How the Lights Stay On · The Trilemma

The Trilemma, part 2

The Messmer Plan was a bet. France won that bet, by most measures. But it was not a free win.

Germany made a different bet, decades later.

After the Fukushima nuclear accident in Japan in 2011, the German government — under Chancellor Angela Merkel — announced that Germany would phase out nuclear power. All of it. By 2022, every nuclear reactor in Germany would be shut down. This was on top of a separate German commitment to rapidly expand renewable energy, called the Energiewende — German for “energy transition.”

The reasoning was a particular combination of post-Fukushima public fear, deep environmental movement skepticism of nuclear, and confidence that Germany could replace nuclear with solar, wind, and (importantly) imported Russian natural gas.

For a while, this seemed to work. Germany built more solar panels than any other European country. Wind farms went up across the north. Coal plants began to close. Total renewable share of German electricity climbed from about 10 percent in 2005 to over 40 percent by 2020.

There were warning signs. German electricity rates climbed to among the highest in Europe — paying for the renewable buildout was expensive, even before you accounted for the cost of grid upgrades and storage. Germany’s emissions did not drop as fast as expected, because closing nuclear plants meant burning more coal in the short term to make up the difference. Independent analysts pointed out that Germany was becoming dangerously dependent on Russian gas as a backup fuel.

Then, on February 24, 2022, Russia invaded Ukraine.

Within months, the Russian government cut off gas exports to most of Europe. German industry, which had been running on cheap Russian gas, suddenly faced energy costs three or four times higher than the previous year. Households faced staggering heating bills. The German government announced emergency measures — including, embarrassingly, restarting some of the same coal plants the Energiewende had been designed to close.

The Energiewende had, in essence, optimized for clean and (apparently) affordable while leaving reliability dependent on a foreign country whose intentions had been misread. When Russia changed the rules, all three corners of the trilemma got worse at once.

Germany is, several years later, slowly recovering. Renewable capacity continues to expand. Some nuclear plants have been kept running past their original shutdown dates. New gas terminals have been built to import liquefied gas from the United States and the Middle East. But the lesson is hard, and German voters have not forgotten it.

The Energiewende was an attempt to have all three corners of the trilemma. Many energy experts had warned, before 2022, that it was relying on Russian gas to make the math work. They turned out to be right.

We covered Texas in Chapter 8 in the context of the February 2021 freeze. The honest framing through the trilemma is worth revisiting now.

Texas, for the last several decades, has optimized hard for affordable. Light regulation. An isolated grid that does not have to comply with federal reliability rules. Market structures that reward generators for the electricity they actually deliver, not for being available in emergencies. Cheap land for power plants. Easy permitting for new generation.

The results have been real. Texas electricity has, for most of the last twenty years, been cheaper than electricity in most other states. Texas has become the largest wind-power producer in the country, partly because the same easy regulatory environment that left it vulnerable to extreme weather also made it possible to permit and connect wind farms in months rather than years. Industrial customers love Texas electricity. Tech companies have flocked there partly for the cheap power.

Texas has also been, for most of those twenty years, fairly reliable. The 2003 Northeast blackout did not affect Texas. The 2021 freeze was an outlier — or at least, it was an outlier until February 2021. After February 2021, it was clear that the reliability had been borrowed against an extreme-weather bill that came due.

So Texas, in trilemma terms, picked affordable and (mostly) reliable. The clean corner is partial — Texas is the largest wind producer but also a huge natural gas user — and the reliable corner is conditional on weather staying within historical ranges.

After 2021, Texas has done some retrofitting. Winterization is now required by law. The grid has more battery storage than any other state. But the basic structural choices — isolated grid, light regulation, market-based reliability — have not changed. Texas is still optimizing for affordable. The price is real.

California has spent the last twenty years running an aggressive experiment in clean energy.

The state passed laws requiring its utilities to generate 60 percent of their electricity from renewables by 2030 and 100 percent from clean sources by 2045. It paid generous subsidies to homeowners to install rooftop solar (until NEM 3.0 cut those subsidies — see Chapter 9). It built more battery storage than any other state. It pushed automakers, with state-level rules, to sell more electric cars.

The results, by some measures, are impressive. California now generates roughly half of its electricity from renewables during the daytime hours on most days. The state has more battery storage on its grid than any country except China. Solar panels cover roofs across the state in numbers that would have seemed impossible twenty years ago.

The results, by other measures, are sobering.

California has the highest residential electricity rates in the contiguous United States — about twice the national average. The reasons are complicated: wildfire-related infrastructure costs, transmission upgrades, paying for the early-build subsidies of the previous generation of renewables. Whatever the cause, ordinary Californians pay more for electricity than ordinary Americans almost anywhere else.

California has also had reliability scares. The 2020 rolling blackouts during a heat wave. The wildfire-related public safety power shutoffs. The duck curve from Chapter 6 — the daily challenge of evening ramps as solar fades. None of these are catastrophic in the way the Texas freeze was. But they are the reliability cost of pushing clean and affordable harder than most other states.

California, in trilemma terms, has picked clean and (mostly) reliable. The affordable corner has been sacrificed. Whether this is a worthwhile trade depends on what you value. California voters have, repeatedly, said yes.

There is a fifth system worth visiting in any honest discussion of the trilemma. It is the system the next chapter is entirely about.

China has built more solar than any other country, more wind than any other country, more transmission lines than any other country, more nuclear plants under construction than any other country, more electric cars than any other country, and — at the same time — more new coal plants than any other country. China is doing all of these things at once, at a scale and speed nothing else in human history compares to.

If you only looked at the showcase coastal cities — Shanghai, Beijing, Shenzhen — you might conclude that China has achieved all three corners of the trilemma. The lights are steady. Industry is humming. Air quality in those cities has improved dramatically in the last decade. Electricity rates are reasonable.

But, as the next chapter will explain, this picture is more complicated than it looks. Reliability in China’s showcase cities exists in part because someone else, somewhere else in the same country, takes the cuts when supply runs short. The trilemma has not been solved. It has been displaced — onto people without political power to fight back.

We will get there. For now, the point is that the trilemma applies even to systems that look, from the outside, like they have somehow escaped it.

Here is what I want you to take from this chapter, more than any specific set of facts.

The trilemma is a tool. Once you have it, you can use it to evaluate almost any energy claim you hear for the rest of your life.

When someone tells you “France has the best energy policy in the world,” ask: which two corners did France prioritize, and what did they pay for the third?

When someone tells you “Germany is a model for the energy transition,” ask: clean and affordable — but reliable? Reliable how, exactly, when the wind stops blowing and the sun stops shining and the gas stops flowing?

When someone tells you “Texas has the cheapest electricity,” ask: cheap on average, or cheap when you weight the cost by how it falls in February 2021?

When someone tells you “California is leading the world on clean energy,” ask: leading at what cost, paid by whom, and how reliably?

The trilemma is also useful to apply to yourself. To your own utility. To your own state.

If your electricity rates are low, ask which corners your state has sacrificed.

If your electricity is clean, ask what you are paying for that.

If your grid is reliable, ask how much it costs and how clean it is.

There is no shame in any particular set of trade-offs. There is no universally right answer. But there are always trade-offs, and the people who pretend there are not are usually the ones trying to sell you something.

The trilemma applies to the United States as a whole, too. Not just to individual states.

For most of the twentieth century, the United States picked affordable and reliable. Electricity was cheap because we burned coal. Electricity was reliable because we built more capacity than we needed, with diverse sources, on a continental grid. The clean corner was sacrificed almost entirely.

In the twenty-first century, we have started trying to claw back some of the clean corner. We have built enormous amounts of natural gas (cleaner than coal but still fossil), solar, wind, and now nuclear. The clean corner is, slowly, being recovered. But we have not yet decided which of the other two corners we are willing to sacrifice to do it.

That decision — whether the United States will pay more for electricity, or accept a less reliable grid, in exchange for a cleaner one — is being made right now, mostly invisibly. Different states are making different bets. Different decades will prioritize different corners. The conversation about what we want from our grid is ongoing.

Most of the people making the choices are not consulting voters explicitly. They are state regulators, utility executives, environmental review boards, and federal agencies. The choices show up in your electric bill, in the air quality where you live, in the reliability of the grid during the next heat wave.

But the trilemma is the frame underneath all of it. If you understand the trilemma, you understand a lot of what is going on in the world.

You also understand that anyone who tells you it can be escaped is wrong.

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