Saturday, May 19, 2018
If Solar And Wind Are So Cheap, Why Do They Make Electricity So Expensive?
The following article appeared in Powerline on May 17th
By John Hinderaker
We are constantly hearing about the declining cost of wind and solar energy. Yet electric rates keep rising, especially in areas that have invested heavily in these “green” technologies. How can that be? Michael Shellenberger answers that question in a guest post at Watts Up With That?
Over the last year, 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 understandably 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.
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;
* over 100 percent in Denmark since 1995 when it began deploying renewables (mostly wind) in earnest.
What gives? If solar panels and wind turbines became so much cheaper, why did the price of electricity rise instead of decline?
Especially since, during the same time, the cost of natural gas plummeted while coal and nuclear were flat. So what’s happening?
The main reason appears to have been predicted by a young German economist in 2013.
In a paper for Energy Policy, Leon Hirth estimated that the economic value of wind and solar would decline significantly as they become a larger part of electricity supply.
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.
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 to pay neighboring nations or states to take their solar and wind energy when they are producing too much of it.
This is exactly what has happened in Minnesota, as documented by Steve Hayward and Peter Nelson in their paper for Center of the American Experiment titled Energy Policy In Minnesota: The High Cost of Failure.
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.
Shellenberger indicts our news media for failing to report accurately on the costs of “green” energy:
By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity prices, journalists are — intentionally or unintentionally — misleading policymakers and the public about those two technologies.
The Los Angeles Times last year reported that California’s electricity prices were rising, but failed to connect the price rise to renewables, provoking a sharp rebuttal from UC Berkeley economist James Bushnell.
“The story of how California’s electric system got to its current state is a long and gory one,” Bushnell wrote, but “the dominant policy driver in the electricity sector has unquestionably been a focus on developing renewable sources of electricity generation.”
Is it ignorance or is it bias? You can decide, but here, as everywhere, ignorance and bias are mutually reinforcing. One probably can imagine a worse press than the one we have in the U.S., and generally throughout the West, but it isn’t easy.