The Plague of Renewable Portfolio Standards

There are few commodities that are more perishable than electricity.  If it is not consumed at the moment it is produced, there are not very good options.  Yes, it is possible to store electricity via a reversible hydroelectric scheme called pumped storage.  It can also be stored in rechargeable batteries.  Both options are exorbitantly expensive.  With eggs or milk, cold storage for a period is feasible, and if that doesn’t work, there are powdered eggs and cheese.  Electricity is produced by generating plants that are capital-intensive.

At a modern natural gas generating plant, two thirds of the cost is capital, and one third is fuel.  If you idle the plant because at a particular time there is no market for the electricity, two thirds of your costs keep on running.  At a nuclear plant, fuel is extremely cheap.  Nearly all the cost is capital or staffing, and nearly all the costs continue if the plant is idle.  Idling a nuclear plant saves practically nothing.  That gives a clue why nuclear plants generally run flat out, turned on more than 90% of the time.  With a wind or solar generating plant, nearly all the cost is capital.  If you turn off wind or solar generation, because there is no market, all your expenses turn into losses.

Wind or solar plants, usually, can be turned off on command, but they can’t be turned on unless the wind is blowing or the sun is shining.  They are erratic generators.  Not only can you not be sure of turning them on when needed, but they are liable to turn off by themselves because the wind died or a cloud moved in front of the sun.  This is worse than producing milk or eggs.  The cows and chickens can be counted on to produce at a fairly predictable rate.  When a substantial part of the electricity in a particular area is being generated by wind or solar, there have to be enough quick-response backup plants ready to compensate for a drop off in generation from the wind or solar.  Usually the backup plants are natural gas plants due to their agility.

Wind and solar are feasible only because the operators of the grid agree to do everything possible to accept whatever amount of wind or solar is coming their way at any time.  They assume this posture toward wind and solar because that is required by various regulations and contracts.  All the other sources of power are ordered to decrease or increase output as needed to balance the amount of wind or solar power flowing at any moment.  If wind and solar are minor players, the burden of accommodating their erratic nature is small.  If they become big players, the burden starts to be a serious problem.  In some places, like California, it’s starting to get serious.

Wind and solar are impractical due to their erratic nature.  Another big problem is that they are extremely expensive, even with government subsidies.  The alternative to purchasing wind or solar electricity is to use the natural gas plants, already in existence, that back up the wind and solar.  To use the natural gas plants, the only additional expense is the marginal cost of operation, almost entirely the cost of the fuel.  That cost is about $15 per megawatt-hour.  You don’t have to build new backup plants to substitute natural gas for the wind or solar, because there already has to be enough backup capacity to 100% replace the wind or solar.  Electricity from either wind or solar costs around $80 per megawatt-hour; nearly all the cost is the cost of capital, and the cost is five times more than it costs to use the natural gas plants that are already there.  (Wind and solar cost about the same.)  Government subsidies exist that may lower the cost of wind or solar to around $30, still double the $15 cost of using the backup plants.  Many of these subsidies are under political attack or are scheduled to sunset.

The wind and solar industries claim that their products are competitive with conventional generation.  They do this by making a false comparison.  The total cost of natural gas electricity is around $45 per megawatt hour, the $15 cost of the fuel, the $30 cost of amortizing the capital investment.  The cost of wind or solar with current subsidies is around $30.  So they claim that wind or solar is cheaper than conventional natural gas, $30 versus $45.  Adding wind or solar cuts only the fuel cost, not the capital cost of natural gas plants.  The capital cost of natural gas remains because the plants have to stay in place to back up the wind or solar.  Further, the government subsidies are not a real cost reduction.  The pubic just pays for the electricity via taxes rather than via their electric bill.  If you add wind or solar to a grid, someone has to pay $80 to save $15.

This situation, where everyone else has to bend over backwards and pay high prices to accommodate wind and solar, is sold to the public on the grounds that it reduces CO2 emissions and thus saves the world from global warming.  One objection to this is that the predictions of global warming are based on junky science, while adding CO2 to the atmosphere greens the Earth and increases agricultural production.  If we ask the most qualified people who firmly believe in global warming from CO2, such as the scientist James Hansen, they say that using wind and solar to cut CO2 emissions is a big lie, a grotesque and fantastical solution that won’t work. See  here, here, and here.  They say that only CO2-free nuclear energy can save us from global warming.  Most environmental organizations are still advocating wind and solar.  They have a problem with nuclear because during the ’70s and ’80s, they worked very hard to destroy the nuclear industry in the U.S.  They largely succeeded.

The biggest government policies that keep the wind and solar fraud in business are the thirty states that have renewable portfolio standards.  These laws require that a certain percentage of the electricity must come from renewable sources.  Renewable sources end up being wind or solar.  Hydro and nuclear are generally not feasible alternatives to satisfy the standards.  Nuclear is arbitrarily banned by almost every state.  Hydro is allowed but killed by banning hydro that involves dams.  The Sierra Club hates dams.

There are other niche sources of renewable electricity, but they are too minor and too expensive to be important.

The renewable standards mostly have an accelerating schedule.  In Nevada, 50% of the electricity must be renewable by 2030.  In California, it is 60% by 2030.  The end consequence of the renewable portfolio standards are the regulations and contracts that provide all the special accommodations that wind and solar require to be even remotely feasible.  When wind or solar cross a threshold of supplying about 20% of the electricity in a grid, it becomes necessary to add storage, usually batteries, doubling or tripling the cost.

The state legislatures have enacted renewable portfolio standards because they have accepted the lie that wind and solar are competitive and the lie that wind and solar are a good way of reducing CO2 emissions.  They also have largely accepted the poorly substantiated notion that we face a global warming crisis.

Norman Rogers writes often about energy.  You can see his list of inconvenient facts about renewable energy here.

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