The media have published story after story after story about the declining price of solar panels and wind turbines. People who read these stories are understandingly left with the impression that the more solar and wind energy we produce, the lower electricity prices will become. And yet that's not what's happening. In fact, it's the opposite reports Michael Shellenberger.
Solar and wind present two problems. One is low power density; massive areas have to be devoted to power generation. The other, more serious problem is intermittency. If we only wanted to run electrical appliances when the wind is blowing or the sun is shining, fine, but don't expect to use solar to turn on your lights at night. So solar and wind cannot manage on their own; it's always solar on wind and something else. Generating more electricity from solar and wind is just a very expensive exercise in political correctness that will have little impact on carbon dioxide emissions, but a big impact on your wallet says Jonathan DuHamel. 2
Between 2009 and 2017, the price of solar panels per watt declined by 75 percent while the price of wind turbines per watt declined by 50 percent.
And yet, during the same period, the price of electricity in places that deployed significant quantities of renewables increased dramatically.
Electricity prices increased by:
51 percent in Germany during its expansion of solar and wind energy from 2006 to 2016;
24 percent in California during its solar energy build-out from 2011 to 2017: Between 2011-2017 the cost of solar panels declined about 75 percent, and yet electricity prices rose five times more than they did in the rest of the US. 3
Over 100 percent in Denmark since 1995 when it began deploying renewables (mostly wind) in earnest.
Shellenberger asks what gives? If solar panels and wind turbines became so much cheaper, why did the price of electricity rise instead of decline? 1
The reason? Their fundamentally unreliable nature. Both solar and wind produce too much energy when societies don't need it, and not enough when they do. 4
Solar and wind thus require that natural gas plants, hydro-electric dams, batteries or some other form of reliable power be ready at a moment's notice to start churning out electricity when the wind stops blowing and the sun stops shining.
And unreliability requires solar and or wind heavy places like Germany, California and Denmark pay neighboring nations or states to take their solar and wind energy when they are producing too much of it. 1
Lion Hirth predicted that the economic value of wind on the European grid would decline 40 percent once it becomes 30 percent of electricity while the value of solar would drop by 50 percent when it got to just 15 percent. In 2017, the share of electricity coming from wind and solar was 53 percent in Denmark, 26 percent in Germany and 23 percent in California. Denmark and Germany have the first and second most expensive electricity in Europe.4
A report from the American Wind Energy Association shows electricity prices are rising four times as fast as the national average in 9 of the 11 states with the most wind power consumption. In Texas, the only one of the 11 states with significantly declining electricity prices, deregulation, not wind power, is causing the decline in electricity prices. 5
The question is how to calculate the actual cost of electricity generated by these technologies. As The Economist reports, "Whereas the cost of a solar panel is easy to calculate, the cost of electricity is harder to access. It depends not only on the fuel used, but also on the cost of capital (power plants take years to build and last for decades), how much time a plant operates, and whether it generates power at times of peak demand. To take account of all this, economists use 'levelized costs'--the net present value of all costs (capital and operating) of a generating unit over its life cycle, divided by the number of megawatt-hours of electricity it is expected to supply.
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The problem with this approach is that levelized costs do not take account of the costs or intermittency. Wind power is not generated on a calm day, nor solar power at night, so conventional power plants must be kept on standby—but are not included in the levelized cost of renewables. Electricity demand also varies during the day in ways that the supply from wind and solar generation may not match, so even if renewable forms of energy have the same levelized costs as conventional ones, the value of power they produce may be lower. In short, levelized costs are poor at comparing different forms of power generation. 6
A Brookings Institution report by Charles Frank gets around this problem by using a cost-benefit analysis to rank various forms of energy. The costs include those of building and running power plants, and those associated with particular technologies, such as balancing the electricity system when wind and solar plants go off-line or disposing of spent nuclear fuel rods. The benefits of renewable energy include the value of the fuel that would have been used if coal or gas-fired plants had produced the same amount of electricity and the amount of carbon dioxide emissions that they avoid. When all this is taken into account, wind and solar look far more expensive than they appear on the basis of levelized costs. 7
Summary
By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity, journalists are intentionally or unintentionally, misleading policymakers and the public about those two technologies.1
Amid hundreds of graphs, charts and tables in the World Energy Outlook (WEO) report released in November 2018, there is one fundamental piece of information that you have to work out for yourself: the percentage of total global energy demand provided by wind and solar. The answer is 1.1 percent.8
A recent University of Chicago study says even minimal increases (1-4%) in wind/solar raise electricity prices 11-17%. Reducing CO2 emissions costs $130 to $460 per ton.9
Benjamin Zycher sums this up well, "Clean and renewable energy has proven so costly and uncompetitive that even the Europeans are backing away from their own mandates rapidly. The basic reality is that 'clean and renewable ' energy in almost all of its manifestations is far too expensive and unreliable to compete." 10
References
Michael Shellenberger,"If solar and wind are so cheap, why are they making electricity so expensive?", forbes.com, April 23, 2018
Jonathan DuHamel, "The high cost of electricity from wind and solar generation," wryheat.wordpress.com, March 12, 2018
Michael Shellenberger, "Why renewables can't save the planet," quillette.com, February 27,2019
Lion Hirth, "The market value of variable renewables: the effect of solar and wind power variability on their relative price," Energy Economics, 38, 218, July 2013
James M. Taylor, "Electricity prices skyrocketing in wind power states," Environment & Climate News, 17, 1, April 2014
"Sun, wind and rain," The Economist, July 26, 2014
Charles R. Frank, Jr., "The net benefit of low and no-carbon electricity technologies," Brookings Institution, Global Economy & Development Working Paper 73, May 2014
Peter Foster, "Another report reluctantly admits that 'green' energy is a disastrous flop," business.financialpost.com, November 22, 2018
Michael Greenstone et al., "Do renewable portfolio standards deliver?", bfi.uchicago.edu, April 21, 2019
Benjamin Zycher, "Cleantech gets clocked by 60 minutes, and the usual suspects try to make lemonade," The American, January 23, 2014
Jack Dini is author of Challenging Environmental Mythology. He has also written for American Council on Science and Health, Environment & Climate News, and Hawaii Reporter.
The media have published story after story after story about the declining price of solar panels and wind turbines. People who read these stories are understandingly left with the impression that the more solar and wind energy we produce, the lower electricity prices will become. And yet that's not what's happening. In fact, it's the opposite reports Michael Shellenberger.
