TRANSCRIPT
INTERVIEWEE: Russel Smith (RS)
INTERVIEWER: David Todd (DT)
DATE: April 9, 2002
LOCATION: Austin, Texas
TRANSCRIBERS: Chris Flores and Robin Johnson
REELS: 2173 and 2174

Please note that the recordings include as much as 60 seconds of color bars and sound tone for technical settings at the outset of the recordings. Numbers correlate with the time codes on the VHS tape copy of the interview. “Misc.” refers to various off-camera conversation or background noise, unrelated to the interview.

DT: My name’s David Todd. I’m here for the Conservation History Association of Texas. And, we’re in Austin, Texas, at the Austin Energy Headquarters. And it’s April 9th, year 2002, and we the u—good fortune of interviewing Russell Smith, who’s been an advocate for sustainable energy both through his role in the Texas Solar Energy Society and through the Texas Renewable Energy Industry’s Association and through other capacities, and I wanted to thank him for spending the time to explain some of the work he’s been doing and his philosophy about it.
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RS: My pleasure to be here.
DT: Good, well, welcome. We usually start interviews like this by asking a little bit about your early days, and if there was some circumstance in your—your family or your circle of friends that might have introduced you to environmental concerns or energy matters, in your case.
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RS: Well having—having grown up in a—in a Texas county west of Houston, Colorado County, which is a farming community, primarily farming rice, although cotton and corn to some extent. I was exposed to—directly to nature from the beginning in the 1950’s, when I was very small there wasn’t much to do except for, get out in nature and explore in the countryside. And we certainly did that. And so I had direct exposure to all aspects of nature throughout my early years, the good, the bad and the ugly. And there
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was plenty—plenty of reason for us to feel like we were constantly under attack by nature. We had an ongoing war with—with bugs, and critters of all kinds. And so our perspective might have been a little bit different than—than someone who—who grew up in the city, one would expect. And as I went through the teenage years, and—and worked in the rice fields and was exposed to the family businesses that involved farming rice, including such things as chemical fertilizers and pesticides and herbicides and so forth, I had some very direct exposure there to the realities of—of what it takes to survive
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in the farming community and—and the concepts that existed at that time about you increased crop production and—and—s—and, and made it through the next year; and it seemed natural to us to do things that way, because it was the modern thing to do. We were, as youth, members of the Future Farmers of America, and if you were a young boy, you were pretty much expected to be a member of that organization. And we had our philosophy there, which basically said, “Better days through better ways.” I don’t know if you recall that phrase or not, but that always stuck with me because that was—that was the objective, or one of the major objectives was to—to move forward to a better time
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through doing things in a better way. And we certainly felt that the direction of agriculture at that time was improving things constantly. We were always learning new approaches and new products and new systems and ways of doing things that we thought were considerably improving life for the farm and increasing our production and so on and so forth. We also had a very strong ethic of conservation, and—and that focused primarily on the soil. In fact, as you’re probably well aware, this whole conservation
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districts have been around for a long time and then it was a term that was common to everybody. We knew that without the soil, we weren’t going to survive, in the farming communities. And so you had to take care of the soil. It was our objective to—to do it the right way, so that we would always have that resource. And that probably was a foundation that future ideas about conservation was built upon. Not that I—I consciously spent time thinking about, oh we’re talking about conservation, here. We—we were not in that mindset. We were just living and surviving. And yet it was an important—
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important element for—for the future for me. So in my later teen years, I began to be more conscious of the down side of some of the things that we were doing. There was a little creek, down below our house, where I used to hunt and fish. And I recall many, many times going down there and—and watching the carp swimming in the stream and casting about to catch them and reeling them in, and finding them with huge, grotesque growths on their bodies and looking deformed. And nobody had every talked about that, or why that would be; but I began to put two and two together, and realized that those
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creeks were runoff streams from all of the fields that we dealt with on a daily basis, and what we put in those fields, found its way into the streams and, hence, into the fish, in—in the stream. And we knew we couldn’t eat those fish. It became pretty obvious that anything that we caught in that—in that stream was not worth anything to us. But I still didn’t spend a lot of time agonizing over it, because we’d increased rice production from, I forget how many barrels per acre at the time, but we’d more than doubled, considerably more probably than doubled rice production per acre during my youth up to that point. And there was prosperity, comparatively speaking, as a result of that. And so I didn’t spend a lot of time thinking about that. That is pretty much all I had to say or do or think about conservation until I left my hometown and went away to college.
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DT: Oh, and then that took you to the college, and—and did you get some sort of exposure, or introduction to conservation there, or was that a later stage for you?
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RS: It was—it was still a later stage. In fact, my focus in college was—was not oriented in the direction of farming, at one time. There was an expectation that I might be involved in—in that in some way, but, my interests didn’t lie there, and—and I explored what they were. Music was a primary interest for me, in my earlier years, and that’s where I thought where I would end up. But discovered after a year of focusing on that, that the most likely thing I would end up being was a band director. And I had somewhat higher aspirations than that, and—and I more enjoyed playing music than I did
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the rest of the aspects of being a band director. So I made a determination that I could (inaudible) and it wasn’t necessary to be a—a major in that, so I—I headed off in another direction. I had a great deal of interest in—in politics and—and issues of the day, and ended up majoring in political science and minoring in speech communications. And that remained my focus throughout my undergraduate years, and—and then on through getting a Masters in—in the same fields. And I maintained my music throughout those periods of time by—by playing in bands and so forth, and making money on the weekends and—and basically massaging my—my interest that way. The—the topical
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areas that I focused on in my—my major, did not center on ecology or environment, or anything like that. They were primarily focused on foreign policy and to some extent, domestic politics, but more than anything on foreign policy. So no I—I—I really was not directed through my higher education experience toward conservation or environment.
DT: It sounds like sort of a tantalizing thing. What—what—what was your—your entry point, then, to environmental issues and energy in particular? Can you pin it down, or was it a gradual thing?
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RS: Yeah. Actually, I—I—I—I have in my own mind found a point of—of beginning, I guess, in a sense, something that I could attribute it to; it—it was pretty gradual, but, I think what triggered it more than anything else, was after I had graduated with my undergraduate degree, and was working on my Masters, and was teaching (inaudible) I had a family circumstance which was—was very difficult in—in—in that my father was diagnosed with—with cancer. And ultimately (inaudible) it—it was the brain cancer that got me to—to thinking, trying to figure out why this had occurred. I
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didn’t understand it, and I’m not sure I still do, where it started or where it ended, but it was the fact that it was in the brain that—that made me wonder if perhaps exposure to the things that I had experienced in—in my youth, and the industry of the business that he was in, managing a chemical fertilizer and pesticide operation, with his constant exposure to that, might have been a factor? Whether it was or not is immaterial because I attribute it to that. I made a conscious conclusion that that’s what it was. Disallowing the reality that he had been a smoker for many years, but it had been fifteen years since he had been
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a regular smoker, that probably was a major factor. Who knows? But, anyway, as I’m saying, that’s where I laid the blame. And it got me to thinking more and more about issues that had sort of been simmering in the back of my mind for many years. When I left the teaching situation that I was in, and moved to Austin, I—I began to look for ways to manifest my concern and that took me to the next—next phase, I guess.
DT: (inaudible)
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RS: (inaudible)…wanted to—to question the—the impacts, the source of the impacts on my—my father’s health, that led to his ultimate death from cancer. And during that period of time, or at least in the early two or three years that—that he survived, I was still in a teaching position. When I graduated with my Bachelor’s degree, my first job was teaching in the Job Corp. I went immediately into—into the teaching profession, where I thought I would be for the balance of my life. I had always, once I had gotten into higher
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education decided that’s what I was going to be, was a teacher. And actually in my youth, I kind of—I had that direction, anyway. I had a family of teachers, a history of teachers. And teaching in the Job Corps. was a—was a difficult task in many ways and—and a very stressful one. And—and I took the job very seriously and—and to such an extent that it—it pretty much messed me up for the future of teaching. After five years,
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I—I had pretty much taken all I could physically and emotionally take, and certain physical things that it required that I depart that job, which I did. And—and was left to drift, in a sense, because I’d never expected at that early age to have made the decision that this was no longer my future. I moved from San Marcos at that time to Austin with no prospects, no direction and—and no future. And during the same period of time, the situation wo—with my father was progressing and I was looking to do something, I didn’t know what, but more and more I realized that I—I wanted to do something that might impact the things that I was troubled about. And I had past experience in Sales, I
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had always had little jobs of one kind or another on the side to survive, and Sales was a—an area that I had some capabilities in. So I cast about looking for selling opportunities, and in particular was interested in new products and new concepts, and stumbled across an operation that was involved in producing a—an organic fertilizer. And this organic fertilizer could be sold into the commercial or the residential market, and had been used even in the rice farming community, on a limited basis. It’s a long story to explain what this was all about, but it was nitrogen-fixing bacteria in a biomass-based product, which showed some spectacular results, as far as I was concerned. And I was very excited
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about it. It could replace the chemical fertilizers; it could purify soil, and restore it. And this, to me, was an open door that I decided to take. What I learned after a very short period of time is that it may be a very good product, and—and it—and it may be doing the right, but if it costs three times to four times what the existing products cost, you’re going to starve to death. And basically, I did for—for a couple of years, working with a—a group of people who in—in most cases had the flexibility to be able to do that because they had made their money. They were older folks who—who were retired from the military or whatever, and they—they were in the position to be able to hang on for—
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for however long was necessary. And I learned a lot from that experience about how good products are—are produced and sold, and not all of it was good. As a matter of fact, a significant part of it was very disturbing, because what I learned is that, quite frequently, when you have a product like that, and you are bound to push it, you will say and do things, which are outside the bounds. And we learned a lot about this product and compared it to the claims that were made, and things didn’t always mesh, and that disturbed me. I thought the product was adequate on its own, without having to lie about
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it, or—or to at least expand upon the realities. But it was a difficult decision to make; how do you—how do you get a new product, how do you get something that is the right thing to do, into a marketplace? And that kind of set the stage for future thinking on some of the things that I was to do later. It was a good experience, all in all, and I met a lot of interesting folks who were trying to push the envelope in that particular arena, and—and I was firmly convinced that the future for agriculture could be significantly impacted by this type of product. And once again, today, we’re seeing the same types of things, surfacing. And the alternatives are the existing products are much more
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expensive now than they were back then, so at least the disparity between the two is a—a little closer, and maybe they’ll have a chance. But in any case, having—having had that experience of sales, I began to realize that I couldn’t survive doing that. I had to find something that was more viable. And nothing surfaced. So it was during that period of time that I came to a—another conclusion and that is that I could not force the future; that –that I had to accept life and be open to the possibilities; and then make a choice and follow the path that was presented. And once I made that decision, it was easier for me to
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say, I’m not going to stay here starving until the right thing comes along that I think is the thing I should be doing. I’m going to do what I have to do next. And so I—I opened my vision a little bit, and I decided, well, I don’t have to do something related to solving this perceived problem with the environment and—and with chemicals and so forth. I have other interests. So one day I was walking in the mall, near Christmas time and—and I heard an organ playing, coming out of a store, and having had a music background and so forth, my ears were immediately drawn to the music and something told me, go in the
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store. I did. I walked around and saw this fellow demonstrating one of these really modern organs that could do just about anything. And it was kind of interesting, I thought it was cheating, but, it was still kind of fun to—to watch him make all these sounds with an organ where most people who didn’t know how to play an instrument could have some fun. And the more I thought about it, I suddenly realized, there’s a reason for being here. I asked the guy, I said, “Do you need any help?” And he said, “Yeah, I need a salesperson. You know, it’s coming up on the Christmas season and it’s
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hard to get help, and particularly somebody who knows anything about music who’s willing to—to do this.” I said, “Well, I’m willing.” He said, “Well, you’re hired.” And so, I began selling pianos and organs and for at least two years, that’s what while I continued to—to look for the next step along the way. And—and that delivered well enough for me to survive and—and it led me to the next step.
(inaudible)
DT: Take us there, if you would when you get a chance. What was the next step?
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RS: The next step was to continue to explore and keep an open mind. And one day as I was wandering down 51st Street, just going for a walk, I—I happened to notice a—a house that had a sign, a very colorful sign on it and it said, Texas Solar Energy Systems, Inc. And I thought, you know, “ I wonder what that—I wonder what that’s all about.” So I walked up to the building, of the house and walked in and they had a little showroom in the front room there, and there was this collector panel hung on the wall. I’d never
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seen anything like it. And they had a desk in there and they had some literature and so forth, and so I just wandered around and looked at the literature and you know, looked at the product and nobody came out and said anything to me, and I was in there about fifteen minutes, and then finally, somebody comes in from the back and—and said, “Well, are you interested in buying one of these?” And I said, “Well, what is it, you know, I mean, I—I can see it heats water but is – is that all it does?” “Well, yeah, it’s a solar water heater.” And I said, “Well okay tell me a little bit more.” Well it didn’t take me very long, listening to this fellow to realize that he didn’t know anything about sales;
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I could have walked out at any point in time and he’d have never gotten any further with me than the first word out of his mouth. So he wasn’t going to be selling any product, but I was curious about it. I—I—I’m not exactly sure why, because I didn’t have any particular energy interest at that time; but it was new and it was innovative, and…
DT: (inaudible)
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RS: …this—this had to be ‘76, probably 1976, late ’75 and so, just as I had done, w—when I made a decision about the music thing, I had decided, well, I’ll keep an open mind about this. Now I have to tell you one thing. The past, as I mentioned to you earlier i—is the past to me, and—and when it’s gone, I don’t spend a lot of time dwelling on it, I don’t think. And—and I don’t remember dates very well, and sometimes I get things out of sequence, so, as I’m talking now, I’m remembering the sequence that some of these things happened in, that I hadn’t thought about before. And the music part of it actually falls right after this exposure to the solar company; because what I’d ended up doing was,
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I said, “I’m interested in what you have here. And I’d like to learn more about it, and I’m looking for a job.” So that was my first time to just walk in and say that. And I said, “Do you have any jobs?” And they said, “Well, we need a salesperson.” And I said, “What does it pay? And the guy laughed and he said, “Pay?” He said, “It doesn’t pay anything. You know, this—this is a straight commission deal. You know, you sell something, you make money; you know we don’t pay you anything.” And I said, “Well, that sounds
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good. If you need help, I’m willing to do it.” And so, he hired me. And it turns out, he was a plumber, and his partner was An HVAC [Heating Ventilation and Air Conditioning] contractor. And they had bought a franchise for this solar energy equipment out of Florida. And they had a brand new truck all painted up nice, with a collector on a rack on the back of it, and they had their showroom, and they had their brochures, and—and they were ready to—ready to roll. But after a few days of working with them, I—I realized that not only did they know—
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not know anything about sales, they didn’t have a very good work ethic, either. One of them had back problems, and—and had had operations, he was in constant pain, so he was on pills all the time; plus he drank heavily. Both of them did. So they’d come in early in the morning, and they wouldn’t get anything done until after noon. And they had a young lady who worked out front as their receptionist, and the phone never rang; and she sat at the desk and chewed gum, and—and read a book, all day long. And I tried to sell solar water heaters. And they hadn’t sold but one, and that was to his—his nephew, I
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think, or some relative. And I didn’t sell any, and weeks passed, and I was getting nowhere with it; and a—gain, I was starving to death…
DT: Did you go door to door, or…
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RS: …I—I—phone calls, cold calls, door to door, passing out brochures, anything I could think of to try to get some interest in it, and—and there just wasn’t any, you know…
DT: What did people say when you (inaudible)…
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RS: Well, I—I—first of all, you have to understand that even at that time, a solar water heating system was gonna—was selling for two thousand dollars. Now you could go down to the hardware store and buy an electric water heater for a hundred and fifty bucks; and a gas one for less than that. That’s a hard sell, it really is…
DT: (inaudible) figure into that period (inaudible) between ’74 and ’76 when we’ve had one and the second energy crisis, and the Carter Administration’s pro-energy policy?
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RS: It was abs—it was absolutely out there, but—but it wasn’t universal by any means. And—and that didn’t change the realities in the marketplace, particularly. And—and we weren’t at the tax credit time, at that point in time. So, what you had is just a straightforward sale. So—so basically I said—said to the owners, “You know, you’re—you’re paying—you’re paying this young lady minimum wage, and—and she’s out front, and I don’t think that she’s particularly contributing to this effort. Why don’t you do this? Why don’t you hire me to sit at the desk, for minimum wage, and then I will answer the phone, and I will sell, two for the price of one. How’s that?” They thought
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that over for a while and said, oh, that’s not a bad idea. So unfortunately, she lost her job, but at least I was able to make a little bit of money while I was learning. I was with them for about six months. I also learned during that period of time, that once again, just because it’s the “right thing to do” and it’s a good product, or whatever, doesn’t mean it’s necessarily everything it seems. I was not very mechanically minded, particularly, I’m not that much of a hands-on guy, but I understood enough to realize, after a while, that this product was basically a piece of junk. And I had real hard time selling it, I—I didn’t
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want to sell it anymore, which is one of the reasons I left. But I learned enough from that to know what was wrong about some of these things; and realized that there probably was something better out there. Now, during this period of time, one day, I was standing in the front room there, and the phone rang, and I heard a—a loud, hollering conversation on the part of one of the owners at a guy, and then he slammed the phone; and he came out and I said, “Well what’s that all about?” And he said “Well, there’s this—this guy called me up and—and he wants to use a name for something that he’s putting together; and—and it’s close to our name, and so, you know, he had to get our permission. And I told him, no way, you know, you want—you want to use that name, it’s going to cost you five hundred dollars.” And I said, “Okay, well, what was the name?” And he said “Well,
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it’s this Texas Solar Energy Society.” And I said, “Okay, now wait a minute. Texas Solar Energy Society, that’s—that would be a non-profit, right?” And he said, “y—yes that—he said it was a—a membership organization.” I said, “Well let me get this straight now. You just told this fella, that you weren’t going to let him have the name. Why?” He says, “Well, it’s too close to ours.” I said, “Well what difference does it make? Here’s an organization that’s going to be promoting the ideas that you’re behind, and it’s not a competition to you, why would you not do that?” And I went to his partner and explained that to him, and—and his partner saw that, and—and he went back and had a conversation with him and convinced him that maybe it wasn’t such a bad idea. And so they said, “Well, you know what, we’re going to let him have the name.” So I ended up
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calling the person back, and telling him that the Texas Solar Energy Society was available and they could use that name. And through that, I met that individual, who happened to be one of the people who was forming the Texas Solar Energy Society; and, again, this had to be nearing the end of ’75, going into ’76, and through that process, I became one of the founding members, not a—an incorporator, but one of the founding members of the organization; and—and in the course of our conversations with this group of people, I expressed an interest in staying involved in some way, but there wasn’t anything happening at that time, sufficient for my full-time involvement, and that’s when
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I ended up taking the job selling pianos and organs, okay…this may be more history than you really wanted to know, now that I’m thinking about it. This may not be getting where you wanted to go.
DT: No, this is helpful. And—and—and (inaudible) maybe you could segue into talking about the types of solar energy (inaudible)…
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RS: Yeah, well that’s—that’s kind of where I’m—you know, where I’m headed, so, okay. The—the Texas Solar Energy Society was—was founded in ’75 going into ’76, driven to a great extent by the academic community, and individuals within government agencies. There was already and American Solar Energy Society and it was being formed as a chapter of the American Solar Energy Society, which at that time was headquartered in Florida. And its main mission was education. It’s a 501C3 non-profit educational organization. And I—I thought at the time that—that clearly there had to be some stronger movement put together if there was going to be any momentum behind it.
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And the—the oil embargoes were already underway. Everybody was becoming more and more conscious of the problems we were facing on the energy front. And it seemed apparent that this was an important arena to be concerned about and involved in. And so I—I offered to be involved in a—in a larger way, if there were an opportunity. As a matter of fact, some of the individuals involved in the first board had asked me, if—if there were an opportunity to establish an office, would I be interested in—in being Executive Director; and I indicated that I would. But for at least a year and a half after that, there—there just wasn’t enough activity happening to—to bring that to be. And—and so as I was working selling pianos and organs, I kept hoping that there would be an
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increased level of activity and I tried to stay in touch with the folks and so forth. And sure enough, going into 1978, a call did come one day, indicating that a—a contract was being sought with the U.S. Department of Energy by the Texas Solar Energy Society, in a first round of contracts, coming from DOE to boost up the level of involvement and activity out in the—in the country, supporting solar energy. And that contract involved exploring what existed in the field in this particular State, related to solar energy, cataloguing it and documenting it and so forth. And the entire contract was ten thousand dollars. And there was three thousand dollars in there for administration, and would I be
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interested in taking that position? And I said yes, you know, so I quit my job, and we opened the first office for the Texas Solar Energy Society in 1978 on the basis of three thousand dollars; and who knew what after that, as part of a ten thousand dollar contract. And set out on the task of finding out what was happening in solar energy around the State; and it really gave us a good foundation and a basis to work from through surveys and phone calls and everything we could do to try to find out what was out there. And there was a lot more going on than we had realized…
DT: What was going on?
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RS: Well, there were—there were a number of companies that had sprung up selling solar hot water, or trying to manufacture solar water heaters. And there were several companies that were exploring small-scale wind generation, two or three in particular that were pretty far along in the process by that time. And there were a half a dozen schools, universities that had elements that were involved in solar energy research, and development or courses or something along those lines. So it was really beginning to
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churn up by—by 1978. And, whereas we had started out with a handful of—of members in the Texas Solar Energy Society, it had bun—begun to grow at that point, and then with the survey activity, that really spurred the—the first real significant spurt of growth, in pulling members into—into the organization. It also allowed for pursuit of the next
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contract, and then a series of contracts over a period of four or five years through the Department of Energy, which all made it possible for the organization to survive and grow. At the height of the—the contractual efforts that we had through the Department of Energy, I had maybe three hundred thousand dollars worth of contracts flowing in and a—a staff on those contracts of about five people. And with that kind of—of support, it’s a lot easier to build momentum in an organization, obviously. And, so the Society was beginning to—to thrive, and we were adding chapters locally, around the State. At the
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height of—of our effort we had, as I recall, nine chapters in different cities, with all the members that they had, all of which were not necessarily members of the State organization, so when you add up the total numbers, it was considerably more than just the membership of the Solar Energy Society at the State level. And at the height, as I recall, we had somewhere in the range of six hundred to seven hundred paid members of the Solar Energy Society. And they covered the full range of involvement, from the
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individual who just was interested in learning more and supporting the effort, to individuals who had companies and were selling product, and academics and governmental officials and—and so forth, so it was the full range…During that period in time the—the term of art for what we were trying to do was solar energy and the academic community defined solar energy, you know, in a—in a broad way, anything that was attributed or driven by the sun, what we now call renewable energy, was included in that definition of solar energy. And so a lot of the early laws and rules that
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we were successful in—in getting passed used the terminology, solar energy. And in some cases, further defined it within the body of—of the document. In some cases, they don’t. That created a problem years later when—when the semantics began to shift and the—the whole issue of—of semantics is a—is a critical part of what occurred during that period of time, because you can kind of trace the—the back and forth battles that were going on by the shifts in terminology. It became desirable to talk about alternative energy, as opposed to solar energy, because solar seemed to define too narrow in the
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broader circle, and—and there were many who felt like if we went with the alternative energy terminology, that we would encompass a much broader spectrum of—of interests. And so the shift began in that direction, it didn’t take long for that to be co-opted. Alternative energy began at a certain point to—to be pushed in the direction of including nuclear power. And—and then pretty much anything that was not precisely the way we’ve always done energy became alternative energy, so it encompassed some fossils technologies and—and so forth; and it became eventually, almost useless to—to our efforts to continue calling it alternative energy.
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DT: Can you help sort of set the—the stage the context for what, you know, we’re doing with, I guess, strictly speaking, solar energy, photovoltaic cells, and—and the hot water heaters that you’re talking about and—and—and wind turbines and maybe talk about what was going on in nuclear energy or oil shale, at the time. I guess people were exploring a lot of different alternative to fossil fuels (inaudible).
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RS: Well, a—a—at the beginning, at least for me, and for quite a few of the other folks who were involved, the—the driving force behind our involvement was—a—wa—centered around providing alternatives to fossil fuels, because of the circumstance of the times, it was less driven, in many ways by environmental issues, than by the need to have alternatives. And—and the—the term, “conservation” at that time was much more common as well because by conserving fossil fuels, we were succeeding in—in one of
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the imperatives that we—we had and—and one way to do that was by using other alternative sources. So that was—that was kind of the driving element behind it. And so anything that supplanted the fossil fuel, we were interested in. Efficiency was very strong, we always said, and continue to say today, but the—the—the terminologies were—were coined at that time, insulate before you insolate, and we—that was a mantra that was always used. We were very aware of the necessity of—of doing the most efficient thing first, particularly when you’re dealing with ta—technology such as we
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were that don’t provide the same level of energy, that a concentrated fossil fuel does. You’ve got to reduce the demand as much as you can, so that you can maximize the benefit from lower provisions that are made by—by a solar source. So we were focusing a lot of attention on solar hot water. It was a—a near-term available concept that was not new, but there were new materials and—and new approaches to the technology that were coming together. Solar hot water had been used in the 1800’s, in the late 1800’s and—and then it had another big rush back in the 1930’s. As I recall there was a—a—there
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were somewhere in the neighborhood of thirty or forty thousand solar water heaters in Florida, in the 1930’s. The only thing that had changed was the primitive—comparatively primitive materials that were available, but the concepts were the same: you’d r—run water through a tube or a plate plaint—painted black with a glazing over it, and trap the heat and extract it and put it into storage; not real complex. One would think a very simple thing to accomplish, but to meet modern tastes, and modern desires, and modern expectations, required going beyond the most simple approaches, and to maximize getting as much heat extracted and stored as you could. How you controlled
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the system became very important: putting th—the water through at the right pace, using the right materials, extracting the maximum heat, and then putting it into storage. In addition to that, having as much hot water as somebody wants available at all times, is—is much more of any issue than it would have been in the 30’s or the 1890’s, and as a result of that, you had to have it available as long as possible and you had to deal with the issue of freezing, in certain climates. And so controls related to solving the freezing
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problem were a big issue. And there were many failures, and—and many bad products out there, and there were all sorts of problems related to that that had to be solved. And things were just beginning to percolate I guess in the private sector, going into 1980, thereabout, ’79, 1980, when the Carter Administration focused much more attention on solar energy and alternative energy. There was a strong push, at that time for tax credits for solar. There was a lot of support for it. In our circles in the Texas Solar Energy Society, there were folks who were completely for it, and others who felt it was not a
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good idea. We argued these things back and forth, and there was…
DT: What—what were the debates about? Was it most a geopolitical argument, that, you know, you’ve got tension and instability in the Middle East, or was it more of an environmental argument that you had to, I guess at that time worry about nuclear winter? Or—or—or I don’t know if they were concerned about climate change at the time, but (?) particular issues of fossil fuels? What was the—the—the debate about?
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RS: Well, that particular debate was even more specific than that. But to—to set the—the stage, kind of as you’re suggesting, obviously the anti-nuclear movement was very strong, at that time. And—and we were just coming out of the anti-Vietnam War movement. And what I observed, in any case, and this is just my opinion, I—I saw a lot of activists who—who came out of those efforts, looking for solutions, and they sh—they slipped from the anti-War into the anti-nuke and then into the pro-solar camp. And—and there were a number of folks who were well known in the activist community who were
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members of the Texas Solar Energy Society who worked with us and—and on these contracts, and so forth. It was quite a mix of folks. And m—they all meant well, but we—we had, in my opinion, some difficulties in communicating to our citizenry in the United States as a result of this. There were promises being made about what solar energy was going to do for this country. And they were being made high profile, and in a very big way. And I—I v—very vividly remember materials that were circulated around the first Sunday, which officially became Earth Day, that we were going to solarize America. And we were going to solarize America in five years. And this was the
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promise that we were going to deliver. And there were many of us who felt that that—that was overstating things considerably and would lead to disillusionment. But the promise was made, irregardless, and then it was left to the industry to try to deliver. Now remember, at that time, solar water heating was the primary solar technology that was available. Solar photovoltaic for electric generation were so far out, as far as cost goes, as to not even be a realistic factor. Concentrating solar for thermal electric generation was getting a foothold with parabolic trough collectors and a considerable amount of effort going into the power tower concept, which was just bubbling down in Houston, due
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to a focus at the University of Houston, which I can tell you a little more about later, if necessary, but solar water heaters, were the primary mechanism for solar to deliver in real terms. And as I’d mentioned earlier, solar water heaters were selling for fifteen hundred to two thousand dollars. So the tax credit was proposed, and the argument, the discussion that we were having centered around, is this a tool or a mechanism that will be useful and effective, or counterproductive? And it all depended on how the—the incentive was structured. And there were several individuals within the organization, and I tended a—along those paths, to feel like it was dangerous the way it was being structured.
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Ultimately the tax credit was a forty percent income tax credit, right off the top of your tax liability at the end of the year. Forty percent of the value of the system, and they did put a cap on it of ten thousand dollars. So I—I have this discussion frequently with people because I think it’s instructive, and it’s the way I read it, it may not be accurate, but it’s the lesson that I learned from it, or at least I think I learned it. The objective was to increase the volume of production of solar water heating systems, and get economy of scale and the objective of that, of course, is to bring the cost down. So it was a five-year program. Congress said we’ll approve this for five years and then we’ll approve it again
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for five more, after that first round, assuming that it’s effective. And it kicked in and within, gosh a year, there were companies springing up all over the place. And within a couple of years, there were at least a hundred and fifty solar water heating companies in Texas, either manufacturing, but primarily dealers and distributors and installers. And it was growing and there were hundreds and hundreds, literally thousands within three years of systems being put on, and Texas was one of the slow areas. California, Arizona,
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New Mexico, and Florida and some other States, were just going crazy with systems, and so one would feel as though we were succeeding and so the question I generally ask folks is, “How much did we succeed? Where were we within three to four years of the beginning of that tax credit on our reductions in price? How much had we been able to reduce them?” Remember, we were starting at about two thousand for a typical family of four water heating system, and so, I—I guess, I want to ask you the same question, just off the top of you head, if you were guessing, and you may not even remember that
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period of time, I don’t know, but, do you remember seeing the systems, or hearing about them at all?
DT: Would this be like the Cricket or the SunTrapper…
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RS: Well that was one of them, Cricket was one, yeah, that was a—out of Oregon, I believe, but yeah, there were—there were twenty or thirty…
DT: (inaudible) I recall they were still quite expensive. Is that—is that true, or…
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RS: Yeah. In fact, if you look at the way the thing was structured, I—I looked at it like this, if—if I were in sales, and I was walking into a—a household and I was going to present my system, and I explained to them that I had a two thousand dollar solar water heating system, and at forty percent, they were going to get eight hundred dollars back from that, they would see that as a positive thing. But there were a lot of people marketing out there, and I think that a lot of what happened is, the next guy down the block figured this out. Where do you go to sell a two thousand dollar water heating
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system? You go to households that have what? Money. You’re not going to sell a two thousand dollar water heater to people who are in poverty. So you go to where the money is, and if you want to sweeten the deal, you start getting pretty creative. And you say, “Well look, you know, that company over there. Yeah, they’re selling their water heater for two thousand dollars, but, you know, we have a better water heater. First of all, that’s why ours is more expensive; but furthermore, ours is three thousand, but that’s twelve hundred dollars back at the end of the year. So you couple twelve hundred dollars, plus the fact that ours is a better water heater, and you’re going to save more money on it. If you add all of that up, and actually our more expensive water heater is a
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better deal, than their cheaper water heater.” And sure enough, that worked, and people started buying it. And in some cases, the water heaters were actually better, but a lot of fudging of numbers was going on, I mean, remember this is a period of time where there were predictions being put out by those who promoted what we were trying to do that oil was going to be a hundred and forty dollars a barrel by 1985, and, you know the world was coming to an end. And so predictions on what future costs of energy were going to be figured into the formulas determining how much money you’re going to save over the lifetime of the system and how soon it’s going to pay back for itself and so on and so
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forth. All of this was happening so fast that there wasn’t a sufficient amount of time for the r—regulations and—and certifications and all the other things that—that help make a product legitimate in the marketplace to effectively be put in place. And people were playing fast and loose. Not everybody, but there were a sufficient number of them out there who were. And as a result of that, I next generally ask, “What would you guess then that a solar water heater was selling for by 1984? “
DT: Two thousand dollars. Or three thousand dollars, maybe, sounds like the (inaudible) to hike the price.
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RS: Yeah, people, people automatically say, “Well, okay, so maybe it went up, so, you know, maybe it was like, three thousand.” Remember, the two main things of that tax credit were forty percent and a cap, and the cap was ten thousand. Now what do you think a solar water heater was selling for? There were solar water heating systems being sold for eight and nine thousand dollars by 1984. Th—there were companies who had massive operations, one near Houston had eleven satellite offices surrounding the Houston metroplex and they had a phone boiler room, calling from dawn until late,
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setting up appointments to come to workshops that they would put on, seminars, and if you would come to their seminar, they’d give you a free TV. And in addition to that, of course, you would have all the benefits of learning about this marvelous system that they had; and how it was going to not only save you money, but it was going to make you money. When you started looking at issues like borrowed money and what interest rate, and opportunity value that you would have lost or w—or gained, and you figure all these things in, and then you—you stretch a little bit how much you’re saving on energy and how much energy would cost over that period of time, and you start adding it all up, and there were people who were convinced that by paying eighty-five or ninety dollars a
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month for a water heater, on a loan, that they were actually going to make money over the life of that system. And then these companies would throw these systems on people’s roofs, and there were installers who didn’t know what they were doing. There was no training mechanism out there; there was no licensing process, et cetera, et cetera. The good guys, and there were plenty of them, in our organization, who were trying to keep a lid on this, were pointing these things out, and all they got was shot at, basically. That these systems were being put on roofs, facing north. The Sun’s in the south; not even hooking them up in some cases; yet people were so convinced that they got what they paid for, and didn’t want to entertain the possibility they didn’t that they would insist that
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it was working. They’d take you into the garage and say “Feel this pipe. It’s hot,” not understanding that yeah, the back-up water heater is keeping the water hot, no question about it, the water is hot. Well that led to some very difficult times, because all over the country this was going on. And there were companies who were trying to do it right; good guys, members of the Texas Solar Energy Society, in many cases, who tried to sell at least lower cost systems. They went up on their prices as well, because it was hard to make a living at two thousand dollars, selling solar water heaters, with all the expenses that are involved in marketing and so forth, to really broaden the market. So they were finally making some money, and they had to follow the market, up, for the most part.
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Well, when Congress looked at this, after five years, the decision was made to not renew this tax credit. All of these things that I’m telling you were known to Congress, and there were many of us who suggested and supported the idea of a ramp-down, phase it out, renew it for four years or three years, and do a thirty, twenty, ten and out, something like that; they weren’t hearing it. They pulled the plug on it. And when they pulled the plug on it, it was instantaneous. Midnight, 1984, December 31st, I think was the—the time and the next day, everybody turned into pumpkins. And within a year, there wasn’t twenty
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percent of the industry in this country left. It’s pretty hard to sell a nine thousand dollar water heater on January the first. And I—I—I’m not a conspiracy theorist, or anything like that, but it’s not outside the realm of possibility that there were those who understood and knew going into this, that if you create this kind of program, it’s going to lead to this kind of conclusion.
DT: (inaudible)
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RS: Yeah, I mean, people are going to gain the system when you lay it out there like there, and it’s going to result in an industry shooting itself in the foot, and then you pull the plug on it. But I think, more realistically it was just ill-conceived and supported in the panic and enthusiasm combined of the moment that we were in at that time. It—it was a disaster, which set that industry back a minimum of fifteen years; and I think it’s just beginning to come back around. There’s nothing wrong with the concept of solar water heating, and there’s nothing wrong with the equipment that’s available out there today, for the most part, that’s making it in a regular marketplace…
[End of Reel 2173]
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RS: …Well this mid-1980’s time frame was a major watershed in the—the direction of—of solar energy in this country and in Texas. With the demise of the tax credit came a lot of other disasters shortly thereafter for the industry. In Texas, the major one being the bottom falling out over the next two to three years, of the oil industry, because not only did you no longer have a tax credit, but then, you—you no longer had that economy to support buying things that were considered pretty extraneous, like several thousand dollars for—for a water heater. Now the—the industry at that time still was primarily
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then focused on solar water heating, there was a small-scale wind industry that was fairly active, but not selling a lot, just out there trying to educate and create a good product and so forth. And the Solar Energy Society was actively involved in trying to encourage appropriate laws and rules in Texas that would support the development of all of these solar technologies, including wind and biomass and so forth, as I explained earlier that fell under the definition of solar. But we realized after several successes in—in helping shape some of these pieces of legislation that with our particular IRS status, we were beginning to reach a point where we were involved enough in that, that under certain IRS
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limits, we were going to be under increasing scrutiny for it. I don’t think we ever really exceeded what the limits allowed. Matter of fact, I’m sure we didn’t on an actual books basis, but there was enough concern about it, that within the organization, we began to discuss the necessity for considering separating out a trade association. And—and I’ll talk more about that in a minute. Before we get away from that particular time frame and what happened at the Federal level, there’s a lot of memory out there. When I ask people, “You remember what happened to solar water heaters?” What I usually get is, “Yeah there used to be a tax credit and then—and then Reagan got elected, and Reagan
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eliminated the tax credit, and—and Reagan took the solar water heater off the White House.” And that set the scene, basically for the—the typical understanding of what happened to solar energy in the 1980’s. And basically it was, Ronald Reagan destroyed it. From the beginning with the Texas Solar Energy Society and later with the—the Trade Association, my philosophy has been and I think the leadership in our organizations’ have been on the same path, choosing between parties and politicians and that sort of thing is something that—that our effort doesn’t necessarily have the luxury of
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being able to do. It’s important that we work with all sides if we’re going to advance the effort because there will be changes in politics and so our objective was to try to advance the cause regardless of who’s in office in Washington or in Austin. And as a result, we—we did try to work with everybody, to whatever extent we possibly could. And my view of what happened at the Federal level, with the Reagan Administration may be somewhat different. There’s no question that there was a bias against our approaches and our technologies, but things like touchstones such as Ronald Reagan pulled the solar water
heater off the White House and that’s a symbol of—of his attitude and how he thought about it, is not quite accurate when you know the company that put the solar water heater
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on the White House and how that came to pass, and the quality of the product that was there. And—and that it, to my knowledge, never worked effectively in the first place. And periodically they do paint the roof of the White House and having a m—a significant collector system and rack and so forth on the roof was a difficulty; and it—and it was for other institutions and so forth as well. It had to be dealt with. And so when they removed it to repaint the roof, as I recall, the decision was made not to put it back up. And in all probability, it was probably a pretty good decision. There was a system similar to that that was put on the Railroad Commission Building at that time, here in Austin and—and I think it was by the same company, and that’s why I’m drawing this
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parallel because that system became an eyesore, right on Interstate 35 that remained there for years. It never worked right; and it became a tattered piece of junk that was looked upon by thousands who drove Interstate 35. It did us no good. But it was pushed there and put there by policy and by activist effort. And that doesn’t always pay off, and in this case, it didn’t. So we had—we had some bad times during that period. And—and the
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solar water heating industry, as I said, cratered. There were two or three companies that hung on and tried to manufacture equipment, and they lasted a couple more years, and ultimately, with the exception of one, they sold their—their manufacturing effort to their service employees. And ultimately over the next ten to fifteen years, what survived in the solar water heating industry in this state and in many others, were those hands-on guys, who really had a love for doing solar water heating systems, and knew the stuff inside-out and got up on the roofs and maintained the systems. These maintenance guys, they took it over, and they took on orphaned systems, while companies drop like flies throughout the country. And a hundred systems here and a thousand systems there: they began to take them on as the maintenance person. And there are three or four companies in Texas who each maintained four or five thousand systems. And they continue to maintain them today. These are systems that were put on in the 1980’s and they’re still working just fine. And for those people who had a—a piece of junk on their roof, they pulled them
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off, for a fee. They sold the—the equipment for scrap. And occasionally they’d put a new system on when somebody’s just really beat them over the head and shoulders. But they weren’t really into marketing, for the most part. That’s beginning to change now, because the climate’s different. But that’s what happened to the solar water heating industry. The wind industry, the rules and laws and regulations were a very important part of what was going to happen with it. This gets us into the whole electric arena, which is a whole different ball game. We were very active at the Public Utility
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Commission, trying to shape and help shape rules that would favor the development of our technologies. And—and—and we’re fairly successful in that; including things such as the net metering rule that was put in place in the 80’s, one of the first in the country. It’s a long, complex story to explain what that was all about and how it opened doors or could have opened doors, and it still exists today, but it’s been controversial and had never been totally effective because of how agency rules are not always enforced and
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how they apply differently to co-ops and municipals and investor-owned and-and so on. And how now today in a deregulated climate, it’s all changed, and we’re back to square one, with that approach. But for a brief period of time there was a—a real spurt of small-scale wind generation interest and activity in this State. And a handful of companies survived doing that. The mid-80’s brought it into to that as well. The bottom pretty much fell out of the economy as I had indicated, and anything that was as expensive as some of these pieces of equipment were, was a real hard sell.
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DT: Can you explain what you mean by net metering? (inaudible)
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RS: Net—net metering was—was a rule that required that anyone who installed a solar energy system, which we now refer to as wind or whatever renewable source, of fifty kilowatts in size, or smaller, would be allowed on their request to interconnect the system with a utility with a single meter that runs both forwards and backwards. And this would go on throughout the month; it would run forwards and backwards, if they were producing excess power at any given time, it would turn the meter backwards, and run kilowatt hours off. And at the end of the month, at that instantaneous time that the meter
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is read, if for that month they had actually gone past the starting point, any number of kilowatt-hours that were now on the meter as a feedback, the utility was required to pay them for those kilowatt hours. But under the rules, which reflected Federal rules at that time, all they were required to do is pay what’s called a voided cost. And a voided cost was the utility company looking at the lowest cost to them to produce power or purchase it, basically on a wholesale basis if they were purchasing, or their production cost. That’s what they were only required to pay. So they might be paying you two to two and a half cents a kilowatt-hour, for that power. So nobody is going to make a lot of money selling
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power back that way. And that was not the intent. The intent was to have systems sized in such a way, that they met a significant part of—of the existing load. It might occasionally spill over additional power, because when you started expanding a system to a much larger size that would move significant power the other direction, you start running up against the additional cost, and from a cost/benefit standpoint, you’re not going to make enough money to make that pay out. So sizing the system appropriately is what it drove you towards doing. That rule has not been very effective because of a number of reasons, not the least of which is getting an understanding on the utility side of
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how it works, and an acceptance of it; and on the Public Utility Commission’s side, a way to enforce it. And that’s played back and forth for so long, municipals were not covered in the first place, because they were not covered under PUC rules, and the co-ops were covered for—for at least the earlier years, but as I understand it, in very recent years, there was an opt—and opt out provision for rate-setting for co-ops, as to whether or not they were to be covered by the PUC. And—and that, I think has been interpreted to
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mean anything that kind of impinges on rates, which one could argue the net metering might in some. The bottom line is, it’s not any longer being effective because now we’re in a deregulated climate where the investor-owned utilities are definitely no longer in the same circumstance that they were when that rule was written. All of that’s being re-looked and reconsidered at the PUC and hopefully we will work out a way to reinstate a—a similar rule that will allow for these renewable energy systems to be interconnected and at—at a minimum, run that meter backwards when you’re producing more power,
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because that’s a net trade-out for retail electricity; and that’s what makes it a really very effective thing. Plus it puts electricity on the grid where it’s most needed in most cases, which is out on the line, some distance, so there’s a—a dual benefit. But in any case, that was one of the things that—that the Texas Solar Energy Society was actively involved in. There are other things, such as the sales tax exemption, which for a brief period of time
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existed for the property tax exemption for—for renewable energy equipment, which still exists; and the franchise tax exemption, which still exists. Those were some of the early successes that have remained. As we went into this mid-80’s period of time, as I was explaining before, where it became apparent that the industry needed a stronger ability to—to lobby and be more aggressive and more high profile, members of the—of the different sectors of the industry decided it was time to split off an organization and form a new group, which would be a trade association, with a different IRS status with a much broader ability to affect legislation. And so the effort was undertaken to form what is known as the Texas Renewable Energy Industry’s Association, and a conscious choice was made to use the terminology, renewable energy. Earlier we talked about the semantics and how they were shifting and so forth, after alternative energy got co-opted,
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we had to come up with a term that was very specific. And renewable energy became that term. And we set forth immediately to try to define it in a way that was very accurate as to what we were trying to represent, that could not be co-opted or usurped. And we’ve been fairly successful through the years at seeing to it that that definition has found its way into laws and rules so that it is a pure definition. And so the renewable energy terminology has survived. We’ve of course transitioned now into a new term,
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which some would like to umbrella over all of this, called sustainable energy, and it has its downsides. And it has already been co-opted, and I—and I think to some extent, abused. So we’re—we’re sticking with Renewable Energy Industry’s Association. There were three founders of the organization: Warren Cole, who was a manufacturer of solar water heating systems, going into his closing throes, basically following the demise of the tax credit, he—he lasted a couple more years and was no longer around. And Michael Osborn, was the second individual, and I was the third involved in—in getting the organization officially chartered. And that was a period when there was a—a brief
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rush of interest in biomass related fuels to a much higher degree than there had been. And ethanol had begun to really get some—some traction. Gasohol, as we knew it back then, ten percent blend of ethanol, was finding its way into the market all over the country, in the years leading up to that. And some states like New Mexico and maybe it was Oklahoma had significant tax advantages in place to encourage the production of ethanol in their states and the very first major issue for the Renewable Energy Industry’s Association was to try to expand on a very modest incentive that was in place in Texas.
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And try to get a ten percent per gallon incentive through the legislature. And amongst the first members of the Renewable Energy Industry’s Association were some forty or so companies that were connected with the ethanol industry in one way or another. I think it was the 1985 legislative session where that failed and shortly thereafter, when the bottom fell out of the oil industry and everything went south in Texas, ethanol was doomed at that time, and within a very short period of time, there weren’t two or three companies left in the State, they all went to other States. And the core that was left, were those
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trying to make it in solar water heating, small-scale wind, passive solar design for homes and that was pretty much it; and a couple of efficiency-related companies. There were probably fifteen members left, after the first rush and that’s pretty much the foundation and basis that we—that we built from, to where we are today.
DT: Are there any methane gas producing companies or technical consultants who are trying to get landfills to be a factor? (inaudible)
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RS: At that time, there really wasn’t much activity in the landfill methane; that came along a little bit later. The methane related activity that there was centered primarily around trying to extract methane from manures in the farm setting, confined animal operations and so forth. And in fact, there had been a significant demonstration project near Austin with DOE money in those early 80’s, years that ultimately once the money ran out, folded. But it was integer—energy integrated farm concept where they were raising swine in a confined situation and—and collecting the manure and extracting
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methane and using the methane to run generators to power the fans and the lights for the swine operation, and that worked very effectively. At the same time, they were trying to develop a small-scale ethanol blending plant, a farm-scale plant where they were going to use sorghum, I believe, raised on the farm to be the feedstock for ethanol production which they would then run the tractors and pick-up trucks and combines and so forth on. But they were never successful in—in the creating a small-scale ethanol plant that was efficient and effective enough to—to survive and then the DOE money went away. And they sh—they pretty much shut down that energy integrated farm demonstration effort.
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In—in later years, going into the mid-90’s, as we approached later utility deregulation, we’ve seen an upswing in the landfill methane approach. Austin Energy was one of the first to really get involved even before electric utility restructuring. And—and now there’s the potential for significant activity there, and we know of between fifty and seventy-five megawatts of—of landfill methane projects that are proposed, and hopefully will move forward in the not too distant future. They’ve been somewhat stymied by changes in—actually ratcheting up of the—the bar in pollution controls east of I-35, through the Texas Natural Resource Conservation Commission, reflecting the EPA’s
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tightening requirements. And where going into the deregulation process, they appeared to have no major problems, that changed very suddenly. The caps that were being put on, all of a sudden became a problem for the amount of pollution even that came out of—of what we know as a cleaner, renewable source. And a lot of work had been done on that in—in the last year or so and adjustments have been made, and as I understand it, that industry believes that they can now proceed with some of these projects and come in under—under the requirements, under the wire.
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DT: Can—you mentioned a couple times another technology besides the solar water heating and the biogas, but wind generation, can—can you talk a little bit about that, and the—the roots of it and the—I guess the 80’s and how it’s developed since then?
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RS: Well now in the 80’s, it was primarily a small-scale effort with lots of hopes and plans and everything to scale up the size of these wind-generating machines. And a lot of battles back and forth as to what technology would take the lead. There were three-bladed technologies, there were two-bladed technologies, there were various egg beater concepts and—and just any number of…
DT: (inaudible)
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RS: Right, right. And—and ultimately—one can argue why the United States ended up in the position we’re in now, where the majority of the equipment that’s being put into the large-scale wind farms comes form Europe, when a huge amount of the research that resulted in the ability, we believe, of large-scale to be successful came from the efforts in the United States, and, from a lot of work that was done at the National Renewable energy Laboratory and other places, it—it could a, be argued that because we did not have a commitment equivalent to what Europe had to developing these technologies,
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we—we let it slip. The winner at this point in time has been the three-bladed technology. And the attempts to scale-up in the 80’s were met with a lot of different failures here and there, particularly with some of the large leaps to one megawatt and above at that time that were just spectacular failures, with some of the large (?) equipment the DOE was behind and so on. But the Danes and the Germans and others really hammered out solid technology that—with the electronic controls that are available today, which I think is a real key to our success in—in wind energy in the 90’s going into 2000 and beyond.
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It’s—it’s the fastest growing large-scale electric generation technology in the world today, and—and Texas is a major player at this point in putting those types of machines in. The—the machines back in the 80’s were small one kw, five kw, ten kw in size and for a brief, twenty-five kilowatt machines by a manufacturer who’s still a member of the Texas Renewable Energy Industry’s Association, Jay Carter. His Carter machines back in the eighties were the first larger small-scale machines that—that were actually even attempted as wind farms. Michael Osborn in the 80’s took several of those machines up
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into the panhandle and put them up and connected them to the utility system; he was the first one to do that in Texas. It didn’t prove out to be a money maker because the—the regulatory issues were not right; the rules and the laws and everything weren’t in place to make it a—a—a financially beneficial thing for someone to put up a wind farm, but he did it anyway to get the experience and to show that it could be done. And—so for a while those machines were all that was available out there. And there were a couple of companies, another one of our members, at that time, known as Texas Wind Power
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Company, made a living for several years after the mid80’s in going out and finding these machines that had been put up in the early 80’s and to refurbishing them, or purchasing them and rebuilding them in the shop and reselling them and so on, with a vision to the future of being involved in larger machines. And today, in fact, they are—are now two companies, Texas Wind Power Company and Cielo Wind Power, and Cielo, out of the over nine hundred megawatts of large-scale wind that was put into Texas in 2001 is
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responsible for over four hundred megawatts of those installations. So they have grown from a very small operation to a significant company, headquartered here in Austin. All of this has come to pass because of changes in—in—in the electric utility industry, in particular are the electric utility deregulation process that occurred starting in 1999, when it was passed in the Legislative session.
DT: (inaudible) which they haven’t gotten around to regulating (inaudible)
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RS: It’s an area that’s hard to tread on because people have their visions of how this came to pass, how this happened, and with our own circles, there are disagreements and—and that’s understandable because everybody saw a different part of the elephant. There is no real simple way to explain how we got from where we were in the 80’s to where we are today, in—in electric regulation. You could—you could sit here and talk about it for hours on end, trying to explain the process, but the process was all-important to where we did get. You could not have, I don’t think, taken the leap without the steps in between. And, by that I mean, the strictly regulated climate that we were in in the
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80’s, transitioning into a—a modifying regulated climate with integrated resource planning as the approach, and moves that were made by the PUC during that period of time pre-deregulation to push things forward in lieu of deregulation, to introduce elements of competitiveness without having a competitive market. There are those who supported deregulation and going all the way, and—and those who didn’t. And some who were skeptical about it, still, and honestly, I’m among them. Over the longer haul, I question whether or not a deregulated electric utility industry will prove to be the boon for the average ratepayer that many hope and expect it will be. I think there are inherent
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issues that over a ten or fifteen year period of time may surface that will—but it will never be able to be proven, will result in—in—in perhaps higher cost to the individual residential rate payer than might have otherwise been in the case of a—a regulated market. No way to prove that, and the complexities of it can be argued, as I said. But it makes no difference because that’s where we are, and for a couple of legislative sessions leading up to 1999, there was reason to—to be concerned about deregulation when it came to renewable energy; certain logic that did not make sense for—for us. If you look at it in these simple terms, if the objective of deregulation is to provide lower cost
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electricity to the retail user, this requires that electricity costs less at the wholesale level; and that those who sell electricity are going to have to market it in a way that results in lower cost to the retail user. If that is all true, does that not drive the market in the direction of choosing electricity to buy and resell that is cheap? I would say, yes, it does. And if you make money in two ways selling a commodity, those two being, either making the money on the margin, the difference between what you bought it for and what you sell it for, or on volume, which of those two ways is likely to dominate? One could argue that selling electricity on volume is going to dominate. Selling on volume, you have to have the lowest price, and what are the resources that we were looking at the time
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that this began to be discussed six or eight years ago? If you look at coal and you looked at nuclear and you looked at gas, and then you looked at wind and solar and so forth, on a comparative basis, at that time it was fairly clear, that it would be a hard row to hoe for us to immediately leap into a deregulated situation driven in those ways, where we have a more costly product. Forget about the fact of whether it’s the right thing to do; forget about the fact of whether it’s good and good for us. What would that mean to us in the marketplace? It potentially could mean the end of any hope for the future of large-scale
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generation of electricity from a renewable source in Texas. And so with that perception, it was hard to get enthusiastic about deregulation. But going into the 1999 legislative session when it became clear, or fairly clear that it’s likely that—that it was going to happen in that legislative session, it became important for the renewable energy industries to find a place in the process. And that effort was undertaken on all fronts. Members of TREIA, TREIA itself, organizations that are friendly and involved with our efforts, everybody was looking for a way, and ultimately the concept of a renewable portfolio standard, which in past times had not been enthusiastically supported by our
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Association because it was a mandate in a regulated climate, and hard to sell politically and never successful when it was attempted, was now embraced because there was a way to assure that there would a role to play in a deregulated climate for renewable energy. And the concept that—that evolved was a market-based approach, in no small part as a result of—of the influence of—of then Chairman of the PUC, Pat Wood, that—that allowed the market to determine the winners within the construct of the mandate; and also set up mechanisms to enforce it and mechanisms to make it enticing and create additional markets. In other words the renewable energy credit trading portion of the
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program, and how that was constructed. All of these elements were bandied about between all of the players: the environmental groups, the—the—the consumer groups, the renewable energy folks, the utility industry; everybody was involved in this discussion, in a very, I think, forthright and open way, and what evolved was what we think is probably a—a program that has the best opportunity for success of its type in the country; and in fact is being looked at in other parts of—of the world as a—as a pattern for how to approach he portfolio in a deregulated utility environment. That’s not a detailed explanation of how or why it happened, but I have to say that you go back years and years to—to see the groundwork that was laid to get to that point, for it to occur. It could not have occurred in any other circumstance, in my opinion. The deregulation
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process was the element that allowed it to occur. And secondly, I think it was facilitated, again in no small part, by some of the things that we decided to do within TREIA, some brief years after we founded the organization. And that was a conscious decision to invite the utility industry to join the Texas Renewable Energy Industry’s Association. Up until that point in time, in most areas of the country and to great extent, here in Texas the—the attitude had been the utility industry is “those guys,” and then there’s “us.” And it was an “us and them” kind of—of mentality and it was the utility companies are out
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to—to slow us down, and they’re not cooperative, and you know, they’re I wouldn’t say the enemy per say, well in some places they were perceived to be the enemy. Our concept was that we’re not going to see significant utilization of renewable energy without the utility industry. And my personal opinion was that all we’ve attempted to do since we started the Texas Solar Energy Society in 1976 will ultimately go for naught if we don’t have large-scale production of renewable energy on the electric utility system. That is—that is a significant transition from where we were in the 1970’s and 80’s, where
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there was a—a significant direction that said, “Small is beautiful. Big is bad; utilities are not good; we want to all produce our own power; we want to reduce the consumption of power on an individual basis (not a bad idea) and that’s how we’re going to solve the problem.” And any discussion of large centralized generation of energy, renewable or otherwise, was looked down upon, and—and fought in our own circles, in many cases. We made a cautious decision that—that—that was not the direction that we were going to
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go. And that it was a better idea to have an educated and interested and involved and in fact, recipient of benefits in the form of a utility industry. They could see a reason to want to do renewable energy themselves, buy it, produce it, whatever. So in about 1993 or ‘4 the board voted to actively pursue the utility industry; and we started working with utility companies. And one by one, they joined the organization, and we had our
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disagreements and—and ups and downs, but we had them on the board, we shared these discussions and we got to know each other pretty well during that period of time
DT: How did you make the case to them that they should join you? What was—what was the incentive for them to invest in renewable energy?
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RS: A—a vision of potential down the line, future potential. At that time there wasn’t much in it—in it for them. But I’ll tell you my personal feelings about it; and that is that, and maybe this is a Texas perspective, I don’t know, but it all comes down to personal relationships. A lot of these folks, we had been dealing with through the years at the Public Utility Commission, in an adversarial situation, but the adversarial situations as I saw them and—and I think, maybe again this is—maybe it’s unique, maybe it’s not, but there was a respect in spite of the adversarial circumstance. And in the hallways and in
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the meetings, we were—we were all Texans. And the objective was to move the issues forward. And—and to actually get something done; the purpose is to accomplish something; and to accomplish something positive. And I think that—that individuals saw that. And through the relationships of individuals across these—these groups, the benefits were perceived. And once—once we engaged in that way, more and more little niches here and there began to surface as to how this might be a useful—this might be a benefit, well here’s our problem with that, what can you do about this, et cetera. And—and so we were accustomed to working these issues through. And by the time we hit
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things in 1999, I think there was a significant enough understanding to allow the give and take to occur that resulted in the shaping of this kind of program, but it—it couldn’t have occurred without individuals who were open on all sides, to try and to do something positive.
DT: What—what do you think the basic trade-off was between the renewable camp and let’s say the—the invest-owned utilities was that you—the renewable folks will get a renewable portfolio, but the utilities, in turn, will get the ability to some of the large consumers: through a restructured industry?
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RS: Different individuals, as I—I mentioned a—a minute ago, saw different parts of the element. And one could argue that well the trade-off was they—they got to securitize their—their bad debt, their stranded investment. Others would have a different view of what—what the benefit was, I—the—I don’t—I don’t believe that there was a single—there certainly wasn’t any single trade-off that was made. There were a whole series of give and take situations that resulted in everybody getting some of the things that they needed, or wanted out of the process. And—and—and that’s what makes things work effectively.
DT: Well, looking forward, what do you see as being the big challenges or promising opportunities in the energy industry and energy policy area?
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RS: Well, I think that—that quite often, the average individual, even those of us who are actively involved in this set of issues, have a hard time separating rhetoric from reality. That’s true on all sides. When you really get right down to it and you start looking at where we are today, here we are in Texas, we’re in 2001, we put over nine hundred megawatts of large-scale wind generation on the electric utility system. The whole United States puts something over seventeen hundred megawatts. They said it
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couldn’t be done. There were those who when—when the RPS was passed, wouldn’t believe it; couldn’t accept the fact that it was happening in Texas. That amount, when you weigh it against the big picture, it just a very, very small drop in the bucket. When we reached the two thousand megawatts that are in the renewable portfolio standard, which we will reach before—well before the 2009 benchmark, it will still be less than three percent of the demand of—of Texas. So it—it’s very small. When you look at how much energy we use in this State, and how much energy we use in the United States, when you really, really get your arms around it, and then you look at the sources that we
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are professing, that we are pushing forward, and what they can bring to the table and how long it might take to get them on line, you begin to understand that, ultimately we’re headed there. There’s no question about it. It’s an inevitability, and it’s really a question of when, not if. But, it’s not a simple process and it’s not a short-term process, and it’s not going to happen overnight. Those who were promising a five-year solar revolution in 1976, we were saying, some of us then, I—I felt is very strongly, this is a multiple decades process. As we got deeper into it, I said, this is a lifetime process. As I had a
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conversation today with one of my members, he said, this is a several lifetime process. Who knows which it is? But the bottom line is, it’s a long-term inch-by-inch, hopefully mile-by-mile, and then eventually bigger chunks process. And we’re all involved in it.
DT: Well, considering that it may be a lifetime scale kind of commitment to see any change, how do you recruit new people to come into your initiative? And how do you encourage them, when, you know, the—the prospects are—are remote, small, however you want to put it?
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RS: I don’t think that’s going to be a difficulty. In the 1970’s, with the right, or the wrong, as the case may be, drivers behind it, being virtual panic, driven by oil embargoes and so forth, there were people springing up everywhere; our problem was, we had too many people who, in many cases, ran off in directions, that—that were counterproductive, or nonproductive. It happened too fast, it wasn’t focused enough in many ways. That’s something you can’t control. We’re so far beyond that today, by comparison, with what we have technology-wise to deliver, and the successes we’ve had
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in recent years are so far and away beyond what we were capable of in the 70’s, going into the 80’s and so forth, that the excitement and interest is going to continue to build, and there will be those who begin to see an economic opportunity and an economic advantage, because, let’s face it, this is not going to occur strictly on the basis of it’s the right thing to do. It’s not going to occur because it’s going to solve our environmental problems. It’s going to—it’s going to have to be adopted by the broader population; it’s
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going to have to multiply itself in ways that are going to have to be driven by hard-core economics. These other things are important factors that—that are spurs that push it along, but it has to be an economic sweep. And at a certain breakpoint, it will become that, not necessarily because we’ve hammered out every economic detail that’s necessary to make that happen, but because like a—like a changing of poles with a magnet and you metal filings, there’ll be C change that happens; and—and when that does, a mentality will shift and economics will follow more rapidly. So while we’re driving for that C
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change with our efforts on the environmental front, our efforts on security, from dependence on foreign oil, our concerns about global climate change, our need for independence as individuals, you name the horse, we’ve ridden it, or we will ride it at one point in time or another. All of these things will drive us toward that C change and the economics, we’re chipping away at those gradually, but that C change I think, will make the economics have a great leap forward, because people will be willing to take that leap themselves. See our—I—I think our big problem right now is, that, you know,
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everybody wants it—renewable energy, we know that. Survey after survey has been done, we don’t need to do them over and over again that the people will respond and say, “Yes, we want clean energy. We want renewable sources.” But the proof is when given the opportunity is will they pay for it? And the answer up to this point is for the most part, “No, they won’t, they won’t pay for it.” Does that say that there isn’t money out there to pay for it? I don’t think so. I think we’ve invested a lot more in a lot less in our history in this country. It’s where we put our priorities. So, if we can get that C change to happen as a result of shaping our priorities, the economics can tak—make this great
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leap; people will start investing in buying green power, spending that extra six dollars a month or ten dollars a month to sign up for a program like Austin Energy’s Green Choice where a hundred percent of it, or whatever percentage they may be offering in a particular program, comes from a renewable source. Or they may, if they’re in a competitive area, buy from Green Mountain Energy Company, a hundred percent wind product and spend that extra how many ever dollars a month more it is, and everyone of them that does that, means more renewable energy will be built to deliver that need. Right now they’re
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spending that ten dollars for something, what are they spending it for? What do you spend that extra ten bucks for? I—I don’t know, soft drinks? Candy? A—a pizza that you could do without one time a week? Change those priorities and just think about it. If eighty percent of the—of the people who—who get their energy from Austin Energy were to suddenly decide to do exactly that, what an amazing change that would be, and we’ll reach that point.
DT: I hope so. Did—did you have any questions to add?
DT: Would you like to add anything?
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RS: Well, unfortunately, I could, you know, I could explore these things for—for hours on end, because I’ve—I’ve got so many ideas and thoughts about what we’ve done and where we’ve been and where we’re going and so forth that it’s hard to express them all. But, it’s been a pleasure to have the opportunity to attempt to in this brief period we’ve had together.
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DT: Thanks very much for sharing (inaudible)
RS: You’re welcome.
[End of Reel 2174]
[End of interview with Russell Smith]