my novel, __DEADLY FREEDOM__, has three objectives. The first is to *entertain*. If it’s entertaining, more people will read it and possibly be influenced by it. While (hopefully) being entertained, I’d also like the book to *inform* you about the geopolitics of energy that exists today, and with the help of some technology, show you what the world could look like if we step up to the plate. Once informed, I’d like you to be *motivated*, motivated to take action and insist that we move to solve the issue of our time. DEADLY FREEDOM is really a business proposition for America, a proposition that will eliminate our dependence on oil—first foreign, and then domestic. A byproduct of this proposition is that the solution will also eliminate the other symptoms I describe, including: terrorism, pollution, energy shortages, global warming and climate change. So fasten your seatbelts, I’m about to pitch you on investing in the Electric Economy.

The solution I propose in my book will be expensive, expensive enough that it will need to be supported by a majority of us. The question then becomes—and should be—what’s the payback? What’s in it for us? There will be two components to the return on our investment, one measured in hard dollars, the other in “soft” benefits that would be difficult to quantify, but valuable nonetheless. Let’s focus on the hard-dollars, first at a summary level and then in more detail.

This country currently consumes 21M barrels of oil per day, importing 60% of that oil from a variety of sources outside of our country. Fortunately, one-third of our imports are from Canada and Mexico leaving a total of 40% of our imports coming from OPEC countries that directly or indirectly sponsor terrorists and terrorism.

When we look at how we utilize the oil we consume, we find that 65% of our oil is used for transportation, and of that, 65% is used for what the government calls Light Duty Vehicles, or LDVs, including cars, light trucks, and SUVs, essentially vehicles that run on gasoline as opposed to diesel or other “heavier” fuels. Since 65% of 65% is 42% of the total, if we eliminate our use of gasoline for our fleet of 200M LDVs we can stop importing oil from those who would harm us. This should be our first priority and is the focus of this posting.

The challenge becomes: how much additional electricity will we need to generate if all 200M vehicles in our LDV fleet were electric vehicles, and where will we get it? According to US statistics, the average LDV drives 13,000 miles per year which amounts to 2.6 trillion miles per year for the entire fleet. On average, an electric vehicle can travel 5 miles on a kwh of electrical energy. This means we would need about 0.5 trillion kwh of electricity to operate all the electric vehicles that will be displacing the current internal combustion fleet. It has been estimated that we have enough excess capacity in the off-peak evening hours to support 10-20% of our LDV fleet when it becomes electric. It turns out that this 10-20% excess evening capacity is the key to kick-starting the Electric Economy as will be shown in the detailed analysis below. For this summary analysis it means we would need to add 0.4 trillion kwh of capacity to a system that is already generating 4 trillion kwh per year, a 10% increase.

We then need to convert this additional energy requirement to power generation taking into account peaks that will emerge in what is currently the off-peak evening period. Dividing our needed annual increase by 365 will yield the energy we need to generate per day. Multiplying by two-thirds and dividing by 8 hours will model our usage of this technology such that two-thirds of our vehicles will be charging in an eight hour period in the evening. This works out to requiring an additional 90 gigawatts of peak power generation, which is again, about 10% of our current 1 terrawatt peak generation capacity.

Referring to the picture above, my research indicates that generating solar thermal energy from our “solar furnace” would best be done in modules of 10 GW each, transporting this energy using __High Voltage Direct Current__ (HVDC) technology an average of 1500 miles. Generating 10 GW of energy will require about 50 square miles of dessert for the solar array and cost about $20B. The HVDC equipment and lines to transport 10 GW of energy 1500 miles is about $5B for a total cost per 10 GW module of $25B. Ultimately, to provide an additional 90 GW of additional peak power would require nine such modules for a total cost of $225B, a large number to be sure.

We then need to ask how we would pay for this investment, and that takes us to the hard-dollar savings it will generate. As mentioned above, 42% of our 21M barrel daily usage is for our current LDV fleet. Oil to support these vehicles at $100 per barrel is costing us $882M per day, or $27B per month. Since eliminating 42% of our oil consumption would eliminate our need for Middle East oil, we would no longer need to be there and we could save the $10B we currently spend monthly protecting our “strategic oil interests” we would no longer have. We then subtract from these monthly savings the cost of driving EVs every month. To get this number we take the 2.6 trillion miles driven annually and divide by the average of 5 miles per kwh, multiply by the 10 cent average cost of a kwh and divide by 12. The result is $4.33B dollars per month. This works out to a total of $32.7B in savings per month which means our investment of $225B would be paid for in less than 8 months!

**A More Detailed Analysis**

The results above are interesting and you can imagine how profitable this investment would be after we repaid the initial capital. And this analysis is conservative since I did not include savings on the oil changes, tune-ups, and emission checks that EVs don’t need, not to mention saving the time it takes to stop at gas stations periodically and waiting in gas lines as we slide down the peak oil curve. Also not included in the analysis are the other benefits including: revenues from exporting our solar generated energy to countries like Canada that have no solar furnace, and exporting our technology to countries like Mexico, China, and many European countries that do. Then there are the hard to quantify but very valuable benefits of removing oil from the foreign policy agendas of the major industrialized nations and restoring the stature of our country that has been damaged over the last six years.

As profitable as these prospects are, the numbers above are a bit unrealistic since they assume that we could deploy 200M EVs and provide the 90 GW of additional power they would need in a single step. To get a more accurate picture of how our investment would play out we need to look at a time-series analysis of costs and benefits over a five-year period.

We’ll start with the knowledge discussed above, that we have enough excess capacity in the evenings to charge about 10-20% of our current LDV fleet as EVs. It turns out this is a very valuable state of affairs since it will provide the economic fuel to boot-strap the creation of our Electric Economy. To that, we need to add one more ingredient, and that is a government mandate that 20% of all new cars sold in this country in the first year must travel at least 40 miles without burning carbon fuels. This would allow pure electric vehicles like the __Tesla Roadster__ and serial hybrids like the __Chevy Volt__ to participate. In the second year, 40% of new cars would need to meet this standard, and likewise until at year 5, all new cars sold in this country would be emission-free. My research indicates that 20M new LDVs are sold in this country every year. So my economic model distributes these out by multiplying 20M times 20%, or 4M cars, equally divided across the twelve months of the year. The next year it does the same for 40% and so on until at the fifth year, all 20M vehicles are distributed across twelve months.

Then we need to model gasoline savings for our new EVs that won’t be using any. To do this, taking industry statistics, we will assume that the average LDV drives 13,000 miles per year and gets an average 20 miles per gallon of gasoline that costs three-dollars per gallon. Note, as mentioned above, we will not take into account the other savings EVs experience with regard to oil changes, tune-ups and other internal combustion engine maintenance.

But driving EVs will not be free, and we need to account for the electrical energy costs associated with that same average 13,000 miles driven. To do this we assume an EV will get 5 miles per kwh, and that kwh will cost ten cents, which means energy costs for an EV are about two-cents per mile.

Then we need to consider the capital investment of adding electric power capacity in 10 GW modules as necessary. From above, these costs will be $20B for solar thermal generation, and $5B to transport the energy generated an average of 1500 miles, a total of $25B for each 10 GW to be added. But once we add one of these modules we will also need to maintain it and associated transmission facilities at a cost of about $54M per month.

Lastly, we need to consider the savings associated with extracting our resources from Iraq. My model assumes that as we taper our need for Middle East oil, we taper our involvement in a region that doesn’t want us there. Specifically, I assume a gradual straight-line reduction in forces over a five-year or sixty-month period.

Here is a graphical representation of my five-year projection. I have truncated the time line at three years since the benefits completely overwhelm the details after the full five years. Note that the vertical axis is in billions of dollars.

**Electric Economy Economics**

Each of the line items discussed above is represented on the graph according to the legend. The line of interest is the blue increasing “saw-tooth” that represents the cumulative gain (loss) of the investment as a function of time.

As you can see, introducing EVs even at the modest rate of 20% of new cars in year one results in significant savings. By taking advantage of our existing excess evening power capacity, we can defer installing the first new 10 GW generation module until the beginning of year two. Notice that the savings almost pays for this additional generation capacity which is completely recouped in the next two months. After that, the savings generated during the year completely pay for the next infusion of additional power generation, each increment paying for the next. At the end of three years, our investment has netted us about $115B. As mentioned above, I have left out the last two years of analysis since they would drown out the details, but suffice it to say, at the end of five years, when we are producing nothing but EVs, our investment will have netted us $368B.

Two issues remain: monetizing the savings so we can begin construction of the first 10 GW power module, and offsetting highway funds that will diminish as we migrate away from gasoline.

**Monetizing our Savings**

As discussed above, the first year of gasoline savings will fund the construction of the first 10 GW generation module and these savings will accrue to the owners of EVs who are benefiting from the savings. But some of these savings need to go toward construction of power generation modules situated in the desert.

**Highway Funds**

We currently pay 18.3 cents per gallon of gasoline for federal highway maintenance that amounts to about $26B per year. As we move off gasoline towards electric vehicles we will experience a decrease in highway funds. Unless EVs are also hovercraft they will still be using the highway system that will still need to be maintained.

**Solution**

Moving toward an Electric Economy will require that we tax electricity one-cent per kwh which will generate $40B in revenue annually, split to fund construction of power modules and highway maintenance. The __average household uses 10,600 kwh per year__, so a tax of one-cent per kwh will cost this average household $106 per year. The same average household has two cars, each of which travels 13,000 miles per year. With gasoline at $3.00 per gallon and the average car getting 20 mpg, that’s 15 cents per mile. Our newly added one-cent per kwh tax means that an EV that gets 5 miles per kwh will consume electricity that costs 11 cents per kwh yielding 11/5 = 2.2 cents per mile. This means the average EV will save 15-2.2 or 12.8 cents per mile or 13,000 * 0.128, approximately $1650 annually. The average household with two cars will then save $3300 per year, not to mention saving the costs of oil changes, emissions tests, etc.

Ironically, a one-cent per kwh tax on electricity will stimulate demand for electric vehicles. Those still driving internal combustion vehicles will be paying $106 more per year for electricity without receiving any of the savings that will accrue to EV owners.

**Conclusion**

So here’s the pitch: Would you be willing to invest $106 per year to save $3300 per year while at the same time: really defeating terrorism, putting an end to the emissions that are fouling the air we breath and the atmosphere above, establishing a new energy industry that will take us from trade deficits to trade surpluses, financially and politically neutralize Iran’s Ahmadinejad and Venezuela’s Chavez, and reestablish this country’s leadership position in the community of nations. And we can achieve this without really sacrificing anything; Americans are much better consumers than conservationists. An Electric Economy will allow us to have better cars with higher performance, much lower operating costs and all the amenities we have come to expect. Our solar furnace has the capacity to support 30 countries our size even after we phase out our coal and __ultimately nuclear generation__ plants.

With the 2008 elections on the horizon, we have an opportunity to find real leaders instead of just politicians. The way to get started is to mandate that 20% of our new vehicles will be “forty-mile capable” EVs beginning with the 2010 model year in 2009, exploiting our fortuitous excess off-peak electrical capacity. This will trigger our self-funding freedom from fossil fuels and those that would do us harm. Imagine the good we could accomplish both here and abroad with our new-found wealth and regained stature. I, for one, would feel much better about how we have left the *State of Our Union* to our children and theirs.

*V1.6*

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