One of the background sounds in cities such as Lagos, Baghdad or Kabul is the heavy thrumming of diesel generators, which rise in pitch and volume as the grid-powered street lights dim with equipment failures or fuel shortages.
You can see another effect of the diesel gensets on global air quality maps, where the grid-poor and diesel-intensive cities glow red with pollution.
Now that thrum and haze are spreading across America, growing louder and dirtier with the summer heat. This was supposed to be the year of the green recovery, with union-scale workers pulling the wraps off wind turbines, solar panels and massive batteries, as environmentally conscious fund managers in pretentious plastic hats looked on in satisfaction.
Well, some people are making money. Even as alternative energy shares have sputtered and drifted down since the beginning of this year, grimy old diesel genset manufacturers are coining it. The largest pure play diesel genset maker, Generac Holdings Inc of Wisconsin, has seen its shares rise more than 250 per cent over the past 12 months and nearly eight times over the past two years. It is now trading at price equivalent to 58 times its earnings over the past 12 months, a rather aggressive valuation. That is even with earnings per share up by 36 per cent in 2020 and a revenue increase of 12.7 per cent.
Clearly, people are willing to pay up to get their hands on diesel gensets, and the company confirms that it is hard put to make the equipment fast enough. Some of this growth comes from the demand for back-up generators for data centres, a fast-growing application in recent years.
But sadly, much of the increase in the diesel business has been created by the declining reliability of US electricity grids, particularly in storm-wracked coastal areas, inland tornado alleys and, recently, renewable energy-intensive California and Texas.
Both states have moved quickly to install tax-advantaged wind and solar, but slowly to ensure the flexibility and resilience required to support intermittent renewables. Texans seemed to think their fossil-fired power would make up for any fluctuations in wind power, but were caught short in February when the natural gas pipelines and generators froze up.
Californians have taken for granted that their own hydro supplies, as well as those from their northern neighbours, could offset the huge swings in the state’s solar and wind output. Unfortunately, drought conditions have spread across the entire west, and water power, even carefully rationed, may not be able to prevent severe blackouts this summer.
Americans dependent on air conditioning and internet access are unwilling to accept power outages. So they will spend $15,000 to $20,000 to buy a home back-up diesel system, or $75,000 for one of the new gasoline-powered Ford F-150 pick-up trucks with built-in 7.5kW generators.
Hundreds of thousands, and, prospectively, millions of people and the commercial enterprises they depend on are making the decision to choose carbon-intensive diesel or gasoline-fired power. That represents not just a threat to air quality but a break in the social contract that is the true basis of the electric grid.
Does America really want the flickering lights, choking air and extreme social inequality of the places where the rich have private power systems to light their guardhouses and perimeter floodlights?
In too many cases, renewable energy is treated as a tax gimmick and political box-ticking exercise. Solar and wind projects are photo-op ready and easily monetised. Officials can fob off concerns about the stability and sustainability of the grid by assuming neighbouring regions will supply any necessary power imports on demand.
That partly explains how careless California has been about the assumptions underlying its green ambitions. But now its neighbouring states and power grids have drought and generation problems of their own. So rural Californians are building the order books for Generac and its competitors.
Europe and Britain, so far, have been spared a forced dash for diesel. The assumption has been that the continent’s tight interconnections will allow its grids to offset wind and solar generation variability with dispatchable imported power from . . . somewhere.
But nuclear and coal retirements in Germany over the next couple of years will turn it into a consistent power importer. Britain is also retiring nuclear stations ahead of schedule. France is partly denuclearising.
Without grid stability and resilience, the green transformation will disappear in a cloud of diesel smoke.