The High Cost of Renewables

Numerous attempts are made by the media and others to claim that renewables are less costly than electricity generated from fossil fuels.

The prevailing mantra is that costs are “rapidly declining” and that wind and solar are competitive, or will be shortly.

The fact is, wind and solar, of all varieties, are not, and will not be competitive with fossil fuels in the foreseeable future.

Wind farm in New York State. 2013
Typical wind farm

This administration fosters this misinformation.

An example is the Energy Information Administration (EIA) that used to publish levelized cost (LCOE) information that was current, but has now resorted to publishing LECOEs for the future, most recently for 2020.

This misleads the reader into believing something that isn’t true.

These projections increased the LCOE for natural gas combined cycle from the current cost of around 5 cents per kWh, to 7.5 cents in 2020, four years from now.

While claiming that wind will also be 7.4 cents per kWh in 2020, when, today, it’s at least 10 cents per kWh.

This leads the media and casual observer to say wind is competitive with natural gas … which it isn’t.

Even more egregious is that the EIA adds a cost for carbon of 15 dollars per ton of CO2 for coal-fired power plants, which arbitrarily increases the LCOE to 9.5 cents per kWh, when in fact, it’s approximately 6 cents per kWh today.

Here are the EIA’s LCOEs projections for PV solar and Thermal solar, of 12.5 cents and 24 cents per kWh respectively … in 2020.

Obviously, neither type of solar power is or will be competitive with natural gas, or coal.

The media hype is misleading, and the EIA aids and abets the effort to mislead and deceive Americans.

In the real world these deceptions have consequences.

One need only look at the residential cost of electricity where renewables are being forced onto the grid compared with where coal-fired power plants provide most of the electricity.

The clearest examples are California, where the residential rate is 17.4 cents per kWh, and Arkansas, where the residential rate is 10.2 cents per kWh.

A more dramatic example is where wind and solar have become major components of the electricity mix … Germany.

The residential rate for electricity in Germany, depending on the exchange rate, is approximately 40 cents per kWh … or 4 times the rate in Arkansas.

Forcing wind and solar onto the grid will result in increasingly higher costs for electricity, especially as storage, essential for operating the grid when the percentage of renewables reaches 30% or more, is added to the grid.

It’s not greedy utility companies that are increasing the cost of electricity, it’s wind and solar.

 

References:

LCOE information is at http://1.usa.gov/23NqVjm
Residential rates at http://1.usa.gov/1SP8CVU

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See Chapter 9, of Nothing to Fear: The Utility Death Spiral.

Nothing to Fear is available from Amazon and some independent book sellers.
Link to Amazon: http://amzn.to/1miBhXy

Book Cover, Nothing to Fear
Book Cover, Nothing to Fear

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0 thoughts on “The High Cost of Renewables

  1. Further, the EIA costs for wind & solar are four times these sources to produce power. Not considered are extra costs for times when they do not.

  2. Donn, great article, we need to get it out to the public and to those who vote for the renewable mandates with wrong information.

    Thanks for exposing the government misinformation about how “cheap” wind and solar are now and the false promise of how it will become much lower cost in the “future”. Not possible! The only way it can become competitive is to tax fossil and lower cost fuels or to continue heavy government subsidies paid for by taxpayers. Also the expense of upgrading the grid, necessary with these alternatives, is not normally included in the claimed rates.

    It would be interesting to show a plot showing delivered cost versus % of “renewable” energy. In NJ we have an average residential rate circa 15 cents/kwh which has increased dramatically due to % green energy mandates, while low cost coal and nuclear are being shut down in the state.

    Another point, California PG&E has a tiered rate for electricity depending on usage which goes up to 34.9 cents from 18.4 per kwh depending on usage.
    http://www.pge.com/en/myhome/saveenergymoney/plans/tiers/index.page

    I see different rates depending on the source of the data which I don’t understand.

    • Thanks for your comments, and for the information on PG&E.
      There’s a great deal of misinformation in the media, which is bound to confuse many people.
      That’s why I turn to the EIA LCOEs even though they are biased, because it’s not my data but the governments data, and I can use it to compare to the facts.

  3. Hi Donn,

    Two of Elon Musk’s companies are seeing plunging stock prices.

    CNBC reported that Solar City’s earnings report showed slowing installations of solar panels on customer roofs. Their stock plunged 19% after hours.

    Tesla stock, which I recently sold, is reporting their sales and profits tomorrow. Analysts are projected Tesla sales of 70,000 for 2016, after selling 50,000 cars last year, slightly under the projections of 55,000 earlier last year.

    One thing both of Elon Musk’s companies are facing is lower energy costs.

    Tesla was also having some problems with their gull wing doors in their Model X SUV’s, as well as manufacturing problems with the third row of seats.

    The expected profit for TESLA is 10 cents per share, for their fourth quarter of 2015. They raised money by issuing Tesla shares when the stock was trading at $240 per share, but the stock has plunged lately and is now trading at $140.

    They keep their sales up by taking advantage of EPA-type subsidies as you know. Will those subsidies be extended if a Republican occupies the White House in 2017?

    Craig

    Sent from my iPhone

    >

    • Thanks. Great comments and great question. Unfortunately this congress has already extended many of these wasteful subsidies. We’ll have to wait to see whether Republicans will have the gumption to redress this mistake

  4. Good article, I didn’t know they were padding the cost of conventional power. My favorite is that the feed in tariff for renewables, something like $.50/kwh, is not considered a subsidy. Actually the price in California is worse, when an “event” happens, it can spike to $1/kwh. I propose that renewables be called DIES(Diffuse Intermittent Energy Sources) which I hope becomes a reality.

  5. There is an important consideration no one talks about and that is, why should a utility buy green electricity and then cut back or shut down equipment and end up loosing money. Start up and shut down fees and loss of revenue should be paid by the green part time producers.

  6. Pingback: Weekly Climate and Energy News Roundup #215 | Watts Up With That?

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