The Peter Zeihan Podcast Series - Clean Energy in Chicago: Why Windy Suburbs Matter || Peter Zeihan

Episode Date: April 19, 2023

What do Chicago, Denver, and DFW all have in common? Yes, they are all major metro areas in the US, but more importantly, they're colocated with green energy sources. As the world adopts more and more clean energy, these regions with localized energy sources will have a huge leg up on places that don't.Full Newsletter: https://mailchi.mp/zeihan/clean-energy-in-chicago-why-windy-suburbs-matter

Hey everybody, Peter Zion here, coming to you from very chilly northern Illinois. Behind me, of course, we have a wind turbine, which is one of literally hundreds in the immediate area around me. We are at the edge of the Great Plains here. I mean, technically, yes, we're in more of the Midwest, but we are in one of the world's great wind zones. Great Plains going into the northern Midwest is all pretty good wind space. And what is unique about this turbine in particular is it is supporting the metro region that is the Chicagoland zone, which is the fourth largest metro in the United States. In most places of the world,

it doesn't matter what continent you're on, what country you're in, it is very rare for there to be good wind or solar potential near a major metro. And so even if you are able to build out the system to generate the power, then you have to transmit hundreds and maybe even thousands of miles. Chicago is one of the handful of cities in the world that is an exception to that rule. Northern Illinois, especially northeastern Illinois, you've got decent wind right at the doorstep of the metro zone,

and so you don't need high voltage lines in order to transmit the power up to the urban section effectively. You can use more lower load-bearing facilities and equipment, and that means that Chicago is able to reach out not just to northern Illinois, but also southern Wisconsin, eastern Iowa, something a little bit of western Iowa, and into Ohio as well. in order to generate electricity. Now, there are very, very, very few places in the world where this works, but most of them are in the United States. So my adopted hometown to Denver

is at the edge of the Great Plains, Great Wind Zone. Phoenix is obviously at the heart of a great solar zone, as is Albuquerque, and Dallas Fort Worth is probably the American metro that has the most green potential of all because it's where the Great Plains meet the southwest. And so Dallas Fort Worth is likely to be

the first major American metro zone to go 100% green, despite the fact that there are only like four environmentalists in the entire metro zone. Now, if you're going to try to make a green impact, it's very important to co-locate power with your urban centers because it's very rare anywhere in the world to locate power generation more than 500 miles, because at that point, the transmission loss becomes so high that it's really not worth it from an economic point of you anyway. And in the United States, we're one of the very few places that actually has the metro zones that meet those criteria. But you can't do that in New York. You can't do that in Paris. You can't do that in Berlin or London or Moscow or Beijing. It's really only in the

United States where we have that co-location. If you don't have that co-location, then you have to have high voltage lines that are designed for long-range transmissions. And those are not cheap. Now, in most countries, you have a unified power grid. The United States is not in most countries. We do things a little bit differently. Most of our utilities are set at the state or even local level. And that means if you want to transmit power from, say, Utah to Los Angeles, you have to cross through different states' regulatory authorities,

and each of them have their own rules for transmission and for even just raising the capital to do it in the first place. And God forbid you want to cross between different grids, because the United States has three. Roughly everything west of the Rockies is on one, roughly everything east of the Rockies is on another, and then of course Texas has its own thing. If, if, if the goal is to decarbonize the power system,

not only do we need a lot of solar and wind, we would also need several acts of Congress that would break down the regulatory burdens that exist across these different grid systems and across the different states and across the different municipalities. The problem of the Americans face is that the United States,

is a federal system where the national government, the state governments, and the local governments all share power. They all have about the same amount. And Congress would need to break that down within the power sector in order to encourage a more unified grid space that allows green electrons to travel more freely. That would trigger dozens of lawsuits from the state and the localities, which would rightly challenge the power grab from the federal government, which means, at least in the near term, the next decade, maybe two. Most of the stories for green power penetration into the American grid have to happen at the local level.

And that gives cities like Chicago, Albuquerque, Phoenix, Denver, and of course, Dallas-Fort Worth, a huge leg up over everyone else whose local electricity resources when it comes to green tech simply aren't that great. Okay, everybody, that's it for me. See you next time.