Subsidies for wind, solar put dependable energy at a disadvantage.
Wind and solar power subsidies put dependable energy at a disadvantage
The climate obsessions of the Obama administration yielded a substantial myopia with respect to the other central goals of energy policy, the cost and reliability of the electric power system in particular. One obvious result of that single-minded focus was a concerted effort to ignore several unavoidable trade-offs, as the push proceeded for expansion of wind and solar (“renewable”) electricity generation, rationalized as “cleaner” than such conventional generation as coal and natural gas. More about that purported cleanliness below. For now, we should recognize the importance of a new draft study from the Department of Energy, which examines the effect of increasing reliance upon wind and solar power on the reliability of the nation’s power system. Shunted aside by the Obama administration, this topic is crucial because of the intermittent nature of wind and sunlight — unlike the energy from coal, natural gas or nuclear fuel. These are available upon demand and thus can be scheduled (“dispatched”), while wind and solar power are available only when they are available, and thus require substantial backup generation capacity in order to avoid power outages.
Such backup power is very expensive — my own estimate of those backup costs is $368 per megawatt-hour — and there is an unavoidable trade-off between those extra costs and the massive costs of potential blackouts. The Energy Department’s two central preliminary findings can be summarized as follows:
• Many retirements of large, reliable baseload plants over the past 15 years have been driven by competition from inexpensive natural gas, from a slowing of demand growth for electric power, and from the anticipated costs of increasingly stringent environmental regulations.
• But since 2007 the growth of wind and solar power, driven heavily by large federal, state and local subsidies and by guaranteed market shares (“renewable portfolio standards”), has exacerbated the problem of large baseload plant retirements.
In short: The subsidies and guaranteed market shares for renewables have distorted the market. Large, efficient baseload plants fired by clean coal and nuclear technologies are difficult or impossible to ramp up and down as wind or sunlight conditions decline or rise. As a result, the “capacity factors” — the proportion of the time that they are producing power — of the baseload plants fall, the effect of which is to increase their average production costs.
The outcome described in the Energy Department study is straightforward: The plants cannot operate efficiently, their owners cannot cover their costs, and their early retirements are reducing the reliability of the electric power system, an effect that is both costly and unavoidable — and dangerous in terms of the potential for blackouts.
Notwithstanding ubiquitous assertions to the contrary, wind and solar power are expensive and unreliable. They are expensive because the energy content of wind and sunlight is unconcentrated. That is why they are dependent upon massive subsidies and guaranteed market shares; when those are threatened with policy reforms, investment in those sectors collapses to zero. Moreover, the production subsidies for renewables — the production tax credit for wind power in particular — allow the wind power producers to underprice their electricity without incurring financial losses. Coal and nuclear baseload plants, which cannot ramp up and down easily or at all, must match those artificially low prices, which under some conditions actually are negative. The longer-term effect of this large distortion is less investment in reliable baseload capacity, and thus a power system that is less reliable.
Moreover, there is nothing “clean” about renewables. There is the heavy-metal pollution created by the production process for wind turbines. There are the noise and flicker effects of wind turbines. There is the large problem of solar panel waste. There is the wildlife destruction caused by the production of renewable power. There is the land use both massive and unsightly, made necessary by the unconcentrated nature of renewable energy.
And above all: There is the increase — yes, increase — in the emissions of conventional effluents caused by the up-and-down cycling of the conventional backup generation units needed to avoid blackouts caused by the unreliability of wind and solar power.
The Energy Department reliability study is important because it exposes the central problem with wind and solar subsidies swept for so long under the rug. Such policy support is forcing the shutdown of large numbers of reliable baseload power plants producing inexpensive conventional electricity, in favor of unreliable wind farms and solar power facilities, a growing distortion mandated in pursuit of a climate agenda even though the net effect on global temperatures of the assumed reduction in greenhouse gas emissions would be effectively unmeasurable by the year 2100. Can this possibly make sense?